Examination of Witnesses (Questions 100-119)
MR RICHARD BROADBENT, THE EARL OF CRANBROOK, MR MICHAEL WHITING AND MR NEIL CARRIGAN
MONDAY 5 NOVEMBER 2001
100. It seems to me you are coming quite close to the margin there. The interesting point you made about how you decide what is a benefit and what is not, needs some further investigation. I do not feel entirely happy that has been properly answered yet.
(Mr Broadbent) I would accept that and it is an area we are looking at.
101. May I move on to Figure 7 which is fascinating and which shows the number of bodies which are not fully compliant? I still think, and I think a lot of my colleagues from the sound of things feel, that the fact that there can be such low compliance scores is a weakness in the way that ENTRUST has worked up until now: We have some bodies here at less than 60 per cent compliant. Can you give me a figure on what is the lowest? Amongst those investigated, what was the lowest compliance score?
(Lord Cranbrook) There have been non-compliant environmental bodies and they have been revoked.
(Mr Whiting) We do not have a figure with us for that.
102. This is merely compliance on provisional information, is it not? Or does it actually cover all sorts of other things as well?
(Mr Whiting) We made 21 tests on a visit and they cover a wide range of things from financial verification to projects and enrolment verification. They can fail any one of 21 points.
103. Paragraph 4.20 says that in 1999-2000 you revoked the enrolment of 26 bodies of which five had failed to comply with the scheme rules altogether. The rest were merely cases where they had not provided all the information. Is that right?
(Mr Whiting) No, the rest would be voluntary ones who wanted to withdraw from the scheme.
104. Sorry, yes, those were the actual revocations; right. All the other cases you were worried about were ones where what was wrong was that they simply had not provided all the information and therefore you did not feel you needed to revoke.
(Mr Whiting) Or that they were not timely with providing information sort of thing.
105. Let me come on to that. You say they were untimely, but if you look at Figure 7, where obviously a lot of non-compliance is going on, how many of those have now complied fully with all the information you felt was not available at the time you looked at them?
(Mr Whiting) We have only revoked ten, so all the rest are now compliant.
106. Fully compliant? Have provided all the information?
(Mr Whiting) There is always an ongoing thing where you have to go back. We visit and then we send a report within the week after the visit and we have two months to sort things out with the people who have not been fully compliant on that first visit.
107. All information you have ever needed has always been available within two months of your visit.
(Mr Whiting) That is the case now. That is our target now.
108. That is your target now or that is the case now?
(Mr Whiting) That is the case now; sorry.
(Mr Carrigan) I have some figures which might help. The NAO correctly identified that late submission of information was a significant problem at the time they were looking at it. In March 2000 only 8.3 per cent of financial returns were received within a target time of three months. For March 2001, that figure is up to 71 per cent. There are many who have not submitted within two months.
109. I go on to paragraph 4.16 where I notice, at that time certainly, the NAO found that out of the 12 least compliant bodies in ten cases ENTRUST had carried out visits and in two cases ENTRUST had not actually even carried out a visit eight months after the non-compliance was first found.
(Mr Carrigan) That is correct. They have been followed up since and we have tightened up the system to make sure we catch them.
110. You are saying that is all now much better. Can we look at the end of paragraph 4.20? There is an interesting sentence there, which presumably is agreed as it is part of the NAO report. "This is because in the vast majority of cases ENTRUST consider that such action would be too extreme." We have heard already that you considered it was merely a technical matter, even where quite a lot of information was missing. What was true of those who were not in the vast majority of cases? That the action would not be too extreme?
