CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1619 i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Environment, Food and Rural Affairs Committee

Environment Agency

Tuesday 1 November 2011

RT HON Lord Smith of Finsbury, Dr Paul Leinster CBE and Ed Mitchell

Evidence heard in Public Questions 1 - 65

USE OF THE TRANSCRIPT

1. This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Tuesday 1 November 2011

Members present:

Miss Anne McIntosh (Chair)

Thomas Docherty

Richard Drax

George Eustice

Barry Gardiner

Neil Parish

Dan Rogerson

Amber Rudd

________________

Examination of Witnesses

Witnesses: Rt Hon Lord Smith of Finsbury, Chairman, Dr Paul Leinster, Chief Executive, and Ed Mitchell, Director, Business and Environment, Environment Agency (EA), gave evidence.

Q1 Chair : Good morning, Lord Smith. May I welcome you? It is the first opportunity we have had to actually meet you and take evidence from you, but first of all may I congratulate you on your reappointment? Just for the record, would you like to present your colleagues and introduce them to the Committee? You are all very welcome.

Lord Smith of Finsbury: Thank you very much indeed, Chairman. I have with me Paul Leinster, who is the Chief Executive of the Environment Agency and Ed Mitchell who is the Director of Environment and Business.

Q2 Chair : Thank you. If you look at your overall responsibilities, given how wide the responsibilities of the Environment Agency are, how do you balance your responsibilities in your everyday work?

Lord Smith of Finsbury: Inevitably with difficulty, because there is so much when you are covering pollution, waste, impacts on the environment generally, flood risk, rivers, Water Framework Directive, coastal erosion and everything from nuclear waste to angling licences. You simply have to arrange your time as best you possibly can to cover everything. One of the things I have quite deliberately tried to do throughout my time as Chairman is to get out to all parts of the Agency on a regular basis so that I can see what is happening on the ground as well as knowing what is coming up to the Board in terms of Board papers.

Q3 Chair : In your own words, what would you describe as your main successes as Chairman in the last three years?

Lord Smith of Finsbury: I think I would say three things. First, I was determined from the outset to make sure that the Environment Agency became a lot better at working with local communities, local stakeholders, local authorities and local MPs than perhaps it had been at times in the past. Instead of assuming that always the Agency knew best, I was determined to share information with communities and come to common decisions. That is happening much more now than it was three or four years ago.

Secondly, I was also determined to try and make the Environment Agency a little bit less of a bureaucratic organisation. In any large organisation with a multitude of responsibilities, you are always going to have some element of bureaucracy, but I wanted us to become an agency that liked to say, "Yes, if…" rather than an agency whose default position was to say, "No". That again has been a big culture change across the Agency and there is a sense on the ground now that that has changed.

The third thing is that of course, over the last two years in particular we have been living through very difficult financial times; we have lost a substantial amount of our grantinaid funding. As a result, we have had to manage a programme of major change across the organisation and, together with the Chief Executive and the Board, we have managed that process as well as it is possible to manage it. We have come through it with the Agency both intact and determined now to focus again on its environmental responsibilities.

I would say those are the three big-picture things that I would point to: much more partnership working, a much more "yes, if…" approach in terms of the culture of the organisation, and working through a period of great difficulty and great change.

Q4 Chair : Just in terms of the partnership approach, a lot of the challenge is going to come from the fact that, regarding those to whom you are looking to provide the funding under the partnership, in the case of local authorities the money is not ring-fenced and in the case of local communities the money is going to be very, very tight. How do you see that you will surmount these challenges in the next three years?

Lord Smith of Finsbury: The first thing to say is it is always better to have two heads working together rather than one, even where local authorities are facing the same sort of financial strictures that all other parts of the public sector are at the moment. We are still finding that in quite a number of cases, local authorities are keen to work in partnership with us, whether it is on particular flood schemes or in fulfilling their responsibilities on surface water flooding or, indeed, on a multitude of other environmental issues, be it air quality, river quality or whatever.

Q5 Chair : Does Dr Leinster want to say something?

Dr Pau l Leinster: No.

Q6 Thomas Docherty: First of all, Lord Smith, on the issue of staff morale, you mentioned that you have been through a period of upheaval; I think it was a 12% reduction in head-count in the last period. How would you assess staff morale across the Agency?

Lord Smith of Finsbury: I think it is a bit more than 12% in fact. About two years ago we had 13,500 employees and we now have around 11,500. All but about 100 of that reduction have happened by voluntary and natural process. To say that makes it sound far too easy; it hasn’t been. There has been major restructuring. Every single department within the Agency has undergone fundamental restructuring. Two of the large regions-the Thames and Southern regions-have merged into the South East region; we have taken more funds out of the back office functions than we have out of the frontline functions, so the proportion now that we spend in the regions and areas is a greater proportion than it was before; it has involved in many cases staff having to apply for new roles and in some cases having to apply for their existing roles.

It has been a period of very substantial uncertainty and difficulty across the organisation. We wanted to do it reasonably quickly because if you string out this sort of process it can make it a lot worse for staff. Where we are now at is that most of that restructuring has taken place and there is now a real determination on the part of staff to get back to the day job. I was very worried at the outset about the impact on morale and, recognising that it has been painful and difficult, I am in some ways surprised and enormously heartened by the fact that morale has stayed intact through that process.

Q7 Thomas Docherty: One area that does not seem to have had restructuring is your Board. Your Annual Report and Accounts say that for the 2009–10 year you spent £550,467 paying the Board; this year it has gone up by £1,099 to £551,566. I am slightly surprised that when you have had significant headcount and you have made a big play about the restructuring in back room functions, you are spending the same amount of money on paying a handful of people a significant sum of money. I look down the list here and I see that you picked up £106,000 for a threeday week. Actually, I see the Chief Executive has taken a cut in salary of £10,000; perhaps you could explain why the Chief Executive’s salary has gone down but yours has not, and why you are paying members of the Board on average about £20,000, and some as much as £27,000 or £28,000, for doing maybe five or six days a month. Do you think that is correct?

Lord Smith of Finsbury: For a start, just to correct your figures slightly, my own salary has gone down by 5% this year; it will go down by 5% next year.

Q8 Thomas Docherty: These are your own reports-this is your annual accounts, sir.

Lord Smith of Finsbury: Yes, but you are looking at last year’s figures. My salary for this year has gone down by 5%; my salary next year goes down by a further 5% and the year after that a further 5% again. That was by agreement between myself and the Secretary of State.

In terms of the Board overall, we have already reduced the number of people on the Board by one. Our intention is to reduce the number again by a further one next year. There are two reasons why we have not been able to do that more quickly. One is that one of the very good things we have on the Board is that each Board member takes a responsibility for shepherding a region across the remit of the Agency. I believe that making sure that we have a Board member who gets personally involved with the senior team and the work on the ground for each region is a very important element. That does mean we need to have sufficient Board members in order to cover all the regions.

