Examination of Witnesses (Questions 66-79)
14 OCTOBER 2004
MR MIKE
WALKER AND
MR PER-ANDERS
HJORT
Q66 Chairman: Welcome; I am sorry we
are running late. It would be helpful if we could keep our questions
short and you could keep your answers crisp as well. You heard
us talking there with the Environment Agency about the difficulty
they have in dealing with the multitude of small businesses, as
opposed to the larger, usually regulated, businesses which is
much easier to do. In the ESA memorandum you accuse the Agency
of going for quick wins and not really getting to grips with the
problem, so they ought to adopt a risk-based approach to their
work. Implicit in what we have just been hearing from the Agency
is that they do believe they are working on a risk-based approach.
Do you still disagree, having heard what you heard earlier today?
Mr Walker: We would agree that
the ultimate aim of Agency policy appears to be moving towards
a risk-based approach, but we think that there is still some way
to go. What we want to do is to work with the Agency to make sure
that their efforts are targeted at real environmental criminals
and give greatest benefit to the environment. We do believe that
greater effort should be targeted at illegal operators; we do
not believe enough effort is targeted at that end of the spectrum
at the moment. There are a number of reasons for that. It is partly
due to the chaotic implementation of EU legislation, which means
that there are opportunities for criminals to get involved in
waste management activity because waste producers are often confused
about what new regulations require. Secondly, it is a matter of
resources being made available to the Agency and then directed
in the right way so that they can tackle illegal operators.
Q67 Chairman: You introduce an interesting
concept which is no-fault pollution. You stress the differences
between those you describe as ". . . responsible regulated
companies providing a public service who occasionally and often
without fault err . . . " and those who ". . . with
reckless disregard for the environment and human health, deliberately
choose to evade legal requirements". We know that both camps
exist, but to set up the two in opposition is rather to miss the
point, is it not? There is no such thing as no-fault pollution
in law anyway. Are you not just creating a saints and sinners
environment which is not actually very helpful to the Agency or
anybody else who is trying to tackle the problem?
Mr Walker: I would draw a major
distinction between responsible operators such as ESA's members,
who often have verified environmental management systems such
as ISO14000 in place and which produce transparent annual environmental
reports. They are often inheriting sites, through mergers and
acquisitions, which may not have been operated to such high standards.
Obviously after such an acquisition it takes a while for standards
to improve, to get the work of the company up to speed. Mr Hjort
may be able to expand on his experience of that.
Mr Hjort: I have limited experience
from the UK. I have worked for SITA as managing director since
April 2003. If I look at my company as a whole, we employ 5,000
people with approximately 40 to 50 landfill sites. We spend around
£2 to £2.5 million a year on environmental compliance:
£2 million on the internal costs, on our internal control
organisation and about £0.5 million to the Environment Agency.
It is important for companies like ours to have very high environmental
standards because that is the basis of our business. If we look
at the internal procedures which we have for our personnel, the
environmental compliance is a key bonus targets for people. Of
course we have issues. Our company has been prosecuted. We have
had problems with odour from landfill sites, problems with leachate
from old landfill sites mainly from sites acquired from local
and regional councils, which is something which we need to deal
with It is probably the same if you look at all the different
landfill sites throughout the country as a whole: there are many
old former public landfill sites which could have looked better
than they currently do and we have to deal with them.
Chairman: That illustrates the point
I was trying to get at really. If it were really the case that
members of ESA were as good as gold and never got prosecuted for
anything and only people who are not members of the ESA are out
there deliberately polluting the countryside, then we would be
talking about a very different overall picture. I just suggest
to you that trying to create the contrast that you have done is
not helpful.
Q68 Mr Thomas: We had a discussion a
little earlier about resources for the Environment Agency and
your evidence pointed out some of your concerns about the squeeze
from both efficiency savings and from the grant-in-aid. You suggested
in your memorandum to us that you could overcome this in two ways:
one was the landfill tax approach, which is clear to us and we
can see how that may work. The other one was something which you
called responsible operators' own management systems. Could you
say a little more on that? It seems to me that in that context
you would be expecting the company to do the inspection work on
behalf of the Environment Agency.
Mr Walker: What we are highlighting
is the fact that responsible companies generally are moving towards
implementing recognised, externally verified, operating systems
such as ISO14000 and other environmental audit systems. It costs
the industry to implement these systems, there are significant
internal costs in putting those in place. As they are externally
verified, we believe that the Agency should be able to use the
information coming from those systems rather than going and doing
all the work again.
Q69 Mr Thomas: Does that not happen already?
The evidence from the Environment Agency seemed to suggest to
me that where you have a company like that, then the approach
of the Environment Agency is to visit that company less often,
to regulate it more lightly than a company which does not have
such systems. Is that your experience?
