Examination of Witness (Questions 180-183)|
TUESDAY 9 JULY 2002
180. I was going to say that if the bulk of
the portfolio is in long term gilt with about a 2.5 per cent return,
it makes sense to discount at 2.5 per cent in relation to the
liabilities that they are intended to meet.
(Mr MacKerron) If you go to a proper funding system
in which you are talking about real money then you have to think
about what is the likely real rate of return, as opposed to the
Treasury system which is much more a matter of public sector appraisal
and not really relating directly to cash.
181. Could we just talk for a minute about regulation?
There are a whole range of different regulatory bodies involved
in the industry and everybody we have spoken to has emphasised
the need for more joined-up regulation and for the relationship
between the LMA and the regulatory bodies to be robust and to
work, and the White Paper says that as well. What I am not clear
on is how anyone is saying this should be achieved. Have you got
(Mr MacKerron) It is a very difficult question in
the sense that in some ways it is more difficult than that because,
on the one hand, you want the regulators to be involved and co-operative;
on the other hand you want proper tension so the regulators can
be seen to be independently regulating and giving a certain kind
of public assurance that things are being done properly. I do
not have any formula; I do think it is important that HSE and
NII and the Environment Agency work together as closely as possible
so they do not give conflicting or confusing or over-bureaucratic
messages to the industry. It is a process that I think has started
and should be encouraged but I am not a specialist in the field
and I do not have some recipe for specific and concrete improvement.
182. Can I take you on to Nirex and ask whether
you believe it should be made independent and, if so, what kind
of arrangement do you want to see developed from that?
(Mr MacKerron) I think there is a good case for Nirex
to be made independentand as I understand it, its main
shareholders have already suggested that would be a good idea
at meetings of the Nirex boardlargely because I think,
in the process of creating public trust and greater openness and
transparency, Nirex will be seen to be acting in the public interest
rather than in the interest more narrowly of waste producers if
it is freed of direct ownership ties from those waste producers.
The question of Nirex's long term future is not yet established.
There is potential mismatch in decision-making between the relatively
lengthy DEFRA timetable for waste and the relatively rapid creation
of the LMA, and it is important that one should not get too far
ahead of the other. But on the immediate question you ask, yes,
there is a good case for Nirex to be independent.
183. Professor, if there is anything you would
like to add or supplement we would be grateful to receive it but
we have a deadline of next Wednesday.
(Mr MacKerron) I would be happy to do that.