Memorandum submitted by the Environment
Agency
SUMMARY
The Environment Agency welcomes the opportunity
to respond to the Regulatory Reform Committee's inquiry into the
Better Regulation Executive (BRE) and the impact of the regulatory
reform agenda. We are committed to the better regulation agenda
and keen to work with the BRE and others to deliver real results
for the environment, the public and consumer protection and for
business.
We have been leading on developing and delivering
better regulation initiatives on the ground for many years. The
current level of priority given to better regulation in government
has been helpful in pushing the agenda forward, for example in
terms of gaining momentum behind the Environmental Permitting
Programme.[1]
However, we think that the BRE's current agenda
fails to strike the right balance. With too much emphasis on cutting
red tape, there is a risk that the agenda loses sight of how regulation
can most effectively deliver the outcomes it is designed to achieve.
We would like to see the BRE adopting a more balanced approach,
working more closely with regulators to ensure that regulatory
reform delivers real results. This would benefit the environment,
the public, consumer protection, and business, as well as maintaining
credibility and public confidence in regulation.
We want to work with the BRE and other government
departments to unblock obstacles to better regulation. For example:
We need more effective, consistent
regulation in the UK and Europe with greater transparency, certainty
and predictability for business and regulators alike, while also
maintaining and enhancing protection of the environment. For example
consolidating regulations and developing single environmental
permits. The network of European Environment Protection Agencies
has examined how obstacles to good regulation arise and developed
a "barriers" checklist to help overcome them.[2]
We need modern funding arrangements.
Hampton[3]
recommended intelligence-led enforcement and better advice and
guidance but our present funding arrangements restrict our ability
to deliver these.
We want easy access to meaningful
and effective penalties. Only partial progress has been made towards
delivering Macrory's recommendations[4]
and making new sanctions available to regulators. The process
for gaining access to the Macrory penalties outlined in the draft
guidance accompanying the Regulatory Enforcement & Sanctions
Bill is bureaucratic and over-burdensome. The provisions delivered
by the Bill need to be supported by the implementation of several
other Macrory recommendations on which, as yet, less progress
has been made.
We are keen for the BRE to work with us more
effectively for example to communicate with business and other
stakeholders and to share good practice between regulators.
1. INTRODUCTION
1.1 As a modern regulator, and one of the
major regulators in the UK, we are well placed to provide evidence
to this inquiry. We are committed to the better regulation agenda
and have been leading on developing and delivering better regulation
initiatives on the ground since our "Modernising Regulation
Change Programme" began in 2000. Much of our experience pre-dates
the Hampton Report and the creation of the BRE in 2005.
1.2 In 2005, following extensive consultation,
we published Delivering for the environment[5]
which set out our approach to regulation. Our main focus is on
improving the environment in the context of sustainable development.
We have to get the balance right between:
providing risk-based, outcome-focused
and cost-effective regulation;
not imposing unnecessary administrative
burdens on businesses; and
ensuring the public retains confidence
in us as an effective regulator.
1.3 Our approach to regulation drive environmental
improvements using a risk-based approach. It is not about lowering
levels of protection of the environment, but rather preventing
or minimising environmental impacts and achieving high standards
of environmental management by better targeting our effort. We
aim to find the right balance, improving the environment, rewarding
good performance and taking tough action on those who fail to
meet acceptable standards.
1.4 We have already achieved significant
results from this approach:
we have reduced the cost of regulation
to business by around £10 million a year;
we are on track to deliver our contribution
to Defra's target to reduce administrative burdens by 25% (£25
million per year) by 2010;
for example 23,000 low-risk water
abstractors no longer have to register with us saving £1
million a year, and similarly 500,000 low-risk hazardous waste
producers are saving £14 million a year; and
the Environmental Permitting Regulations
transpose 14 Directives and over 40 pieces of UK legislation into
a single set of regulations saving £1.6 million in administrative
costs per year from 2008.
1.5 Our work has been widely recognised
by:
Hampton: a "high-performing
national regulator" making a "contribution to
modern regulation";
the European Commission recognised
the Environmental Permitting Programme, Opra,[6]
Netregs[7]
and our strategic approach as best practice;[8]
and
in our last survey of corporate customers,
72% agreed that we are a tough but fair regulator, 88% were satisfied
with our inspections and 75% agree we provide helpful advice to
business to improve their compliance and environmental performance.[9]
1.6 We continue to deliver successful results
for the environment:
Most of the environmental indicators
continue to improve.
Serious pollution incidents caused
by all industry are now the lowest on record, halving since 2000
and down 17% since 2005.[10]
2. STRATEGY FOR
REGULATORY REFORM
AGENDA
2.1 It is important that the better regulation
agenda strikes the right balance between effective regulatory
outcomes, reducing burden on business and retaining public confidence
in the effectiveness of the regulatory system.
2.2 We think that the BRE has failed to
strike the right balance. Seemingly distracted by the current
emphasis on reducing the burden on business, it may have lost
sight of how regulation and the outcomes that it delivers can
be supported and made most effective. We would like to see the
BRE adopting a more balanced approach, working more closely with
regulators to ensure that regulatory reform delivers real results.
