Select Committee on Scottish Affairs Minutes of Evidence

Examination of witnesses (Questions 600 - 629)



  600. Would there be any long-term effect?
  (Mr Mitchell) It would not be long-term in the sense of, for instance, if there was a toxic material discharged which may then have an effect in the sediment. It would be something which would happen and it would pass and the stream would recover but in that time there may be some threatened species which may not recover because of the population that is there.

  601. So from the point of view of the watercourse it would be better to let it burn from the point of view of health and safety but you would want to control it?
  (Mr Mitchell) I think in general for both health and safety and for the environment, the preference would be to let it burn.

  602. Under the Regulations, most of the malt distillers fall into the so-called "lower-tier", ie lower risk, category. SEPA has been visiting almost all the lower-tier sites, for which obviously charges are made. To what extent might it be argued that this enforcement programme, and the attendant costs, are disproportionate to the risks?
  (Mr Mitchell) I cannot actually answer that question very well. The risks are obviously very high. The fact that we have not had an incident does not mean to say that there is not a risk there. The environment is very sensitive. At the moment all of these distilleries are being visited this year. This is the first year of the Regulations, so they are being visited this year. Because of the situation we find where there has not been a full system in place to look at what the impact may be there may be a further single visit next year to every premises, but thereafter, once the systems are in place and the risks have been identified, I imagine that the frequency of inspections will be much reduced. In terms of the cost, the cost is directly attributable to the inspections.

  603. The start-up costs?
  (Mr Mitchell) Start-up costs.

  Chairman: We now come to the policing of regulations.

Mr Sarwar

  604. Eric has very kindly asked half of my questions about the policing of regulations. There are a number of criticisms from whisky producers about what they considered to be an unduly rigorous approach by SEPA in terms of policing their industry, particularly with regard to effluent disposal, and Eric has raised this point with you. One repeated comment concerned SEPA's interpretation of European Directives, especially the Waste Water Directive, which it was argued was blanket legislation aimed at cleaning up parts of Southern Europe. Extrapolating the requirements of the Directive onto parts of Scotland where there was no major pollution was thought by some to be both costly and counterproductive. The industry was concerned that granting of consents to discharge trade effluent was not always based on scientific evidence of harm to the receiving water. The industry had something of a persecution complex, arguing that it felt itself to be an easy target for SEPA who seemed to adopt a hardline approach. Can I ask you this question: how would you respond to criticisms from the whisky industry that in terms of Scotland you are pursuing the letter rather than the spirit of relevant European directives? Is there any inconsistency of approach both within and across the SEPA regions?
  (Ms Henton) I think I will start that question and then I will hand over to my colleague for some of the detail. I find the terminology there unfortunate. I think to say that we are, in effect, picking out one particular sector for attention over and above others is frankly unfair, it is not true. We seek to implement all the legislation fairly and equably across all sectors. I suppose the measure of the success of that is that everybody complains about being regulated to some degree or another but the fact is that it is our job to protect Scotland's environment and we do that. We try, wherever possible, to exercise a light tough but it is not always possible to do that because of the nature of the particular bits of legislation. I would certainly refute the suggestion that their sector, the whisky sector, has been in any way selected for treatment which is different from any other industrial sector.
  (Mr Mitchell) Perhaps if I could look at the aspect where you mentioned that the consent conditions are not based on scientific information. There is a Directive, the Freshwater Fisheries Directive, which sets a limit on how much the temperature of the river can rise as compared to upstream and downstream from the discharge of, say, cooling water and that is 1.5 degrees. There are a number of stories of small watercourses that breach that limit by quite a bit. Even on some of the larger streams, the larger rivers like the Dulnain and the Fiddach, which are tributaries of the River Spey, that does happen. We have sought to enforce that limit with the distillers, but since they have come to us and said they do not agree that this is necessary there has been a research programme which they themselves are doing looking at the life cycle of the salmon to try to see whether there is any effect. As a result of that we have set conditions, which are basically standstill conditions for the moment, until this research programme is finished. I feel that we are basing our judgments on scientific information and not just by the letter of the law.

