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Session 2007 - 08
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Public Bill Committee Debates

Draft Environmental Permitting (England and Wales) Regulations 2007

The Committee consisted of the following Members:

Chairman: Mr. Martin Caton
Barker, Gregory (Bexhill and Battle) (Con)
Beckett, Margaret (Derby, South) (Lab)
Benyon, Mr. Richard (Newbury) (Con)
Carswell, Mr. Douglas (Harwich) (Con)
Cox, Mr. Geoffrey (Torridge and West Devon) (Con)
Gapes, Mike (Ilford, South) (Lab/Co-op)
Gardiner, Barry (Brent, North) (Lab)
Griffith, Nia (Llanelli) (Lab)
Horwood, Martin (Cheltenham) (LD)
Huhne, Chris (Eastleigh) (LD)
Kumar, Dr. Ashok (Middlesbrough, South and East Cleveland) (Lab)
McDonagh, Siobhain (Mitcham and Morden) (Lab)
Main, Anne (St. Albans) (Con)
Ruddock, Joan (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)
Ryan, Joan (Enfield, North) (Lab)
Smith, Mr. Andrew (Oxford, East) (Lab)
Smith, John (Vale of Glamorgan) (Lab)
Glenn McKee, Committee Clerk
† attended the Committee

First Delegated Legislation Committee

Monday 26 November 2007

[Mr. Martin Caton in the Chair]