The other reason we have not been able to reduce the number of people on the Board as quickly as we would have perhaps wanted is the changes that are under way now in Wales, with the move towards a single environment body in Wales joining Environment Agency Wales together with the Forestry Commission Wales and the Countryside Council for Wales. The Welsh Government specifically asked if we could have a Board member from England staying on the Board in order to help shepherd that process, and they have contributed to ensure that that can happen.

Q9 Amber Rudd: Can I just ask what sort of composition you have in terms of men and women on your Board at the moment?

Lord Smith of Finsbury: I would need to count up in my mind. I think we have five female members and eight male members.

Q10 Amber Rudd: You referred to the front line and your efforts to make cuts to the back line in terms of the cuts that were needed. What impact do you think the Comprehensive Spending Review (CSR) settlement has had to the frontline overall?

Lord Smith of Finsbury: It has meant that we have had to stop doing some things. For example, we are no longer involving ourselves in recreation work, beyond angling and some specific boating responsibilities; it has meant we have had to draw back from quite a bit of navigation facilities work; it has meant that we have had to rationalise together with local authorities how we approach things like flytipping and waste control management and enforcement, with us concentrating on the "big, bad and nasty" and local authorities concentrating on the small scale; it has meant that we are now probably relying more on generic planning advice to local authorities rather than getting involved in the detail of every single scheme. So there have been some areas where there has been an impact on things we have done, but we have quite deliberately said those are things that were nice to have, but not absolutely essential to the core business of the Agency. The responsibilities that are essential to the core business of the Agency-like pollution control, monitoring radioactive waste and making sure we can respond to flood emergencies happening at the same time in three different regions-we have very much made a point of keeping firmly in place.

Q11 Amber Rudd: Do you have a process for monitoring the impact of the CSR on service delivery on an ongoing basis?

Lord Smith of Finsbury: Yes, because on a very regular basis we have not just the normal scorecard operation where we look at a whole range of measures to test how we are doing in each of those, but we also seek to go further than that to push delivery beyond just what is on the scorecard targets.

Q12 Amber Rudd: Do you think there are further opportunities for sharing services between yourselves and Natural England? Is that relationship a positive one at the moment?

Lord Smith of Finsbury: Yes, it is and yes, there is scope for further sharing of services, not just with Natural England, but with other bodies in the Defra family. Just yesterday we had a meeting with the English National Park Authorities Association about work that we can share together in national parks, where one person doing it on behalf of two organisations can both make a saving and be better for the impact on the ground. In terms of Natural England, we now have a Board group-drawing three Board members from the Environment Agency, Natural England and the Forestry Commission-meeting together regularly to talk about joint working and to move it forward. There is also a lot of practical work happening on the ground that we could also point to.

Q13 Neil Parish: Good morning. The National Accommodation Delivery Plan recognised that many staff do not spend the majority of their time working from offices. This means that they are using office space more flexibly and the total amount of office space can be reduced. It could be argued that especially those officers that are going out and looking at flood protection might actually be better off out looking at that, rather than in offices. Therefore, the question is: in this next financial year and for the whole CSR period, what are you expecting to save in accommodation?

Lord Smith of Finsbury: We have already saved quite a lot and, just as an example, for our head office functions we used to be based in two large office buildings in the Bristol area. We have now brought all of that together into a single office building in the centre of Bristol with far fewer desks than were in the previous two put together. I don’t know, Paul, if you have the figures off the top of your head on that, but we can certainly supply them if not.

Dr Paul Leinster: On average, we look at providing one desk for 1.3 people. As we have moved to the building in the centre of Bristol, then the ratio is 1 to 1.6. We benchmark that against other people in the Government Estate and the Defra family, and we come out very well in terms of the amount of space per person and the ratio of people per desk. Hotdesking, working from home and people going from home directly to work in the field are all ways we are looking at driving down our accommodation costs and all the associated costs that go with that, such as energy. We are also providing a lead within Defra on accommodation; the person who is leading on our accommodation strategy is also, because of their expertise and skills, providing a lead within Defra.

Lord Smith of Finsbury: Just to give you some overall figures, we maintain about 250 offices and depots; we have disposed of 25 properties since 2009–10 and we will reduce that by a further 14 disposals by the end of the current financial year. Our aim is a target of a 33% saving by the end of the Spending Review period on accommodation and property, which will amount to about £16 million.

Q14 Neil Parish: I see you have 181,000 square metres of office space, which is a fair bit, and you own 94,000 square metres while the rest is leasehold. Are you taking the easy option of raising money by selling or not? What are you actually doing?

Lord Smith of Finsbury: It is part of the general approach to maximising the efficiency of our use of property. What we are also doing is, as leases from external bodies come to an end, where appropriate, we are getting out of those leases and going into other accommodation within the Government estate. In one or two cases it may be that it is not going to be appropriate to do that, given the work that is needed from that location, but where it is possible to do so, we do.

Q15 Neil Parish: But you will still keep a regional base for a lot of your work because otherwise, it is going to be counterproductive; you are going to get people out of the offices to go and see what is happening, and if they then have to go miles to get back to their office, that is not going to work out.

Lord Smith of Finsbury: A regional and an area base; and indeed, in many cases it will be even more local than that, because depots with the guys who are actually clearing the weeds out of the streams and doing the immediate responses and so on have to be as near as possible to what they are doing.

Q16 Barry Gardiner: I would like to talk about better regulation and your role in that. Under the one in, one out process, the Departments are required to measure the net costs to business. Under the classical ways of measuring this, externalities would often be left out of that equation, and I wonder if you have any clear recommendations to Government about how it is possible for them more accurately to measure the net costs of environmental regulations. If one is simply looking at the net costs to business, they may not be the net costs to the country as a whole. I wonder how you are taking that into account, how you are progressing the argument about valuation of natural capital through Government, and what you are doing on that.

Lord Smith of Finsbury: The first thing to say is that the existence of environmental protection regulations in the first place recognises that there does need to be a balance drawn between the economic interests of particular companies and the need for the safeguarding of the environment, both for the sake of populations but also for the sake of that company and others. The second point to remind the Committee of is that a very large amount of the regulation that we have to deliver implementation of comes from Europe rather than from decisions made individually by the UK Government.

Having said all of that, we are always looking at ways in which we can secure the environmental outcomes, but with an easier and less burdensome process on the businesses that we regulate. For example, take the pig and poultry industries: we now have an agreement with those industries, which have their own assurance schemes, whereby the regulation that we would in other circumstances do can be carried out, effectively on our behalf, by the assurance schemes, provided that we have an overall checking ability that enables us to intervene if things go wrong. What we can achieve by that is a lighter touch from us, cheaper regulation for the regulated industry-because of course, the regulatory process is paid for by the industries that are regulated-and also, actually, just as effective regulation for the sake of the environment. It is possible to get a winwin that is better for business but also continues to safeguard the environment.

