Examination of Witnesses (Questions 60
- 79)
WEDNESDAY 13 JUNE 2007
IAN PEARSON
MP, MR NIGEL
ATKINSON AND
MS CAROLINE
CONNELL
Q60 Lynne Jones: You have just said
that going beyond the minimum would help the law fit better together,
and that is certainly what some of the submissions that—
Ian Pearson: I was saying that
I can conceive of a case that you would want to go beyond legal
implementation at a minimum level if we thought there was a strong
case that the law would work better together by doing that. We
do not believe that that case has been made during the consultation,
and we were not persuaded of it prior to issuing the consultation
document ourselves, which is why we are where we are today.
Q61 David Lepper: One final point
on this particular issue. We have talked about consultation and
I wonder what view, if any, Defra took, if any, from other departments
in Government of this question of minimum implementation. Was
there a strong view from elsewhere in Government as well—the
DTI, for instance, the Treasury—that this was the best line
to take?
Ian Pearson: There is a strong
view right across Government about better regulation and we have
established, as Government policy better regulation principles,
that our default position is that we do not gold plate unless
there is a really compelling case to do so. What I am saying to
you is that we looked at those sets of principles and we applied
them to this Environmental Liability Directive. We considered
the case as to whether we should go further than minimum implementation,
but we did not believe that that case was sufficiently persuasive
enough for us to justify doing so. That is why during the consultation
exercise we explained that we did not want to gold plate and we
set out the policy options that we did; but we recognised at the
same time that there might have been a marginal case in areas
for actually implementing beyond the minimum.
Q62 Chairman: In your evidence to
the Committee in paragraph 9 you comment about the exceptional
circumstances that might suggest that you go beyond the implementation
terms, the basic requirements, and you say that such a decision
would be "justified by cost benefit analysis and following
extensive stakeholder engagement". Can you just lift the
veil a little bit upon what kind of a return as a result of a
cost benefit analysis would lead you to make an exception? How
is that judgment to be reached?
Ian Pearson: I think I have been
pretty clear about this and what I have said is that we looked
at the case for going further; we undertook cost benefit analysis
on a range of different policy options and those are contained
in the draft regulatory impact assessment, and they have not been
challenged or disputed or debated in any way.
Q63 Chairman: Let me try and assist
you, Minister, a little further, because you are quite right,
you go on in the same paragraph to say that you estimated in the
context of applying the ELD to nationally protected biodiversity
within SSSIs as only a small net benefit. So when does small become
big? How much in quantum do you have to have in terms of the return
on a cost benefit analysis; or, put it this way, what would the
number have had to have been in the exercise you did carry out
to have convinced you that SSSIs should have been within? What
is the cut-off?
Ian Pearson: I think you have
to look at these things on a case-by-case basis and exercise judgment,
and the judgment that we exercised as a Government, as part of
the consultation exercise, was that we did not believe there was
a sufficiently strong case to gold plate and to go beyond the
legal requirement.
Q64 Chairman: You made that very
clear and I think we have the principles clearly, but you made
a statement in paragraph 9, which says that you estimated only
a small net benefit. Most government investment decisions are
made on the basis that numerically if the rate of return in a
cost benefit analysis goes beyond a certain positive number an
event occurs, and you have described in here in words "small
net benefit", so I was interested to know, in the example
that you have actually done, how big would the return have to
have been to convince you that it was worth going beyond the minimum
implementation. You may not be able to give me that answer now
but perhaps you would like to reflect on it?
Ian Pearson: I think you are trying
to look for spurious precision in terms of an answer and, as I
say, it is a matter of judgment as to what a significant benefit
would be.
Q65 Chairman: Minister, with respect
your consultation document contains some numbers and it has a
fairly precise number in it, because you have written it down,
which gives us the numerical answer to the question what was small.
So if you can do it for small all I am saying is, how much bigger
does the benefit have to be before it becomes "we will go
further'?
Ian Pearson: This will apply on
a case by case basis and what I am saying is that if as a result
of a benefit cost assessment exercise that we undertake, whether
it be as part of this or part of any other implementation of the
Directive across Government generally, we will take a full look
at this.
Q66 Chairman: I am sure you will
do, but I have asked a very simple question.
Ian Pearson: Yes, you are asking
me a very simple question to which there is no one simple straight
answer.
Q67 Chairman: You know what the answer
is at the small end of the spectrum because you have already made
a decision. It is Table F5 of the Regulatory Impact Assessment.
Ian Pearson: We produce figures
as part of the Regulatory Impact Assessment, yes, and my judgment
and the judgment of Government when we produced the consultation
exercise was that we thought there were, on the basis of the RIA,
some benefits but they were relatively small overall. If we thought
that the benefits were more substantial, like, for instance—
Q68 Chairman: There is a reason for
this approach, it is not just for the sheer entertainment value
of asking you—
Ian Pearson: I don't think it
is very entertaining, to be honest!
Q69 Chairman: We can always make
the entertainment even better. The reason I am asking you is that
people will want to probe how the decisions are made about implementation
and this particular page in the RIA does give a lot of detail
about the basis upon which you made your decision, but it says
that the net benefit was less than £1.1 million and therefore
that is deemed to be small. That accords with the words. All I
am saying is that just to give us some feel of the order of magnitude
as to how these decisions are made, if it had been, say, £1.5
or £2 million at what point would you have said that if the
benefits had got to that level then it would have been worth going
beyond it, just to give us some idea of the order of magnitude?
Because what we have here is nought to 1.1 no, but we do not know
1.1 to 1.5 might be, or 1.5 to 2, yes.
Ian Pearson: I think I just have
to say in response to this that this is a matter of judgment as
to what is small and what is significant, and it always will be,
and it will vary from policy area to policy area.
