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Lord Stoddart of Swindon: My Lords, I congratulate the noble Lord, Lord Pearson of Rannoch, on his persistence and watchfulness over this Bill. He should be thanked for bringing forward the amendment tonight. I shall not keep the House long, but I find disturbing the fact that the Federation of Small Businesses, which represents 135,000 businesses, was not properly consulted about the Bill and its provisions. As we have seen in previous legislation--for example, that relating to small abattoirs--the failure to consult and to take into account the real problems of small businesses has resulted in many being closed down. I am sure that the FSB is most concerned that that may happen to many of its members as a result of the Bill. I sincerely hope that my noble friend can reassure the House that that will not be so.

I should like the Minister to recount exactly why no response was made to the FSB's representations and to say whether the Government will examine the methods by which they consult on all matters, particularly those related to the European Union, with small businesses and not merely large transnational companies. It is an important point. Small businesses are worried. After all, this country is run on small businesses which are entitled to be treated far better than has been the case over the past 20 years. Their interests are important.

I concur with the kind remarks of the noble Lord, Lord Pearson, about the way in which my noble friend treats this House, the respect he gives it and the proper

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consideration and answers he gives to questions. I hope that he will be able to reassure us and small businesses that the Government have their interests at heart and that the Government will ensure that small businesses are properly consulted about regulations and measures which adversely affect them.

Baroness Blatch: My Lords, I, too, associate myself with the personal comments made about the Minister. I, too, admire the way in which he carries out a busy portfolio, the expert way in which he does so, and the courtesy he shows to this House. I stood in his shoes when the 1990 Environmental Protection Act went through this House. I look back on the Act as a seminal piece of legislation in terms of the way in which it brought about a substantial improvement in the environment. There was further evidence of that only this week in the reference in the Environmental Protection Agency report to continuing improvement over the past decade. That is largely due, I believe, to the 1990 Act. What is it that was not in the Act that needs to be put into legislation in order to conform with the European directive?

The BATNEEC principle, which I have always supported, is necessary as a protection for small and vulnerable businesses. The whole point was to ensure that firms would not go out of business as a result of improvements deemed necessary by the regulators when the choice was a matter of survival--complying with their obligations under the Act or going out of business and jobs being lost. A perfectly reasonable principle (BATNEEC) was included in the Bill in order to give people time to negotiate a way in which they could improve their industrial and working processes which did not entail such a financial burden that jobs and/or the company were lost to the economy. Why are the Government so reluctant to see that principle in its entirety reintroduced in this Bill?

I agree entirely with the noble Lord, Lord Stoddart of Swindon. European directives, often well intentioned, are often considered in isolation one from the other by Parliament. Almost without exception, they are considered without early discussion in their formulation. They are born of commissions in the vaults of the European Community and when we become aware of them it is usually too late to do anything. They have been agreed by endless groups of officials of countries and tacitly agreed to by Ministers and the Commissioners, who will have given birth to them in the first place. By the time European directives come before this House, which does a good job in scrutinising European legislation, it is usually too late for Parliament to act.

Dealing with them in isolation, we as a Parliament fail lamentably to consider the impact of all the burdens placed on business and commerce as a result of different directives and the tendency for us to gold-plate almost everything we do. Therefore, I strongly support my noble friend who wishes to import BATNEEC into the Bill. Can the Minister say why we have probably the most unsatisfactorily drafted Bill before the House? It is a poor and dangerous substitute for that part of the

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1990 Act which is to be removed. Why do we need the Bill? What was it about the 1990 Act which did not allow us to conform with European directives?

Earlier, the noble Baroness, Lady Hamwee, said that sometimes the wording of a European directive is not clear or is broad brush. That gives us an opportunity to interpret it in a way that is satisfactory to the country as a whole but, in terms of this amendment, is satisfactory to the wellbeing and health of our small businesses. I support the noble Lord, Lord Stoddart of Swindon, and I certainly wish to support my noble friend. If at any stage of the Bill he wishes to press the matter to a vote, I shall support him in the Lobby.

