Pollution Prevention and Control Bill [H.L.]

HL Deb 15 February 1999 vol 597 cc497-530

5.15 p.m.

House again in Committee on Clause 1.

[Amendments Nos. 2 to 6 not moved.]

Lord Dixon-Smith moved Amendment No. 7:

Page 1. line 25, at end insert— (" ( ) Regulations under this section shall require individuals or bodies responsible for carrying out such activities as are referred to in the regulations to employ the best available techniques not entailing excessive cost to be used for minimising the pollution which may be caused to the environment as a whole by those activities.").

The noble Lord said: Amendment No. 7 seeks to reintroduce to the Bill the concept of the need to prevent imposing excessive costs on industry when it complies with the idea of best available techniques. That concept, under the hideous acronym of BATNEEC, was written into the Bill and because best available techniques should have a profound impact on the economic prospects of individual enterprises we felt that it was worth introducing some concept of economic validity into the Bill as in the previous one. I beg to move.

Lord Jenkin of Roding

This is an important amendment. It stands in its own right. Whereas the previous amendment dealt with the scope of the legislation, this amendment seeks to deal with the standards that Parliament should establish as guidance to the draftsman of the regulations and the regulators enforcing them.

Of course there are unpleasant acronyms. The noble Lord, Lord Whitty, mentioned BPEO—I do not believe that was ever shortened into a word—which means "best practicable environmental option". Two others that one comes across in this field are ALARA—as low as reasonably achievable—and ALATA—as low as technically achievable. But in recent years what has emerged in this country as the preferred standard is "best available techniques not entailing excessive cost".

My noble friend Lord Whitty explained to the chairman of the Delegated Powers and Deregulation Committee, my noble friend Lord Alexander, when he wrote on 21st January 1999: The concept of 'best available techniques' with the associated balancing of costs and benefits, will, as the Committee suggests, be at the heart of the new regime". He then goes on to address the question which the Select Committee raised as to whether there ought to be exceptions to that in the sense that costs should not enter into the issue; that the effect of pollution is so serious that it ought to be dealt with using the best available techniques, period. That is an issue which we debated in this Chamber in earlier legislation and it has always been recognised that there could be extreme cases where, in the last resort, the pollution has to he abated at almost whatever the cost.

The directive on which all this is based is quite interesting. There is a definition of the best available techniques in paragraph 11 of Article 2: Best available techniques shall mean the most effective and advanced stage in the development of activities and their methods of operation which indicate the practical superability of particular techniques for providing in principle the basis for emission limit values". It then goes on to talk about techniques and "available", about "best" and finishes: In determining the best available techniques special consideration should be given to the items listed in Annex 4". What is interesting is that it is only when one gets to Annex 4 that the directive contains any reference to costs and it does so in an oblique and parenthetical way. It states, Consideration is to be taken into account generally or in specific cases when determining best available techniques as defined in Article 2 (11), bearing in mind the likely costs and benefits of a measure and the principles of precaution and prevention". It goes on to list a number of specific "best available techniques".

I detect the hand of British Ministers and officials during the negotiations of that directive when I see the insertion of the requirement that costs and benefits should be taken into account. Hitherto that has not been the practice of the European Commission. I also detect the hand of the Commission in making sure that if that provision has to go in, it will go in obliquely and parenthetically in the last annex.

To my mind, that may or may not be effective. It is certainly much less clear and much less transparent than the concept of "best available techniques". In seeking to explain that, the Government have referred to what is now in the Bill and in the directive as "a similar concept"—that is referred to in paragraph 5 of the Explanatory Notes—or in a letter to my noble friend Lord Alexander of Weedon as not dissimilar to "best available techniques". That must mean much the same.

The Minister, in his reply to the Select Committee, was seeking to justify the use of more restrictive conditions than the normal application of the BAT or BATNEEC principle would provide. As I have said, that may be appropriate in certain circumstances. To my mind, the central problem at which the amendment is aimed primarily, is that the Bill does not spell out the required standards either as BATNEEC, or using the words of the directive, BAT and Annex 4.

As my noble friend has said from the Front Bench, BATNEEC is a concept familiar to most of those affected by this legislation. It has been embodied in UK legislation in the past. It is familiar to those who are charged with enforcing it and to those who have to make regulations under earlier legislation. The directive is not a community regulation that is directly applicable. I certainly support the Government in not trying to bring this in under the Act of 1972. It is left to member countries to decide how to implement the requirements in the directive.