Mr Hjort: I cannot comment on
other companies then us. The number of visits you get varies quite
a lot depending where you are in the country. The only way forward
for big companies like ours is to build up the internal controls
and welcome the EA coming in and looking at them. I think that
is also more effective because we need to have these internal
procedures in place in order to operate in a proper way. That
would also make the EA's life more efficient and make it easier
to deal with all the other problems which are out there.
Q70 Mr Thomas: In your experience at
the moment does the Environment Agency make a material differentiation
between companies which have those external ISOs and those which
do not?
Mr Walker: There is a differentiation,
but not as much as we would like. The overwhelming experience
of ESA's members is that the Agency still regulates using a prescriptive
approach, looking at the detail of processes. Everybody recognises
a need to move towards an output based system of regulation which
will use management systems more. We need to move towards that
approach more rapidly. The Agency has talked about setting a sector
plan, where we would work together to try to improve regulation
across the whole of the sector. That is something we really want
to work with the Agency on. We believe that with European legislation
coming through at an increasing rate, we need to be able to plan
exactly how we are going to be regulated, not next year but for
the next five and ten years.
Q71 Mr Thomas: You also mentioned in
your evidence some concerns you had about European legislation
and you even suggested that if we were not careful it could increase
criminal activity.
Mr Walker: Yes.
Q72 Mr Thomas: You specifically said
inadequately prosecuted European legislation. Can it ever be justified
that any company should not follow a European directive? In what
way do you think European legislation can increase criminal activity?
Mr Walker: ESA supports EU legislation
on waste. Waste regulation drives the market in waste management
activity.
Q73 Mr Thomas: So it is waste in particular
that concerns you here.
Mr Walker: We support the principle
of EU legislation on waste being well implemented across the UK.
Our concern is with the way that it has been implemented. It often
takes a long time to put it into UK law and, when it is in UK
law, inconsistencies and uncertainties often still exist. That
climate of uncertainty actually allows illegal operators to flourish.
As the Agency said in their evidence, the vast proportion of small
businesses do not recognise their duty of care to have their waste
managed responsibly. That is a legal duty of care which already
exists. It is then not surprising that they do not know about
the new legislation which is coming in, which is more onerous.
We support the legislation, but it is quite often going to be
more onerous for waste producers. It does allow the opportunity
for illegal operators to come in and offer cut-price services
to waste producers.
Mr Hjort: When prices, which will,
go up when there are higher environmental standards, we create
a possibility for people who do not take this seriously to earn
more money by not doing business correctly, and according to the
law.
Q74 Mr Thomas: Presumably eventually
the regulating system catches up with those fly-by-night operators.
Mr Walker: Eventually the regulatory
system should catch up with those fly-by-night operators. Our
concern is what happens in the interim because responsible operators
are making investment in order to meet new standards. Once the
treatment plant is put in place, if no waste flows to those plants
because of inadequate enforcement, then you have a stranded asset
and it is a waste of money for the industry.
Q75 Mr Thomas: It is certainly a concern
which end-of-life operators in my constituency have raised with
me. They are preparing for the directive and others do not seem
to be and yet are still in that line of work. Could we turn to
your own organisation? Could you tell us how many members you
have?
Mr Walker: ESA has almost 150
members. We represent the UK waste management industry. The vast
majority of our members operate waste management infrastructure;
we have a smaller number of associate members who are legal companies,
equipment manufacturers, consultants, et cetera. The vast majority
of our members are SMEs. In terms of turnover and waste handled
that is concentrated in a relatively few members.
Q76 Mr Thomas: You mentioned in your
memorandum that you have a code of conduct. Does everyone subscribe
to that?
Mr Walker: That is right. It is
part of the articles of association.
Q77 Mr Thomas: So if you join the ESA
you have to subscribe to the code of conduct.
Mr Walker: Yes. We have a code
of conduct, we have a detailed disciplinary procedure and we have
the power to expel or censure members when the code of conduct
has been breached. Originally the code of conduct was restricted
but in the last year it has been expanded to included health and
safety, signing up to health and safety targets which have been
agreed with the Health and Safety Executive, and environmental
reporting in accordance with Green Alliance indicators.
Q78 Mr Thomas: Can you tell us whether
you have ever taken action against a company under your code of
conduct?
Mr Walker: Certainly we are prepared
to take action. The way we like to do it is to work with the members
to improve standards. We do not want to expel members, other than
as a last resort. It has been done.
Q79 Mr Thomas: You have expelled members.
Mr Walker: Yes. We prefer to work
with members and try to improve standards across the board as
the most constructive way.
Mr Hjort: It is also quite important
when you apply to be a member that there is control over who can
come in.
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