Lord Whitty: My Lords, the debate on the amendment has gone wider than the amendment itself. Perhaps I may deal with two points immediately. The noble Baroness, Lady Blatch, asked why we do not stick to the 1990 Act. This Bill incorporates many of the principles of that Act, but we want a coherent system which runs across European national level legislation and local level legislation and regulation. Industry as a whole welcomes that coherent approach. That is why the Front Benches of all parties have welcomed the principle of it. Indeed, I am slightly surprised by the noble Baroness's remarks. I know that she had left her position in the department towards the end of the previous government, but the Secretary of State, Mr. Gummer, promoted the directive within the European Commission. Indeed, he seconded one of his own officials to help draft it; he was a major drafter of the directive. The previous administration completely supported this approach, and most of industry supports the coherence which the directive, and the regulations and directives under the Bill, will bring to industry.

As for small firms, all our consultations involve them. The Federation of Small Businesses was fully consulted. We do not reply by and large to any of the individual consultations, but in three consultations the FSB was fully informed.

The Bill is not about killing off 135,000 small businesses; it will be applied to around 7,000 mainly large businesses. The House is on the wrong track if it attacks the Bill for attacking small businesses. It does quite the opposite. As to the Government's handling of the Bill, we have accepted some of the criticisms--

9 p.m.

Baroness Blatch: My Lords, is the noble Lord saying that there is an exemption for small businesses; that the Bill will impact only on large businesses?

Lord Whitty: No, my Lords. I am saying that it applies to large installations. Some such installations may be owned by small businesses, but most will be owned by large businesses. The extension to agriculture, for example, applies only to very large pig and poultry installations. It does not apply to the broad range of agricultural enterprises.

Lord Pearson of Rannoch: My Lords, I do not know whether this is the moment to disagree with the noble

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Lord the Minister, but, from the amendment that he has tabled this evening, that cannot be so, because it says that the purpose of Section 1 is not only to implement the directive, but to regulate "otherwise than in pursuance" of the directive--and of course in pursuance of the directive--any,

    "activities which are capable of causing any environmental pollution", and,

    "otherwise preventing or controlling emissions capable of causing ... such pollution". It goes on to say that these activities mean,

    "industrial or commercial or other activities ... carried on on particular premises or otherwise". So we go on. In the definition of environmental pollution, as my noble friend the Duke of Montrose has indicated, "harm" can mean causing,

    "offence to the senses of human beings". Technically, that might cover smoking. It certainly covers the bonfire at the bottom of the garden and anything that a small business might produce if--when--they get going, that is how these famous regulators want to behave.

Lord Whitty: My Lords, the incorporation of the IPPC regime will not extend these controls to areas which were not already covered by the 1990 Act. That is the point that I am making. Clearly, those small businesses already covered by the 1990 Act will still be covered by this regime. It is the change brought about by the Bill to which I am referring. Schedule 1 clearly restricts that to plants and installations most of which will be owned by large businesses.

I also have to deal briefly with the suggestion that we tried to conceal the intention of the Bill. The noble Lord, Lord Pearson, may well say that it was a low-key Second Reading. I am a low-key sort of chap, I suppose; but I did introduce the intention in my second sentence, when I said that it,

    "arises from the fact that we must implement the European Council directive".--[Official Report, 7/12/98; col. 778.] I do not think we were concealing anything from the House, and certainly not from the noble Lord.

Perhaps I may concentrate on the points of the amendment. In Committee, I gave the noble Lord, Lord Jenkin, two reasons why this was not appropriate. First, BATNEEC is not identical to the concept of BAT, which the IPPC directive requires us to transpose. I accept that we are required to transpose it. Secondly, the directive safeguards the concept of BAT at the heart of the IPPC regime. The requirement to specify in regulations all the circumstances in which conditions more or less strict than BATNEEC, or BAT, might be applied would rob our pollution control system of the flexibility that is its essence and that we want it to see in the directive and in the Bill. Those who want a fuller explanation had better refer back to my comments in Committee.

However, I have an additional reason, which completely addresses the concern about small firms. The amendment would require the use of BATNEEC in all cases to which the regulations apply for minimising

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emissions to the environment as a whole. In other words, it would require integrated permitting of air, water and land emissions from all the installations to which the new regime applies.

Our proposals, which are in line with current practice, are that integrated permitting, which is quite burdensome, should apply to the larger installations, including all those subject to the IPPC directive, but that over 11,000 smaller installations should remain regulated by local authorities in respect only of their air emissions. I suspect that that was not the intention of the noble Lord's amendment, but it appears to me that that would be the result. Therefore, if the noble Lord is really concerned about small businesses, he will not press the amendment.

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