Draft Environmental Permitting (England and Wales) Regulations 2007

4.30 pm
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Joan Ruddock): I beg to move,
That the Committee has considered the draft Environmental Permitting (England and Wales) Regulations 2007.
The draft regulations will streamline and simplify environmental permitting arrangements by integrating the systems for waste management licensing and pollution prevention and control. In doing so, they cut red tape and provide an easier and more flexible way of permitting, allowing regulators and business to focus on protecting the environment at a lower cost. The regulations provide an opportunity to reduce administrative burdens on business and regulators consistent with the Government’s policy on better regulation. They respond to various drivers to review the different approaches to environmental regulation and to establish a more efficient regulatory system.
In 2005, the Better Regulation Task Force challenged the Department for Environment, Food and Rural Affairs to improve environmental permitting regulations, stating in “Regulation—Less is More”:
“Various licensing requirements are set out in different pieces of legislation and may impose different administrative requirements on industry. The procedures relating to integrated pollution prevention and control (IPPC) for an industrial process that might pollute the air, water or land are different to those required for waste management—yet their objective, to protect the environment, is the same.”
The Hampton report of 2005 challenged us to take a more risk-based approach to regulation. In that year, we responded to those drivers by launching the environmental permitting programme with the Environment Agency, the Welsh Assembly Government and other stakeholders. The aim was to reduce the administrative burdens on business, in particular, through a single, streamlined permitting system. The environmental permitting regulations are a product of that initiative, which has been developed in close consultation with industry and other stakeholders.
The regulations replace more than 40 pieces of law with one set of clear regulations, simplifying and reducing them to less than a third of the length, but still delivering the environmental protection that we so need. The regulations introduce a risk-based proportionate approach. In practice, that will mean that the level of regulatory effort is more proportionate to the level of risk. Regulators will be able to concentrate more on environmental outcomes and on poor performers who pose a higher environmental risk. The vast majority of businesses that are low risk will face fewer forms, fewer inspections and simpler guidance.
The regulations deliver a single permit system for waste management and industrial pollution by streamlining and combining the two separate systems currently running. A single system makes it easier to apply for a permit, to change it, and, ultimately, to surrender it. For example, under the current regulations a business might need several permits to operate on a single site. If it wants to change what it does, several applications will have to be made under separate laws and on separate forms. Under the new environmental permitting regulations only a single environmental permit is required for activities on the same site. If a business wants to diversify into different activities, such as recycling and composting, it will not need to apply for another permit but can simply have the conditions of its single permit changed. That will involve filling in one form, making it cheaper, quicker and easier to apply.
The changes will have benefits for a wide range of businesses, but particularly for smaller enterprises, which often have limited time and resources to spend on form filling. It is anticipated that that simplification will bring cost savings of about £76 million over 10 years, through administrative burden reduction and wider economic benefits. Potential further cost savings could be realised in the future by delivering other environmental protection measures through the single permit. We are currently looking to identify suitable regimes that could be integrated into the new permitting system as a next step, if the costs and benefits add up. For now, the single permit will make it easier for regulators to do their job of protecting the environment, and easier for business to comply. The regulations have been widely welcomed by industry, regulators and other stakeholders, and I commend them to the Committee.
4.35 pm
Gregory Barker (Bexhill and Battle) (Con): I thank the Minister for introducing the regulations. It is rare indeed for the Government to move to reduce the huge regulatory burden on business in this country, but when they do, they will always find support from the Conservative party.
However, the measures still deserve proper scrutiny. The Government, fond as they are of targets, have decided on the figure of 25 per cent. for the reduction in regulation by 2010 for the Department for Environment, Food and Rural Affairs. As the Government measure regulation by the number of statutory instruments, it is only natural that they should seek to streamline large bundles of them into single instruments. Therefore, I am understandably cautious in welcoming the reform. We need to be absolutely certain that this is a genuine cut in red tape and not simply a repackaging, and that it will still deliver the stringent environmental safeguards that we expect.
We have been told that the two existing permits that cover the 12 EU directives regulated by these statutory instruments will become three distinct types of permit; two will become three. Moreover, we have been told that, in certain circumstances, all three may perform the same function. However, having looked at the proposed reforms, I would say that the intentions behind them have been well thought through. Three types of permit with three breadths of cover will allow smaller specialist operators access to simpler permitting and larger multi-use or rapidly evolving operators to apply for a broader, comprehensive permit. That seems to compare favourably with the confusingly overlapped pair of permits currently used.