Dr Paul Leinster: Can I just build on that as well? In our flood and coastal risk management (FCRM) work we have had a relatively well developed economic benefits appraisal. We do benefitcost analysis, which is a fundamental part of all schemes and habitat creation that come forward. For example, over the past three-year period, the benefit-cost ratio of the flood risk management work we did was in fact 8:1, which is good value for public expenditure. We are now looking at how we use those sorts of approaches-of valuing benefits for people and the environment-to our environment and business part of the business as well.

It is still more at the development phase. We are building on the work that was foreshadowed in the National Ecosystem Assessment; we are looking at that term, "ecosystem services", and trying to work out what that means in practice; and factoring that into our work and looking at how we can monetise benefits against our input costs and industry’s input costs. It is nowhere near as well developed as it is within FCRM. We are working closely with Defra colleagues and Defra economists on this, but I think we are beginning to make strides forward on it.

Q17 Barry Gardiner: I want to put both of your answers together in a way, because Lord Smith mentioned that much of the regulation is coming from Europe. What dialogue do you have with your counterparts in Europe on these matters and, specifically, when one is looking at net costs of in-and-out, given that you have a remit to assess the net cost to business, how do you balance that remit with looking at the cost-benefit analysis overall? How are those discussions shaping with your European counterparts?

Lord Smith of Finsbury: The first thing to say is that there is a network of the environmental protection agencies across Europe that Paul, as the Chief Executive, attends every six months or so. Paul, I think you are chairing the better regulation committee of that grouping and perhaps you could say a brief word about that. Then Ed might want to say a little bit more about regulation in general.

Dr Paul Leinster: As Chris says, I head up the better regulation group within the Network of heads of Environmental Protection Agencies (NEPA). Ed in fact heads up the better regulation group amongst the practitioners in Europe and we also are actively involved in the worldwide network of regulators, which is called INECE (International Network for Environmental Compliance and Enforcement) so that we can both learn best practice from others, but also influence. Ecosystems services is one of the areas that we are thinking about addressing within the group that I run. When it comes to those discussions, though, we are the practitioners and the one in, one out basis and regulatory impact assessments are a matter for Government. We do not write the regulations; we apply the regulations and provide advice to Government, but it is Government that is writing regulatory impact assessments.

Ed Mitchell: If I may just add a specific example. In the network called IMPEL (European Union Network for the Implementation and Enforcement of Environmental Law), which is the group of enforcers and practitioners within the European Union, we have developed a checklist, which that whole network has endorsed, that is a way of looking at new legislation coming through from whatever source, whether it is domestic or European, and looking at the ability to make it risk-based, proportionate, focused, etc. Once or sometimes twice a year, the network as a whole applies that questionnaire to a piece of emerging European legislation or a recast of European legislation, in discussion with Defra, Department of Energy and Climate Change (DECC) or whoever it is, so that we can inform right at the start-point of the legislation to make sure it is implementable, risk-based, etc.

Lord Smith of Finsbury: It is also worth emphasising, of course, that if that then is going to issue into any further discussion across Europe about the nature of the directives and the regulation itself, that will be a matter for Defra to deal with.

Q18 Barry Gardiner: That’s a policy matter. The EA was due to introduce director-level assurance in April 2011, but it was not mentioned in your Better Regulation Evidence Plan for 2011–12. Has it been introduced and if so how effective has it been?

Ed Mitchell: The evidence plan, just to be absolutely clear on that, is the evidence that we are commissioning within the organisation and outside to support our better regulation work; it is not the totality of our better regulation work. On the director-level assurance, we are piloting that in this current year amongst 20 operators in a range of sectors to see how it works, to then evaluate it and then to roll it out more widely. That would not appear in the evidence plan; the evidence plan will be, "What’s the state of evidence nationally and internationally on how you change behaviour most effectively to deliver environmental outcomes?", for example. The piloting of assurance schemes is something you would do separately from that, but joined up.

Q19 Barry Gardiner: So how has the EA ensured that its regulatory regime is delivered at minimum cost while of course trying to achieve maximum benefits?

Lord Smith of Finsbury: By constantly looking at how we can further improve the risk-based approach, the focus on where the real harm is likely to be rather than just spreading scattergun across the whole sector, and developing more active ways of sharing responsibility with other regulatory bodies. Just to give you another example, we now sit down with the cement industry as a whole every six months or so to discuss their practice, best practice and our regulatory approach. What we have found is that by taking that industrylevel approach and by having our own dedicated experts within that field, we can achieve a lot more, a much better practice, but at a cheaper cost to the industry than we would otherwise be able to do.

Q20 George Eustice: I wanted to turn to the National Planning Policy Framework (NPPF). In particular, given that the Environment Agency is usually very reluctant to comment on policy matters that, quite rightly, are a matter for Government Departments such as Defra, I wondered why you thought it was appropriate to comment publicly and publicly raise concerns about the emerging NPPF.

Lord Smith of Finsbury: A lot of the public discussion is of course in areas where the Environment Agency is not particularly a relevant player. There are two areas where we have expressed our views in response to the consultation, views which we shared well in advance with colleagues in Defra and in the Department for Communities and Local Government (DCLG). The first of those areas does relate to flood risk and flood risk protection because that is where we have the day-to-day responsibility. There, we are actually very pleased with what we see in the draft National Planning Policy Framework: it keeps PPS25 (Planning Policy Statement 25) firmly in place; it places an emphasis on flood risk; we remain a statutory consultee; and it takes flood risk issues seriously. We have been very happy to see that.

The other area that we expressed a modicum of concern about in our response was a potentially unintended consequence-that where there is a delay in the updating of local plans, there might be a period where there was potential for detriment to the local environment. We felt that that was an important point to raise as a concern. We have done so in our formal response-that is very much public-but we see this as a point to be addressed in the detail, rather than as any sort of fundamental challenge to the framework as a whole.

Q21 George Eustice: What abou t the issue of brownfield sites? One of your concerns was about replacing an explicit definition of brownfield for this term "land of lesser environmental or amenity value". Could you explain that?

Lord Smith of Finsbury: The point we were seeking to make there is that, in terms of creating a better environment for local communities, the need for local authorities to consider the current condition of a piece of land and what the impact of development might be on it is something they obviously would want to take into account. That seems to me to be a fairly self-evident truth to put on the table.

Q22 George Eustice: Your concern specifically was that talking about "land of lesser environmental or amenity value" was not-

Lord Smith of Finsbury: We are always keen to encourage land of lesser environmental amenity value to become land of greater environmental amenity value. That is part of what we are charged with doing as an Agency; it is part of why we were brought into being.

Q23 George Eustice: Exactly, so you do not mind that. This is the point: I think you were saying they should explicitly use the term "brownfield", instead of "land of lesser amenity value"; whereas the Government’s argument is that in practice they probably mean the same, but in different parts of the country.

Lord Smith of Finsbury: How the Government wish to frame this in terms of their legislation is entirely up to them; it is not up to us.

