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Viscount Ullswater: Clause 37 requires each new agency, in considering whether or not to exercise any of its powers, or how to do so, to take into account the costs which are likely to be incurred and the benefits which are likely to accrue as a result. This duty is subject to two exceptions. First, it does not apply to the extent that it would be unreasonable for a new agency to take into account costs and benefits because of the nature or purpose of the power or the circumstances of the particular case. Secondly, the duty to take into account costs and benefits does not affect the non-discretionary obligations of the new agencies. That is set out in the second half of Clause 37.
This clause has attracted considerable comment both at Second Reading and in Committee. There has been erudite discussion of the strengths and weaknesses of cost-benefit analysis, its ability to deal with costs and benefits which cannot adequately be quantified, the circumstances under which it might be unwieldy or inappropriate, the information that might be required for it and, as my noble friend lord Marlesford said, the risks of legal challenge to which it might lead.
The noble Baroness, Lady Hamwee, asked me where I felt that BATNEEC and BPEO fell into the duty. When I was explaining the Government's response to the last group of amendments, I indicated that we have experience with the assessment of BATNEEC under the IPC. I did not believe that additional information gathering powers were required, as put forward in Amendment No. 213 by my noble friend Lord Mills. BATNEEC is a mandatory requirement. It must be applied under Section 7 of the Environmental Protection Act 1990. We therefore take the view that its application is an obligation for the purposes of Clause 37(2) of the Bill. Therefore there is no discretion for the agency in that instance.
My noble friend Lord Peyton wanted me to expand a little on what I intended to reply to the noble Baroness, Lady Hamwee. He asked me whether the costs were just to be financial costs. In my reply to the last group of amendments I said that I believed there would be a possibility that "costs incurred" could be construed more narrowly as actual financial costs. We are examining the matter and we may need to introduce an amendment to remove that narrow definition.
My noble friend also asked me who is to judge what the costs and the benefits are and to whom they should apply. As the clause sets out, that is for the judgment of the agency. That is what the agency is required to do; namely, to make a judgment as to the costs and benefits. But of course it will have guidance from Ministers. The noble Baroness, Lady Hilton, asked me about guidance. The guidance under Clause 4I refer to the guidance under paragraphs 5.3 and 5.4; of course these are only draft guidance notesstates that,
I must stress again that the Government are not seeking to impose upon the agency a requirement to undertake a full cost-benefit analysis before it acts in any case or to follow slavishly the results of such analysis. We recognise that costs and benefits must be considered broadly and in the round. I pray in aid the remarks of the noble Lord, Lord Chorley, who I believe stands with me on that. We recognise that cost-benefit analysis is a tool whose value will vary from case to case and that the agency must be free to exercise its judgment. We recognise that the consideration of costs and benefits must be capable of being exercised on the basis of available information and that there will be circumstances in which it would be unreasonable or would conflict with the agency's environmental obligations. That is why the clause is drafted as it is to reflect the core proposition that the agencies should have some regard to the likely costs and benefits of their actions but this must not interfere with their ability to ensure effective environmental protection, management or enhancement.
I believe that to reject this clausewhich is the proposition before the Committeewould send a very damaging message to all those who are looking to us to reconcile the needs of the environment with the needs of economic development as part of a balanced and sustainable approach to environmental protection, and I therefore commend the clause to the Committee.
Lord Peyton of Yeovil: I have two questions, which I shall ask very shortly. But first I have one comment: official guidance on industrial costs is not always very convincing or very valuable, and I personally would put a very large question mark over the usefulness of such guidance.
The second point concerns the question I asked him, which I do not think he has dealt with and which is: what exactly is the effect of the second half of the clause on the first half? It seems to me to go some way towards apologising for the first half.
Lord Renton: Before my noble friend replies to that, perhaps I may take the liberty of reminding him that he did give an undertaking to reconsider the question of how the guidance in Clause 4 should be expressed constitutionally.
The Earl of Onslow: There is one other factor which has arisen out of my noble friend's reply. I personally like the idea of some such clause as this in the Bill. It seems to me that it is essential, because it is a guidance measure as much as anything else.
What happens if the agency, in weighing and balancing, makes a grave error and puts 4lb in one set of scales and 3oz in the other? Is there any method of appeal to say that, "You, O agency, have weighed it very incompetently", to use the words of the Book of Daniel, rather than those of the environmental protection agency establishment Bill?
Baroness Hamwee: Before the Minister sits down, I wonder whether he can tell the Committee when he thinks he will be able to come up with any alternative, if that is what his legal advice in fact suggests, because clearly the timing of any alteration in the approach that this clause takes is a matter of concern to many Members of the Committee. I hope that he will be able to pursue as a matter of some urgency the question of legal advice as to whether "costs" and "benefits" are the best terms?
I wonder if he could also include in consideration the point on BATNEEC, to come back to that. I understand the comments he has made, BATNEEC being an obligation for the purposes of subsection (2) BATNEEC is about avoiding excessive cost. That suggests to me that excessive cost may be reasonable within Clause 37(1).
Lord Marlesford: Before my noble friend finally responds to the remarks of my noble friend Lord Peyton about ministerial guidance and all that, the problem surely is that costs are relatively easily measurable and expressible in monetary terms. Benefits are identifiable just as costs are identifiable, but are much harder to measure, and the value imputed in an equivalence of costs to benefits will be a function ofif you like, in a democratic societyopinion at the time. This is why a government is much more easily able to give guidance as to the resolution of such an issue than if the matter is left to an agency which is made up of people who are not in any sense elected and who, although responsible ultimately to Parliament, have no particular skill at interpreting the public mood. We all know that the public mood towards environmental problems has changed hugely in all our lifetimes. To reflect that, I should have much preferred to see the Government
Viscount Ullswater: I am not sure that I can say a great deal more at this stage, but I should like to take up the point which my noble friend Lord Peyton made because I believe that this is where the distinction can be drawn, and I think it also encompasses the point made by my noble friend Lord Marlesford.
The difference between the two sections of the clause, as I understand it, is that in Clause 37 subsection (2) refers to the "duties", and therefore it does not give the agency any measure of discretion. That is the requirement of Clause 37(2) and that is where it differs from Clause 37(1). I believe that we need the clause so as to distinguish between these two matters, which would not necessarily be undertaken or, let me say, it seems as if we are going further by putting this on the face of the Bill than we would necessarily do by taking the advice of my noble friend Lord Marlesford and merely putting it into guidance. I believe that we are making it quite clear that the new agency has duties. That is taken under Clause 37(2).
My noble friend Lord Renton also asked me about the status of the guidance. On the first Committee day, I said I would consider whether the guidance should be published and should be subject to consultation, and I am obviously in the process of considering that at the moment. So the status of the guidance is as it is at the moment on the face of the Bill, but I am considering whether those two matters should be taken into account.
I trust that I have explained in what I have said to the noble Lord, Lord Peyton, the role which I believe BATNEEC plays. This is a tried and tested method, and it falls under the obligations of the agency to use it in certain circumstances. I do not believe that that has been questioned during the course of the debateexcept perhaps in parenthesis by the noble Baroness, Lady Hamwee. I do not believe that the technique has been questioned, and I therefore consider that I cannot go any further on that particular matter. I commend the clause to the Committee.