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Environmental Permitting (England and Wales) Regulations 2007

Volume 696: debated on Tuesday 20 November 2007

rose to move, That the Grand Committee do report to the House that it has considered the Environmental Permitting (England and Wales) Regulations 2007.

The noble Lord said: The draft regulations are being made to streamline and simplify our arrangements for environmental permits by integrating the systems for waste management licensing and pollution prevention and control. In doing so, they cut red tape and provide an easier and more flexible permit. They allow regulators and business to focus on protecting the environment at a lower cost.

The regulations provide an opportunity to reduce administrative burdens on business and regulators and are consistent with the Government’s better regulation policy. They respond to various drivers to review the different approaches to environmental regulation and to establish a more efficient regulatory system.

In 2005, the Better Regulation Task Force challenged Defra to improve our environmental permitting regulations. The Hampton report the same year challenged us to take a more risk-based approach to regulation. Later that year we responded to these drivers by launching the Environmental Permitting Programme, with the Environment Agency, the Welsh Assembly Government and other stakeholders. The aim was to reduce administrative burdens on business, in particular through a single permit system. The Environmental Permitting (England and Wales) Regulations are the result of this initiative and close consultation with industry and other stakeholders.

The regulations replace and simplify more than 40 pieces of law with one set of clear regulations. I understand that in adding up the pages in the 40 pieces of law the total is more than 500. Noble Lords will see that this document is just over 120 pages, so they are reduced to less than one-third of their length, but they still deliver the environmental protection that we care about. They deliver a single permit system for waste management and industrial pollution by streamlining and combining the two separate systems that are currently running. A single system makes it easier when it comes to applying for a permit, changing it and ultimately surrendering it. These changes will have benefits for a wide range of businesses, but particularly smaller enterprises which often have limited time and resources to spend on form filling. It is anticipated that this simplification will bring cost savings of around £76 million over 10 years through administrative burden reduction and wider economic benefits. I am not just tossing that figure out. We have a system for making sure that we monitor the savings gained through the regulations to gauge their effectiveness, and we can report on that.

The new permit system will make it easier for regulators to do their job of protecting the environment and easier for business to comply. These regulations have been widely welcomed by industry and have been consulted on more times than I can ever recall happening with a set of regulations. There have been five consultations on the programme. It is worth putting that on the record, because enormous work has gone into making sure that we can get the savings. The first public consultation took place between February and May 2006, before I turned up back at Defra. The second took place between September and December 2006; the third between January and April earlier this year—I can give details of what each concerned if required—the fourth, relating to the guidance to local authority regulated sites, took place from June to September this year; and the fifth took place between July and October this year. So there has been full consultation through the process. There was the initial push to get something done. Defra wants to cut regulation. People think that we wake up each morning considering that if we can introduce a new regulation that day we will have done our job. That is not the case; it is the other way round. That mindset and culture pervades the department. We are trying to simplify. This is a classic example of being able to simplify regulations and ease the burden on industry without—I emphasise this—sacrificing our environmental protection.

Moved, That the Grand Committee do report to the House that it has considered the Environmental Permitting (England and Wales) Regulations 2007. 27th Report from the Statutory Instruments Committee.—(Lord Rooker.)

I thank the Minister for introducing these regulations. We support any measures that will reduce the burden of regulation and save regulators and industry both time and money. These regulations are further welcomed in that they will integrate and replace more than 40 statutory instruments dealing with environmental permitting with this single instrument. However, there are a number of issues on which I think the Committee will be glad to receive clarification.

Does this measure really reduce the burden of regulation or simply repackage it by encompassing the 40 statutory instruments and 11 EU directives? Time will tell. Estimates in the regulatory impact assessment suggest that there will be around 8,000 agricultural waste licences by spring 2008, and Defra estimates that these regulations will make savings of, I believe, £55 million, but I am very pleased to hear that the figure has gone up to £77 million. Does this saving of £77 million include the cost of burden to industry or is it just the saving to Defra?

The original proposal that the regulator should decide whether extra information is needed for disputed applications was amended in view of concerns voiced by respondents to the consultation on the EPP. It was changed so that an independent appeal body would decide instead. There still remain questions over what shape this appeal body will take, what it will be called and how it will be administered. Perhaps the Minister can tell the Committee how he envisages the appeal process will be undertaken, and how long it will take.

It appears that in efforts to reduce the regulatory burden, there will now be at least three different versions of the panels, the EPP, the standard rules and the bespoke environmental permit, that could potentially perform the same function. Is this really a genuine simplification process? In addition, an IT system is scheduled to be put in place by February 2008. Given the past record of the Government’s IT systems, there is a potential risk that this will lead to costly and problematic delays, and I have to say that disks might go missing. No doubt, hard copy documents and forms will be used to run parallel with the new electronic system until such time as it is found to be functioning as desired.