Q24 George Eustice: Just coming back to my first question, you would not expect to be able to meet Ministers privately and feed in concerns at that sort of level? You just see yourself as yet another organisation alongside the Campaign to Protect Rural England (CPRE) and others who just chip in.

Lord Smith of Finsbury: Not at all. We are an environmental delivery body operating on behalf of the Government. In terms of our delivery on the ground and our practical experience on the ground, we will, from time to time, wish to provide advice to Government based on our experience. That is a world away from lobbying and campaigning by groups such as CPRE, who have an agenda entirely of their own and will want to pursue that agenda. We are not in the business of doing that; we are in the business of saying, "Here’s what we implement at the moment; here’s what we’ve learnt from that implementation and this is what in our experience works on the ground".

Q25 George Eustice: If you are basically there to deliver Government policy, I am curious as to why you cannot just tell Ministers directly that you think there are these problems for them to take on board, rather than publicly making a submission to a public committee.

Lord Smith of Finsbury: We were invited by the Government to make a submission and we did, and in the process of drawing it up we shared it with both Defra and our DCLG colleagues. They were entirely relaxed about us putting what we did in terms of our response.

Q26 Chair : Lord Smith, you said there that PPS25 is kept firmly in place. I have read the National Planning Policy Framework; where exactly does it say that in terms?

Lord Smith of Finsbury: Certainly, looking at the Policy Framework overall it does nothing to disrupt the existence of PPS25.

Q27 Chair : Forgive me, but my understanding is that it replaces all the PPSs (Planning Policy Statements) and the Government is lauding the fact that some 500 pages of planning policy have been reduced to five. My concern is that, in terms, it does not say that PPS25 is firmly in place.

Lord Smith of Finsbury: That’s certainly not my understanding.

Dr Paul Leinster: There are a couple of statements in the NPPF that take the high-level policy from PPS25 and incorporate those couple of paragraphs into the NPPF. I would agree that it does not say that PPS25 as a whole will be retained, but I think that the policy intent of PPS25 is captured within the essence of the document. One of the things that we are doing with DCLG, Defra and the Local Government Association is having a look at what technical advice might be necessary, required or desirable to help the interpretation of the NPPF. That is an active discussion that we are having with officials-and the officials are having discussions with Ministers-around what the nature of any of that advice might be if they want to carry on with it.

Q28 Chair : But if the advice is woolly, surely it could be open to legal challenge further down the road? [Interruption.] Is that a yes?

Dr Paul Leinster: Potentially it could, and that is one of the discussions that we are having with colleagues just now. What we would not want to see is that the guidance was such that it then led to a number of challenges as people tried to redefine what had been, in other places, clear statements.

Q29 Chair : I think we might revert to this on a future occasion. Can I just press you on Mr Eustice’s point where you replied, Lord Smith, that you still have broad concerns? In your summary response to the Department’s consultation, you have three specific concerns: that the NPPF should state clearly that delivery of environmental outcomes is an objective of the planning system, with equal status to economic development and to others as well. Your concerns are actually more than just broad concerns; they are very specific and did attract some public attention.

Lord Smith of Finsbury: They are points of encouragement to the Government rather than objection to the Government. We are the Environment Agency; it is our primary responsibility to safeguard and assist the improvement of the environment, and that is very much the point we were trying to make there.

Q30 Chair : Thank you. I am sure we will return to those points. Can I just turn to flood management? I know the Secretary of State has referred to her Department as being the fourth emergency service. Both my previous and present constituencies are prone to flooding; can I just take this opportunity to thank you, the Agency and its staff for the work that they do in times of emergency and also to welcome the increased visibility? It might be a small thing, but the fact that you are now badged up means people do know that you are there, and it is very important. Can I just ask how far you think your Agency and the Department have gone in meeting Pitt’s recommendations?

Lord Smith of Finsbury: We are well on track to meet the recommendations of the Pitt Review. Quite a number of the very specific things that Pitt recommended, like the establishment of the joint flood forecasting centre between ourselves and the Met Office, are now well up and running and have been for a number of years, and indeed it proved its worth in the Cumbrian floods of 2009, even though it had only been up and running a very short time at that point.

Where I think the implementation of the Pitt Review is still a work in progress is in relation to surface water flooding and the development of response from primarily local authorities as the lead body on surface water. We are working very closely with the lead local authorities on all of that, but it is fair to say that our knowledge about the way in which rivers behave is at a much more advanced stage than our knowledge about how surface water and drainage systems behave. That is developing fast; the more work that gets done by both us and local authorities on that, the better. We simply need to keep on with that work very actively. I am pleased to say that all but one local authority submitted their initial plans on their surface water responsibilities ahead of the deadline, so there is a lot of good work going on out there but it is still a work in progress.

Q31 Chair : Are you disappointed that the regulations progressing Sustainable Urban Drainage Systems (SUDS) have been delayed?

Lord Smith of Finsbury: I think it is important that we get them right, and if a little bit of delay means we can get them right, then I would much rather they be right.

Chair : I think I am going to recommend you for the Foreign Office next.

Q32 Thomas Docherty: The Flood and Water Management Act gives the Environment Agency overall responsibility for flood management. Does the most recent Spending Review give you sufficient resources to carry out this task effectively?

Lord Smith of Finsbury: It would always be good to have more resources because the scale of the challenge for flood risk management is so huge. There are 5.5 million properties at risk of flooding across the country; the current Spending Review period will mean that we will be able to improve the level of protection for 145,000 of those properties. That will make a major difference to the people in 145,000 properties, but there is still a lot more to be done. However, having said that, at a time of very tight public finances we are going to do our level best to deliver as much as possible and, if at all possible, better than 145,000 out of the resources that we have.

Q33 Thomas Docherty: I suppose the pun about a drop in the ocean comes to mind. Looking at the National Audit Office (NAO) summa ry on your flood risk management , it says that you have estimated that you require an annual increase of £20 million to sustain the current levels of protection , and t his equated to an average increase of 9%. I understand that you have had a 26% cut in the last year on your capital allowance . Forgive me for not understanding how, if you think you need an average of £20 million a year and you have had a 26% cut, you think you ll be able to meet that challenge.

Lord Smith of Finsbury: The long-term investment strategy that set out what we envisage will be needed over the course of the next 25 to 30 years and beyond, from which you draw your figures, did look at what the likely impacts of climate change were going to be: increasingly erratic weather patterns, a higher risk of flooding developing and the need for us to respond to that as a nation and as communities. What we also very specifically said, though, in that long-term investment strategy was, "These are the long-term investments we believe are needed, but they do not always, in all cases, have to come from the public sector". The new partnership funding approach that the Government are putting in place provides the possibility of encouraging other third parties, be it local authorities or private companies, to come to the table in order to provide additional funding for flood defence work. Even if we had a much less stringent grant-in-aid position over the next few years, it would be necessary to do that and to seek external contributions in order to do the amount of work that is needed. A combination of grant-in-aid plus external contributions from other sources has to be the mixture going forward, almost whatever the levels of grant-in-aid happen to be in any one year.

