Pre-legislative scrutiny of the Draft Environment (Principles and Governance) Bill Contents

3The Office for Environmental Protection (OEP)

44.As part of the European (Withdrawal) Act 2018 the Government was required to publish draft legislation to make provision for “the establishment of a public authority with functions for taking proportionate enforcement action (including legal proceedings if necessary) where the authority considers that a Minister of the Crown is not complying with […] environmental law” as defined in that draft legislation.108 The draft Bill therefore establishes the Office for Environmental Protection (OEP) and defines its functions.109 The Government stated that the OEP would be “a world leading, statutory and independent environment body” and would have the following aims:

[The OEP] will provide independent assurance of government’s delivery of environmental law and the 25 Year Environment Plan, and impartial advice to support the development of improved measures for future application. […] This will ensure that the current level of accountability and environmental protection is not weakened after the U.K. leaves the EU, while providing for a wide range of additional social, environmental and economic benefits through improved policy design due to the scrutiny and advice functions.110

The draft Bill proposes that the OEP would be set up as a Non-Departmental Public Body (NDPB).111 A schedule outlines the membership, terms of appointment, remuneration, staffing, powers, procedure, funding, reporting commitments, annual accounts and the status of the OEP.112

45.Comparing the proposals for the OEP to the existing EU arrangements, Professor Maria Lee noted that the Commission was independent in a “very special way” in that “it is funded by 28 member states and its appointment is by 28 member states”. She stated that it was “simply a fact” that “we cannot have something as independent as that” and that “every single step that can be taken […] to enhance independence should be built into the wording of the legislation, not left to discretion”.113 The campaign group 38 Degrees conducted a survey asking questions about the draft Bill, to which 72,635 members of the public responded: 98% of respondents said the OEP “should be independently funded”; and 99% said the OEP “should be led by people completely independent from the government”.114 The Broadway Initiative, a group representing interests from business, environmental groups, professional bodies and academia, was also clear that the OEP needed to be “genuinely independent”.115 It stated that independent accountability was “essential to give not only the public but also business confidence in government policymaking on the environment and that any administration will be properly held to account”.116 Overall, it suggested that the OEP’s independence “should be judged primarily by who funds it, who makes appointments and oversees it”.117

46.We recognise that it is not possible for the UK to replicate the existing model of environmental governance as part of the European Union. However, the Government has made clear its commitment to the same outcomes. In setting up the new Office for Environmental Protection, it is therefore essential that every step is taken to ensure the Office for Environmental Protection is as independent from the Government as possible, to give the public confidence that the Government will be properly held to account on its duty to protect the environment.

Appointments

47.The Schedule of the draft Bill states that membership of the OEP’s board will consist of:

The subparagraphs outline the rules for appointment. Paragraph 1(2) states that non-executive members, including the Chair, are to be appointed by the Secretary of State.119 The explanatory notes state that this is “customary for NDPBs and reflects the need for adequate ministerial oversight”.120 Paragraph 1(7) also states that the Chair must consult the Secretary of State before appointing a Chief Executive.121 Paragraph 2(3) states that a non-executive member must be appointed for a fixed term of no more than 5 years.122 Paragraph 2(5) outlines the grounds on which a non-executive member may be removed by the Secretary of State.123

48.The UK Sustainable Investment and Finance Association expressed concern that “the draft Bill does not provide for terms of the appointment of members that protect and guarantee their independence.”124 The Aldersgate Group noted that the proposed appointment process was similar to that of the Committee on Climate Change (CCC), but that in the CCC’s case “its UK-wide remit means that other national authorities are also involved in decision-making”.125 This, it suggested, “improves the perceived independence of the appointment.”126 It also argued that the OEP’s enforcement functions warranted appointments being made in a more independent manner than the CCC’s.127 Dr David Wolfe QC went further and questioned whether the Secretary of State needed to be involved in any of the appointments at all.128 He argued:

If it wants to be truly independent, to my mind there should not be more than advisory input from the Government. By all means, have the Minister express a view on the proposed candidates in a transparent kind of way, but do not have them be the person who makes the decision.129

