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Viscount Ullswater: The effect of Amendment No. 195, introduced by my noble friend Lord Lucas of Chilworth, would be to provide specifically, as part of each new agency's general powers, for an agency to be able to establish subsidiary companies in connection with the carrying out of its functions. We can see no reason why, for the effective discharge of its functions, an agency should need to establish such companies. Furthermore, those functions are to be conferred on the agencies. The public needs to be clear as to who it is that has the responsibility for environmental regulation. It would be wholly inappropriate for the agencies to be able to set up subsidiary companies to perform some of their functions.

However, my noble friend went on to explain that the motivation behind this amendment was to provide for the new agencies to be able to establish a subsidiary company for the purpose of managing a mutual fund by which waste management operators who contribute to the fund would be able to meet the financial provision requirements on waste management licensing. A person wishing to obtain a waste management licence must satisfy the waste regulation authority—in due course the appropriate agency—that he has made financial provision which is adequate to discharge the obligations arising from the licence.

My noble friend indicated the sum of money that is being talked about. The statutory guidance issued to waste regulation authorities by my right honourable friends the Secretaries of State explains that there are a number of ways of doing that. One means identified is a mutual fund.

I am aware that the National Association of Waste Disposal Contractors put considerable effort into the development of such a fund in advance of the introduction of the new waste management licensing arrangements in May last year. I understand that the proposal was not taken forward.

I know that the waste regulation authorities and the National Association of Waste Disposal Contractors are working together to try to develop an alternative scheme which would offer one means of meeting the financial provision requirements of the legislation. It would be quite possible for such a scheme to be based on the concept of a mutual fund. Clearly the agencies, as regulators, would take a close interest in any such fund designed to provide resources to meet the long-term obligations of licences which remain the responsibility of the waste management operators. It would not, however, be necessary for such a fund to be managed by a subsidiary company of an agency. Furthermore, it would be inappropriate for either agency to manage a fund which was intended to take on responsibility for licence obligations along the lines of the scheme proposed by the association. I see no reason why such

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a scheme could not be developed without the need to involve subsidiary companies of the new agencies. I therefore ask my noble friend to withdraw his amendment.

Lord Lucas of Chilworth: I am grateful to my noble friend for his full response, although I am disappointed in it. He mentioned sums of money "being talked about"—those were his words—but it is not a matter of talking about the sum. A Cambridgeshire firm was required by the waste regulation authority, which was the county council, to provide £1.6 million for a comparatively small site. I do not believe that the Government realise the great difficulty that could be met by setting up what might be called a mutual fund—in other words any other funding arrangement—to meet the obligations for which the industry is quite prepared to pay. It seems to me that if the agencies were given the power, they could accept or reject the responsibility and no one could say any more about it. But to deny them the opportunity of assisting in the setting up of a fund seems to me a negative approach.

I do not believe that I can let the matter go like that, although I do not propose to divide the Committee this afternoon because I wish to study carefully what the Minister said. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 195A:

Page 29, line 23 at end insert:
("( ) without prejudice to the generality of that power, shall, for the purposes of, or in connection with, the carrying out of those powers promote energy efficiency.").

The noble Lord said: I wish to move this amendment standing in the names of my noble friend Lady Hilton and the noble Lord, Lord Beaumont of Whitley. It may be for the convenience of the Committee if I also speak to Amendments Nos. 198, 199 and 200.

This is an important group of amendments, although at this stage I regard them as probing. The reason I do so is that I wish to explore how far the Government will move along with us in setting a different agenda for the agency from the rather limited one which the noble Viscount set out on Second Reading when he introduced the Bill.

Clause 35 gives us an opportunity, if we wish, to insert a number of other functions which are relevant to the environment and which could be performed by the agency. They are the subject of the amendments to which I am speaking this afternoon.

First, I refer to Amendment No. 195A. At Question Time today the noble Viscount and I agreed on one thing: efficiency in the use of energy is of vital importance in sustainable development and the Rio plan, if I may call it that. The burning of fossil fuels for energy by industry and in our power stations is the largest source of UK carbon dioxide emissions. Carbon dioxide is the most important greenhouse gas causing climate change. Therefore, it is a vital element in the environment, in the wider sense of the word.

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The UK is, of course, a party to the United Nations Framework Convention on Climate Change. Under that convention the UK is required to return its emissions of carbon dioxide to the 1990 levels by the year 2000. One of the major control operators in the programme is HMIP. The chief inspector of HMIP has said that it will be an inspectorate that will have to deliver the CO 2 targets for this country.

Energy efficiency is widely recognised as being the most cost-effective means of reducing carbon dioxide emissions: the improved use of electricity, the improved use of any substance which, when burnt, emits carbon dioxide. It therefore seems to us to be important that the new agency—which, after all, will incorporate HMIP within itself—should have a central role in monitoring and indeed promoting energy efficiency. That should be one of the functions that both agencies should use when exercising their powers. If we were to give that remit under Clause 35, it would improve the profile of the agency as we see it.

To refer to Amendment No. 198, as I mentioned at Second Reading, there has been considerable progress—not least through the energies of the Confederation of British Industry—in making sure that companies take account of and start to report the environmental effects of their activities. There is within the CBI an environmental group, which—and I hope that I am not saying anything out of turn—is making very good progress. A number of companies have signed up for that group. One of the conditions for signing up is that you have to have a director on the board who is specifically responsible for environmental matters; you have to have an environmental audit, and all sorts of other things. I should like to see the two agencies that are being set up in this Bill promote this sort of activity. An important function that the two agencies could assume is to encourage companies to report the environmental effects of their activities. That is the objective of Amendment No. 198. I do not see that any Member of this Committee could possibly disagree with the thrust of that amendment.

