Examination of Witnesses (Questions 20
WEDNESDAY 28 MARCH 2001
20. That will be recorded in the minutes?
(Lord Cranbrook) Absolutely.
(Dr Sills) Yes.
21. Could you clarify Dr Aickin's position at
(Lord Cranbrook) Dr Aickin is Chief Executive of Entrust
and a board member.
(Dr Sills) No, Dr Aickin.
(Lord Cranbrook) I beg your pardon, I thought you
said Dr Sills. Sorry.
Mr Olner: The look of panic as you got the sack.
22. That was a rapid change in regulation.
(Lord Cranbrook) I hope that will not appear in the
record, I am so sorry. The tongue runs away with itself and I
got confused. Dr Aickin at present, there has been a meeting between
Dr Aickin, Dr Sills and myself which is recorded in the correspondence
to you, Chairman. There is quoted in that correspondence a joint
memorandum which was drafted by Dr Aickin and is supported by
all three of us.
23. Could you tell us what that means in terms
of Dr Aickin's future in relation to Entrust?
(Lord Cranbrook) What that means is that Dr Aickin
has in that memorandum clearly stated that none of the parties,
including himself, see that a position on the Improvement Panel
would be where he would be best placed in order to assist Entrust.
It also tells you that with Dr Aickin Entrust will examine ways
in which he can assist us to improve our regulatory capacity.
We envisage that there are two frameworks within which this may
be possible. One is regulation under the regulations that exist
and the other is looking forward and being in a position to be
prepared to adapt to whatever changes may be made by Government
to those regulations in pursuit of the statement that was made
by the Government itself and possibly in response to your Select
24. You have not identified the precise role
(Lord Cranbrook) We have only had one meeting. There
has not really been time. You will imagine that there are other
things pre-occupying ourselves these last few days.
25. In your letter to this Committee you do
clearly apologise for the contempt. If what you had done had not
been constituted as contempt of Parliament or this Committee,
would you still have done the things you did?
(Lord Cranbrook) I did not hear the end of the question.
26. You have apologised for contempt, if your
actions had not constituted contempt, would you still have wanted
to continue what you started?
(Lord Cranbrook) What I started?
27. Have you changed your position because you
found you were in contempt of Parliament? If you had not been
in contempt of Parliament would you have felt justified in what
(Lord Cranbrook) Circumstances have unrolled as they
have. We were in a position of negotiating with Dr Aickin at one
stage and I cannot really say what would have occurred if it had
not been that we had inadvertently committed this contempt.
28. Can I just follow up the question of openness
and the relationship with the user groups and the environmental
groups. Reading from a reported dated 9 September on the issue
of Delivering Sustainable Waste Management there is a reference
to some minutes at that meeting. I quote: "We acknowledge
that there has been criticism by environmental bodies that EBCO
is too constrained by Entrust. We have endeavoured to represent
the broad spectrum of environmental bodies' views and concerns
to Entrust. This in turn has attracted criticism from Entrust
that we have strayed outside our terms of reference." This
appears to be a factor where Entrust is putting pressure on organisations
to remain within the confines of Entrust. Can you give us a little
bit more information about that?
(Lord Cranbrook) I would be most grateful if you could
explain what this document of 9 September is. If it is the original
draft memorandum which Dr Malcolm Aickin prepared perhaps it is
relevant for me to draw attention to his note on page 97 of your
report if that is the document, but I do not otherwise know what
document of 9 September may be being referred to.
Mr O'Brien: It is the document to this Select
Committee from the Environmental Bodies' Council. The document
has been sent out with our evidence giving reference to the minutes
of meetings that have been held. Are you saying you are not aware
of this document? Can I pass it to you?
29. Let us put it another way. Are you satisfied
that Dr Aickin is the only person who is being critical of the
way in which you have treated EBCO?
(Dr Sills) No, he is not the only critic, there have
been others. However, the EBCO board as a whole is far less critical.