(Mr Broadbent) The last sentence of this paragraph rightly reflects a situation which is probably our more responsibility than ENTRUST's, which is that ENTRUST can only work within the powers we give them. At the moment their powers are quite limited. They can encourage, they can set up systems, they can control, but one of the limited sanctions they have is to revoke and revocation is something of a nuclear weapon for an environmental body; that is the end of their existence. They have worked very hard on a voluntary basis to find means between cajoling and revoking to ensure high levels of compliance. One of the recommendations of the NAO report, which I believe is right, is that we should consider giving ENTRUST intermediate powers. We need to look at this rather carefully. My own view would be that it would be inappropriate to give ENTRUST the powers to fine these bodies because ENTRUST is not a statutory body. It might have been possible to give ENTRUST the power to suspend these.
111. I understand all that and that has come out in answer to some of my colleagues. What I am asking is about this particular sentence, ". . . in the vast majority of cases ENTRUST consider that such action would be too extreme". Maybe I ought to be asking Lord Cranbrook. In the other cases, beyond the vast majority, was it considered that such action would not be too extreme?
(Mr Broadbent) I misunderstood. This is whether we have revoked any cases in that year.
(Lord Cranbrook) In that particular year there were revocations.
112. All on a matter of information?
(Mr Carrigan) Mr Rendel's point is whether there were revocations purely on information and no, there were not.
113. Yet such action was not considered to be too extreme. I wonder why not.
(Mr Carrigan) I can only guess that this refers to the speculative position that somebody is a year late with the information and refusing to provide it, for instance.
114. How does it feel to preside over an organisation which a select committee of this house has called a tarnished organisation in need of radical change?
(Lord Cranbrook) That was the view of the Select Committee, but with respect, it is not my view. My view is that the scheme as a whole has been highly successful and as I have pointed out already, in his executive summary, the Comptroller and Auditor General said he is satisfied that ENTRUST fulfils its duties satisfactorily.
115. Is that not one of the problems, that you were criticised by the Select Committee for your lack of transparency and the very quote you have come out with says, "I am satisfied that ENTRUST fulfils its duties satisfactorily"? How that quote begins is, "although". You conveniently left that word out. "Although I am satisfied that ENTRUST fulfils its duties satisfactorily, I have made recommendations on the way ENTRUST can improve" and so on.
(Lord Cranbrook) We followed the recommendations of the Committee. Are you quoting back to me my words?
116. I am quoting back to you the selective quotation you have just quoted to the Committee. I put it to you that that is exactly the problem which was found by the Select Committee previously, that the whole organisation from top to bottom has been untransparent in its dealings.
(Lord Cranbrook) I am perfectly happy with the whole recommendation, "Although" etcetera. He has made recommendations, we have already discussed them and, as we have made clear, several of the recommendations which appear in this report are those which we have been able to implement to the improvement of the scheme in meeting the objections of the report.
117. What have you done to effect the radical change which was called for? My colleague Mr Trickett talked to you about the possibility not of revocation but of suspension. At the end of that you were good enough to take on board some of the things he had said. You said at that point, "I hope I have not spoken out of turn in accepting those". That struck me as really strange. You are supposed to be the Chairman of this organisation. How could it be that you are speaking out of turn in taking on board a suggestion, a very sensible suggestion in all the minds of the Select Committee, that had been made?
(Lord Cranbrook) That was a reasonable courtesy, since I am anticipating that this Committee will be writing a report with its views and I intended to emphasise that the issue of suspension is one which we have been considering for some time and the whole issue of the intermediate sanction between approval and revocation is something which needs to be tackled. I still hope that Mr Trickett will bring this forward in whatever recommendations you make.
118. You do not need this Select Committee to tell you how to do your job, do you? You say you have been considering suspension for some time. Why? Why have you not implemented it?
(Lord Cranbrook) It is my job to ensure that ENTRUST fulfils the requirements of the terms of approval of Customs and Excise and ensures that the Landfill Tax Credit Scheme is properly regulated. This is what we do and we have done generally to the satisfaction of the NAO.
119. Would you now like to answer the question?
(Lord Cranbrook) The answer is that we are bound by the regulations. Until people in your position, Parliament, change the regulations our hands are tied.