This would benefit the environment, the public, consumer protection,
and business, as well as maintaining credibility and public confidence
in regulation.
2.3 With an emphasis on cutting red tape
there is a risk that the agenda loses sight of the reason for
regulationthe very real benefits that regulation delivers
to the environment, business and wider society. It is essential
that initiatives are seen to be about driving better regulation
and that in communicating this agenda the BRE does not undermine
the credibility of regulation.
2.4 We would like the regulatory reform
agenda to support and enable us to focus on achieving real results
for the environment, business and other stakeholders. Our regulatory
customers support initiatives that make a real difference to them
and the environment, such as consolidating regulations and developing
single permits rather than just focusing on administrative burdens.
2.5 For example, adapting to climate change,
reducing greenhouse gases and using resources more efficiently
are good for businesscreating new business opportunities
and making savings for existing businesses. Such a strategy can
have the same effect on business profits as a 5% increase in sales
and 20% reduction in energy use. Despite this only 3% of all FTSE
All-Share companies are aiming at low carbon strategies.[11]
2.6 The Environment Agency Board is accountable
directly to Ministers in its sponsor departments, Defra and Welsh
Assembly Government. BRE has an important role in offering comment
and advice to the Board on which it can base its own decision
and advice to Ministers. The clarity of the accountability relationship
is weakened when the role of BRE begins to encroach on regulatory
policy or even oversight of the regulator.
Therefore those setting the regulatory reform
agenda should ensure proportionate approaches to the oversight
of regulators. Any additional bureaucracy should respect existing
accountability arrangements, be justified and deliver real results
and should not further restrict the ability of regulators and
the regulatory system to innovate in response to changing circumstances.
For example, it is also important that the agenda
does not adopt overly simplistic or prescriptive "one-size
fits all" approaches that fail to recognise the very different
regulatory models and risks that different regulators are regulating.
We need an approach that delivers flexibility and allows regulators
to tailor solutions to their own circumstances to achieve the
best results. Both Government and the BRE need to take a better
regulation approach to their regulation of the regulators.
3. REMOVING OBSTACLES
TO DELIVERING
RESULTS
There are a number of obstacles to delivering
balanced and effective better regulation. For example the Barriers
to Better Regulation report points to: inconsistencies in legislation;
lack of a common legislative framework or platform, and; a failure
to consistently involve regulators in developing European legislation
and its transposition into member states' law.[12]
3.1 Better regulation needs better legislation
in the UK and Europe. We need more effective and consistent regulation
with greater transparency, certainty, predictability and reduced
burdens for business. We need a better regulation agenda in the
UK and Europe that delivers:
A better strategic picture of how
policies fit together.
Clearer definitions of the desired
outcomes for regulation.
Use of more innovative approaches
to achieve results.
A consolidated, and better coordinated
regulatory framework, with more streamlined and transparent processes.
For example consolidating regulations and moving towards a single
environmental permit.
Common approaches to regulation across
policy areas including definitions, permitting, consultation,
and monitoring arrangements.
Effective penalties that act as a
powerful deterrent and encourage compliance.
Flexibility for Member States and
regulators to tailor solutions to their own circumstances to achieve
the best results.
The BRE could usefully focus on how the UK might
more effectively influence the EU legislative agenda to deliver
better regulation.
3.2 We need modern funding arrangements
to deliver modern regulation. One of the areas we see as essential
in delivering effective regulatory reform is improving our funding
arrangements. In particular:
We face significant restrictions
in moving regulatory income within and between regulatory regimes
in the way that Hampton set out due to ring fencing. This prevents
us from getting the best value for money from our income though
we recognise that this needs to be done in such away as to protect
financial accountability.
We have no regulatory income to fund
advice and other services, for those we do not regulate directly
(ie through some sort of permit), which the Regulators Compliance
Code calls for. For example NetRegs, which provides web-based
advice and support for 300,000 business per year (particularly
SMEs) and is forecast to save businesses £14.8 million in
administration costs by 2009-10, is reliant on unsecured external
funding. Without a grant from the Treasury Capital Modernisation
Fund, NetRegs would have taken 25 years to reach its current status.
We are limited in our enforcement
work as we cannot recover costs for enforcement activity that
targets "rogue" businesses. We want to recover costs
from regulated businesses as this activity levels the playing
field for legitimate business. Rogue businesses are those that
avoid their obligations, damaging the environment, public health
and local communities and gain competitive advantage over legitimate
businesses.
3.3 We need access to meaningful and effective
sanctions. In 2006, Macrory made a series of recommendations to
ensure that regulatory enforcement is more meaningful, proportionate
and effective.[13]
Despite being accepted by government, only partial progress has
been made to deliver some of these recommendations through the
Regulatory Enforcement and Sanctions Bill. We believe that meaningful
and effective sanctions are an essential component of real risk-based
regulation that delivers outcomes and helps to level the playing
field for legitimate business and maintain public confidence.
