Motion to Consider
My Lords, we are rightly proud of the environment in our country. Many facilities which could harm the environment or human health are regulated under the environmental permitting regime. We are today considering one type of enforcement, and as noble Lords know, enforcement is an important part of environmental regulation. In the past, it has generally relied on criminal prosecution with fines and imprisonment, or formal cautions which result in a criminal record. For some cases, prosecution and cautions can be heavy-handed and slow. Currently, there is no proportionate alternative for offences under the Environmental Permitting (England and Wales) Regulations 2010. The regulations we are considering today will enable the Environment Agency to accept enforcement undertakings for certain offences at facilities where an environment permit is required.
Originally introduced in 2008, enforcement undertakings give greater flexibility to regulators in the way they secure compliance, reserving criminal prosecution for the most serious offences. The Environment Agency started to use enforcement undertakings, as well as other civil sanctions, for some of its regulatory activities in January 2011. These regulations will allow it to start accepting enforcement undertakings for offences in the environmental permitting regime.
Enforcement undertakings are voluntary offers made by offenders to restore and remediate damage and, importantly, to ensure compliance both now and in the future. There are around 90,000 Environment Agency permits which cover a diverse range of facilities including scrapyards, landfill sites, sewage works, chemical plants and nuclear power stations. It is a relatively new framework that has brought clarity and cohesion to permitting regulation without reducing levels of protection for the environment and human health. It is important to confirm that the worst offenders will continue to be prosecuted. Enforcement undertakings will be most appropriate for normally compliant people and businesses as long as they address the causes and effects of their offending. Where they are used, they will streamline enforcement, put compliance and restoration first, and encourage dialogue between the Environment Agency and business.
Let me give your Lordships an example of where these regulations could be used. I shall take an industrial company with high environmental performance standards which accidentally pollutes a river with sediment run-off from an on-site development project. Rather than being subject to prosecution, the company could in the future offer an enforcement undertaking. That offer might explain how the company would prevent the offence happening again, perhaps by changing procedures and possibly by making a board member responsible for future development projects and environmental performance as a whole. The enforcement undertaking would also quantify the environmental harm that had been caused and propose investment to that value, perhaps to a local environmental project or charity that works to improve the river which has been polluted.
As regards how the decision on accepting the offer of an enforcement undertaking is made, the Environment Agency, Defra’s regulator, has already put in place robust guidance and governance for its civil sanctions powers. In deciding appropriate enforcement, it will continue to apply a stringent assessment of what it calls “public interest” factors. In my example, if the offender’s compliance history had previously been good, the offence was not foreseeable and the environmental effect was minor, it may be appropriate to accept an enforcement undertaking. The regulations we are considering would extend enforcement undertakings to the Environment Agency’s largest regulatory regime. It is estimated that around 50 prosecutions or formal cautions could be avoided each year.
These regulations introduce no new regulatory requirements and make no changes to existing offences or existing enforcement mechanisms beyond allowing the Environment Agency to accept enforcement undertakings from those who voluntarily offer them. The regulations will have no impact on businesses, charities, voluntary bodies or the public sector, unless they have failed to comply with the law. No impact assessment is therefore needed, as they introduce what is, in effect, a voluntary measure.
Just to be clear, the costs of enforcement undertakings fall only on offenders, who offer them to the regulator. Where enforcement undertakings are offered and accepted, they will give priority to the restoration of what has been harmed and a return to compliance and, where appropriate, they will also benefit persons affected by the offending. Enforcement undertakings will streamline the enforcement process, which is no small matter. They will avoid the stigma of a criminal conviction, with its knock-on impacts, which may be higher business insurance and a negative impact on being able to bid for business contracts.
These regulations are part of a package of better regulation work on civil sanctions. My department has consulted twice on the introduction of enforcement undertakings for environmental permitting. More recently, stakeholders have confirmed that they continue to support them.
To summarise, the benefits of introducing enforcement undertakings include: restitution for local communities and those affected, instead of court penalties; giving priority to renewed compliance and restoration of harm, with opportunities for co-operation between business and regulator and giving offenders the opportunity to address non-compliance; and freeing-up regulators’ time to focus on tougher and speedier exercise of criminal sanctions where they are needed, tackling those who wilfully and repeatedly flout the law or harm local communities. The proposal is very much in line with the Government’s better regulation agenda. No one will be made to have an enforcement undertaking, but offenders will be able to offer them for some environmental permitting offences. They will give priority to renewed compliance and restoration of what has been harmed, including restitution for local communities, instead of court penalties. I commend the regulations to the Committee.
My Lords, I thank the Minister for introducing this measure. I am most grateful to see that the regulations start off by allowing enforcement undertakings in the case of any infringement of pollution. I declare my interest as a farmer and I am looking at the subject from that angle. Of course, at the moment farmers who pollute or allow noxious substances to escape from their farms are subject to penalties under the common agricultural policy and the good agricultural and environmental condition standards. Farmers can be penalised by those, first; and secondly, the Environment Agency can impose penalties. Usually the idea is that a small penalty is imposed as a warning, but there is power to impose a very much heavier penalty. I am wondering whether these enforcement undertakings will work in tandem or whether they will be the opening gun of trying to enforce regulations when people are not complying properly and causing pollution or environmental damage.