In supporting the amendment I firmly express the view that to incorporate BATNEEC into our regulations will be to implement the directive. Therefore, I have two questions to put to the Minister. Do the Government consider that the combined effect of Article 2 paragraph 11, and the words that I read from Annex 4, are more or less demanding than BATNEEC? If the answer is "not dissimilar; they are much the same; they are similar to", my second question is this. If Parliament were to decide to prefer the words which have been used in legislation in this country for more than a decade and with which, as I said, everyone is familiar, do the Government believe that we would face a challenge in the European Court for not implementing the directive properly? If the answer to that is no, why can we not have the words that we are used to, rather than having to incorporate what, in effect, are different words, with the same meaning, from the European directive? BATNEEC is what everyone understands and it should be in the Bill. I support the amendment.

Baroness Hamwee

My Lords, perhaps I may use the amendment to ask a question on the same topic, but arising from the draft paper on implementation which is currently out for consultation. Draft Regulation 3 defines "best available techniques", which are said to be those which have been developed on a scale allowing implementation in the relevant sector, under economically and technically viable conditions". As I understand the word "viable", it means capable of supporting life independently. I am worried that the term "economically and technically viable" may find its way into the draft regulation because it suggests to me that the environmental standard may be lower than many would want to see. Perhaps I am at a different point in the spectrum from noble Lords who have already spoken. So often it can be argued that it is not economic to carry out a particular process, to apply a particular type of prevention, and so on. I would be grateful if the Minister could help the Committee at this point on the thrust of the definition within the draft regulations. Whatever the outcome of the debate on what is contained in the Bill, there will be regulations and they will not be amendable, so I wish to ask the question now.

Lord Whitty

My Lords, I regret that in relation to this amendment we do not follow the recommendations of the Select Committee on Delegated Powers and Deregulation for a specific reason that has not been mentioned by any speakers directly so far.

In response to the questions on the definitions of BAT and BATNEEC, in our view the concepts are indeed very similar. I have no means of knowing whether it was British influence that brought in the reference to costs in Annex 4, which is reflected in regulation 3 and in Article 2 (11). With BAT as well as BATNEEC the intention is that cost is taken into account. I take the point of the noble Baroness that "viable" in this context may not be the appropriate word. Nevertheless, the draft regulation 3 (1) (a) does relate to importing costs into the assessment.

The old techniques, BAT, will be at the heart of the new regime, as the directive ensures. The reason why we cannot be as absolute as the amendment would require is that there are circumstances in which we would need to be more restrictive than the BAT provisions would allow in order to comply with European or other international obligations. Clearly, the most obvious example—although it would be rare in practice—would be where European Community environmental quality standards, such as those for air quality, would be breached by the emissions from an installation which had otherwise complied with the BAT provisions. In those cases, more stringent conditions than those based on BAT would have to be applied in order to conform with the other directive. That is not dissimilar to the provisions of the Environmental Protection Act 1990, in particular Section 7 which enables the Secretary of State to specify in a direction the conditions to be imposed. In those circumstances, such direction would have overridden the BATNEEC requirement. Directions have been used under that provision to implement European directives such as the hazardous waste incineration directive where emission limit values have to be imposed under European law, even though they went beyond the previous BATNEEC provision.

We accept, as do the regulations and the directive, that BAT, as now defined, would apply in the vast majority of cases unless overridden by other international or similar obligations entered into by Her Majesty's Government. In the areas of air quality and hazardous wastes, BATNEEC of itself would probably not be sufficient to meet those standards. Therefore, we need a little latitude in this respect. I hope that with that explanation the noble Lord will feel able to withdraw the amendment.

Lord Dixon-Smith

I am grateful to the Minister for that explanation in which he has given us additional information which we shall clearly need to study. I hope that he will understand that and that we may need to return to this at a later stage. In the meantime, I beg leave to withdrawn the amendment.

Amendment, by leave, withdrawn.

5.30 p.m.

Lord Dixon-Smith moved Amendment No. 8:

Page 1, line 25, at end insert— (" ( ) Before making regulations under this section, the Secretary of State shall—

1. (a) consult individuals and businesses involved in activities proposed to be subject to those regulations; and
2. (b) publish the result of that consultation.").

The noble Lord said: This amendment seeks to introduce a degree of consultation with the relevant parties to Clause 1. It is grouped with a government amendment which seeks to do the same thing, but in rather a better way. I shall need an assurance from the Minister that Clause 2 applies to Clause 1.

However, the matter is not straightforward and I should like to be sure of the ground on which I am standing. My noble friend Lord Lucas, who is not in his place, has tabled an amendment to Amendment No. 8 and subsequent amendments have been tabled to the Government's amendment, Amendment No. 13, which may require discussion if the Government choose to press their amendment. It is essential that in making the regulations all the relevant parties are consulted and their views taken into account before any regulations are made. That is not to say that the effect of the consultation should mean that the views of the consultees should be predominant. Clearly, there is a much wider interest. However, consultation is always useful and helpful points may arise from it. That is why we think that consultation should be on the face of the Bill. I beg to move.

