Supplementary memorandum submitted by
EEF
INTRODUCTION
1. We would like to thank the Committee
for the opportunity to elaborate in more detail some of the issues
we raised in our initial written submission and in our oral evidence
to the inquiry into the workings of the Environment Agency (EA).
In particular, we will focus on two particular areas—the
perception of the EA, and that of Grant in Aid funding and transparency
of cost.
THE PERCEPTION
OF THE
EA
2. One of the biggest challenges facing
the EA in their relationship with business is changing the perception
of the organisation amongst the regulated community. The EA is
often seen as "policing" and using heavy-handed enforcement
rather than offering advice and guidance. This is illustrated
by the following example.
3. A company within our membership obligated
under the Pollution and Prevention Control (PPC) Regulations as
a surface treatment activity had a spill inside the plant. The
company are running on a very tight profit margin and had found
the PPC process itself extremely demanding and expensive. The
environmental damage arising was negligible as it had happened
on hard surfacing and internally. However, as a condition of their
PPC permit, they were required to report any spills to the EA.
4. The company therefore wrote to their
inspector to inform them of the incident. The reply from the inspector
thanked the company for reporting the incident and informed them
that next time a spill occurred they would be fined. This attitude
will not encourage a company to report an incident if one should
occur in the future. For any company running at a very low profit
margin reporting such an incident in the future may become a business
decision. If spills are not reported and dealt with this obviously
runs counter to the EA's aim of protecting the environment.
5. A more helpful attitude may have been
for the inspector to visit the site and assess what went wrong.
They could then put in place a structured improvement plan to
an agreed timescale that must be followed in order to ensure that
such an incident is not repeated. The kind of incident outlined
above is a case of a company doing their best to comply with the
law and following the rules through communicating such an incident
to the EA. In our opinion this scenario is not the most appropriate
situation for the EA to use their powers of fining for enforcement.
This is totally different to a company deliberately and consistently
flouting the law, which is the more appropriate context for the
use of fines for enforcement.
6. Although the EA may argue that the actual
number of cases as outlined above is small, it is these sorts
of experiences that influence the perception of the EA amongst
the business community and make it less likely for companies to
report incidents or approach the EA for help with legal compliance.
This is clearly an area for improvement if the EA and business
are to work together towards the shared aim of improved environmental
performance.
7. We recognise that the Agency is as a
regulator first and foremost and cannot resource a full advice
service. However, we do believe that there are certain actions
the EA could take in order to bridge this gap:
— It would be helpful if the EA had
a "warning" system for those companies who are perhaps
in breach of the law but are genuinely seeking help to remedy
a situation. Instead of threats of prosecution, we feel an approach
whereby the Agency insists on a programme of improvements to an
agreed timescale may be more productive. If the company fails
to adhere to the programme, the Agency should then use powers
of enforcement. We note that some inspectors do already use this
approach, but there is still a difference in approach between
regulators. To standardise this and make the philosophy widely
available would be beneficial. We understand that the EA has a
"Mind the Gap" policy that aims to bridge the gap between
high level EA policy and the decisions made by regulators on the
ground. We welcome this and efforts made by the EA to standardise
practice amongst inspectors.
— We also suggest that the EA may like
to consider working more closely with the DTI Manufacturing Advisory
Service (MAS). Not only would this make the environmental benefits
of streamlining and resource efficiency more obvious to companies
using MAS, it would also help to promote the Agency as a business
friendly organisation.
TRANSPARENCY OF
COSTS AND
GRANT IN
AID FUNDING
8. We understand that Grant in Aid is funding
from DEFRA for core EA "set up" costs in the run up
to new regulations being introduced. We also understand Government
policy to recover the actual costs of regulation from industry
charges under the "polluter pays" principle. However,
what is not clear is where the dividing line lies for activities
covered by these two different types of funding. Transparent rules
should be in place to enable stakeholders to see what is legitimately
inside scope for Grant in Aid and therefore what is chargeable.
Current arrangements lack this clarity.