  605. I can understand how you feel in responding to this question but unfortunately this was the view of the whisky producers and this was not the view of one here or there, this was almost a unanimous view. It might be the case that there is this lack of consultation and that is why I want to ask this question. What consultation does SEPA have with the drinks' industry in Scotland in order to develop efficient environmentally sound practices which do not incur undue economic or bureaucratic costs?
  (Ms Henton) We have both, if you like, strategic level discussions with the industry and we have very much local level discussions, it operates on both terms. We have at least an annual meeting with the Scotch Whisky Association where they come in and meet the Chairman, myself, and any other appropriate senior staff. That has gone on ever since SEPA was started and it is a very useful forum for exchanging views and information. It allows us to keep them abreast of what is happening and what is coming along on the lines of legislation, it allows us to hear their concerns, and we do listen to them. I think by far the greatest contact that we have with the industry takes place pretty much on a day-to-day basis. My colleague has explained the sorts of things that come out of specific applications. I know also that we meet, for example, the Malt Whisky Association and we have had extensive discussions with them. I think I am right in saying that we have certainly for industry in general laid on seminars explaining things like COMAH. When COMAH was a new piece of legislation we went round and laid on seminars and explained exactly how it is going to work and impact on different industries. I think the amount of contact we have with the industry is high. That goes for most industrial sectors, I would not pick this sector out as being any different from any of the other major industrial sectors in Scotland. Stewart, do you want to elaborate?
  (Mr Mitchell) No, I do not think there is more to say.
  (Dr Curran) We also have a joint study with the industry looking at the toxicity of distillery effluent as well which is being run on Skye and we can certainly provide you with information relating to that, the major toxic element being the dissolved copper of course. Again, just to emphasise the standard that is set against that is based on a range of tests that have been done for the toxicity of that particular element in the natural environment, so there are sound scientific bases for the standards that are being imposed.

  606. Obviously there is a difference of opinion, the industry has one view and you have firmly another view that you have a high level of consultation with the industry. How can we build this trust and mutual understanding between the industry and SEPA and allay their fears that SEPA is heavy and hard on them?
  (Ms Henton) Our door is open at any time for them to come and have further discussion with us. There is no problem with that. They are welcome to come and put those concerns to us in person again if they feel that this has not been addressed adequately. Again, through the individual applications for consent and for authorisation built into all of those is the appeals procedure if they really feel that we have been unfair in any way or the conditions that we are imposing are not the correct ones, they do have an appeal mechanism.


  607. Following up on Mohammed Sarwar's point, no one would dispute that it is your duty to protect Scotland's environment, the suggestion being made to us is what is the end result of this, do we just make Scotland one big national park and close down all industry and lead a very, very green lifestyle, with everyone unemployed, or do we get a proper balance? It was not just the big companies who made the point to us, as Mr Sarwar said, it was an unanimous views. We visited many companies, small independent companies and in one case we were told the cost would be £5,000 a year and this was a significant factor about whether or not they decided to stay in business. There was a general feeling that the whisky industry thought it was being seen as a soft target because it was regarded as making substantial profits and it was an easy one to hit, again and again and again. There also was a very strong feeling of inconsistency of approach by SEPA across the regions. Mr Sarwar did ask that question and I do not think we got an answer.
  (Ms Henton) Sorry, I did not pick up that bit on inconsistency. I presume by that you mean inconsistency in the standards that we set.

Mr Sarwar

  608. Yes, in different regions.
  (Ms Henton) That is something that we are very aware of in SEPA. If I might step back a bit to how SEPA came into being, it was only five years ago, although it seems much longer, the fact, inevitably, of bringing together seven river purification boards, islands, councils and people from local authorities has been a major exercise in trying to make this all into one organisation that is entirely consistent in everything it does. We know that we have not fully managed that, although we have achieved an awful lot over the years. There was a recent report carried out by the Audit Commission in Scotland into SEPA looking at this very issue of consistency and they have picked up and made some very helpful comments about it. We have also acknowledged this and are dealing with it through a major reorganisation that we are undertaking at this very moment, whereby we are going to go away from having the three regions, which we currently have—and the whisky industry is primarily situated in our north and west regions—and we are going to bring all of the operational side of our business together under one directorate. We are convinced that this will finally lay to rest the issue of consistency, because we will be able to better control the way that we deal with specific issues. If I was to come back here in one year's time hopefully we would not hear what complaint from people.