The National Trust suggested that board members and other non-executive staff should be interviewed and appointed by an independent appointments panel.130 It also suggested that the Chief Executive should in turn be appointed by these board members or non-executive staff.131

49.The Institute for Government (IfG) pointed out that it was not clear from the Bill whether the Chair would be subject to a pre-appointment hearing by the relevant select committees and that this left a risk “that the Government could seek to neuter the body by appointing a compliant chair”.132 Numerous stakeholders similarly suggested that select committees should play a role in the appointment of the Chair of the OEP.133 The IfG suggested that the process could be prescribed in the Bill in a similar fashion to the appointments process for the Chair and members of the Budget Responsibility Council at the Office for Budget Responsibility (OBR).134 The equivalent schedule for the OBR puts the appointments process on a statutory footing:

1 (1) The Office is to consist of—

(a) a member to chair it, appointed by the Chancellor of the Exchequer with the consent of the Treasury Committee of the House of Commons,

(b) 2 other members appointed by the Chancellor of the Exchequer after consultation with the member appointed under paragraph (a) and with the consent of that Committee, and

(c) not fewer than 2 members nominated by the Office and appointed by the Chancellor of the Exchequer. […]135

The IfG also noted that in paragraph 6(3) of Schedule 1 of the same Act there is a process enshrined to protect members against dismissal by the Secretary of State:

[…] the appointment of a member appointed under paragraph 1(1)(a) or (b) is not to be terminated without the consent of the Treasury Committee of the House of Commons.136

The IfG stated that a statutory role for a parliamentary committee in the appointment process “appears to have worked well for the OBR, but has not been replicated so far for any other government arm’s length body” and that “it would be a clear way of underlining the Government’s commitment to the independence of the OEP”.137

50.The independence of the Chair of the Office for Environmental Protection will be crucial to its ability to hold the Government to account. It is therefore inappropriate for the Chair and the other non-executive members of the board to be appointed solely by the Secretary of State.

51.The Government must revise the appointments process to ensure greater independence and transparency. We recommend that the process should be modelled on the equivalent process for the appointment of the Chair of the Budget Responsibility Council at the Office for Budgetary Responsibility. The Chair and all non-executive members of the board should be appointed by the Secretary of State only with the consent of the Environment, Food and Rural Affairs Select Committee. The Chair should be subject to a pre-appointment hearing prior to the Committee consenting to her appointment. Similarly, a non-executive member should not be dismissed from the Board of the OEP without the consent of the Environment, Food and Rural Affairs Select Committee.

Funding

52.The Schedule of the draft Bill also outlines the funding model for the OEP:

9 (1) The Secretary of State must pay to the OEP such sums as the Secretary of State considers are reasonably sufficient to enable the OEP to carry out its functions.

(2) The Secretary of State may provide further financial assistance to the OEP (including by way of grants, loans, guarantees or indemnities) subject to such conditions as the Secretary of State may determine.138

The explanatory notes explain that paragraph 9 “places a duty on the Secretary of State to fund the OEP sufficiently to perform its functions” and that funding will be provided to the OEP in the form of grant-in-aid, “which will be set out as a separate line in the overall estimate of [Defra] to ensure adequate transparency”.139

53.The IfG expressed concern that under the grant-in-aid model “a Department that wants to rein in a body can cut its funding with relatively little visibility”.140 For example, the IfG pointed out that the Equality and Human Rights Commission (EHRC), which the Minister referred to as an existing example of the powers of an NDPB, had its budget reduced from £70.3 million in 2007 to £18.3 million in 2018.141 The IfG further stated that “the EHRC has repeatedly said that, in its view, it could better discharge its duties if [it] reported directly to Parliament”.142 Greener UK argued that the proposed funding mechanism for the OEP had “shown little durability in providing public bodies with adequate funding to deliver their functions” and cited two examples of budget cuts with Natural England and the Committee on Climate Change.143 In November 2018, Andrew Sells, then Chair of Natural England, told us that “what started as cost savings has run over into something that feels more like less freedom […] we have lost a great deal of independence”.144 Greener UK also noted comments made by Lord Deben, Chair of the Committee on Climate Change, who referred to the “long history” of bodies “starting off as independent and being brought more and more under the control” of the Department.145