Q34 Thomas Docherty: You segue nicely into my next series of questions. What do you believe is going to be the likely value of those new types of schemes for 2012–13?

Lord Smith of Finsbury: It is difficult to be precise because it depends on the particular contributions for particular schemes. The full implementation of the partnership funding approach has not actually occurred yet; that will happen at the start of the next financial year. But what we are already seeing is that some areas-where there is a very real need for schemes to take place and where the funding up to now has not been sufficient-are now attracting money in. In York, an additional £1 million has come in from the city council that has enabled the Water End scheme to happen; there is a contribution from the county council to assist better flood defence work in Morpeth; in Cockermouth the same is now happening, and you will recall that Cockermouth bore very much the brunt of the Cumbrian floods in 2009; and in Sandwich, the prospective sale of land by Pfizer is being facilitated by a contribution from them to the sea defences at Sandwich. Therefore, we are already beginning to see the partnership funding approach happening and unlocking schemes that otherwise we would not have been able to go ahead with.

Q35 Thomas Docherty: Apart from that last example you used, they are all effectively still public sector; they are all moving around different chunks of public sector money. I am not sure if the Pfizer one made it into the NAO’s figures or not; I don’t know whether you could clarify-

Dr Paul Leinster: It did, yes.

Thomas Docherty: It did. The NAO reported on Friday that only £3 million of private sector money had been levered in and-forgive me if my figures are not entirely accurate-the total flood management capital spend is some £1 billion or £1.05 billion. Maths is not necessarily my strongest point, but that means that less than 0.1% of the capital spend on flood management is coming from the private sector. The others on the Committee had some scepticism about the ability to have an exponential increase in the next 18 months of private sector capital. Can I press you again: surely you must have some figure in mind as to what you think that private sector value will be by 2013? Secondly, if it is not going to bring in significant sums of money, given that you have had a 26% cut in your budget and that local government is under severe financial constraints, will we be able to find sufficient money for flood prevention in places like Thirsk and Malton and elsewhere?

Q36 Chair : We will come on to that. Before you answer that, Lord Smith, you did not mention Pickering and of course that money is at risk now because the Environment Agency got the scheme wrong and the cost has tripled in value. You also have not come forward with the advice on the reservoir safety guidance, so everything that Thomas has said holds true. The NAO raised a number of issues in connection with what I think we all hope for-that the water companies may add to the mix. The NAO was concerned about the relationship that the Department and the Agency have with water companies. What concerns the Committee regarding the partnership approach is that the NAO has been quite critical about where you are as an Agency in relations with both local authorities and companies; and about your technical knowledge, which, in Pickering, proved woefully defective at the last minute.

Lord Smith of Finsbury: May I come to Pickering in a moment?

Chair : Indeed.

Lord Smith of Finsbury: First, in relation to the private sector versus local authority contributions, it is undoubtedly true that at the moment, in the majority of cases that we can identify as likely partnership funding mechanisms coming into play, most of them are local authorities stepping up to the plate. In terms of the private sector, I would say it is early days yet; there is not a huge amount of private sector development going on anywhere around the country at the moment because of the economic circumstances. That will not last for ever, and looking at how we can make sure we put processes in place so that we can draw in-I suspect it will mainly be from developers-contributions to flood defence work in the future is going to be very important in the way we take partnership funding forward. As I say, it is very early days yet. There is not very much private sector money coming in as yet, but I do not think that means that is going to be the case for ever.

Q37 Thomas Docherty: We are asking you about the period no more than 18 months away, and it sounds as if you have not acknowledged that 0.3% is not a great deal. I think the Committee’s concern is, where are we going to be in 18 months’ time on flood prevention spend? Are you, the Environment Agency, saying-and it’s not a criticism-"We will not know for another five months where we will be for that financial year"?

Lord Smith of Finsbury: First of all, the actual budget for capital work on flood defence for 2012–13 is £317 million.

Thomas Docherty: That is the EA’s budget, isn’t it?

Lord Smith of Finsbury: That is the grant-in-aid capital budget for flood defence in 2012–13. Our expectation is that for that year and the succeeding two years, £43 million will come in from external sources of all kinds.

Q38 Thomas Docherty: Do you mean that includes other public sector bodies?

Lord Smith of Finsbury: That includes other public sector bodies. That is a figure based on an estimate; it will depend hugely on what happens with each individual scheme, but it is our best guess as to what the likely picture over the next three years is going to be. What is difficult for us to say at this stage is what proportion of that might come from the private sector.

Dr Paul Leinster: Just to build on that, there are three water companies that we are actively talking to, including Anglian Water, around Louth and Horncastle, which is intending to come forward with money for a scheme there. On a scheme up in Warrington, United Utilities are looking at a contribution. We are also talking to Yorkshire Water in Hull around what can be done, in particular, around surface water and other drainage issues in Hull. In the past, we have also had money from supermarkets. Hereford was a particular scheme that went ahead a few years ago with a supermarket there making a significant contribution. In other places, especially on the east coast, people have released land for development, which has also then funded flood risk management.

This is very early; we have only had partnership funding in place since this financial year. We had a contributions policy before that, so I think we are into a new world. We have given indicative allocations to our Regional Flood and Coastal Committees; they are meeting just now to look at how much more they can lever in. That information comes back to us probably this month, and then we can see if any more money has been able to be levered in. We will have a much better idea, therefore, in December.

Lord Smith of Finsbury: If I may, can I touch on Pickering?

Q39 Chair : Yes please; there are two elements. There is the reservoir safety guidance that you gave your word you were urgently going to revise; and secondly, the actual technical advice of the Environment Agency was defective.

Lord Smith of Finsbury: On the second point first, the assessment that we had originally made, in good faith, was that the reservoir proposal upstream was going to be fit for purpose and could be constructed for the estimate, at the time, of £1 million. There was then the formal panel engineer assessment of that, and as you will now well know, the panel engineer has to abide by the guidelines that are set down for him, which are very tight and very prescriptive, and very much seeking to eliminate any possible, conceivable 1,000year risk. The panel engineer said, "No, this is not going to be fit for purpose. It has to be to a much higher standard, at a much higher cost". A second panel engineer then came in and confirmed that view from the first panel engineer.

To the extent that our original assessment got it wrong in terms of predicting what the panel engineer might come to as a view, I am afraid that, yes, we have to plead guilty. In the circumstances, though, I think it was an understandable error. What we are now actively involved in is trying to see if there are other ways of trying to alleviate the problem without having to build the very expensive reservoir. We are looking at whether, for example, smaller reservoirs, which individually might fall below the necessary threshold, would make a potential solution, and various other options. We are very actively seeking a solution on that.