  Chairman: Mr Clark referred to Islay and we were told there that the cost of building a new outlet was something between £400,000 and £500,000 and the added cost of transporting it was something like £5 litre. Again it was getting to the point, is it worth doing or is it better just to give up?

Mrs Adams

  609. The concerns were not just for the industry itself but were we having a greater impact on the environment by putting the affluent in the tankers and taking it all the way across the island. The roads are quite fragile on the island, as well as the rest of the environment. Here we have a situation where each distillery put its affluent into the sea—we are not close to other land—and now they have to put it in tankers and take it from one end of the island to the other end of the island. This is obviously having an impact on the road, it was having an impact on the fuel they used and the cost of the fuel they used. It was having an impact on the industry itself because they did have to build this pipeline at Keills out into the Sound at Jura. They were at the point of saying, "Is this worth it any longer?" You also have to measure that against the fact that this island is very fragile, it has 50 per cent unemployment at the moment. It is very, very dependent on the whisky industry. If the whisky industry goes from that island we might not have to worry about the people that are there at all. What was levelled at us was in this country, and we meant the whole of the United Kingdom by that, we tend to take the very letter of the law sometimes rather than the spirit of the law, whereby our European neighbours tend to be a bit more relaxed about it, and take the spirit of the law rather than the letter of the law and that has never left us on a level playing field. This is a bone of contention with the drinks industry anyway in the United Kingdom, that they are not in a level playing field, and here was something else to add to that. There was a multiplicity of questions from the islanders, and it was not just from one. We spent two days on the island speaking to all sorts of people and we were getting all of these concerns from them.
  (Ms Henton) You raise a number of issues there. I think in terms of the island discharge itself, because none of us around this table are familiar with the island in person, the best thing is I can send you written information, as promised, setting out the thinking behind why the authorisation was given the way it was[5].


  610. That would be helpful. The Treasury gets something like £100m or £150m in taxation revenues from that one island. If that was to be lost that affects everyone in the country.
  (Ms Henton) There are two wider points of principle, the first one was the question the Chairman asked, do we want to turn Scotland into a green theme park and nothing else. That is certainly not our intention, no way did that ever enter into our thinking. What we have to do is to recognise that the use of natural resources, and that includes actually using the capacity of the water, air and land to absorb pollution, can be over-stretched in cases. We have to protect the ability of the land to absorb pollution. There is a principle, it is not a terminology I like, the shorthand version is that "polluter pays", people tend to see that as a principle that means that you just pay hard cash up front for charges. It goes deeper than that, it is the principle that if you are using natural resources in any way that, for example, the cost of building an affluent treatment plant to treat the effluent from that process is part of the payment you make for being able to use that natural resource. The "polluter pays" principle is strongly enshrined both in United Kingdom and European legislation. Obviously, again, we seek to protect Scotland's environment, firstly so that people can use the natural resources for industry, that there is clean water to drink. There is the aesthetic value of having a nice environment. There is also, very importantly, we heard it earlier from Scottish Enterprise, the brand image. A lot of the protection of waters, the pristine waters, the pretty pictures we see of the lochs and rivers it is our job to make sure they stay reasonable and nice and that people have a decent environment in which to live in an urban situation. To move on to the European question, I am not going to comment on how other European countries do or do not implement European legislation, suffice it to say that the Commission itself has taken very considerable interest in this over the last few years and the European Fifth Action Programme on the Environment is now evolving into the Sixth Action Programme and, as far as we can judge from what is proposed, one of the key parts of the Sixth Action Programme is actually to see that the European Directives which have been passed are properly implemented across Europe. The infraction proceedings, as they are called, that are being issued to all European countries, not just the UK, although the UK does receive a proportion of them, are being issued on all Member States who are not implementing environmental legislation adequately. I know there is a perception around but I think things are actually changing and in the next few years you will find that perception really has very little truth behind it.

  Chairman: Again, we will see but I think we are all suspicious. You will be relieved to hear that we have only two questions left.

