Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of Witnesses (Questions 40 - 56)

WEDNESDAY 28 MARCH 2001

LORD CRANBROOK AND DR RICHARD SILLS

Mrs Dunwoody

  40. But that is not good enough, is it? The burden of your complaint against Dr Aickin was not that you were not capable of refuting or did not want to refute what he said. The burden of your complaint was that he thought strategically, put it into some kind of context and then asked you awkward questions you did not even want to consider.
  (Lord Cranbrook) Many of the questions that were brought to us through Dr Aickin's submission were, as Dr Sills has already explained, outwith our capacity as regulator.

  41. With the greatest respect, my Lord, you just recently said in your reply to Mr Blunt "it is not a matter for me, I do not really have to consider that". In fact, what Dr Aickin was doing, he was doing you a favour. He was forcing you to consider not only the role of a private company that is entirely funded by public money but whether you were capable of moving on and whether you were fulfilling the job. You chose to interpret that as an attack upon presumably your abilities and your personnel, which I think is an extraordinarily narrow response, but in fact you are still not answering the question because Dr Aickin's complaint was not just about what you had done, it was what you were going to do, where you were going and how that fitted into the scheme that you were lumbered with. Why is it that you find that so destabilising? You reacted in the way in which you did like—if you will forgive my saying so—petulant schoolgirls because he had actually said things you did not want to answer.
  (Lord Cranbrook) Please, you respond because I have spoken.
  (Dr Sills) He said things we cannot answer. As Lord Cranbrook has said, they are outside our remit, they are outside our mandate.

  42. But Lord Cranbrook has just said you do not even have an opinion on these things. You said you work in relation to Customs and Excise. You keep your heads down and your mouths shut and you hope nobody will examine the role of the company, is that it?
  (Lord Cranbrook) Well, that would be a gross distortion of what we do. Naturally as individuals we may have opinions but our duties under our terms of approval are to regulate the scheme as the scheme is laid down under the regulations.

  43. You do not see any system in which you can allow a criticism of that that cannot be interpreted as a personal attack? You are not prepared to enter into any debate with someone who you yourself say is extremely well qualified?
  (Lord Cranbrook) I think all of these are distortions of our position.

  44. I do hope so. This is why I am asking you, my Lord.
  (Lord Cranbrook) I find it hard to give a simple answer other than the answers we have given. There are aspects of Dr Aickin's criticism which are outwith the regulator's capacity as defined in the regulations. We operate under the terms of approval with Customs. We apply the regulations and, as I have said, I believe as regulator we do a good job. For the more strategic thinking it is really your Committee, Chairman, it is Government. Dr Sills will explain the levels of interaction that we have with the Treasury, with Customs, in looking forward and in reviewing the regulations as they are applied.

Mr Blunt

  45. Obviously it is helpful to the Committee to know the position of Entrust about the scheme you are operating. One would have thought that you would have a view about it as to how it sits and as to how it has developed. Dr Sills, you made the remark that the scheme has grown through its own success way beyond perhaps what its originators' designed. I think it is appropriate—given that the difficulties you have had with Dr Aickin are perhaps symptomatic with the difficult position you find yourself in as private company regulator in these perhaps unique circumstances—that we can ask your opinion as to how things ought to go forward from here. You will have seen the opinion of the Select Committee but, as the people operating the scheme, you are surely in a position to give an even more expert view than ours. Ours is based on the evidence that we have received but you are the people at the sharp end running this so you have seen the difficulty you have got into with Dr Aickin, which I think is a product of this peculiar neither public nor private position that you find yourselves in. I am asking for your views as to whether you think there is merit in the recommendations of the Select Committee that the whole Landfill Tax Credit Scheme should be looked at again and how it operates?
  (Dr Sills) To answer the last part, yes, it is a function of this Committee and Government to review its instruments for using taxation in whatever way they feel suitable. It is for us to advise Government and the Select Committee what we think, yes. Our view, however, is that there is a fundamental difference in perspective between the Committee's view as expressed in the report and what the rules under which we work are. Those are two areas.

  46. I completely understand that. That is clear. I do not think in our report there is a suggestion that in terms of the terms of reference—apart from this unhappy incident with Dr Aickin—of how you are carrying out your duties that there is a series of criticisms that seriously stack up against you. There are questions about accountability and Customs and Excise but in terms of how the actual Tax Credit Scheme works on the ground I think you are entitled to want to say that in its own terms it is a very successful scheme. Now, we then come back to the point that you are operating that scheme and I am inviting you to comment on whether or not you now think it is time for the whole operation of it to be reviewed, and particularly the position you find yourselves in as a private company having to act as a regulator in something which has perhaps grown out of all proportion from what those who designed it expected.
  (Lord Cranbrook) This is a strategic question. What we have attempted to do to assist this is to evaluate and to discuss with those who are concerned where and what would be the role of the regulator if the scheme was to be modified in a way in which political circles, your Committee or Government, chose to do so. We feel that our proper role is to provide advice from the regulator's point of view of how alternative schemes would be regulated in order to maintain probity and compliance with whatever way the regulations were amended. This is the strategic way in which we are operating.