In terms of the Reservoirs Act and the guidance that engineers have to abide by under it, it is not up to us to change the Act and the guidance. As I told you we were going to do, we did urge Defra to have an urgent look at this. Defra are now doing that. We are certainly expressing the hope that that can be done as rapidly as possible. They are reviewing the way the Act operates and the guidance that is in place under it.

Q40 Chair : Thank you. I would just make the comment that obviously, the partnership funding may be at risk. How do you imagine that the farmers, farmland and food production might be taken into account under the new funding approach?

Lord Smith of Finsbury: In terms of compensation for potential use of agricultural land as flood plain, I would envisage that exactly the same sort of compensation approach that happened under the old system would be transferred over to the new system.

Q41 Chair : Just on the threat that the Statement of Principles will not be renewed, I think you stated earlier, Lord Smith, the number of houses at risk. How do you respond to the suggestion from the Association of British Insurers that you should set binding targets for reducing the number of properties and businesses at significant flood risk?

Lord Smith of Finsbury: There is a lot of discussion under way within Defra, who have set up a number of working groups working with the insurers, ourselves, local authorities and others to talk about what could be put in place after 2013 and the end of the Statement of Principles. In fact, a point usefully made by the insurers is that those decisions have to be made by 2012 because the renewal of insurance policies will happen from 2012 onwards, rather than all falling in 2013. I am sure that, whatever emerges out of that picture, the insurance companies will want to know that the Environment Agency has a forward programme of the maximum it possibly can, within the available funding, to improve protection for properties at risk.

Q42 Barry Gardiner: Previously, you told this Committee in respect of water management that managing and planning for the future supply and demand balance across all sectors of use could be improved. In the Water White Paper, would it be helpful to you and do you think it would constitute such an improvement if you were given a statutory right to information on water supply from non-public sector bodies such as industry, agriculture and navigation?

Lord Smith of Finsbury: I will ask Paul to answer that specifically and then if I may I would like to make a slightly broader point about the White Paper.

Dr Paul Leinster: Through the abstraction licensing system we have access to that information. We find out from abstractors how much water they are using and also, through the licensing system, we are able to ask them for further information and further details if we should think it necessary.

Q43 Barry Gardiner: So it would add nothing to your power.

Dr Paul Leinster: It is already available.

Q44 Barry Gardiner: In that case, of course, my follow-up question must be: in what ways do you feel it could still be improved, given that you have that element available to you without the statutory part?

Lord Smith of Finsbury: It is obviously up to Defra and the Secretary of State to decide what she puts in her White Paper, but the broad approach towards which we would certainly urge her is to consider the issues of abstraction generally in the White Paper, to take account of the potential impact of climate change on flows in rivers and watercourses in England and Wales and, especially, to look at the historic abstraction rights, over which we have very little ability to influence, especially at times of low flow and drought.

Q45 Barry Gardiner: Do you want to expand on exactly what "influence" means in that context?

Lord Smith of Finsbury: It means where we might need to place restrictions on the amount of abstraction in a particular watercourse because of the danger either to human health or the ecology of the watercourse.

Q46 Barry Gardiner: So you believe that your overall capacity for water management would be improved by having that power to impose restrictions?

Lord Smith of Finsbury: If the Government were able to consider the issue of historic abstraction rights and place them within the more general context of abstraction rights, it would undoubtedly be helpful to us, yes. More importantly, it would be helpful to the environment and certainly I sense that the Government are very much aware of this issue.

Q47 Richard Drax: Lord Smith, good morning. The EU Water Framework Directive has set some very challenging targets, which both you and Defra think cannot be met for cost reasons, quite apart from others. Has the current water strategy, Future Water, failed to give sufficient priority to water quality, given the lack of progress that has been made?

Lord Smith of Finsbury: First, I think actually quite substantial progress has been made over the course of the last 15 years or so. It is fair to say that a lot of that has been down to what one might call point source pollution control-chiefly regulating the activities of the water companies, and the water companies themselves investing in much better treatment plants and much more effective handling of what they put out into watercourses. There has been substantial improvement over that period.

We are now faced with a much tougher challenge. At the moment, 27% of watercourses in England are in good ecological status under the terms of the Water Framework Directive. Our initial objective between now and 2015 is to move that percentage from 27% to 32%. We would hope to exceed that substantially, but that is the figure at the moment in the formal plan. In order to do that, there is still a little bit of point source pollution work that needs to be done, but the major task is a much more difficult one of identifying the myriad sources of pollution, some agricultural, some urban. Tackling the myriad sources of pollution is always going to be much more costly to do, much more resourceintensive to do and it is going to require the co-operation of a large number of people and bodies.

That is why we have set up 10 pilot catchment areas. We have taken the decision together with Defra to concentrate on a catchment-based approach because that is the best way by which you can understand what is preventing a river from achieving good ecological condition and what is needed to bring it up to good ecological condition. We have 12 pilot catchment areas where we are taking a lead-together with partners from the agricultural community, from the water companies, from voluntary bodies, rivers trusts and so on-in order to work in detail on those catchments, identify the sources of pollution, tackle them at source and improve those rivers. There are another 60 or so catchments around the country where other bodies-it may be a rivers trust; it may be a local environmental group; it may be a national body like the National Trust or the Royal Society for the Protection of Birds (RSPB)-are going to take the lead in looking in the same intensive way at a catchment and seeking to improve the ecological status there.

Q48 Richard Drax: I am sure this is all very good news, but the cost you hinted at of doing it is probably disproportionate and, therefore, it will take time to implement. Do you think it is time that under this EU Water Framework Directive you went back to the EU and said, "Look, the targets you have set us are unmanageable" and to lobby for fresh targets that are more pragmatic and reachable?

Lord Smith of Finsbury: That of course will be a matter for Government, not for us.

Richard Drax: But you talk to Government, presumably, because you are an arm of it.

Lord Smith of Finsbury: We do very much. And Government are very aware, first, that the Water Framework Directive is a priority for them because everyone very much wants to have clean rivers, clean water, good ecological status and fish through the whole range of the river, rather than having a dead river.

Q49 Richard Drax: So are you asking the Government to look at the targets?

Lord Smith of Finsbury: If you asked me personally whether I think that 100% good ecological status will ever be achieved in the rivers in England, I would say almost certainly not.

Q50 Richard Drax: So do we get fined, possibly?

Lord Smith of Finsbury: Is it important that we make substantial progress to better than 27%? Yes, it is very important, not just for the dangers of infraction and failing to meet our responsibilities, but much more importantly because our rivers are not good enough and we need to improve their ecological and environmental quality.

Q51 Richard Drax: We accept that, but we could be fined for doing our best? Is that right?

Lord Smith of Finsbury: I think it is very unlikely that we would be fined provided we can demonstrate that we are doing our best.