Mr Tynan

  611. Obviously we have covered a great deal this morning but I must say that as far as your assurance that the environment is protected is something we share and there is no alternative to the protection of the environment. My question is where we have an industry which is environmentally friendly to a great degree and depends on ensuring the purity of their product and regulates itself in that direction then obviously they have concerns as regards over-regulation in that respect. Do you see SEPA as a "regulator" or as a "maker" of environmental policy?
  (Ms Henton) Primarily we are a regulator, that is our prime role, but we also have a very strong role in what I would loosely call "education". We can achieve a tremendous amount through straight forward application of the law but some of the greatest achievements that we have and the greatest improvements have been in areas where we have worked, for example, in partnership with others, where we have worked with local authorities, particularly through, for example, the land use planning system. Very often you can actually achieve more by getting certain things put in a certain place and not another one much more effectively than you ever can by going in and putting very strict conditions on something that is inappropriately sited. Regulation is the base line. Effective, well understood, firm regulation is something that most industries welcome. We know this because they tell us so. It gives them the sort of back-stop against which they can plan to move forward. We do have a bigger role in putting information into the public domain and raising public awareness and in achieving things through working in partnership. Sorry, you asked me another part of the question.

  612. Are you a regulator or an environmental policy maker?
  (Ms Henton) It is this word "policy" that causes the problem because what is policy and where does it come from? Environmental policy is set at a governmental level and really on environmental issues very much set at a European level, so we do not make environmental policy per se, that comes from Europe and from Westminster and from Holyrood. We certainly have a route into trying to influence the way that things evolve in the future because of our experience. We know what goes on on the ground, we know what the issues are, we can foresee what the up and coming problems are. It is part of our job to advise Government, in this case through the Scottish Executive, that we think they should be doing this or that to ensure that Scotland's environment is properly protected in the future.

  613. Can I just develop that. Obviously you are a regulator and that is your prime function, to make sure the regulations are applied, but how much latitude do you have as regards regulation? I will give you an example of that. The whisky industry has large storage areas where whisky is being matured in casks and obviously a lot of money is tied up in that industry and they have to ensure there is not any damage and they constantly examine the barrels and the conditions in which the whisky is maturing. My understanding is that one of the conditions that might have to be applied as far as regulation is concerned is that they would have to put in a sprinkler system that would cover the whole area of the storage of that whisky. They see that as something that will be very, very expensive and will be at enormous cost to their industry. Would you have licence under those circumstances to decide not to apply the regulation or would you have to apply the regulation in that type of instance?
  (Ms Henton) I will ask my colleague to answer the detailed question but I suspect sprinkler systems are— I do not know.
  (Mr Mitchell) If I can surmise where that may come from, that is probably from the COMAH Regulations and the COMAH Regulations do not require sprinkler systems. This would be something which would come from a risk analysis of the site. If there was a particularly sensitive site and a particularly high risk of fire, say, or explosion then presumably that would call for the need to have some sort of preventative measure. In answer to your question it is probably true to say that there is some latitude within SEPA. The COMAH Regulations are not entirely regulated wholly by SEPA, it is what is known as a Joint Competent Authority, which is the Health and Safety Executive with SEPA, so there would have to be some sort of joint agreement on that. There would be the ability to look at the risks and discuss them with the operator concerned.

  614. The reason I am asking is obviously it is within the producer's remit to make sure that they protect the stock that they have and they do all they possibly can under these circumstances. When working in partnership with that kind of producer as regards that they would see that as a step forward because there are some concerns there. You made the point as regards funding of SEPA and I would like to ask you to what degree of monitoring and auditing is SEPA subjected with regard to the fees it charges and the number of inspections it undertakes of companies with a good track record of regulation compliance?
  (Ms Henton) SEPA operates a number of charging schemes. I think there are at least ten different charging schemes that apply to each bit of legislation. If the Committee would like details of the number of charging schemes I can certainly supply that. We are required by Parliament to recover costs on our charging schemes and that is all. Each scheme is different, regrettably, from the other and that does make for quite complex monitoring of them. We are at the point where we are virtually cost recovering on all the schemes but not quite, on some of the radioactive substances schemes we are not quite at full cost recovery yet.

  615. Cost recovery is an aspect of SEPA, they have to break even. Would that mean that on the basis of the costs they would need to recover they would decide the number of visits or would it be the regulations that are required to be applied that would decide that?
  (Ms Henton) The regulations decide that. The only scheme where the costs are directly related to the number of visits that we make is the COMAH scheme.