54.Prospect, the trade union, expressed concern about the ability of the OEP to scrutinise the Government effectively based on its resourcing, rather than its proposed constitution.146 It noted the impact of funding cuts on the ability of the Environment Agency and Natural England to operate effectively, and added that years of pay restraint had contributed to problems with recruitment and retention of specialist staff.147 It suggested that, given the body’s large remit, it would be “totally inadequate” for the OEP to have fewer than 100 staff.148 Professor Richard Macrory QC also stressed the link between adequate resourcing of existing bodies and effective enforcement, referencing the four-fifths drop in Environment Agency formal cautions in the last three years, and the drop in prosecutions from 515 in 2011 to 113 in 2017.149

55.Greener UK proposed a Government commitment to a multi-annual budgetary framework for the OEP.150 It noted that there was precedent for such a commitment with the Office for Budget Responsibility (OBR), which agreed a five-year funding allocation from the Treasury from 2016–17.151 Greener UK highlighted HM Treasury’s own advice which recognised that “setting a multi-annual funding commitment supports the OBR’s independence” and that such an approach is “consistent with international best practice, strengthening institutional independence through delegated budgetary autonomy”.152 The IfG also suggested the Bill could be redrafted so that the OEP had its own estimate, to be negotiated directly with HM Treasury, and voted on by Parliament in the yearly Supply and Appropriation (Main Estimates) Bill.153

56.Both Natural England and the Environment Agency spoke positively about five-year settlements.154 According to Emma Howard Boyd, the Environment Agency had benefited from such settlements for their work on flood and coastal risk management programmes, as it had allowed for “greater freedom” and delivery.155 Alan Law stressed that a five-year budget settlement in line with spending reviews would help “to ensure that the body is able to fulfil its requirements without in-year changes compromising them”.156

57.The Secretary of State’s response was that it was “a direct responsibility of any Secretary of State to make sure that, if you are setting up a body as important as this, it is properly resourced” and that he expected the Chair and the board of the OEP to make it clear to him if the OEP was in need of additional resources.157 The Environment Minister noted that, under the draft Bill, the OEP could make a statement if it felt it was inadequately resourced, and she considered that the Government would have the “political sensitivity” to recognise and anticipate such a situation.158 She further suggested that the resourcing of Natural England was not comparable, as Natural England is a delivery partner and regulator, whereas the OEP would play a different role “scrutinising government”.159

58.A history of sustained budget cuts to Defra’s arm’s length bodies does not fill us with confidence that the current funding provisions for the Office for Environmental Protection in the draft Bill are sufficient. Given the importance of the OEP’s independence from Government it should have additional budgetary protections than is customary for Non-Departmental Public Bodies.

59.The Government should commit to providing a multi-annual budgetary framework for the Office for Environmental Protection in the Bill. This commitment would help to ensure the Office for Environmental Protection’s independence from Government and is consistent with best practice as seen with the Office for Budgetary Responsibility. Rather than grant-in-aid, the Office for Environmental Protection should also have its own estimate which should be negotiated directly with HM Treasury, and voted on by Parliament in the yearly Supply and Appropriation (Main Estimates) Bill.

Independence and parliamentary accountability

60.Prior to publication of the draft Bill there were calls from stakeholders, including the Environmental Audit Committee, that a new environmental oversight body should be directly accountable to Parliament and set up as a parliamentary body, modelled on the Public Accounts Commission and the National Audit Office.160 The Government’s response was that establishing the OEP as a parliamentary body would “prevent it from taking legal proceedings against the government if it were to remain within the well-established constitutional boundaries by which Parliament currently operates”.161

