Select Committee on Delegated Powers and Regulatory Reform Second Report



Supplementary Memorandum by the Department of Environment, Food and Rural Affairs

171.  This memorandum supplements the Memorandum made by the Department in respect of the Waste and Emissions Trading Bill and addresses the concerns expressed by the Committee in paragraphs 22 to 29 of its First Report 2002-03 dated 27 November 2002.


172.  The Department acknowledges that this Bill is unusual to the extent that it confers wide delegated law-making powers on the appropriate authorities for each country of the UK. However the Department considers that there are good reasons why the Bill is structured in this way.

173.  By way of background, the Bill is intended to give legal effect to the legal obligations imposed by Article 5(1) and (2) of the Landfill Directive.[3] Article 5(2) of the Directive requires Member States to reduce the amount of biodegradable municipal waste sent to landfills to 75% of the amount produced in 1995 by 2006, to 50% by 2009 and to 35% by 2016. There is a 4 year derogation of this target for Member States which sent to landfill more than 80% of their collected municipal waste in 1995. The UK qualifies to take advantage of this derogation.

174.  Environmental protection is generally a devolved matter:

  • Environmental Protection is not a reserved matter under Schedule 5 of the Scotland Act 1998;
  • The majority of the functions under the Food and Environment Protection Act 1985, the Environmental Protection Act 1990 and the Environment Act 1995 were transferred to the National Assembly for Wales by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI No 1999/672);
  • Environmental Protection is not an excepted matter under Schedule 2 or a reserved matter under Schedule 3 to the Northern Ireland Act 1998.

175.  The Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly are each responsible for implementing Community obligations in so far as they have power to do so.[4] Where the obligation is a quota obligation which does not relate separately to Wales, Northern Ireland or Scotland, the obligation to implement can pass if an Order is made which creates a separate obligation for that country.[5]

176.  HMG and the administrations of Scotland, Northern Ireland and Wales have agreed that each territory should bear its share of the Directive targets. The amount that the UK as a whole is permitted to landfill therefore needs to be divided between the countries of the UK. General powers enabling a proportion of Community obligations to be transferred to each administration are contained in section 106 of the Government of Wales Act 1998, section 106 of the Scotland Act 1998 and section 27 of the Northern Ireland Act 1998.

177.  In the Department's view these general powers are not sufficient for the purposes of this Bill for the following reasons:

  • Allocating shares of the UK target to devolved administrations is a key part of the Bill and provides a link between the strategies and their implementation. It is necessary for the power to be tailored to the specific circumstances that may be encountered in giving effect to the landfill allowance scheme;
  • The Department considers that it is important to set maximum amounts in years which are not target years under the Landfill Directive (defined as "scheme years" under clause 22 of the Bill) in order to encourage the reduction of biodegradable municipal waste in preparation for meeting the Directive's targets in target years. However, it is doubtful whether the general powers mentioned above would allow the Secretary of State to set maximum amounts for non-target years, as is envisaged in clauses 2 and 3 of the Bill, as these are not (unlike amounts in target years) directly derived from Community obligations;
  • Although section 106(3) of the Government of Wales Act 1998 and section 27(4) of the Northern Ireland Act 1998 expressly provide that an Order may set staged targets (i.e. the time by which any part of the obligation is to be achieved) they do not provide for any other variation in the form or character of targets. It follows that this might be taken to be the only permissible deviation from a fixed and certain quantity. This would be consistent with statements in the House of Commons during debates on those Acts on the need for 'fixed positions' to be established through such orders;
  • As regards Scotland, the Scotland Act 1998 makes no express provision for staging targets over time and therefore it may not permit UK Ministers to set for Scotland a timetable for compliance with its part of a Community obligation other than the timetable set down in the Community obligation[6];
  • For maximum amounts for target years to be set using the general powers in section 106 of the Government of Wales Act 1998, section 106 of the Scotland Act 1998 and section 27(1) of the Northern Ireland Act 1998, but for the maximum amounts for non-target years to be set under the Bill would create complexity and possibly confusion.

178.  The Department is therefore of the view that specific powers are necessary in the Bill to allocate targets to each country of the UK for both Directive target years and non-target years (clauses 1 and 2). The Department recognises the importance of regulations made under clause 1 and 2. Accordingly the Bill provides for such regulations to be subject to the affirmative resolution procedure.

179.  As regards the setting up of a landfill allowances scheme (clauses 4 to 15), the Department considers that there are good reasons why the Bill should set out a framework for a landfill allowance scheme leaving the details of the scheme to be established in subordinate legislation made by the appropriate authority in each country of the UK.

180.  The Scottish Parliament can and, prior to the suspension of devolution in Northern Ireland, the Northern Ireland Assembly could make primary legislation in all areas except where they are specifically precluded from doing so (section 28 Scotland Act 1998 and section 5 of the Northern Ireland Act 1998). By convention the Westminster Parliament will not legislate in devolved areas for Scotland or Northern Ireland without the agreement of the Scottish Parliament or the Northern Ireland Assembly.

181.  Whilst it would have been possible for Scotland, at least, to legislate in its jurisdiction, the Department and the Scottish Executive considered that a uniform approach across the UK was preferable to ensure compatibility between the schemes in the different countries of the UK. In particular this is necessary if cross-border trading is to be permitted.

182.  The Scottish Parliament has consented to the Bill (the Sewel motion was passed in the Scottish Parliament on 28 November 2002). Prior to the suspension of devolved government in Northern Ireland on 15 October 2002, it was expected that the Northern Ireland Assembly would indicate its consent to be included in the Bill by passing a similar motion. The suspension of devolution means that this is no longer necessary.