Turning for a moment to Amendment No. 199, I would have thought that it is, again, an amendment which every Member of this Committee would encourage. As I said at Second Reading, we have an enormous opportunity in this country of being in the forefront of clean technologies. Such an agency as we propose to set up—not the agency that the Government propose to set up, but the one that I should like to see set up—should have a function to promote the development in the United Kingdom of clean technology and to encourage its export. We have to be in the forefront of such technology and be able to sell it to other countries, where it will be sorely needed if the Rio targets are to be met, as we hope they will be.

Amendment No. 200 is slightly more modest. It simply seeks to put the drinking water directorate into the agency. The drinking water directorate, as the Committee will know, has been the object of some controversy over the years. On these Benches we are not entirely happy that it is working to our satisfaction. For instance, one environmental organisation describes the drinking water inspectorate as a "dormant

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watchdog". While that may be overstating the case, there is some point in incorporating into the agency what the drinking water inspectorate does at the moment.

In moving Amendment No. 195A and speaking to the others, I come back to where I started. This is an agenda for the agency which is rather more forward than the agenda that the Government have announced. The Government's agenda is simply to merge three organisations which already exist. Our agenda is to make this agency a powerful environmental agency. It is on that basis that I beg to move Amendment No. 195A.

4 p.m.

Viscount Ullswater: The amendments in this group seek to place a variety of additional duties on the agencies. The noble Lord, Lord Williams, indicated that these were probing amendments. He also indicated that in his view the agencies should have a different agenda; namely, to be made into a much more powerful environmental agency. I have to indicate to the noble Lord that the Government have considered many of the things that he wished the agency to do. But during the course of my remarks I shall indicate some of the reasons why we did not feel that it would be appropriate for that agency to undertake those duties.

Amendment No. 195A would require the agencies to promote energy efficiency. The Government attach great importance to the efficient use of energy. It saves money which could be used to develop businesses, improve homes and living standards and boost the economy. It helps to protect the environment by reducing the threat of climate change—all the things that the noble Lord indicated were important, and I agree with him. It also helps us to carry forward our sustainable development policy, changing people's culture by promoting realistic ways of achieving development at lower cost to the environment.

But, the new agencies will have specific tasks related to environmental regulation. The legislation should concentrate on these primary functions, leaving it to others such as the Energy Saving Trust and the regulators of the gas and electricity industries to promote the efficient use of energy. The noble Lord proposes that that should be a requirement of the agency; but I believe that there are separate bodies of legislation which deal with these issues.

Amendment No. 198 seeks to place a duty on each new agency to promote the proper reporting by private companies of the environmental effects of their activities. The noble Lord made reference to making a corporate commitment, which is what companies undertake at the moment. This kind of reporting on environmental performance is something we would undoubtedly wish to encourage, and we would wish to see the development of business-led good practice. But the agencies will not have dealings with all companies, and there seems no reason for singling out those with whom they will have dealings for special treatment. Nor is it clear what in practice this duty would entail. It is of course right that in seeking authorisations for potentially polluting processes, companies should assess and provide information on environmental impacts. This is

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why the Environmental Protection Act 1990 provides for this. But I believe that the proposed amendment could lead to additional and unjustified burdens on both the agencies and on industry.

Amendment No. 199 seeks to place a duty on the agency to promote the development and encourage the export of clean technology. In exercising its IPC functions, each agency must encourage the use of the best available techniques not entailing excessive costs (the BATNEEC techniques), and the concept of best practicable environmental option underlies many of the agencies' functions. BATNEEC in itself encourages innovation, and this seems the appropriate way for regulatory bodies such as the agencies to encourage clean technology. In addition, one of the objectives to be included in the national waste strategy under Clause 75 will be to encourage the prevention or reduction of waste through the development of clean technologies. However, the stand alone duty proposed by this amendment appears inappropriately wide-ranging and would go well beyond this.

The purpose of Amendment No. 200 appears to be to make the new agencies responsible for the inspection of drinking water. The Government considered whether or not the drinking water inspectorate, which is presently part of the Department of the Environment, should be transferred to the proposed new environment agency for England and Wales. Its conclusions, having considered carefully the responses to our consultation document, were that such a transfer of functions should not take place because drinking water quality relates to public health rather than to the environment.

The amendment is a little confusing, because it refers to the "functions for inspecting drinking water assigned to the National Rivers Authority by Section 86(1) of the Water Industry Act 1991", and, so far as I am aware, there is none. Section 86(1) of that Act does allow for the appointment of technical assessors to advise the Secretary of State on drinking water matters, and it is under that section that the present chief inspector is so appointed. The amendment therefore proposes the transfer of functions which the NRA does not have.

I do not quarrel with the noble Lord concerning the technicalities of the amendment: I understand the purpose. I am also a little unclear about the intended scope of the amendment because it refers to "each" agency, which implies in context that SEPA is also to have the powers of the National Rivers Authority transferred to it. But, for the record, I should make it clear that in Scotland, where the Scottish Office Environment Department is responsible for drinking water quality legislation and its enforcement, no changes in the existing arrangements are envisaged.

I hope, in view of what I have said, that the noble Lord will feel able to withdraw his amendment.

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