  47. To a degree that is around the detail of how the regulations are carried out, as you say, with due probity and compliance. I will tell you what I am driving at. We made a recommendation in our report which would remove Entrust from the scheme if it was carried out completely and there would be a whole new set up. What I am trying to get at is when you read that do you think "well, strategically although it is not our responsibility, it is the responsibility of politicians and Government to come to these decisions, they have got a point", or do you read that and think "how could they possibly come to that conclusion, look what has happened to the scheme, it has been a wonderful success, it is going to be simply ruinous to turn around and tear it up and try and replace it with something else"? What is your view? Do you think we are crazy?
  (Lord Cranbrook) As I say, the formal discussions within our organisation have consisted of evaluating and outlining what regulation we see would be necessary and what the role would be under a wide scenario of alternatives.

Mrs Ellman

  48. What would you say you have learned from this episode and how do you see the role of this Select Committee?
  (Lord Cranbrook) The first thing I have learned, frankly, and in my parliamentary experience of 21 years I have never come across it before, is contempt. The contempt was unintended and it has been a real lesson to me to find what can arise inadvertently in these things. I have apologised for that and that has been a very real and memorable lesson to us all. Secondly, I hope that the Select Committee realises that when I appear before you I appear before you as the Chairman of an appointed regulatory body and that is the perspective from which I have tried to assist you to reach conclusions. The second lesson I have learned is that you are always going to tweak at this and you are always going to try to pull me out of that frame.

  49. How do you see the role of this Select Committee? What role would you say it is performing?
  (Lord Cranbrook) This Select Committee has a very honourable history and it has had a decisive effect in the waste management field in which I have taken an interest for many years. When I was a Member of the other place I was also concerned with parallel committees and I have a great respect for this Committee.

Mrs Dunwoody

  50. My Lord, is it not mildly illogical to say to the Committee that we have a responsibility of the sort you have outlined and then when Dr Aickin gives us evidence with which you disapprove you sack him?
  (Lord Cranbrook) As I say, the criticisms Dr Aickin has made of Entrust, which we find difficult to deal with, are those which say that Entrust and the scheme should be something completely different. What we sought from Dr Aickin as Chairman of EBCO was to bring to us recommendations, points of view, discussions that would assist and strengthen the relationship between EBCO as the representative body of environmental bodies and assist us to make that effective.

  51. As long as those views do not in any way highlight any difficulty?
  (Lord Cranbrook) That would not have been the case, no. We have had endless telephone conversations. If you, Mrs Dunwoody, had been in our office you would have realised that at the beginning of the scheme, when it was totally unknown, intending and actual environmental bodies required an enormous amount of support and that support has come from our staff. An extension of that was to obtain overall views from environmental bodies when they became so numerous in order to assist us to provide the support and backing that is necessary in order to be proper regulators. Do you want to say more?
  (Dr Sills) I do not think I have got anything more to say.

Mr Olner

  52. But in the first instance you thought that EBCO was a tame poodle of Entrust, did you not, you had a large say in who was on EBCO?
  (Lord Cranbrook) No, it was quite the reverse. As we made clear in our evidence there was considerable discussion at our board on ways and means in which we could create an EBCO that was not seen to be a tame poodle. We had to start somewhere and we started with environmental bodies who were known to us and were active and were interested and were prepared to be engaged in this. The Chairman of EBCO was chosen by those environmental bodies. We encouraged EBCO in the management plan that was drawn up to seek membership actually of EBCO, which is its board, through a process of election. We were anxious that election process should bring into EBCO bodies with a very wide range of experience, small and large, regional, national and so on. So every effort that we made was to set up EBCO as as free and independent source of advice to us as possible.

  53. But the facts contradict that entirely. The minute Dr Aickin started in his evidence to criticise Entrust, and Dr Aickin was also the Chairman of EBCO, he got sacked. It just contradicts what you have just said.
  (Lord Cranbrook) Dr Aickin had already resigned as Chairman of EBCO, I think it would be correct to say, by the time he gave evidence.
  (Dr Sills) 31 October is my understanding.
  (Lord Cranbrook) 31 October.

Mr Benn

  54. Just on this point really, a final question. You have made it very clear what you were looking for from the relationship that you intended to have with Dr Aickin, but do you now accept that when he appeared before us as a Select Committee he was fully entitled to answer the questions that we put to him as Members in the way that he did and that it was wrong to have sacked him for having done that?
  (Lord Cranbrook) I do because that is the nature of the contempt. I accept entirely that and I have apologised unreservedly for that.

Chairman

  55. You have obviously given a very full apology to the Committee for the contempt, would you like just to emphasise that you are keen now for the general public and anyone involved in the scheme to come up with constructive criticism?
  (Lord Cranbrook) This has always been our position and I will repeat that it is still our position.

  56. Can I say I am certainly disappointed that you do not seem to want to look at the strategic issue of whether you yourselves are the appropriate body now to do the regulation or whether you should be looking for some other body to take over your function, is that correct?
  (Lord Cranbrook) If it is your opinion, Chairman, I will take that advice seriously.

  Chairman: On that note, can I thank you very much, gentlemen.





 
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