Select Committee on Constitution Minutes of Evidence


Memorandum by the Environment Agency

BACKGROUND

Question 1

  What are the legal bases for regulators? What are the nature of their powers and how do they exercise them? How could their powers be revoked? From where do they obtain their financial and administrative support?

  1.1  The Environment Agency is a Non Departmental Public Body established by Parliament in 1996 under the Environment Act 1995. Creation of the Agency involved the merger of in excess of 80 separate undertakings and over 9,000 staff. It was given the task of integrating the broadest range of functions of any environmental body in Europe. It was also given immediate challenges in terms of environmental objectives, the developing agenda of sustainability, and the changing nature of regulation, as well as the long-term challenge to deliver environmental outcomes.

  1.2  The Agency is the leading public body protecting and improving the environment in England and Wales. The Agency's work includes flood risk management, reducing industry's impacts on the environment in the air, on land and water, the regulation of waste management and radioactive substances, cleaning up rivers, coastal waters and contaminated land, managing water resources, dealing with flooding and pollution incidents and protecting and improving wildlife habitats and fisheries. The Agency also has recreation and navigation responsibilities. All its work contributes to the quality of life for people and the natural environment.

  1.3  The Agency's powers and duties stem from primary and secondary legislation. Much of the secondary legislation derives from EC Directives on environment matters. Through this legislation the Agency regulates a broad range of activities to minimise their impact on the environment, including the use of permits/licences. The Agency considers the grant of permits or licences which involves the submission of an application; advertising the application and a period of public consultation; consideration of consultation responses; in some cases a period of further consultation informed by a draft licence and production of a decision in the form of a licence with a reasoned decision document in some cases.

  1.4  The terms and conditions of licences are regularly reviewed. Decisions are taken on a scientific basis and the results of monitoring of the environment, to ensure that Agency requirements are proportional to risk and impact and take due account of the costs and benefits to society. The Agency has powers of entry and to carry out works and compulsory purchase powers. The Agency seeks to undertake its regulatory duties as efficiently and effectively as possible, enabling business to achieve agreed outcomes in a cost-effective way.

  1.5  Revocation of the Agency's powers would be achieved by the necessary changes to primary or secondary legislation. The Agency is funded by a combination of income from fees and charges under the polluter pays principle and through Grant in Aid from Central Government and Welsh Assembly Government. The Agency is also generating additional income through partnership activities with external organisations and providing technical services.

Question 2

  By whom and how is the continuing need for regulators measured? How is their role changed or ended?

  2.1  Ministers can decide to amend or revoke the role of the Environment Agency at any time subject to the will of Parliament.

  2.2  The Agency is subject to five-yearly Financial, Management, Performance and Resources reviews carried out by Government which include extensive consideration of the role and responsibilities of the Agency and whether there is a continuing need for the Agency to exist. Following extensive consultation by the Government of stakeholders in the Agency the second such review was completed in 2002. The Review stated that the Agency had scored some considerable successes, that there were areas where further development could be secured and further improvements made and concluded that "Both Government and every one of 174 consultees support the continuation of the Environment Agency".

  2.3  Importantly, the Agency must be judged by the real environmental outcomes achieved over time on the ground.

  2.4  The Agency's role would be changed by primary or, to some extent, by secondary legislation and ended by primary legislation.

Question 3

  Who are the members of regulatory bodies? How are they appointed? Are they adequately representative? Do Nolan principles operate?

  3.1  The Environment Agency has not more than 15 members appointed to the Board of the Agency. The Secretary of State for the Department of Food, Environment and Rural Affairs appoints most members and the Welsh Assembly Government appoints one member. Members come from a broad range of backgrounds including Industry, Business and Farming, Science and Academia, Local Government and Trade Unions. The Agency is working closely with Defra to actively encourage applications and appointments from ethnic minorities and disadvantaged groups. All appointments are made in accordance with Nolan principles.