61.The explanatory notes state that the draft Bill sets out provisions for the OEP, established as a NDPB, to reflect the “need for transparency and accountability in the body’s exercise of its statutory powers and functions”.162 In the Statement of Impacts published alongside the draft Bill, the Government defended the decision to set up the OEP as an NDPB and said the model “would provide sufficient scope and capacity to deliver the strategic objectives required”.163 It also stated that it would be “inappropriate in constitutional terms” and “without precedent” for the OEP both to be a body of Parliament and to be able to take enforcement action against the Government.164 The draft Bill references and outlines the various mechanisms via which the OEP would be accountable to Parliament:

62.The IfG argued that the OEP as outlined in the Bill was only accountable to Parliament in the “weakest sense”.170 It suggested that changes to appointments and funding would go some way to making the OEP more accountable to Parliament, but reasserted that further accountability would be assured by making the OEP “a parliamentary rather than a departmental body”.171 It further noted there was some international precedent for a parliamentary body of this sort, with the Environment Commissioner in New Zealand being an Officer of Parliament, although it recognised that the Commissioner had different powers to those envisaged for the OEP, and could not take binding enforcement action.172

63.Greener UK argued that the government “should revisit the OEP’s legal status to provide greater independence than a standard NDPB model allows” and urged for a degree of “imaginative and innovative legislation” for the Government to meet its own ambition of “a pioneering new system of green governance”.173 The Chartered Institution of Water and Environmental Management stated it strongly considered “that the most appropriate form for OEP should be a Parliamentary Body (an Entity Set Up by and Accountable to Parliament)” and called for “an element of the novel about OEP” to allow this body to appropriately be declared as “world leading”.174

64.William Wilson, an environmental lawyer and former legal manager of government bills, challenged Defra’s statement that it would be constitutionally inappropriate for the OEP to be a parliamentary body as “nonsense”.175 He stated that “taking enforcement functions back from the (unelected) European Commission and giving them to a UK body answerable to Parliament” would not be “inappropriate in constitutional terms”, and stated that “if Parliament wishes the body to adhere to financial standards this can be spelled out in the legislation”.176 Dr David Wolfe QC argued that there is another constitutional model that Defra could have chosen to adopt.177 He compared his experience as a non-executive member of the Legal Services Board (an NDPB) and as Chair of the Press Recognition Panel (a body established by a Royal Charter), and stated that the difference between the two in terms of independence was “stark”.178 Overall, he considered that his experience of the Press Recognition Panel equated to “proper independence” and was “entirely different from the NDPB experience”.179

65.When questioned by us on why the OEP needed to be constituted as a NDPB, the Environment Minister stated that there had been “a lot of consideration” on this issue, including a meeting with the parliamentary commissioner for New Zealand.180 She restated the argument that it would be “constitutionally challenging” for Parliament to have a body that is accountable directly to it and that could take the Government to court.181 She also further stated that other NDPBs such as the Information Commissioner’s Office (ICO) and the Equality and Human Rights Commission (EHRC) had powers to take the Government to court and that nobody accused either the EHRC or the ICO of being “a patsy of Government” because it is an NDPB.182

66.The Secretary of State told us that the aim had been to give the OEP the “most stable constitutional footing”.183 He later stated to the Environmental Audit Committee that “the advice that we have received is that this body can exercise full independence as a non-departmental public body”.184 The Secretary of State told us that, under the proposed model, the ultimate protection of the OEP’s budget would come from Parliament:

The key question is that all Ministers are responsible to Parliament and all Ministers are responsible for the bodies for which their department is the sponsor department. Were it to be the case that I or any successor Secretary of State did not fund any of the arms of government or the appropriate bodies that we are responsible for appropriately, Parliament could take a view.185

67.Under the current proposals we are not convinced that the Office for Environmental Protection will be sufficiently independent of Government or accountable to Parliament. The Office for Environmental Protection must not be seen to be just another arm’s length public body attached to Defra, given its elevated watchdog status. We also do not consider that the Office for Environmental Protection will have anything close to the same level of independence as currently exercised by the European Commission.

68.To achieve equivalence with the existing arrangements as members of the European Union, the Bill should be redrafted to ensure greater independence for the Office for Environmental Protection. The Office for Environmental Protection must not be solely a body of Government. The Government should revisit the legal status of the Office for Environmental Protection to provide greater independence than a standard Non-Departmental Public Body allows. Lack of precedent should not be a barrier to establishing a constitutionally innovative model, especially given the Secretary of State’s ambition for the watchdog to be “world leading”.