However, the proposals raise certain questions. For example, what form will the independent appeal body take? Much of the inefficiency of the existing system is due to the laborious appeals system that unsuccessful applicants must go through. Replacing that with an unspecified body of unspecified size and cost will seriously undermine the validity of the £77 million figure for the savings produced by the change. Furthermore, why will this independent panel necessarily be more efficient than the existing regime? Can we see some more detail of the planned structure of the appeal process?
When costing those reforms at a saving of £77 million over 10 years, did the Government factor in the cost to the industry of adapting to the new system and take into account the bureaucratic burden on smaller operators of reapplying under the new system and its more complicated choices? What advice will they be providing to guide smaller operators through that new process?
The new system will be effective if large numbers of smaller operators apply for the simplified standard rule permit and only a few require the labour-intensive bespoke permit. Have the Government looked into the anticipated uptake of each respective permit? How do they intend to ensure that operators apply for the correct permit, because all three could be applicable for a given activity? Have they considered whether the more restrictive standard permits will stifle enterprise in the waste sector? Smaller operators that currently have a broader licence can easily expand into new and growing sectors that might open up locally. Under the narrower standard rule permit they would have to be re-licensed to do so or go through the laborious process of reapplying for a bespoke permit. The IT system to handle the new permits clearly has the potential for delay. What contingency plans have the Government put in place for that situation?
Overall, however, these proposals are welcome. The Conservative party believes that new markets and burgeoning enterprise within the waste sector are crucial in tackling the strain on global resources and the challenges of climate change. Anything that we can do to lift the burden on companies operating in this sector must be welcomed. Freeing smaller, innovative entrepreneurs from complicated regulations and helping existing operators to find new ways of gaining value from their sector with more flexible permitting is an important part of that. We want to ensure that that is what the regulations deliver. Regulation should be efficient and fit for purpose, and we support these efforts to streamline and speed up environmental permit processing.
I look forward to a positive outcome in the follow-up study in 2009, and we hope that DEFRA implements these changes with clear enough guidance to minimise any additional burden on industry in adapting to the new regime.
4.40 pm
Martin Horwood (Cheltenham) (LD): It is very good to be serving under your chairmanship, Mr. Caton. I have to apologise for my hon. Friend the Member for Eastleigh who has an unexpectedly heavy diary at the moment. I am sure that he is very sad to miss this sitting, given his green credentials and that he is an economist.
The statutory instrument before us and the claims that DEFRA has made for it are pretty ambitious. It will be
“a modern, proportionate, risk-based system that is easier, quicker and cheaper to use”
and it will
“not change what is regulated or who regulates”.
However, it will produce £55 million of savings in DEFRA administration alone—the mere fact that £55 million can be saved in DEFRA administration says something—and £21 million in what were described by Lord Rooker in another place as “wider benefits”. Perhaps the Minister will enlighten us a little more on those. They are still savings to DEFRA. Given the complications of the previous system and the reduced amount of form filling under the new one, it is estimated that a further £35 million will be saved by industry.
As the Minister said, some 600 pages and 40 sets of regulations have been reduced to one set of regulations of 150 pages. That is still a considerable document. It would have been quite a challenge for hon. Members to scrutinise it adequately and to do so in detail for this sitting. The devil, as always, may well be in the detail. To some extent, we have to take it on trust that there is no substantive change—not to what is being regulated or who regulates it, which was the careful phrase used in the DEFRA briefing, but to the extent or nature of the regulation. There is a lot of detail in this document, be it on waste incineration or peat working, and I should be grateful if the Minister took this opportunity to point out any substantive changes. It would be possible to make those without changing what is regulated or who regulates it.
Lord Rooker was characteristically honest on the subject of cost savings in the other place. He said:
“I freely admit that, in the scale of government money, to claim that we are saving £76 million over 10 years is chicken feed: it is £7 million a year. It is like the third decimal point in any department’s adding up, and it can be lost.”—[Official Report, House of Lords, 20 November 2007; Vol. 696, c.GC32.]
That may be true, but it remains a very ambitious target. Will the Minister enlighten us on where exactly those savings will be made? The £35 million for industry is an understandable estimate, and I would not expect her to be able to go into great detail on that. However, the £76 million to be saved within DEFRA is a staggering amount, even if it is spread over a number of years. Is it to be saved in IT systems, in printing and publication costs or in staffing?
If there is an assumption that that £76 million is to be saved in staffing, are we risking what we now know is a possible consequence of unwisely ambitious cuts in staffing? Her Majesty’s Revenue and Customs has given us a classic example of how savings do not always lead to improvement in performance. That has given politicians of all parties pause for thought on how easy it is to promise thousands of job reductions in Departments and not worry about the consequences. I should be grateful if the Minister explored a little the question of where exactly she expects that £76 million to be saved.
Nevertheless, with those caveats and questions, this is a welcome simplification of Government regulation. It is a welcome reduction in red tape, and if it lifts a significant burden from business, that is also welcome and it will have Liberal Democrat support.
4.45 pm