A phase 1 survey will be conducted in April 2009 to assess whether, for applicants for permits during 2008-09, the benefits are accruing as expected. It is hoped that at this stage the system will be flexible enough to make any necessary changes and improvements. Also, a full survey and questionnaire will be conducted through stakeholder workshops in April 2011 to ascertain whether costs have been reduced, the permitting process has become quicker and easier, the guidance has improved and environmental standards have been maintained. Presumably all this will require individuals to maintain records and spend time filling out forms. Have these elements been taken into account when assessing whether the burden of regulation has actually decreased? I look forward to a positive outcome.

I thank the Minister for his explanation of these regulations, which are not too transparent as you read them. I also particularly congratulate the noble Earl, Lord Cathcart, on his mastery of the detail. I shall be slightly broader in my questions. Along with everyone else, we warmly welcome this attempt to make the regulations in this area simpler and more concise. In the past I have been involved in the legislation around European directives, and I was particularly impressed to discover that these regulations will subsume 11 of them into quite a reasonably sized document, although at 129 pages it is twice the size of the Climate Change Bill, which is being brought forward to help to change the world. Perhaps the future is more promising in this regard.

I was going to ask the Minister about the saving of £76 million over 10 years, as mentioned in the Explanatory Memorandum. I do not know what the procedure usually is for checking to see whether such savings have been delivered. I welcome this, but I should like to understand a little more about the procedure. I was also impressed by the number of rounds of consultation, and the summaries in the explanatory document make for interesting reading. Some 110 people responded in the first round; 75 in the second round; 53 in the third round and eight in the fourth round. No number is given for the fifth round, so I do not know whether anyone actually made it to the finishing line, but while the graph will not quite be negative, it is good that a certain amount of consultation was held.

The accompanying notes also explain that the Environment Agency came in for some criticism over its targeting for compliance in these areas by taking a risk-based approach. I am more used to that in relation to the Financial Services Authority and that sort of area, where it has been very successful on the whole in determining by fairly straightforward formulae what the biggest risks are, the organisation, and what should be looked at most closely, thereby ensuring that, for the resources that are put into environmental protection, the maximum risk is taken out. I would be interested to know whether there has been any success there.

Also mentioned was the simplicity of regulation and whether single sites could have single regulators, which I agree is particularly important for small businesses or business sites. Again, it seems an obvious way forward and a great help to businesses, particularly SMEs, if they not only have one set of regulations but can deal with a single regulator for their site. I am interested to know whether the regulations allow that and whether the Government are hoping that that will continue.

As the Minister will know, there has been some considerable discussion in your Lordships’ House about the removal of the due diligence defence. Although I am not convinced either way, we now have absolute liability and I am interested to know whether business and industry now accept that this will not be a major problem for them.

Lastly, this is obviously an important initiative over a long period. Will the Minister say what is next in the simplification of environmental permits?

I am sorry that I was little late. I did not spot that the proceedings on the regulations started so soon. Anything that simplifies this is extremely welcome, and I hope that it works. I know about this only because I have tried to register waste exemptions for farming. The waste exemptions for road planings on farm tracks—I think the relevant regulation is paragraph 19 of Schedule 3—were a nightmare, to be honest. You had to register one thing, then you had to get another form, then there appeared to be an exemption, and no one was sure whether they had got it. Anything that simplifies this and makes life easier for people in businesses who are not natural form-fillers and are mostly terrified by the forms and do not understand them is most welcome. I therefore welcome anything that goes in that direction.

I will do my best to answer the questions that have been asked. I am sorry; the answers have been put in reverse order. Single sites can have a single regulator, although it depends on the circumstances. I leaned back and asked my officials whether this included farms, because there is nothing more I would like to say to farmers than that they could have a single regulator. They may have; as I said, it will depend on the circumstances. We must differentiate in some ways. Farms are small but sometimes complicated businesses, and we seek to reduce the form filling, although I would not want to overplay this for agriculture. Under the regulations, the greatest savings in this area will be for small and medium-sized businesses, probably with multi-sites and one licence to cover them. There will be many more savings, but probably fewer for single sites.

The noble Earl is absolutely correct that the whole idea is to simplify the situation and get down to having less regulation and less form filling on farms. We are abandoning 40 different pieces of legislation with more than 500 pages, wrapping them up in these new regulations, with their 120-odd pages, without losing sight of any environmental protection issues. It is important to put that on the record. As I said, single sites can have a single regulator, depending on the circumstances.