The present Chairman, for instance, recognises fully the constraints
that we are under under our terms of approval from HM Customs
where the requirement to set up a user group is mandated and the
restrictions on that are placed on us and, therefore, we have
to place on our user group, EBCO in this case, to feed back information
and opinions and views about the working of the scheme and also
to comment on the proposed administrative changes. In most cases
the criticism that has been levelled at us by Malcolm Aickin in
particular has been of a far more strategic nature and fundamental
to the structure of the regulations which we have no power to
30. You think it has been reasonable you have
directed EBCO to a substantial extent only to concentrate on the
issues that you have got jurisdiction over?
(Dr Sills) Yes, because we have a responsibility to
use the money that we have been given in our administration fee
only for the things that we are mandated for. Those are the things
that we are giving, as it were, to EBCO to spend their money on.
31. If you were going to continue to exist,
would it not be a good idea to have a proper watch dog that looked
at the whole of the operation of the Landfill Tax?
(Dr Sills) I am sorry, I do not understand.
32. Someone who could actually not only criticise
what you were doing but was able to criticise the more strategic
(Dr Sills) That may be something which Government
might consider, yes.
33. This is the same document I am advised that
you are referring to. The criticism from the environmental bodies
is that they refer to the voluntary sector and this is an area
where perhaps there is a wide diversion because of the voluntary
part of the sector. Then they refer also to the environmental
bodies "... are viewed as part of the mechanism by which
the scheme delivers Government policy". There are two parts
to this, there is the voluntary sector which we have discussed
previously and then there is the responsibility of the environmental
bodies carrying out Government policy. Now there is an overlap
there, it is referred to in these documents. Can you give us a
bit more information on that? This is where the criticism comes
(Lord Cranbrook) Entrust was not responsible for the
preparation of that document and, therefore, it does not represent
the opinions of Entrust. That said, I can understand that what
that phrase might mean would be that the regulations were passed
by Parliament. The objectives that are laid down in the regulations
are the objectives of environmental bodies and environmental bodies
are the mechanism by which those objectives are achieved. I do
not know whether Dr Sills would like to add anything.
(Dr Sills) I think that is right. I would imagine
that is what Dr Aickin meant in his submission, that those are
the objectives written down as approved objects in the regulations
and those were enshrined from Government policy within these regulations.
34. My concern isand I think it might
be part of the concern of EBCOthe policing, the monitoring
of these schemes by Entrust. As you are aware I have drawn your
attention to the fact that monitoring it after the decisions have
been taken in my opinion is not the right way to do this. Could
you give us some comment on the point that I have raised with
you in the past where people are under the impression that resources
from the Landfill Tax, as my colleague referred to, and the donations
by the landfill operations are being used in a way that can be
critical of the work of Entrust in monitoring that kind of activity?
My concern is that you play a part after the decision has been
taken, instead of co-operating with the environmental bodies,
during the discussion of those schemes. You advised me that is
not your job, you have told us that is not your job. Can you give
us some indication how you can prevent that kind of overlap that
is referred to in this document that I have witnessed personally?
(Dr Sills) I think you are referring to the strategy
that we use to review and scrutinise the environmental bodies'
(Dr Sills) The regulations only stipulate two things.
That we enrol bodies subject to certain structural criteria that
are given in the regulations and that we scrutinise their expenditure
implicitly after the fact to find out if it is compliant or not
and then we would report to Customs and Excise. What we have done
in actual fact is to take a rather more holistic view of the audit
process, if you like, and we have instituted a three stage process.
We look at the proposed projects before they occur so that we
can advise environmental bodies whether we believe they are compliant
or not. We look during work in progress on these projects by inspection
and audit of what is going on to make sure that it is still compliant.