9. Whilst we accept that the EA must recover
some revenue under the polluter pays principle, in some cases
this concept is being stretched and revenue raised through charging
schemes is not being used to cover the direct cost of regulating
that particular activity. For example, some landfill tax money
being recycled through the Business Resource Efficiency &
Waste (BREW) programme is being used to fund a programme of fly
tipping enforcement. This programme to target environmental crime
does not directly benefit the companies that have complied with
the law and paid their landfill tax. Funding programmes being
used in this way blur the boundary between Grant in Aid and taxation/charging.
10. In addition, there are some cases where
charges to industry are applied seemingly without full consideration
of whether Grant in Aid would be more appropriate, and business
is being asked to fund additional activities over which they have
no control. These fees amount to an additional financial burden
on business as the specific example below illustrates.
Under the PPC Regulations, industry in certain
sectors is required to make an application to the EA (or Local
Authority) for a permit to operate.
11. One particular current area of concern
for our members is the EA policy for recovering funds for "contentious
licensing" (sometimes referred to as "permits of high
public interest") under PPC. Contentious licensing arises
where there is strong public opposition to an environmental permit
application from a company. This can lead to an extended dialogue
between the company, the regulator and the community in the determination
of the application and a permit being issued.
12. Whilst many businesses are keen to engage
with the public and build better community relationships, certain
local stakeholders may be totally opposed to the presence of a
particular business in their neighbourhood under any circumstances
whatsoever.
13. Under the "polluter pays principle",
it is reasonable to expect that the EA recover costs for processing
a PPC application and associated charges for on-going regulation
for compliance with the permit itself. However, once a company
has submitted a "Duly Made" application to the Agency,
their legal obligation under the regulations for making an application
has been satisfied. Any on-going engagement with the public on
aspects of the application is beyond their control. Although the
EA are required by law to open up the application for public comment,
the level and duration of this engagement is flexible.
14. The EA has a responsibility to control
the level and duration of such engagement. It should be made clear
to the public from the outset that the company is operating within
the law and its presence in a particular location cannot be challenged
if it is compliant with the law. PPC is not an alternative to
the planning process and business should not be forced to cover
the EA costs of lengthy engagement with the general public, when
often the duration and scale of this process is out of their control.
15. As it is the public that is benefiting
from the use of EA resources in these instances we feel it may
be an appropriate area in which Grant in Aid, rather than charges
on companies, could be better deployed.
16. The recent EA charging consultation
document—Proposed 2006/7[4]
charges, in relation to dealing with complex licences attracting
significant comment from the public, stated:
"Some of the licences we process attract
attention and significant comment from the public and other consultees.
This in turn generates significant additional work and hence costs
for us… The [DEFRA/Agency charging] review looked at whether
the costs should be paid from government grant or charges and
draft conclusions propose that use of grant in aid was not consistent
with the key principles established by earlier stages of the review
(page 8, Section 4.3).
17. However nowhere in the DEFRA/Agency
charging review[5]
document does it state that Grant in Aid should not be used to
recover contentious licensing costs. The report actually states
that recovering the costs of contentious licences:
"has been identified as an issue requiring
further consideration in stage 2 of the report" (page 31).
18. However, our understanding is that no
further work has been carried out on stage 2 of this report as
yet. It would therefore appear that the use of Grant in Aid to
cover these costs has not been properly assessed to date.
19. The EA 2006/7 charging consultation
at the end of last year gave four options for the recovery of
costs from contentious licensing, all four of these options concerned
recovering the costs from industry. Despite representation from
several industry sectors expressing concerns similar to the ones
outlined in this paper, and despite the conclusions of the EA/DEFRA
charging review, the EA have still taken a decision to recover
these costs from industry.
CONCLUDING REMARKS
20. We hope that this additional information
is of use to the Committee, and offers some further insights into
the two areas of extra interest. We remain at the service of the
Committee and ready to answer any further queries there may be
on the subject of the EA.
EEF
February 2006
4 Link to full document: http://www.environment-agency.gov.uk/yourenv/consultations/1180312/?version=1&lang=_e Back
5
Link to full document: http://www.environment-agency.gov.uk/commondata/acrobat/review_of_charging_1211916.pdf Back
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