  3.2  In accordance with statute, the Agency has eight Regional Environment Advisory Committees and eight Fisheries, Recreation and Conservation Committees for which the Agency itself appoints members in accordance with a membership scheme approved by the Secretary of State. There are also eight Regional Flood Defence Committees with some members appointed by the Agency and some by Local Government. All these appointments are made in accordance the Nolan principles. Taken together, the Agency currently maintains a ratio of around one external person, who has a relationship with the Agency as a consultee or representative of some organisation concerned with one or more functions of the Agency, to every six members of staff.

Question 4

  What are regulators set up to achieve? To what extent do regulators achieve their purposes without adverse consequences? How is their effectiveness assessed?

  4.1  The Environment Act 1995 places extensive duties on the Agency in relation to its functions, for example, a duty to "maintain, improve and develop salmon fisheries, trout fisheries, freshwater fisheries and eel fisheries" and a requirement to exercise "the Agency's pollution control powers for the purpose of preventing or minimising, or remedying or mitigating the effects of, pollution of the environment".

  4.2  The Act also provides a principal aim for the Agency in discharging its functions so as to protect or enhance the environment taken as a whole to make a contribution towards the achieving of sustainable development which Ministers consider it appropriate for the Agency to make. Following public consultation and laying before both Houses of Parliament, the Secretary of State for Defra provides extensive published guidance to the Agency in respect of carrying out its functions in England and Welsh Assembly Government provides equivalent separate guidance to the Agency in respect of Wales.

  4.3  The Agency has two roles in contributing to the achievement of sustainable development. These are first, to protect and enhance the environment in a way which takes account (subject to and accordance with the 1995 Act and any other enactment) of economic and social considerations) and, secondly, to be an independent advisor on environmental matters affecting policy-making, both within Government and more widely.

  4.4  The Agency is also required to take into account any likely costs in achieving the principal aim, and to take account of the likely costs and benefits in exercising its powers. This includes both costs to people and organisations, and costs to the environment.

  4.5  After extensive public consultation, the Agency issued a long term Environmental Vision for England and Wales which identified nine environmental themes followed by further extensive consultation of the public, industry and Government on the detail of what the Agency is going to do over the next five years in its Corporate Strategy (Making it Happen). For each theme the Agency has identified a set of specific targets and measures, which will enable progress to be tracked against the strategic objectives. Specific trends and changes in the environment will be measured and this information put into the public domain.

  4.6  The Agency issues State of the Environment Reports on the general state of pollution of the environment in England and Wales and provides yearly monitoring information to the European Commission pursuant to particular Directives. The Agency makes its State of the Environment reports publicly available on its web-site, along with emissions release information, its Annual Reports and Corporate Scorecard Information produced for the Board of the Agency (www.environment¸agency.gov.uk).

Question 5

  To what extent are regulators both prosecutors and juries on an issue? What rights of appeal are there against decisions made by regulators?

  5.1  The Environment Agency is not a prosecutor and jury on issues. It is the task of the Agency, as required by Parliament, to take decisions taking all the advantages and disadvantages into account including both costs to people and organisations and costs to the environment. It is an expert body which is best placed to weigh all the factors in taking these, often complicated, judgements. As part of this process the Agency consults widely with statutory and non-statutory bodies and the public, taking account of their views as part of its decision making.

  5.2  In the case of such decisions there is usually an express right of appeal by the person regulated to the Secretary of State or, sometimes, a magistrates court. Third Parties and, sometimes, operators, can seek a judicial review of the Agency's decision by the High Court.

  5.3  So far as formal enforcement decisions are concerned, the Agency acts in accordance with its published Enforcement and Prosecution Policy (www.environment¸agency.gov.uk/commondata/105385/enfpolicy.pdf) that contains detailed guidelines and in accordance with the Code for Crown Prosecutors approved by the Attorney General. Enforcement decisions are subject to appeal to the Secretary of State and prosecution decisions are a matter for the criminal courts to determine.

ACCOUNTABILITY

Question 6

  How are regulators held to account by Parliament? What other accountability do regulators have to auditors, Government departments or other public bodies?

