Select Committee on Regulatory Reform Minutes of Evidence


Supplementary memorandum submitted by the Environment Agency

INTRODUCTION

  1. This is supplementary evidence about the balance of the Better Regulation Executive's (BRE) regulatory reform strategy in response to questions 181 and 182 from our oral evidence session on 20 May 2008.

BALANCE OF THE REGULATORY REFORM AGENDA

  2. We have a statutory duty to deliver environmental outcomes without causing unnecessary economic or social cost. It is important that the better regulation agenda strikes the right balance between effective regulatory outcomes, reducing unnecessary burdens on business and retaining public confidence in the effectiveness of the regulatory system.

  2.1 We think that the BRE's current agenda fails to strike the right balance. For example:

  2.1.1 BRE's communications sometimes suggest that regulation and regulators are bad for business, for instance in their recent communications on the Regulators" Compliance Code.

  2.1.2 Although we recognise the importance of minimising administrative burdens, recent proposals on regulatory budgets focus on costs alone and do not take into account the benefits of regulation. This ignores the fact that regulation can be the most effective option to deliver important outcomes.

  2.1.3 The emphasis on cutting costs distracts from the importance of a more consolidated framework for legislation, such as single-environmental permits. This is what businesses tell us that they want.

  2.1.4 The regulatory section of the recent Enterprise Strategy contains ideas which will need very careful evaluation if they are not to risk discrediting the better regulation agenda. One of the Hampton principles is that regulation should be based on risk and not on the size of businesses. However, the Enterprise Strategy proposes exempting small business from regulation despite the fact some pose a high risk and can have a significant impact on the environment. For example they are responsible for over 60% of all commercial and industrial waste and for 40% of pollution incidents in 2006.

  2.1.5 The BRE seems to adopt a "one-size-fits-all" approach to regulators, failing to recognise the very different regulatory approaches and risks that we are managing on behalf of government. For example:

    —  There is a failure to recognise that regulators are at different stages in delivering the better regulation agenda. We are disappointed that the BRE's communications to business do not recognise the good progress that some regulators, such as ourselves, have made. Their communications tend to convey the message that "all regulators are bad" which undermines both the public and business confidence in regulation.

    —  In the Enterprise Strategy, the BRE propose a one-size-fits-all approach, rather than an approach based on risk. This is likely to raise false expectations among businesses.

    —  The BRE seem to be struggling with the fact that regulators are different for example in terms of their relationship with local authorities. We do not devolve delivery to local authorities and yet we are named on the face of the Regulatory Enforcement & Sanctions Bill as being required to have a memorandum of understanding with LBRO.

    —  We have a permit-based system which is fundamentally different to other regulators. This is a European wide approach. The majority of our funding for regulations comes from, and must be spent on, those we permit. Despite this, the BRE have raised expectations around the level of tailored advice and guidance that we can provide, including to those we do not permit.

    —  Through their one-size-fits-all approach, the BRE have also called for us to inspect less. However, we know businesses recognise inspections are important. We often provide advice during our inspection visits. During the recent review of regulators carried out by the NAO and the BRE, the review team spoke to business representatives, owners and managers. The findings have not yet been published but we understand that a key message was that inspections can be welcomed, particularly by small business, as a means of providing reassurance and access to tailored advice and guidance.

  2.1.6 In their quest to reduce burdens on business, the BRE are imposing greater burdens on the regulators, much of which in the end falls back onto business. The restrictions around access to Macrory sanctions, the recent Hampton Implementation Reviews and possible follow ups, proposals to introduce regulatory budgets on top of simplification plans, and Part 4 of the Regulatory Enforcement and Sanctions Bill all add to our cost base.

June 2008





 
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