Q70 Chairman: True, but I am not
asking you to speculate and I do not want to bore us any more.
As Mr Drew has just whispered in my ear, these are real figures;
this is an exercise which you did, and you have listed the costs
and the costs here are £0.6 of a million and the benefits
are less than a million. So, in other words, you could almost
say crudely a two to one ratio in terms of costs versus benefit
that is small, and you have said no. There are a lot of people
who will come to you in the future and say could you extend this
for the following reasons, and they might want to understand how
this mechanism works. That is all I am asking.
Ian Pearson: And of course the
costs and benefits bear down on different groups of people and
it is the role of government to make a judgment based on an assessment
of those costs and benefits as to whether it is worthwhile to
pursue that particular policy benefit.
Chairman: For example, with your flood
protection policies there is an entirely objective set of criteria,
which you know well, which determine whether a project goes ahead,
and applicants for projects have a very clear idea how the point
scoring, cost benefit, everything else, worked out—it is
all down there, you can work it out for yourself. All I am saying
is that it perhaps might be interesting to have a bit more clarity
in terms of the returns to cost ratio, which is what is down on
page 50, to understand how it works. But we will not delay ourselves
any more and we will move on to David Drew.
Lynne Jones: Just before you do, the
Minister was about to give us a "for instance". Some
might think that a two to one cost benefit analysis was actually
quite good.
Chairman: Some might.
Q71 Lynne Jones: You said "for
instance" and then you were interrupted.
Ian Pearson: I just think it is
impossible to apply simple metrics to policy decisions and to
say that, as a Government, we will always do something if the
ratio is two to one or better.
Q72 Chairman: That is me telling
you statistically what this says. I appreciate that is not you.
Ian Pearson: I am suggesting to
you that, as a guide to policy, that does not work. You cannot
just have simple metrics. You have to exercise judgment.
Q73 Chairman: You can have order
and magnitude.
Ian Pearson: My thought that I
was wanting to share with you was that, if I could be convinced
that as a result of a policy intervention in this area we would
have a big impact on achieving some of our biodiversity targets,
that would lead me to conclude that this might be significant
and we might want to go further and gold plate; but I do not think
that that case has been made so far.
Q74 Mr Drew: This is all quite abstract
but we are not talking about abstract ideas. We are talking about
SSSIs and equivalent. We are giving a further layer of protection
to some of those SSSIs. Either we are prepared to protect these
very important sites or we are not. What we have here is a mechanism
by which that could be done. We are using a cost benefit analysis
to take us in that direction. I would have thought you would be
rather more robust saying, "Of course, if there is clear
environmental damage we will be in there like a ton of bricks
to make the offender pay." There is an issue about how they
will pay. My biggest misgiving is that they may decide they will
pay because they have already caused or are about to cause environmental
damage. I want to prevent them but if they are prepared to take
into account and you are prepared to effectively give them the
clearance so they can do that, that is what will happen but something
has to happen. Otherwise they will do it anyway. It is a very
toothless tiger that is affecting the operator here.
Ian Pearson: I want to stress
again that we already do protect SSSIs and we do have a strong
system of environmental protection in the United Kingdom.
Q75 Mr Drew: What is different in
the ELD?
Ian Pearson: What is going to
be different in the Environmental Liability Directive is that
in less than 1% of the environmental damage cases we are probably
going to see implementation of the ELD provisions. Where they
are different is potentially giving a little bit more protection
on the biodiversity side and also in the requirement not just
for primary remediation but potentially also in cases where there
might be complementary or compensatory remediation. Those provisions
are new and different but I do not envisage them being applied
in most circumstances.
Q76 Mr Drew: Let me give you one.
This is in the Regulatory Impact Assessment. It says that the
use of DDT may be an example. For this provision however the past
may not provide a reasonable guide as to how a defence might be
applicable or which sectors it will apply to. In a sense, that
is giving you an answer that we cannot look backwards to determine
action in the future but we must have lots of examples which could
be brought to mind of where the ELD, if it is going to be effective,
will be able to be the mechanism by which we can take action against
people who cause environmental damage. I would have thought that
is something that we have to be talking about. Otherwise, no one
is going to think this is worth a candle.
Ian Pearson: I do not think we
should delude ourselves that the Environmental Liability Directive
is going to be a huge, massive, new change. When you look at it,
it is in effect a minor addition to the legal environmental protection
framework that we already have in the United Kingdom. Specifically
on SSSIs, the best estimate we have at the moment is that approximately
90% of SSSIs will contain some European features because of the
overlap between Natura 2000 sites and the Birds and Habitats Directive
and for other reasons. The additional level of protection and
action that might be needed to be taken on remediation that is
given by the ELD is, I believe, a useful measure but I do not
think we should be pretending that it is a huge answer to all
our environmental problems in the United Kingdom because I do
not see the Directive in that way at all.
Q77 David Taylor: You can be frank
with us.
Ian Pearson: I already have been.
Q78 David Taylor: You are not going
to appear in The Daily Mail pillory or Today in Westminster
or Radio 4 Tomorrow. To you, ELD means Entry Level Directive,
does it not? You are the Stavros of the EFRA team, the Easyjet
man. You want an ELD light, a low cost utility model, barely sufficient
to comply with the EU publication. That is true, is it not?
Ian Pearson: No, it is not true.
What I am doing is exactly what it says on the tin.
Q79 David Taylor: I feared that.
Ian Pearson: I am suggesting we
should implement the Directive as the Directive is and where the
Directive allows us to exercise discretion we ought to use that
in a sensible way. We do not believe that there is a case for
gold plating the Directive. Frequently across other areas of Government
we get criticised for gold plating EU legislation.
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