4. BETTER JOINED-UP
WORKING
4.1 We want a more balanced and inclusive
approach to the Government's Better Regulation Agenda from the
BRE. We are concerned about the impact of BRE creating policy
without the knowledge and input of the experts responsible for
delivering regulation. If the views of regulators are not given
sufficient weight the quality of initiatives and their deliverability
risks being undermined, for example with poorly thought through
ideas leading to unintended consequences. This could lead to business
expectations being raised and dashed and overshadowing the very
real improvements being delivered on the ground by regulators.
This undermines credibility and support for the agenda and regulation
as a whole. The regulatory section of the recent Enterprise White
Paper was sprung on regulators (and indeed Departments) late in
the day and still contains ideas which will need very careful
evaluation if they are not to risk discrediting the better regulation
agenda. For example, blanket exemptions for SMEs would not be
a risk-based approach since many SMEs are substantially poorer
environmental performers than large companies.
4.2 We are keen for the BRE to work with
us to develop policy, communicate with business and other stakeholders
and to share good practice between regulators. We want to share
our experience, alongside other regulators, to work more effectively
with the BRE. We hope that the BRE will listen to and value our
views. We bring our experience, on the ground, of delivering better
regulation with our regulatory customers and a perspective on
what works and what does not.
4.3 We need to ensure that delivery bodies
and our regulatory customers have sufficient capacity to effectively
implement the better regulation agenda on the ground, and that
support is provided to overcome any obstacles or problems that
are inevitably uncovered during this process.
4.4 We need better forward planning with
clearly defined and agreed goals and more realistic timescales.
A better vision and forward plan would improve the efficiency
of the better regulation programme as well as provide sufficient
time and support for regulators and government departments to
deliver initiatives. Given the considerable number of recent initiatives,
we need to avoid "initiative overload". We also need
time to allow the effectiveness of various initiatives to be assessed
so that all parties (government, regulators, business and others)
can develop a more informed view of "where next" for
the regulatory reform agenda.
4.5 We would like the BRE and BERR to agree
a joint strategy with the regulators to promote the benefits of
appropriate regulation to business. We would also urge the BRE
to work with regulators to facilitate data sharing and the funding
of IT investment to enable more data sharing and joined up working
between regulators thereby reducing the burden on business. Additionally,
we would also like the BRE to enable common regulatory approaches
at UK and EU level and to explore options to improve funding arrangements
to enable delivery of the modern regulatory approaches that they
call for.
5. MEASURING
AND REPORTING
ON PERFORMANCE
AND OUTCOMES
5.1 We have our own robust reporting mechanisms
to measure performance and outcomes against our modern regulation
programme through our Corporate Scorecard. We also use this information
to feed into Defra's performance assessment framework which they
use to report to the BRE on progress with better regulation.
5.2 In addition, the BRE and the National
Audit Office recently carried out a Hampton Implementation Review
of five national regulators including the Environment Agency.
6. CONCLUSIONS
AND RECOMMENDATIONS
6.1 We are committed to better regulation
and welcome the opportunity to continue to work with the BRE and
others to achieve more for the environment through regulatory
reform.
6.2 We think that the current regulatory
reform agenda could be better focused on supporting the delivery
of effective regulation that delivers real benefits for the environment,
public and consumer protection and for business. A better balanced
approach will help support public confidence in the effectiveness
of the regulatory system. In summary we need:
A better balance to the regulatory
reform agenda.
Unblocking obstacles to delivering
results through more effective and consistent regulation and modern
funding arrangements.
Better joined up working including
sharing best practice and communicating with business.
3 April 2008
1 From 6 April 2008, Waste Management Licences and
Pollution Prevention and Control Permits will be replaced with
a single system under the Environmental Permitting (England and
Wales) Regulations 2007. This is the first step in moving towards
a single environmental permit for businesses. Back
2
Network of European Environment Protection Agencies, 2007. Barriers
to good environmental regulation. Back
3
Philip Hampton, 2005. Reducing administrative burdens: effective
inspection and enforcement. Back
4
Richard Macrory, 2006. Regulatory Justice: Making Sanctions Effective. Back
5
Environment Agency, 2005. Delivering for the environment: A 21st
Century approach to regulation. Back
6
Our Operator and Pollution Risk Appraisal (Opra) scheme assesses
the environmental risk of an activity. Back
7
The NetRegs website provides environmental guidance for small
businesses in the UK. Back
8
DG Enterprise and Industry-Reducing Burdens on Industry (Simplifying
the implementation of environmental regulation) 2006. Back
9
Test Research, 2007. Scorecard Research Programme Corporate Customers.
Research for Environment Agency. Back
10
Environment Agency 2007. Spotlight on business environmental performance
2006. Back
11
Environment Agency and Standard Life Investments, (Trucost) 2007.
Carbon management and carbon neutrality in the FTSE All-share. Back
12
Network of European Environment Protection Agencies, 2007. Barriers
to good environmental regulation. Back
13
Richard Macrory, 2006. Regulatory Justice: Making Sanctions Effective. Back
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