The Environment Agency is putting into place a system that will allow it to deliver the new regulations—without an IT system, I have to say—if there is a delay; so the benefits to customers will still be there. The noble Earl is quite right that the track record of the new implementation of IT in Whitehall is frankly appalling. It is worse now, and I feel bad about that. Before I became a Minister, I had two years at the Public Accounts Committee and we had several IT disasters between 1989 and 1991. When I became a Minister in 1997, I took three or four reports from the NAO to MAFF. I asked, “When are we going to start the cattle movement system?”, which was not blue sky but IT-based. I said, “Here are some disaster reports, which we should avoid”. In some ways we did. Nevertheless, our record is not good.

I shall not comment on disks. I saw only the Chancellor’s Statement. Because of the Climate Change Bill I had to turn the television off. I wanted to send the officials away because I wanted to watch the rest of it, but I shall have to do that later. On the fifth consultation there were 44 responses. As Members of the Committee will see on page 9 of the RIA proposals, each consultation was specific, so one would expect the numbers to vary. There are three types of permits; namely, the exemption permits with the lowest risk, the standard permits that are low risk and the bespoke permits with the highest risk. It seems to be a real risk-based regulation. One-size-fits-all regulations would have everyone wrapped up in red tape. People will want to be double-sure, will watch their back and will close every gap. That is not risk-based, it is being ridiculous. That would be over-regulation and double regulation, of which we already have too much. So I am very pleased to bring these regulations forward on behalf of my ministerial colleagues, and the industry has welcomed the changes.

I freely admit that, in the scale of government money, to claim that we are saving £76 million over 10 years is chicken feed: it is £7 million a year. It is like the third decimal point in any department’s adding up, and it can be lost. However, we have to make this a reality. I was very pleased to learn from the officials that we have put in a checking system. It is important to show those who have encouraged us to deregulate that these are genuine savings. The £55 million is reckoned to be the administrative burden reduction and the £21 million reduction is from wider benefits, which is how the £76 million is calculated. The savings to industry are estimated at £35 million. It is very difficult to put calculations on this, because we are estimating the number of forms that will have to be completed. A time is put on filling in the form and rough costs are calculated. As far as I know, there has been no industry backlash on this. By and large, the industry is very supportive of the regulations, and I am sure that it will want to make them work.

I have good news and bad news for the noble Earl on appeals. I must not be rude, but the bad news is that the length of appeal depends on the subject matter. The good news is that the Planning Inspectorate will deal with it. I know that the Planning Inspectorate can come under severe criticism, but it is not its own fault for the load it carries in operating the planning process. From a technical, an administrative and a government point of view, the Planning Inspectorate is a first-class body of people, so we can be satisfied that the planning process will be in good hands. The amount of time taken depends on the burden, the workload and the subject matter.

I was asked about the removal of the “due diligence” defence. The existence of strict liability in environmental regulations is the result of a deliberate choice made by successive Administrations to secure higher environmental standards in those areas than would otherwise be the case. That is probably the short answer with a bit of gold-plating. The due diligence defence can enable industry to avoid responsibility for the consequences of the actions that they have chosen to conduct. That is because operators need to do only what they think is reasonable to prevent those consequences, rather than what was objectively possible, even though on occasions severe damage can be caused to the environment or human health. So there are these issues where one takes a different look at the situation.

The Environment Agency wants to use the regulations to drive its risk-based approach to regulation. It is an opportunity to use resources more wisely. I hope that we will get more value for the money we spend. It would be nice if we spent less money. In other words, the Environment Agency staff would be more occupied on the job rather than chasing up individual forms that have been filled in. The agency also gives important advice to industry in its widest sense as well as farmers. It is much better that staff are doing that than chasing up forms, so it is very important to cut their number.

On the next steps, we will be publishing Defra’s annual simplification plan before Christmas. It has been signed off as far as I am aware and has gone around. We are on course to deliver our annual report to Parliament on simplifying regulations. These regulations will be covered by it. We are now looking at the EPP2, perhaps water discharge consents, radioactive substance regulation and a host of other changes. We expect and hope to be consulting shortly, which is shorthand for as soon as resources permit and we have something to consult on. The process of trying to cut down regulation and the number of forms people have to fill in is ongoing in the department. It is a genuine effort by Defra to cut the red tape burden, and that is wholly to be commended.

On Question, Motion agreed to.

That completes the business before the Grand Committee this afternoon. The Committee stands adjourned.

The Committee adjourned at 5.41 pm.