  6.1  The Agency is accountable to Ministers and through them to Parliament. It is also accountable to the Welsh Assembly and subject to investigations and reports and inquiries by many other Committees of both Houses and the Assembly. For example, in 1999, the Environment Sub-Committee of the Environment, Transport and Regions Select Committee carried out an inquiry specifically into the Environment Agency. Other recent examples where the work of the Environment Agency, alongside others, has been scrutinised by a Select Committee, include the Public Accounts Committee inquiries into flooding (2002) and waste management (2003). The Environment Agency also voluntarily contributes written, and where requested, oral evidence to a range of inquiries carried out by Select Committees (including for example, the ODPM, EAC, EFRA and the present Constitution Committee). In 2002 the Environment Agency voluntarily submitted written evidence to at least 10 separate Select Committee inquiries.

  6.2  The financial duties of the Agency are determined by Ministers with the approval of the Treasury. An auditor appointed by the Secretary of State audits the accounts for the Agency each year. A copy of the annual accounts and the report by the auditor are laid before each House of Parliament each year. Similarly, a report on its activities is prepared each year by the Agency, submitted to Ministers and laid by them before each House of Parliament and published. A separate report on the Agency's activities in Wales is prepared and submitted to Welsh Assembly Government.

  6.3  The Comptroller and Auditor General is entitled to inspect all accounts and section 6 of the National Audit Act 1983 (examination of economy, efficiency and effectiveness) applies to the Agency. The National Audit Office conducts regular investigations into aspects of the Environment Agency's activities followed by appearances before the Public Accounts Committee. There are equivalent provisions of audit by the Auditor General for Wales and investigation by Welsh Assembly Government in relation to the Agency's activities in Wales.

  6.4  Ministers have extensive powers to give directions to the Environment Agency of a general or specific character with respect to the carrying out of any of its functions. The Agency is subject to investigation by the Parliamentary Commissioner in relation to all its functions other than its flood defence function. In relation to its flood defence functions it is subject to investigation by the Local Commissioner. There are equivalent provisions in relation to the carrying of the Agency's functions in relation to Wales.

Question 7

  How are regulators accountable to those whom they regulate? What is the impact of regulation on the economy? How transparent are their methods of working?

  7.1  The Environment Agency is accountable to those whom it regulates via appeals and action in the Courts. It is subject to accountability to Ministers and through them to Parliament and, in relation to Wales, to Welsh Assembly Government, as explained above.

  7.2  The Agency is required to develop, in accordance with the principles outlined in the Government's guidance to the Agency under section 4 of the 1995 Act, and to agree with the Secretary of State and, in relation to Wales, with Welsh Assembly Government, both a corporate strategy and a corporate plan. The strategy is to describe how the Agency will work to deliver the objectives set out in the guidance and the plan translates the objectives into specific targets.

  7.3  The Agency's management statement further sets out its accountability, and the administrative arrangements that have been put in place between the Government, Welsh Assembly Government and the Agency to support this. The Financial Memorandum sets out the framework of financial controls.

  7.4  Pollution of the environment can cause significant and lasting damage to people and the environment to the detriment of successive generations. Such damage has a short and long-term impact on the economy in terms of remedial costs, if remediation is possible. For example, the costs associated with remediation of contamination left on sites from former uses vary enormously. But costs of £0.5 million to £1 million per site are common and likely to become more so. The total size of this market in the UK has been estimated at £770 million for 2002-03 (from MBD, UK Contaminated Land Treatment Market Development, October 1999) with similar costs for future years. There may also be other costs, for example, where third party abstraction boreholes must be closed and alternative supply arranged.

  7.5  The Environment Agency prides itself on being an open and transparent public body. All of the Agency Board meetings and statutory committees are open to the public. Board agendas and papers are available on the Agency's web-site in advance of meetings. It carries out extensive public consultation on its proposed policies and in relation to individual decisions. The Agency works extensively with trade bodies, non-governmental organisations, the general public and local, regional, Welsh Assembly and Central Government.

  7.6  The Agency makes information on the environment and on its activities widely available. Many documents are available for public inspection on the Agency's public registers and it provides information in accordance with, and, where resources permit, beyond, the requirements of the Environmental Information Regulations.