Following that, after the event, we both look at their internal
records of what they spend the money on and also we look at their
independently audited accounts of their annual expenditure. Now
that has been criticised, as you may know, by the NAO who believe
that we should be focusing only on the latter, ie. after the event
auditing. We do not believe that is sufficient to ensure the maximum
possible compliance, nor do we believe that it is of the maximum
possible help and assistance to environmental bodies in them getting
36. I do not think anyone could quibble, Lord
Cranbrook or Dr Sills, with the fact your apologies are complete
and unreserved for the contempt but you did say, Lord Cranbrook,
to Mrs Ellman that you could not say that if it had not been contempt
whether you in the end would have acted in the same way. Does
that not come to the heart of the problem with how Entrust is
established and the scheme over which you are presiding? Is not
the issue that you are neither fish nor fowl? You are a private
company and had you been able to act in the way a normal private
company does I would have expected Dr Aickin, given the way he
has performed through this, to have been on the receiving end
of the same treatment that George Graham received at the hands
of Tottenham Hotspur, but you are not in a position to do that.
Is there not a fundamental problem about a private company having
to administer this scheme?
(Lord Cranbrook) From the initiation of our company
one of the very first board decisions was recognising that we
were a private company we would nonetheless attempt to behave
in every possible way as if we were in the public sector. That
has led to our policy of openness. In the case of Dr Malcolm Aickin
we have someone who is highly respected in the environmental world.
He is Chairman of the Environment Council and he is also Chairman
of an environmental body which handles the RMC Environment Fund.
He has an extremely thoughtful mind and he has, in frequent exchanges
with us, shown that he is a broad strategic thinker and there
are many ways in which he can see improvements, not only to the
way in which Entrust manages its affairs but also in the overall
design of the scheme which is completely outwith our control and
outwith our management capabilities. I have known Dr Malcolm Aickin
personally for a long time and I have a great personal respect
and many common memories of things which have happened together.
I have little doubt that his expertise would have been something
that we would have liked to have tapped if it had been directed
towards assisting us, which was our aim in inviting him to join
the Improvement Panel.
37. Yet you find yourself in the position of
saying "We are most disappointed that you have chosen to
publicise your views, damaging Entrust's reputation and inflicting
severe injury on the Credit Scheme and all of those participating
in it". Had it not been for the contempt, of course, I presume
you would still be, Dr Sills, standing by those remarks?
(Dr Sills) Yes. I think the problem that we have mutually,
Malcolm Aickin and ourselves, is that we actually have a highly
successful scheme. It has outgrown its originators' wildest visions.
We are disappointed in Entrust that Malcolm's criticisms have
not been more of the character of "this is a great scheme,
let us make it better" rather than "this is a fundamentally
flawed scheme" which is what I deem his leaked evidence says.
38. Given this is one of the products of a successful
scheme which you say has outgrown the ability of a private company
or the appropriateness of a private company to manage it, and
given the scale of operationand you have seen the recommendations
of this Select Committee about the future necessity to use Landfill
Tax and Incineration Tax directly to support, for example, the
market in recyclables, which is obviously putting the whole scale
of the scheme on a totally different basisdo you think
the time has come to review Entrust's position? In a sense, what
we are discussing this morning could be an unhappy example of
the difficulties you now find yourself in arguing that you are
a victim of the success of the scheme.
(Lord Cranbrook) I think I need to answer this one
because you have asked a strategic question. We have no comment
on the appropriateness of a private company or otherwise but I
would defend our capacity to regulate. We have in place a strong
team. We have in place a system for auditing and verifying expenditure,
as Dr Sills has explained very carefully, and also auditing and
verifying the objects of that expenditure and confirming that
these are compliant with the legislation. I am convinced, and
I hope that the Committee is equally convinced, that the staff
we have in place have the capabilities to fulfil entirely the
requirements of the regulator and all the regulations. My confidence
in saying this is because of the very close relationship that
we have with Customs who sit there as observers at every level
of the organisation, as has been made clear already.
39. Would you accept the point of view that
in the end the scheme you are presiding over is in the end public
expenditure by other means?
(Lord Cranbrook) These are questions which I do not
believe as Chairman of Entrust I need to ask myself. We are required
to operate. We have terms of approval of Customs and we operate
as regulators within those terms of approval.