Dr Paul Leinster: There are two tests within the Directive. One is disproportionate cost and the other is alternative objectives. If you can make the case that carrying out a course of action would be disproportionately costly, then that is taken into account. If you think that, because of particular modifications that have happened or particular circumstances, you are justified in setting alternative objectives, you can also do that; so it is possible to argue a case.

Q52 Richard Drax: So you will be pushing to do that and you will be arguing your case with the Government. What is the EA doing to tackle diffuse pollution, which, as I am sure you know, in English means farmland, highways and urban areas, given the fact you have been criticised by the National Audit Office in this area?

Lord Smith of Finsbury: This is precisely the area where the myriad different sources of pollution have their impact. The approach in relation to agricultural land has to be working very closely with the farming community in order to reduce the levels of pollution that run off agricultural land into watercourses. We are indeed working very closely with the National Farmers’ Union (NFU) and Country Land and Business Association (CLA), both at national level and local level. There are quite a number of different approaches: catchment-sensitive farming, where we work with farmers in a particular catchment to seek better environmental outcomes for the way in which the land is managed; and the Campaign for the Farmed Environment, which was launched jointly by the NFU, CLA, ourselves, Natural England and others. There are a range of initiatives to encourage better practice in terms of agriculture.

A lot of the urban pollution comes from misconnections-where waste sewage is wrongly linked in to storm drainage systems and runs, effectively, straight out into watercourses. For that, what is needed is a painstaking range of detective work to identify where the misconnections are and to approach householders and get the misconnections put right. We are working very closely with the water companies in doing that and, in many cases, also the local authorities. It is a casebycase approach, though, which inevitably means it is going to take time to make a difference.

Q53 Richard Drax: Will your budget cuts affect the number of detectives, as you so call them, who are going out to find these issues, whether they be on farmland or urban areas?

Lord Smith of Finsbury: The staff engaged in this sort of work are precisely the sort of frontline staff whom we have sought to protect very strongly through the Spending Review process.

Q54 Dan Rogerson: Coming on to the issue of waste, one of the aspirations for regulation generally is to take a more risk-based approach. What progress has the Agency made on looking at standards and accreditation in order to have a more modern system of regulation and enforcement for the waste industry?

Lord Smith of Finsbury: The broad answer is we have made some progress, but there is still quite a way to go. Ed, could you fill in the detail?

Ed Mitchell: There are a number of aspects of waste regulation that are tricky in this regard, in that waste is a kind of legal construct and it is often as much about how you create a level playing field so that you are not undermining legitimate business by allowing an unexpected route for the waste to escape from regulatory control. Within that, the bit of work we have done that provides the biggest economic benefit is something called quality protocols, which is a process agreed with Europe.

Dan Rogerson: Like PAS 100 (Publicly Available Specification 100) for compost.

Ed Mitchell: Exactly, so if you produce your compost to a specific standard, it comes out of waste regulation completely and then is sellable as an ordinary product in place of the raw material. The big areas there are composting, aggregates and a couple of other large waste streams. The net contribution to the economy from that is huge because not only are you taking that out of waste controls and all the associated cost; you are creating markets for selling that material as a raw material.

In addition, we have a series of hurdles and groups within the Environment Agency where we test our approach to waste legislation to make sure that we are being as proportionate and light-touch as we possibly can be, whilst protecting the environment and also creating this level playing field. There is a lot of work there that we have done.

Q55 Dan Rogerson: If you look at Ofsted, for example, what they are saying now is they inspect "outstanding" schools far less regularly than others. Obviously there are questions about that, but is that an approach you can see happening in waste-if there is a waste facility that has always had a very good environmental record?

Lord Smith of Finsbury: It is what we already do. If there is a good track record, if they are a responsible company and they are operating well, we do not need to go every week to have a look at them. However, there are quite a large number of operators in this particular economic area where the level of responsibility is not so great, and there we will be very actively monitoring and regulating.

Dr Paul Leinster: We have had a system for a number of years now, called Opra (Operational risk appraisal), where we score sites on an A to E basis: A being good, E being poor. The charges are different, so good operators pay less than poor operators, and also good operators see us less than poor operators.

Q56 Dan Rogerson: Turning to the other side of it, on waste crime, are there any further statutory powers you think the Agency needs in order to combat waste crime?

Lord Smith of Finsbury: On the whole we are fairly satisfied with the powers that we have at the moment. What we have been doing is taking a more intelligence–based approach to tackling waste crime. Instead of just trying to operate on random fishing expeditions, we secure information-and this is particularly where illegal waste exports are involved but also more generally with waste crime. We seek intelligence; we work very closely with the police and with a lot of other agencies. When we have identified a place where there is the potential for crime going on, we will then come in very toughly and quite often in conjunction with the police.

What we find in quite a number of cases is that waste crime is associated with an awful lot of other kinds of crime. At a recent raid in the West Midlands, we found that not only was illegal waste activity going on but illegal immigration, illegal firearms activity and money-laundering. The use of the waste powers was the way in to identify all the other elements of crime that were going on.

Q57 Dan Rogerson: So it is more about joining up with other agencies than needing extra powers; thank you very much. The thing we all get as MPs is concerns from people about fly–tipping. What priority does the Agency give to following up on that and to ensuring that prosecutions take place?

Lord Smith of Finsbury: For most fly–tipping, which can be fairly small scale but a huge nuisance to a local area, the local authority will take the lead in dealing with it. What we will deal with is what we call, "Big, bad and nasty". Big-is it bigger than a tipper-load of material? Bad-is any hazardous waste involved? Nasty-is organised crime involved? Where any one of those factors is at play, it will be our responsibility to take action, and we do so.

Q58 Chair : Would it be for the Government to revisit this difference whereby, if there is fly–tipping on public land its removal is charged to the public purse; whereas if there is fly–tipping on private land-farmland-the farmer pays?

Lord Smith of Finsbury: That would be very much a point for Government. However, I am sure if the Committee were to point out the fundamental unfairness of such a system, it might be a sensible point for the Committee to make to Government.

Chair: That is very kind.

Q59 Neil Parish: What should the next steps be towards establishing an abstraction regime that achieves your aim of water pricing that reflects water stress and the true value of the water? Especially in a drought year, that can be quite a thorny issue.

Lord Smith of Finsbury: At the moment, some 12% of watercourses around the country are unsustainably abstracted, and about 4% are at very high risk as a result of that. That, of course, in a year of drought, could be much exceeded because the conditions then become much more difficult.

On the powers we would want to see, the principal issue for us is the historic abstraction rights-where we aren’t able to make the balanced judgements about ensuring that public water supplies can be secured, agricultural land can at least get some degree of watering, and the level of flow in a river can be ecologically sustainable. Getting that balance right is only possible if we can ensure that abstraction is at a sustainable level across the whole of the watercourse. That would be the principal thing we would be seeking; but Ed, I don’t know if you want to add to that at all.

