Examination of Witnesses (Questions 1-19)
14 OCTOBER 2004
MR RIC
NAVARRO, MR
JIM GRAY
AND MR
DAVID STOTT
Q1 Chairman: Good morning, welcome, thank
you very much for coming along to this Committee, some of you
not for the first time and we are very grateful to you for your
time. This is the first session in our new inquiry into corporate
environmental crime and we are very pleased to have the Environment
Agency in at the beginning, as you obviously have a key role to
play. Thank you also for your memorandum, which we have read with
interest. I note from that, that you state small- and medium-sized
enterprises comprise 99% of all business, are responsible for
60% of the commercial and industrial waste and a significant number
of incidences of pollution. Is not one of the problems that you
have got that that sector is really hard for you to get to grips
with, because you have licensed companies which are obviously
quite easy to regulate and you have this huge other lot which
is getting on with all sorts of things that you have no real kind
of handle on?
Mr Navarro: That is certainly
true. The SME sector is responsible for over 50% of pollution
incidents, as well as that 60% figure of waste arisings, which
we manage. This is a very large and diverse sector and, as you
say, we do not have a direct contact with that sector. Very often,
the first time we come into contact with SMEs is when they have
committed an offence which has had an environmental impact and
that is how they come to our attention. It is a difficult whole
range of sectors to deal with, it is a difficult problem for the
Agency, who are trying, for example in terms of producing the
NetRegs, (which I am sure Jim Gray can talk about), but designed
to provide very user-friendly easy advice to over 100 sectors
of SMEs. The hit rate on that is increasing, I think we are getting
150,000 hits a month, but nevertheless it is a big challenge for
us. Jim, would you like to say anything?
Mr Gray: Yes. The NetRegs have
been very successful. The figure I have in mind is that we have
had about 1.5 million hits a year. It is a number of things with
SMEs: there is obviously just the huge number and we do not have
contact with most of them in the regulatory sense. What we are
trying to do though, is target sectors, sectors like agriculture,
illegal activities, fly-tipping et cetera and construction; so
there is agriculture, construction, food and drink. What we are
trying to do is to identify the higher impact sectors and to target
those, influencing them and dealing with trade associations.
Q2 Chairman: How often do you meet with
the trade bodies?
Mr Gray: We have quite a lot of
contact generally with the trade bodies of the industries that
we regulate. We have fairly extensive contacts with CBI and ESA
who are behind me today. When it comes to SMEs, it is difficult
to find trade associations which deal collectively. There are
some sector bodies—
Q3 Chairman: Do you meet, for example,
with the Federation of Small Businesses?
Mr Gray: Yes, people like that
and the Small Business Service. We tend to deal with about six
or seven, but some of the larger trade associations also have
SMEs, such as the Surface Engineering Association, EEF; a number
of larger trade associations also target a lot of SME interests
and membership. Coming back to the campaign type and targeting
the sectors, we either target sectors, or we have pollution prevention
type campaigns: things like oils, tyre disposal, and of course
hazardous waste has been quite a large campaign where back in
July we were getting 500 enquiries a week at the time of the co-disposal
ban. During the communication of hazardous waste information,
a lot of trade associations were involved there and they would
then be targeting their members.
Q4 Chairman: When you talk about targeting,
you are targeting them with information basically, are you not?
Mr Gray: Yes, information.
Q5 Chairman: It depends, therefore, on
them to be willing to be engaged. It is therefore self selecting,
because you know the good guys who are the people who are going
to engage with you and the people who are causing the difficulty
are not going to pick up the phone and say "Hello, can I
speak to the Environment Agency".
Mr Gray: That is true.
Mr Navarro: That is true and one
of the challenges of the trade bodies themselves is engaging with
the whole of their membership. We talk to the NFU for farmers,
but that does not mean necessarily that they are in touch with
the whole of their 162,000 farmers. We need to try and influence
all those farmers in order to deal with problems like diffuse
pollution and minimising waste and reducing run-off and all that
sort of thing. It is quite difficult.
