Memorandum submitted by Environmental
Industries Commission
Point 1. The Environmental Industries Commission
(EIC)
1. The Environmental Industries Commission
(EIC) was launched in 1995 to give the environmental technology
and service (ETS) industry a strong and effective voice with Government.
2. EIC now has over 290 Member Companies
and has grown to be the largest trade association in Europe for
the environmental technology and service sector with the support
of leading politicians from all three major political parties,
industrialists, trade union leaders, environmentalists and academics.
3. EIC Members operate at the front line
of pollution control in the UK and therefore have regular contact
with the Environment Agency at a local and national level. EIC
has developed a productive working relationship with the Agency.
Senior Agency staff regularly attend EIC meetings to advise ETS
companies on new legislation and policy to maintain regular industry
consultation.
4. EIC therefore welcomes this opportunity
to comment on this inquiry into the role of the Environment Agency.
Point 2. Role and Structure of the Agency
5. The Environment Agency is now approaching
ten years old. Overall EIC considers the approach of a single
body tackling the wide range of duties on environmental protection
has been very successful.
6. EIC has a productive working relationship
with the Agency and has found it open and positive in its communications
with the environmental technology and services industry.
7. Five years ago when the Agency went through
its five year "Financial Management and Policy Review (FMPR)"
EIC recommended that "the Agency should retain its regulatory
role as the heart of its work and focus on rigorous enforcement
of environmental protection regime. The Agency can then build
on success in this role to act as a champion of the environment
and to lead the policy debate". EIC believes the Agency has
broadly been successful since then in marrying together its regulatory
role and its role as a "champion of the environment".
8. One concern on the structure of the Agency
EIC raised as part of the FMPR was the strong regional structure
leading to wide differences in the way which legislation was enforced
across the country. This remains a significant concern for our
Members. However the Agency has made major steps forward in this
area through clear central policy making and guidance to staff.
A current example is the move to dedicated "Account Managers"
to accompany the new system of Mobile Treatment Licences for land
remediation licensing.
Point 3. Resources
9. EIC's main concern with the role of the
Agency is that it has an ever increasing range of responsibilities
for environmental protection but that the funding it receives
does not increase in line with this extra workload.
10. In the field of environmental protection
the Agency receives Grant in Aid Funding from Defra and raises
funds through fees and charges on industry.
11. Major new responsibilities for the Agency
include implementing the far reaching EU Water Framework and bringing
in the IPPC Directive by October 2007. Charging regimes associated
with such legislation rarely cover the full costs of implementation.
12. This means severe pressure is being
placed on the Agency's ability to enforce the basic regulatory
regimes for pollution control. An example is the Oil Storage Regulations
which came into force fully in September 2005. Oil spills are
the biggest cause of environmental incidents in the country and
the new Regulations cover hundreds of thousands of oil storage
tanks. Yet the funding given to the Agency for this regime was
just £80,000 to cover a public information campaign. Taking
this approach risks bringing the regulatory regime into disrepute
as the many sites with oil tanks are not covered by any other
regulatory regimes and rarely see an Environment Agency inspector.
13 Recommendation: Local authorities
have agreed with Government a "new burdens principle"
that all new responsibilities placed on them should be funded.
EIC would recommend the same approach is now taken to the Agency
for its growing environmental protection responsibilities.
Point 4. Risk Based Regulation
14. The Agency has set out its aim to develop
risk based assessment systems to target regulatory activity effectively
and to encourage industry to use environmental management systems
to drive environmental improvements. Its work in this area was
welcomed by the recent Hampton review of regulators.
15. These approaches are to be welcomed
as maximising the effectiveness of the Agency in the face of scare
resources. However they also carry considerable risks for the
credibility of the Agency. Risk based enforcement if not properly
implemented could undermine the level playing field both mainstream
industry and the environmental technology and services industry
seek. Furthermore to the extent that a risk based approach is
a response to scarce manpower and other regulatory resources,
there is clearly a danger that those whose activities have not
been targeted will see this as a green light to ignore or downgrade
the importance of effective regulatory compliance.
16. To ensure that a risk based approach
does not reduce the effectiveness of environmental regulation
EIC set out the following criteria in a paper in 2002 and considers
they remain valid:
— There must be a baseline for effective
environmental regulation—in terms of inspectors and other
staffing per regulated installation, process or activity and the
frequency of inspection, irrespective of any risk; this must be
set at a level which maintains the credibility of the regulatory
regime in the eyes of its customers.
— There must be an enforcement policy,
including prosecution, which is as rigorous in dealing with non-compliance
in non-targeted areas as that applicable to the targeted areas.
— The assessment of the level of risk
must be done rigorously and reviewed at least yearly, as well
as whenever there are significant changes to the operation or
ownership of the process.
— Environment Agency staff must be
fully trained to carry out risk assessments and given the resources
to carry out their work effectively.
17. The Agency has largely followed these
approaches in its implementation of risk based regulation.
18. Recommendation: The Agency
should continue to introduce risk based systems of regulation
with care. Industry should be in no doubt that regulations are
there to be complied with, even if they have a relatively small
individual impact, and that performance as well as systems will
be thoroughly audited.
Point 5. Stimulating Innovation
19. Environmental regulation is essential
to the effective running of the market and, therefore, to stimulating
environmental innovation. However regulation must be designed
and implemented to minimise the costs and to stimulate innovation,
without undermining the benefits it delivers.
20. Increasingly policy makers are recognising
the need to design regulation to stimulate innovation and to recast
regulations which are too restrictive. Many of EIC Members concerns
with working with the Agency stem from the regulatory requirements
that the Agency is required to implement. The clearest example
of this is the burden placed on the reuse of many materials caused
by the wide scope of the definition of waste. The Agency has first
hand experience of how regulatory requirements work in practice
and it is important that Defra and other Government departments
draw on this expertise in negotiating and implementing EU Directives.
21. Recommendation: The Agency should
be actively involved in the negotiation and implementation of
EU legislation to bring practical experience of implementing regulation
into this process.
22. However there is already a major body
of environmental legislation in place which is likely to be reviewed
slowly and the way this is implemented is vital to environmental
innovation.
23. Good regulation should always seek to
welcome innovative approaches to achieve better standards. However
for innovation to be successful the regulated industry must perceive
benefits from adopting the new approach. A key concern from industry
in adopting a new approach is that an extended permitting time
will be needed.
24. It is quicker and easier for a regulator
to approve tried and tested methods in regulated industry. The
cost of any delay is borne by the regulated person. These costs
may be significant. The regulator does not have to evaluate the
business cost of extended periods to permit, but it is paramount
for industry. Impacts are both the direct costs and effort of
a longer permitting process, and the usually greater indirect
effects of business delays and uncertain scheduling—including
allocation of finance in forward business planning.
25. EIC believes there is scope for the
Agency to take a more proactive approach to encouraging innovative
approaches—for example through dedicated staff to process
permit applications using innovative approaches. EIC has raised
this issue with Agency and has been pleased that a dialogue has
begun on this.
26. Recommendation: The Agency should
take a proactive approach in the permitting process to encouraging
innovative approaches to reducing pollution from the industries
it regulates.
Environmental Industries Commission
December 2005
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