108 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, explanatory notes, para 9

109 Environmental Principles and Governance: the draft Bill, Briefing Paper CBP-8484, House of Commons Library, 30 January 2019, p 22

110 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill: Statement of Impacts, December 2018, pp 2–3

111 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, explanatory notes, para 107

112 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule

114 38 Degrees (DEB0042) paras 1.2–1.3

115 Broadway Initiative (DEB0084) recommendation 5

116 Broadway Initiative (DEB0084) recommendation 5; see also Aldersgate Group (DEB0060) para 10

117 Broadway Initiative (DEB0084) recommendation 5

118 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 1

119 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 1(2)

120 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, explanatory notes, para 230

121 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 1(7)

122 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 2(3)

123 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 2(5)

124 UK Sustainable Investment and Finance Association (DEB0073) p 2

125 Aldersgate Group (DEB0060) para 7

126 Aldersgate Group (DEB0060) para 7

127 Aldersgate Group (DEB0060) para 7

130 National Trust (DEB0018) p 2

131 National Trust (DEB0018) p 2

132 Institute for Government (DEB0030) para 9

133 For example UK Sustainable Investment and Finance Association (DEB0073); Aldersgate Group (DEB0060) para 8; Greener UK (DEB0027) paras 15–16; Emeritus Professor of Environmental Law Richard Macrory (DEB0003) para 13

134 Institute for Government (DEB0030) para 11

135 Budget Responsibility and National Audit Act 2011, Schedule 1, para 1

136 Institute for Government (DEB0030) para 12; Budget Responsibility and National Audit Act 2011, Schedule 1, para 6(3)

137 Institute for Government (DEB0030) para 14

138 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 9

139 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, explanatory notes, para 244

140 Institute for Government (DEB0030) para 16

141 Institute for Government (DEB0030) para 16; Qq290–291

142 Institute for Government (DEB0030) para 16

143 Greener UK (DEB0027) paras 10–11

144 Oral evidence taken on 21 November 2018, HC (2017–19) 1728, Q10

145 Greener UK (DEB0027) para 11; Oral evidence taken before the Environmental Audit Committee on 19 June 2018, HC (2017–19) 1062, Q50

146 Prospect (DEB0046) para 3

147 Prospect (DEB0046) para 3

148 Prospect (DEB0046) para 4

149 Emeritus Professor of Environmental Law Richard Macrory (DEB0003) para 3

150 Greener UK (DEB0027) para 13

151 Greener UK (DEB0027) para 13

153 Institute for Government (DEB0030) para 18

158 Q284; See Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 11(3)

160 Environmental Audit Committee, Eighth Report of Session 2017–19, The Government’s 25 Year Plan for the Environment, HC 803, paras 70–71

162 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, explanatory notes, para 227

163 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill: Statement of Impacts, December 2018, p 8

164 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill: Statement of Impacts, December 2018, p 8

165 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 10

166 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Clause 13

167 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Clause 14

168 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Clause 15

169 Department for Environment, Food and Rural Affairs, Draft Environment (Principles and Governance) Bill, Cm 9751, December 2018, Schedule, para 11(6)

170 Institute for Government (DEB0030) para 21

171 Institute for Government (DEB0030) para 22

172 Institute for Government (DEB0030) para 24

173 Greener UK (DEB0027) paras 3, 18

174 Chartered Institution of Water and Environmental Management (DEB0010) paras 24, 28

175 WYESIDE CONSULTING LTD (DEB0001) para 17

176 WYESIDE CONSULTING LTD (DEB0001) para 17

177 Dr David Wolfe (DEB0081) para 9

178 Dr David Wolfe (DEB0081) para 7

179 Dr David Wolfe (DEB0081) para 8

184 Oral evidence taken before the Environmental Audit Committee on 20 March 2019, HC (2017–19) 1951, Q150




Published: 30 April 2019