Q6 Sue Doughty: I am very interested
in this and particularly when we talk about the worst offenders,
we are talking about people, for example, taking construction
waste away. We have been concentrating on prevention, but when
I met my farmers a couple of weeks ago, they were reporting things
like lorry loads of asbestos on their land; not only that, but
when they tried to get it investigated, they were told "Well
the lorry has just changed hands, we could not track the owner",
a lot of reasons why not. So although on the one hand I take your
point, for example, about farmers being told what is required
of them, when they are the victim it seems that the investigation
is somewhat cursory and then they are left with the problem of
disposing of a whole lot of asbestos or whatever else it was in
this case. It is worrying.
Mr Stott: That side of things,
the large-scale disposal of the type that you are talking about,
will come up later on in the discussion about the special enforcement
teams that we have put together and which are going to target
specifically that sort of activity. That is not unsophisticated
and there are significant evidential problems for us, because
a lot of vehicles which are used are registered in names that
we simply cannot track down; they pass between various people
and different hands who use them, so they are difficult operators
to pin down. We are going to need and we will get, police cooperation.
We must start to have more of a joint effort in operating against
that sort of activity, but we are very conscious that that is
a fertile field for us to get into. We have not, to date, really
been structured to deal with that scale of operation, but we are
now getting to grips with it.
Mr Gray: There is a question of
resources; we would like more resources to be able to have the
capacity to do more of this sort of work and also to assist the
local authorities, and to assist them to build capacity as well
for this type of enforcement work.
Mr Navarro: There is a problem,
because that is funded from GIA, which is tending to reduce. Our
effort in relation to that completely illegal unregulated sector
needs to rise commensurate with the problem, but we are faced
with a sort of squeeze in terms of the resources which we can
actually apply to it. We are trying to think of new sources of
funding, maybe some diversion from the landfill tax or other sources
which we could then apply. Basically it is quite difficult to
catch these people, they are sophisticated in the main and the
effort we need to track them down and then we need better powers
when we do catch them.
Q7 Chairman: Coming back to the division
between how you deal with SMEs and bigger licensed businesses,
what do you say to the accusations, which we frequently hear,
that you devote an awful lot of time to dealing with the big businesses
which are basically grown up and are well behaved and they get
fed up with being regulated, when they can look out of their window
and see a whole lot of other stuff going on which you have nothing
to say about? Is that not unfair?
Mr Navarro: We would not accept
that that is the position. We regulate and you know that we are
doing a lot—and I shall ask Jim to talk about the modernising
of our regulatory approach—to lighten the touch on responsible
industry, who, at the higher end, are going beyond the compliance
with our permits, because for competitive reasons and sustainability
reasons they are looking beyond that. So we are coping with that
end down to the lower end of regulated companies which still require
quite a lot of physical regulation to keep them up to the mark
and then dealing with the unregulated sector. We do have various
tools which we have developed to target our efforts, like OPRA.
Mr Gray: Just a few initial comments.
I hear this comment a lot from operators who are regulated saying
we go for soft targets and not the real illegal people. Yet when
we say "Well, tell us where they are, give us the names and
we will go to see them" . . . It is something people say,
but we do not get names and addresses or anything given to us;
occasionally we do, but it is not that often. Usually, forensically,
we have to find these sorts of people ourselves and it takes a
lot of resources. There is an issue around using the money we
get for regulating the people who are licensees, because they
pay us charges to regulate them. It varies: some of them complain,
some of them are supportive. I know ESA, behind us, are very supportive,
but some companies would not like us to use the money they pay
for other purposes. So there is an issue about charges. What we
are trying to do, perhaps to get round it another way, is to try
to target unlicensed activities rather than illegal activities
and stretch the charging scheme towards the unlicensed category.
I think our ultimate challenge, what I would say, is send us the
addresses and the evidence. Is that fair comment, Ric?
Mr Navarro: Well that is certainly
true. Within the regulated sector we have tools to target our
efforts on the ones who are not complying or who require more
regulatory inspection in order to require them to comply as opposed
to the more compliant, more responsible industry. We do have those
tools and those are reflected in the charges that we actually
apply. So there is some incentive there under our operator risk
appraisal system.