Question 8

  How are regulators accountable to the public other than through Parliament? What opportunities do the public have to express particular concerns to regulators? How do regulatory bodies relate to their associated consumer watch-dogs?

  8.1  The Environment Agency is accountable to the public through its statutory committees which are all open to the public, extensive public consultation on policies and particular decisions, sometimes involving public meetings and through action in the Courts, and by complaint to Ministers in Central and Welsh Assembly Government and to the Parliamentary and Local Commissioners.

  8.2  There is no associated consumer watch-dog as such for the Environment Agency but the Agency is required to consult its statutory Regional Environment Protection Committees and the Regional Fisheries, Recreational and Conservation Committees about the carrying out of its functions in the relevant regions.

Question 9

  How effective is public consultation by regulators? What opportunities do the public have to contribute? To what extent do the public make use of those opportunities?

  9.1  The public has good opportunities to contribute their representations in relation to consultations on individual applications for licences and, where appropriate, in respect of consultations on Agency policies. Where policy consultations are in respect of technical areas they may be confined to the particular industry concerned.

  9.2  The consultation periods for licensing are set out in the legislation; normally not less than 28 days. The Agency follows Cabinet Office Guidelines on periods of consultation on Agency policy; normally a minimum of 12 weeks.

  9.3  Consultation documents on applications are placed on public registers and where widespread interest is anticipated they are made available in public libraries and on the Agency's web-site. Although the Agency has no specific funding to do so, in cases of particular controversy the Agency additionally consults the public by holding public surgeries and public meetings. Where the public are concerned over particular applications or issues the Agency's experience has been that they engage extensively with the Agency directly through correspondence and attendance at public meetings and via local authorities and MPs, Members of the Welsh Assembly and MEPs.

Question 10

  To what extent do the needs or concerns of the public guide the work of regulators? Are regulators instruments of Government or representatives of the public?

  10.1  The Environment Agency has consulted widely on its Vision for the Environment and Making it Happen, its detailed plans for the next five years towards the Vision. Each part of the Agency has formulated its Local Contribution to apply the plans in Making it Happen in its Area, which will involve local participation. As described above, the Agency consults widely on policies and individual applications. It has a wide-ranging role that is more than regulatory. Through responses to consultations, advice received from its statutory committees and contacts with the public the Agency is attuned to the needs and concerns of the public and it recognises the importance of establishing a good reputation with the public for taking soundly based decisions and explaining them. In this sense the needs and concerns of the public do guide the work of the Agency.

  10.2  As to whether regulators are instruments of Government or representatives of the public, the position is more complex than a simple characterisation. The Agency carries out regulation for sound reasons to protect human health and the environment but in a way that is the most efficient for the economy and business. It is in the interests of good Government, business and the wider public to determine policy and decisions on a rational sound scientific basis, recognising public concerns about impacts on their health and the wider environment.

Question 11

  How independent are regulators of Government? What factors do or might compromise their independence?

  11.1  The Environment Agency was established with an independent Board and needs to be independent of Government in order to gain public confidence. The Government retains formal powers to "call in" some decisions for the Government itself to take and the power to issue directions to the Agency in relation to the carrying out of any of its functions, however, the exercise of these powers is very rare. It also has the power to issue guidance to the Agency about the carrying out of its functions to which the Agency must, of course, pay attention. So far, the guidance from successive Governments and Welsh Assembly Government has been measured and developed in consultation with the Agency.

  11.2  Factors which might compromise the independence of the Agency would be, over-prescriptive legislative requirements or guidance or inappropriate directions or policies from Central or Welsh Assembly Government which prevented the Agency taking a sound holistic view to achieve real environmental outcomes. Other significant factors which might compromise independence would be a significant failure to devote sufficient public funds or to allow the Agency to recover sufficient costs for the Agency to be able to properly carry out its functions. So far, none of these factors have occurred to the extent that the Agency does not consider itself to be properly independent of Central or Welsh Assembly Government.



 
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