Once again, the Minister has provided the Committee with an excellent introduction to, and explanation of, the regulations. The noble Duke, the Duke of Montrose, brought up the situation regarding farming and these regulations. In case there should be any anxieties, I declare my interest as an owner of a dairy farm. However, my reading of the regulations is that of the nine classes of regulated activity to which they pertain, none applies to dairy farming—except, possibly, the water discharge activity. It would be extremely helpful if the Minister could clarify the extent to which farming is affected by these regulations, and how they might work together with the regulations under the common agricultural policy.
The Minister has clarified that these regulations introduce no new requirements and make no changes to existing offences and existing enforcement mechanisms, but merely allow the Environment Agency to accept enforcement undertakings when they are on offer. I agree that the order is constructive in that it allows the Environment Agency greater flexibility in its approach to transgressions, and follows his department’s Fairer and Better Environmental Enforcement review, which was initiated by the previous Labour Government. The regulations will make a positive addition to the Environment Agency’s ability to do its job well. The benefits to society include giving priority to restoration of harm ahead of criminal convictions.
The Explanatory Memorandum states, with regard to guidance, that the department will write to the Environment Agency setting out the expectation of how these enforcement undertakings will be used to ensure that enforcement is in accordance with Better Regulation principles. Will the Minister update the Committee on this progress? When does he expect that the Environment Agency will be able to publish its guidance on enforcement matters?
As the Minister explained, the Explanatory Memorandum provides no impact assessment, on the basis that the order has no impact on business or other organisations unless they fail to comply with the law. However, this was the subject of extensive discussions in the other place. The changes proposed in 2010 would have significantly reduced costs to both the Environment Agency and Natural England. As the Minister said, at the very least the order will help to free up the Environment Agency’s time.
In addition, since 2010 it is understood that consideration has been given to costs recovery. Did the Minister’s department give any consideration to recovery of the Environment Agency’s costs for monitoring and administering the new enforcement undertakings element of the order? Will he confirm that the Environment Agency can recover its costs from the order? The reply of the Minister in the other place rather missed the point to a certain extent, in his statement that it has no effect on business. It should surely be possible to produce an impact assessment on the benefits to business in this Better Regulation measure. After all, it is the aim of Better Regulation to bring benefits.
Finally, the ability to quantify the value of ecosystem services has also developed greatly since 2010. Are the Government able to give an estimate of the ecosystem services benefit of the increased compliance resulting from this change? I would be very grateful if the Minister could clarify his department’s approach to the benefits of this order.
My Lords, I am grateful to noble Lords for their contributions. My noble friend the Duke of Montrose asked how farmers will be affected by these changes. Under the new system, farmers will be treated in the same way as any other business. The regulations will enable farmers who have a general approach to compliance to propose enforcement undertakings to the Environment Agency as part of the regime. It will form part of the way in which they can resolve issues. He has reminded me that I should probably declare an interest as a landowner.
The noble Lord, Lord Grantchester, asked a number of questions. He asked about guidance. I am not sure I am going to be able to satisfy him entirely today but I can say that my department will be writing to the Environment Agency, setting out the expectation of how environmental permitting enforcement undertakings will be used. It has already consulted on and will pay heed to the existing guidance on the use of environmental undertakings, which is currently being reviewed. That is probably as far as I can go today on that point.
The noble Lord asked about costs recovery. The regulations do not affect the level of inspection or enforcement. Enforcement undertakings will be an alternative to prosecution in suitable cases. Advice and guidance from the Environment Agency will remain the foundation of the environmental enforcement system. I do not think they will have an upward impact on costs at all. I think he also asked why there is no impact assessment, which I hope I explained. No impact assessment is needed for what is, in effect, a voluntary measure that will impact only on those who are not compliant and who voluntarily offer enforcement undertakings. For the delivery of this final part of the Fairer and Better Environmental Enforcement review, we have chosen to rely on the original impact assessment from 2010.
My Lords, perhaps I may clarify the question I asked. I well understand the logic in both the Explanatory Memorandum and the noble Lord’s words that this has no impact and does not require any new regulation to be complied with. Nevertheless, this is a measure that will bring benefits, so I wonder whether any assessment has been made to quantify what is likely to result from the benefits of better regulation.
I referred to what I think is the best estimate we can make although, as the noble Lord will understand, it is quite difficult to do because it depends on take-up. However, if I can add anything to what I have already said in my opening remarks, I will write to him.
The noble Lord also asked whether I can update the Committee on the Environment Agency’s guidance. I have already said a few words about that. The agency has its guidance, trained staff and an established approval and governance process, which includes oversight by a director-level national panel to promote consistency and the sharing of full information. On that basis, I hope that I have answered most of the questions that have been put to me, but to the extent that I have not, I will write.
Committee adjourned at 5.11 pm.