  616. Who actually monitors and audits these visits and charges? Is it SEPA itself?
  (Ms Henton) We are monitored by our sponsor department.

  617. It would be very easy to visit the same companies repeatedly, would it not?
  (Ms Henton) I see what you mean. We determine how many times we visit on the basis of risk assessment as to how many times we visit different companies.

  618. If a company feels that they have been unfairly treated can they appeal? Is the appeal to you? Are you judge and jury, that is what I am asking?
  (Mr Mitchell) Perhaps I could assist here. In the cost recovery schemes, for instance, for the Control of Pollution Act and the various other air pollution cost recovery schemes, it is not a cost to the company for the number of inspections that we do, the charging scheme is based on their activity. For instance, if we chose to go to a company much more frequently because of some aspect of their operations in one particular year, that company would not face any additional charges. The costs are spread across the whole sector, all industries, all dischargers, so basically it is like a postal system, it does not cost any more to send a letter from—

  619. In relation to the whisky industry what do you actually charge if you visit a distillery, for example?
  (Mr Mitchell) If I can give you some figures, if that would help. An Average distillery effluent treatment plant discharge might cost £4,000, approximately, with a very large distillery up to something like £6,000.

  620. Is that for one visit?
  (Mr Mitchell) That is an annual charge. For a cooling water discharge it would be something like £350, that is dependent on the volume. The costs are based on a charging system.

  621. What does it work out per hour?
  (Ms Henton) It is not based on per hour. All of the charging fees are consulted upon. We are due for a revision of one or two of our schemes coming up in the next year. Those go out to public consultation, the industry will be consulted on them.

  622. We were told by one producer that we visited that one SEPA representative came, looked at his watch and said, "The cost starts now."
  (Ms Henton) That is COMAH. That is only scheme which works in that way. All of the other schemes are as my colleague has described.

  623. There certainly seems to be a cause for dissatisfaction that SEPA could come as often as it likes and the charges suggested were rather high. You did say at the outset that your budget was £40 million, partly grant-in-aid and partly charged in levy. Can you break that down?
  (Ms Henton) It is about 48 per cent grant-in-aid and 52 per cent charges, roughly. I can give you the exact figures for last year and the projections for this year.

  624. If the grant-in-aid remained constant or reduced you would have to make up the shortfall by charges in the levy.
  (Ms Henton) We can only charge for cost recovery. We do not make a profit on what we do. We can only charge cost recovery.

Sir Robert Smith

  625. On the formula based plans people will be unhappy who say, "They never need to visit me, why on earth should I pay so much", but conversely on the COMAH ones people will be saying, "What drive is there for SEPA to be efficient in the way it handles the visit?" That is what worries them because, obviously, if the SEPA official turns up and you are paying their bill then what is the incentive for the SEPA person to be quick about it?
  (Ms Henton) Professionalism and resources. We have a lot of work to get through.

  626. Yes, but you are charging for it. The longer you spend there the more money you get.
  (Mr Mitchell) Basically there has to be some element of professionalism in what we do in terms of the number of inspections and the amount of time that is spent on a particular site. If there are good practices and good systems in place then, obviously, there is an incentive there for the company to attain those and once they have those there will obviously be much less need for SEPA to go there. If they still felt that SEPA were paying them undue attention then presumably they could make a complaint.

  627. There is a dispute procedure if they think they are being unnecessarily inspected.
  (Ms Henton) They could write to the Scottish Executive.


  628. Has anybody ever done so?
  (Ms Henton) People do from time to time.
  (Dr Curran) I just wanted to mention that under the CoPA (Control of Pollution Act) scheme there are attributable costs, not only on site visits to the premises but, of course, SEPA is monitoring the receiving water as well, perhaps upstream and downstream, and regularly throughout the year, and that is cost recovered as well. You should not judge it just by who turns up at the site, there is work going on unobtrusively elsewhere. For marine monitoring in particular, it is quite expensive.

  629. We have exhausted all of our questions, are there any final points any one of you would like to make to the Committee?
  (Ms Henton) I do not think so. We would just like to thank you for inviting us along and we hope we managed to answer all of your questions.

  Chairman: In that case I look forward to receiving the notes from you, it will be helpful to the Committee.

5   See Evidence, p 191. Back

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