Joan Ruddock: First, I am grateful for the positive comments from the official Opposition and others on this matter. We are absolutely determined, whatever people’s concerns and caveats might be, to reduce the burden of regulation. That makes good sense. We want our business to be as efficient as possible; we are endeavouring to achieve that and DEFRA is clearly committed to that too.
I was asked by the hon. Member for Bexhill and Battle about the cost of moving to the new system and whether that had been factored into the costs and benefits. It certainly has. It was considered under the regulatory impact assessment and that has been reported on and published. The transitional costs for industry regulators, which are the Environment Agency, local authorities and others, are reported in the RIA. I can assure the hon. Gentleman that everything he asked about has been considered and is published, but he will appreciate the difficulty of finding the detail right now.
He also asked me about the existing licence holders, their need to apply for new permits and what burden that will place on them. Holders of existing permits and licences will not be required to apply for a new permit. When the new system comes into force, existing permit holders will be able to take the benefits of the system without the downside of making fresh applications. We regard that as a positive and substantial benefit to them.
I was asked about the appeal body. The independent appeal body will be the Planning Inspectorate and will obviously operate as it currently does.
Gregory Barker: That is a very important point. Not everyone’s experience of the Planning Inspectorate is satisfactory. That is not necessarily because of the eventual outcome and decision, but because it is prone to significant delays that can last for months and months. How can the Minister reassure us that the decisions of the appeal body will be dealt with promptly? What is the expected time scale in which the Planning Inspectorate could turn around such decisions?
Joan Ruddock: I am sure that the hon. Gentleman will appreciate that the speed with which any appeal can be turned around will depend entirely on the complexity of that appeal. It would be impossible to predict. But I hear what he said about the difficulties that might have been experienced in the past with the Planning Inspectorate. Clearly, in making these new arrangements, we will do our very best to ensure efficient consideration of appeals.
The hon. Gentleman asked me about the three types of control under the regulations. The first is exemption. One of the things that we wish to do in making these changes and bringing the two systems together is to simplify. An exemption means that the regulators will not have to spend so much time on low-risk operations. That will be of huge benefit. The exemption occurs at the lowest end of the risk spectrum. Then there is the standard permit. Again, that is for fairly low-risk operations. We think that that will streamline the process and be to industry’s advantage. Indeed, that was the feedback that we got from both industry and regulators. The bespoke permit will obviously be for the higher-risk operations and that is how it should be. The Environment Agency is moving towards spending more time and more effort on the bespoke permits and on the higher-risk operations. Again, that can only be appropriate and helpful to all.
With regard to IT systems and their implementation, the Environment Agency is putting in place a system that will allow it to deliver the new regulations; only as part of that is a new IT system being developed. We believe that the benefits to customers will occur quite independently of whether the IT system is in place, and that those benefits will exist even if there is a delay in the implementation of the IT system. Having said that, far be it from me to suggest that there will be a delay, and I very much hope that there will not be.
I have also been asked, in passing, about the burdens on small and medium-sized enterprises and whether that factor had been taken into account. Indeed, it has been, and their trade associations took part in the consultation process. It may have been noticed that we had no fewer than five consultations. At each stage, the number of respondents declined as we entered into more detailed work. I would suggest that that shows that people became increasingly satisfied and increasingly accepting of what was being proposed.
I was asked about small operators. I have another note on that subject, which I shall read out, as I think that it will be of interest. It says that the new system allows operators to amend their standard permits to become bespoke permits, by variation rather than applying afresh for a new permit. I think that that deals with the questions that have been put by both the hon. Members who have spoken. Again, I would say that this order is a simplification.
The hon. Member for Cheltenham asked what guidance might be available. We have consulted on the full suite of Government guidance and the Environment Agency is currently preparing its guidance, forms and so on for publication.
I believe that the final question—please tell me if I am wrong—was about costs and benefits and the breakdown of the £76 million DEFRA savings. We have said that the breakdown is as follows. There will be a saving of £55 million over 10 years through the reduction in the administrative burden, with £35 million in savings for industry and £20 million for the Environment Agency. The Environment Agency will obviously save money because there will be a more streamlined permitting system—applications, transfers and surrenders will all be simplified, so the Environment Agency will have far less bureaucracy and red tape to work through. I again refer hon. Members to the RIA, which calculated that the overall saving would be £76 million, and indicated that there would be £21 million worth of wider economic benefits, given the increased speed of applications, modifications and so on, which would enable industry to make quicker decisions, to get on with the job and, consequently, to save money.
Question put and agreed to.
That the Committee has considered the draft Environmental Permitting (England and Wales) Regulations 2007.
Committee rose at six minutes to Five o’clock.

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Prepared 27 November 2007