183.  The position is different in relation to Wales. The National Assembly for Wales can make subordinate legislation but not primary legislation. It is the Department's policy, in line with the principles of devolution, that the NAW should have the power to establish the details of the landfill allowance scheme for Wales. The only way to do this is for the Bill to provide regulation-making powers for the NAW to exercise.

184.  It would, in theory, have been possible to deliver this aspect of the policy by a Bill setting the detail of the scheme in England, Scotland and Northern Ireland but leaving the detail of the scheme to be set by delegated legislation made by the National Assembly for Wales. Scotland and Northern Ireland (if devolved government were restored) would have remained free to adopt in future primary legislation amending the Act. However, this would have led to a strangely unbalanced Act, setting the detail of the scheme in primary legislation for England, Scotland and Northern Ireland, but leaving the detail to delegated legislation in Wales. It would also, in effect, tightly constrain the power of the National Assembly of Wales, who would have to make a scheme compatible with the details already set for England and Scotland and Northern Ireland. This structure would also make very difficult any future changes in the schemes, which will need to be consistent across the UK if trading is to be allowed.

185.  For these reasons it was decided that the Bill should set out the framework for the scheme with each country then able to establish the detailed provisions for its area.


186.  Clauses 6(3)(j) and 7(3)(l) permit regulations providing for the borrowing and banking and trading of landfill allowances to create offences.

187.  Examples of offences which may be created under clause 6 and 7 include:

  • Acting as a broker without a licence or breaching the terms of the licence (clause 7 only)
  • Knowingly or recklessly providing false or misleading information to the monitoring authority.

188.  The Department notes the concerns raised by the Committee in paragraph 27 of its First Report and the Department is considering further the maximum penalties currently provided for in clauses 6 and 7 of the Bill.

189.  As the Bill is implementing an EC obligation, the Committee may consider that an appropriate precedent would be the penalties permitted under the European Communities Act 1972. Paragraph 1(1) of Schedule 2 to that Act provides that regulations made under section 2(2) of that Act may not "create any new criminal offence punishable with imprisonment for more than two years or punishable on summary conviction with imprisonment for more than three months or with a fine of more than level 5 on the standard scale[7] (if not calculated on a daily basis) or with a fine of more than £100 a day." Following this precedent the maximum penalty on indictment for offences created by regulations under clauses 6 and 7 could be two years imprisonment or an unlimited fine.


190.  Clauses 6(3), 7(3), 8(2), 10(3) and 11(3) provide for penalties and clause 8(3) provides for a supplementary penalty. The level of penalties and supplementary penalties are to be set by regulations under clause 25. Such regulations may specify the amount of the penalty or provide rules for calculating the amount.

191.  The Bill does not specify a maximum penalty for which regulations under clause 25 may provide, nor does it indicate how such penalties will be calculated. The principle is that the financial penalty should be sufficiently high to deter a waste disposal authority from breaching the requirements of the landfill allowance scheme and in particular the duty under clause 8 not to landfill more than is permitted under the allowances it holds. In respect of Article 8, the amount of penalties should make it more economically attractive for waste disposal authorities to adopt other solutions (such as increasing recycling or, where permitted, purchasing allowances from other waste disposal authorities) to avoid breaching the requirements of the scheme and therefore being liable to pay a penalty.

192.  However there are good reasons why the Department considers that a maximum or a formula for the calculation of penalties should not be included in the Bill.

  • Firstly it is essential that there is some flexibility in setting the level of penalties. If trading of landfill allowances is permitted, the market price for allowances will fluctuate and therefore the penalty needs to be higher than the market price in order to continue to deter waste disposal authorities from failing to comply with the requirements of the scheme. It is difficult to predict what the market price will be in advance.
  • In addition a formula expressed in terms of market price would be unlikely to work as there may be difficulties in obtaining price information and allowances may be traded for benefits other than money.
  • This is a devolved matter and therefore the Department considers that the amount of penalties is properly a matter for the administrations of each country of the UK to determine. The amount of penalty which is appropriate may vary in accordance with the details of the scheme established by each country under regulations, in particular, whether or not trading of landfill allowances is permitted.

193.  The approach taken in relation to penalties for emissions quota trading schemes is similar to that taken for penalties in relation to landfill allowance trading and clause 31 does not set a maximum for the penalties which may be included in trading schemes authorised by regulations under the Pollution Prevention and Control Act 1999. However, the principle behind such penalties is the same as that set out in paragraph 21 above. The Department considers that, in addition to the reasons cited in the first two bullet points in the previous paragraph, it would be inappropriate to set a maximum or formula at this time because the PPC Act powers which clause 31 amends can be used to establish trading schemes for a wide range of pollutants and situations and that no single maximum or formula would be suitable for all pollutants.

December 2002

3   Council Directive 1999/31/EC (OJ L 182, 16.7.99, p.1). Back

4   Section 106(1) of the Government of Wales Act 1998, paragraph 7(2)(a) of Schedule 5 to the Scotland Act 1998 (see also section 29(2)(d)) and paragraph 3(c) of Schedule 2 to the Northern Ireland Act 1998 (see also section 6(2)(d)). Back

5   Section 106(3) of the Government of Wales Act 1998, section 106 of the Scotland Act 1998 and section 27(1) Northern Ireland Act 1998.  Back

6   If the UK takes the full four year derogation, the Landfill Directive requires a reduction in the amount of biodegradable municipal waste going to landfills to 75% of the amount produced in 1995 by 2010, to 50% by 2013 and to 35% by 2020. Back

7   £5,000 (see section 5 of and Schedule 1 to the Interpretation Act 1978 and section 37(2) and (3) of the Criminal Justice Act 1982 as amended by section 17 of the Criminal Justice Act 1991).  Back

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