Q8 Chairman: You say in your written
evidence, that you issued 369 enforcement notices last year, but
that you are careful, for very good reason, not to be unduly restrictive
because you could actually close a business down. Under what circumstances
would you contemplate issuing a notice which you knew would have
the effect of shutting the business? Have you ever done it?
Mr Stott: It is very rare.
Mr Navarro: We have very rarely
issued prohibition notices under the IPC/PPC regime and we have
actually a duty to issue a prohibition notice where there is an
imminent risk of serious pollution of the environment, so there
is no real discretion there.
Q9 Chairman: As you said earlier, it
is very difficult to identify that risk. You usually come across
instances like this when the pollution has already occurred.
Mr Navarro: We are dealing here
with regulated industry, where we do inspect and if we come across,
or have brought to our attention, a situation where there was
a risk of imminent pollution, we would issue a prohibition notice
to require that process to stop, in order to safeguard the environment
and public health. However, in practice, very rarely do we actually
have to use that sanction and most of the enforcement notices
that you have referred to are notices requiring companies to take
action, to come into compliance with the obligations which they
have already signed up to in the sense that they accepted their
permit conditions.
Q10 Chairman: Could you possibly drop
us a note, setting out the number of prohibition notices you have
issued over the last five years?
Mr Navarro: Yes, we can do that.
Q11 Chairman: I think that would be very
helpful. Coming back to the last point you were making, how do
you actually measure compliance?
Mr Navarro: We have a number of
tools in order to do that. We have compliance assessment
programmes and we provide guidance to our staff on the measures
which they ought to be looking for when they go to visit a site.
Q12 Chairman: So it is relatively straightforward:
you issue a notice and you give a certain amount of time for the
compliance to be effected and then you come back and make sure
that is has been done.
Mr Navarro: Yes.
Q13 Chairman: Do you come back again
and again afterwards?
Mr Navarro: Of course. I think
we are talking about compliance with the enforcement notice or
compliance generally. On compliance generally, we visit sites
in order to ensure that the companies or the operators are complying
with the conditions of their permit and we target the amount of
inspection according to various factors, such as the record of
the company, the risk of the operation which they are undertaking.
So there is targeted inspection. Of course, if we find that a
company is not conforming to their conditions, that argues for
us needing to go back to look to see whether they are improving
in the future. So they will attract more inspection effort.
Q14 Chairman: Do you measure your own
effectiveness too with the compliance classification scheme?
Mr Stott: That is right, the CCS,
the compliance classification scheme, which has been in since
April overall. The data really is too raw, only six months so
far, to develop any form of trend, but that is the whole point:
to capture the types of breaches, classification one to four and
then to take action if we see a trend developing of certain types
of breach with a certain company.
Q15 Chairman: And so far, so good with
that?
Mr Stott: Yes; it is going extremely
well.
Q16 Chairman: One final question from
me. What feel do you have or maybe data on how many of the offences
committed by small- and medium-sized companies are committed deliberately
and how many are committed as a result of ignorance?
Mr Stott: We have no formal data
on that. As you know, the regime generally is one of strict liability,
once pollution has been caused, then an offence has been committed.
Whether it has been committed deliberately, negligently or with
gross recklessness, we have no way of actually measuring.
Mr Navarro: We do know from our
research that 70% of SMEs or 75% of SMEs are not actually aware
of their environmental obligations, so we are starting from a
low base. Then when we come across an incident of course, in those
circumstances we would be able to judge whether that had been
committed negligently or recklessly or deliberately or unfortunately
through ignorance.
Mr Stott: In the data the average
fine is about £8,000 or so. It is of course easy to say in
mitigation "We simply did not know". A lot of companies
would say "We simply did not know that we had this particular
obligation".
Q17 Chairman: I am surprised that you
said you had no way of telling whether an offence had been committed
negligently or deliberately.
Mr Stott: I beg your pardon—no
data.
Q18 Chairman: You have no data.
Mr Stott: I have no data to that
effect.
Q19 Chairman: Yet it must be a factor—
Mr Stott: In presenting the case.
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