Ed Mitchell: Yes, a couple of things. First, the Government is currently consulting on a process for bringing some previously exempt abstractions into the regulatory regime and how to deal with those. The key thing for us is that the abstraction licences then become timelimited, because as the environment evolves-due to climate change or increased pressure on water resources because of population movements or population growth-you get an opportunity every 12 years or so to rebaseline abstractions and make sure there is enough water left for the environment, while also providing water for people and industry. It is the combined effort of bringing in those currently exempt abstractions and making sure that all abstractions are timelimited and can be reviewed periodically without massive cost.

Q60 Neil Parish: The Cave Review says £2.5 billion could be made over 30 years with these abstraction licences. Are we trying to do too many things? If the rivers are under stress then ecologically they need to be looked after, but historically some of the water companies extract from the rivers at a pittance. The trouble is you have, for example, South West Water with some of the highest water charges in the country. It’s all very well charging for all this, but surely you just heap it straight on to the consumer when you do that, don’t you?

Lord Smith of Finsbury: What you need to do is to ensure that the water companies are looking at not just next year’s supply and where it is coming from, but future years’ as well, and that they are planning for whatever might be required. Charging is of course one of the elements that is subject to regulation by Ofwat. It is one of the elements amongst a number that a water company has to juggle with to ensure that it can meet its obligations, as well as meeting the environmental requirements that we would have to put in place.

Q61 Neil Parish: Time is short and I will move on to the other questions. Returning to illegal waste exports, you talk quite a lot about the success you’ve had in some cases. Does the Government need to remove any legal impediments to information being shared between you-the Environment Agency-HM Customs, the police and so on? A lot of this waste is often dealt with in cash and there are lots of problems there, so what more can we do to help?

Lord Smith of Finsbury: I am not sure that there is a barrier to sharing information. We work very closely with Customs, with police and with shipping agencies. I am not aware of any difficulties that exist.

Ed Mitchell: As we have started to align our intelligence–led approach with the approach that, for instance, the police use, we have found that the flow of information between the different bodies actually works quite well. I do not think that is a particular barrier to our activity. One of our biggest problems is, as soon as you close one illegal waste site down, another one pops up somewhere else.

Barry Gardiner: Like golf courses!

Ed Mitchell: The thing to remember is that all waste starts out legitimately somewhere, and more ownership of the waste and legitimate producers taking responsibility for it will prevent illegal waste in the first place. That is an area we are continuing to focus on.

Lord Smith of Finsbury: On illegal waste exports, we are increasingly sharing information as well with other authorities in other countries, very often at the receiving end of the waste stream. That is getting increasingly better and we are working with Interpol as well to maximise the information we can get.

Q62 Neil Parish: It is very much a question of how some of these companies actually receive the waste and how they pay for that when they receive it. There is an argument that all of that should be done by banker’s draft rather than by cash, because at least there would be some sort of trail then. Have you any ideas on that?

Ed Mitchell: There is something called a duty of care, so as a producer of waste you retain responsibility for that waste until you hand it over to another person who is competent, licensed and everything else. When that system works well, it stops leakage from the system. Our focus is on making sure that that duty of care system works well, and then it prevents the leakage.

Q63 Neil Parish: My next question is very much on that. What evidence do you have that enforcement of the control of illegal exports of waste electrical and electronic equipment, such that only fully functioning equipment is exported from the UK, is fully effective?

Lord Smith of Finsbury: It is getting more effective. We are currently running 23 investigations into illegal export of waste generally, 15 of which are in relation to waste electronic and electrical equipment. We have recently stopped 10 containers-approximately 200 tonnes-of mixed putrescible waste being exported to India and we are prosecuting the exporter, so there is a lot that is happening. There will always be more that we can do, and there will always be ways in which people will pack illegal material into the back of a container and put some legal material at the front of a container so even an inspection process would not identify the problem. This is one of the reasons why we are now increasingly working on an intelligence–based approach, because that will tell us that there is nasty stuff behind that we need to look further into.

Q64 Barry Gardiner: In the last minutes that we have, can I just focus on the ambient air quality and look at the problems with 40 of the 43 air quality zones that are not yet satisfactory with respect to nitrogen dioxide and the problems with PM10s (particulate matter 10s)? Rather than ask a series of specific questions, can I ask you to tell the Committee how you are addressing these problems in general, specifically in the 40 areas of the 43 zones that are not compliant? What are you doing there? If there have been any emergency responses that you have had to deploy in the past year, what have those been and what lessons have you learnt from them?

Lord Smith of Finsbury: I am going to ask Paul to address the detail on that, but I have a general observation. Our responsibility rests mainly with the monitoring and regulation of large sites, such as large industrial plants and other large potential emitters, and we have to work very closely with local authorities on the more general background levels of air pollution.

Dr Paul Leinster: As Lord Smith says, Air Quality Management Areas are the responsibility of local authorities. We work with those local authorities to see where sites that we regulate are contributing to any breaches. Then we work, often in multi-agency groupings, with those local authorities-that might include the Health Protection Agency and others-to see whether we can come forward with a solution. Most of the NOx and most of the PM10s are originating from transport, not from processes that we regulate. We have identified, and we have specifically done the work to look at, particular sites. There was a really good example in Port Talbot, where there are multiple sources. One is the motorway-as people who know the area well will know-along with the steelworks and other industrial sources. And there used to be the docks, which also gave rise to particulate matter.

Lord Smith of Finsbury: And there is a line of hills that traps everything on top of the people who live there.

Dr Paul Leinster: We have then worked through a multi-agency approach and significantly reduced the level of pollutants there so that that area is no longer breaching the overall objectives. I think it is in that way that we can work with the local authorities to address these things, but in most cases it will be the local authorities who are leading.

Following Buncefield, we set up an emergency response capability; we have a number of monitoring teams positioned around the country. If there is an event, like a fire or another incident, then that monitoring team should be able to get there within two to three hours. Since Buncefield, there have been just under 40 incidents to which we have gone out, and in half of those we carried out monitoring. A number of them are to do with fires.

Q65 Barry Gardiner: And the lessons learnt from those?

Dr Paul Leinster: In all our work we seek to learn lessons. On a couple of occasions it was to do with tyre fires-illegal tyre stores. The problem with tyres is they are very combustible, so one of the risks is that, either through arson or some other means, people will set fire to tyre stores. In that case, what we have then done is to look at other areas where tyres are being stored legally or illegally. For those stored legally, we make sure that proper firebreaks are in place; and for those stored illegally, we address that through enforcement action.

Lord Smith of Finsbury: There was a good recent example of that in Swansea. The Fforestfach fire went on for days, and it was tyre fluff that went up. What we are now doing together with the local authority is identifying any other potential sites of difficulty in the Swansea area, and making sure that appropriate steps are being taken in each case.

Chair : Lord Smith, Dr Leinster and Mr Mitchell, can I thank you very much on behalf of the Committee for staying as long as you did? You can detect that there is a great appetite for information on the work of the Agency, and we thank you for being so generous with your time today.

Prepared 16th December 2011