Lord Jenkin of Roding moved, as an amendment to Amendment No. 8, Amendment No. 9:

Line 5, after ("regulations;") insert— (" ( ) publish all submissions made to him as part of that consultation, and all relevant expert reports and opinions commissioned by him;").

The noble Lord said: In the absence of my noble friend Lord Lucas, I beg to move his amendment, Amendment No. 9. I wonder whether it might be for the convenience of the Committee if the Minister spoke now to his amendment so that we could then discuss the amendments to his amendment. I hope that that will be within the rules of order.

Lord Renton

Before the Minister does so, I hope that it may be helpful rather than unhelpful if I mention something about Amendment No. 8 which has slightly puzzled me. The amendment would require the Secretary of State to, consult individuals and businesses involved in activities proposed to be subject to … regulations". That seems an impossible task to impose on the Secretary of State because not only hundreds, but possibly thousands, of individuals and businesses may be affected.

Line 10 on Page 2 of the Bill states—I refer to Clause 1 (4) (c)—that the regulations may, make different provision for different cases, including different provision in relation to different persons, circumstances, areas or localities". I can understand that circumstances, areas or localities could be dealt with in different ways, but it seems somewhat unrealistic to mention in the regulations a vast number of "different persons". As those words are already in the Bill, it is not entirely surprising that in Amendment No. 8 my noble friends refer to the need to consult "individuals and businesses".

Lord Dixon-Smith

My noble friend Lord Renton has introduced a justifiable criticism. However, I remind him that the Bill not only requires the making of regulations, but that the regulations can then lead to further downward delegation. Although I entirely agree that it would be impossible for the Secretary of State to undertake appropriate negotiations with every interested party, it is to be hoped that consultations will take place at the point where the regulations will apply.

In moving the amendment, I said that I thought that in some ways the Minister had tabled a superior amendment. We have not yet reached that amendment, which is why my noble friend Lord Jenkin suggested that it may be right for the Minister to speak now.

Lord Whitty

I am sorry to be so bashful in coming forward. It may indeed be sensible for me to speak now. The noble Lord, Lord Renton, raised a point which to a large extent applies to both my amendment and to that of the noble Lord, Lord Dixon-Smith. Although some flexibility is required in relation both to the Secretary of State's ability to determine who should be consulted and, further down the line, to the delegated authorities, perhaps that issue needs some consideration in terms of the noble Lord's query.

I am sure that the Committee will recognise that when we produced the third document on the regulations, we were engaged in a pretty wide consultation exercise in a complex area. Such consultation is what we intend in future. I have sent copies of the draft regulations to those who have shown an interest in the 13ill and have placed a copy in the Library. In the spring, we intend to hold a final round of consultations on the remaining issues, such as the timetable and the phasing. The Department of Trade and Industry will shortly be consulting on the separate issue of the proposals for regulating offshore oil and gas installations.

The proposals in the amendment were, in broad terms at least, widely welcomed—and not only by this Committee. On Friday, I received a letter of support from the CBI as regards the Government's amendment on consultation and the subsequent amendment that we shall shortly be debating. Therefore, I hope that the spirit behind the amendment will he accepted.

A significant number of other amendments have been tabled to my amendment which may make today's debate a little complex. Noble Lords may wish to speak to some of those amendments and any points raised may need to be considered by the Government. In general, I am unhappy about accepting any of the amendments as they stand. Noble Lords should realise that point and decide accordingly how to proceed. However, in case the noble Lords responsible for those amendments want to press them, perhaps I may advise the Committee that it may be more sensible to consider my amendment, the points just raised, and the amendments to my amendment in the round. We may then come forward with a firm amendment on Report, covering all those points. I do not want to curtail debate or prevent those who wish to pursue particular points raised in their amendments from doing so. However, if that course of action were generally acceptable, I would be prepared not to move my amendment at this stage on the grounds that its principles will re-appear on Report when we shall have had the opportunity to take into account other points already raised—or which may be raised once I have sat down.

Lord Dixon-Smith

I am most grateful to the Minister; indeed, I can only regard that as an extremely helpful reply which I welcome. I am sure that other Members of the Committee will do likewise. I believe that I have tripped up again and now I do not know which bit of ground I am standing on. I thought that I was in a position where I could withdraw Amendment No. 8.

Noble Lords

Not yet!

Lord Jenkin of Roding

I have not spoken to Amendment No. 20, which is the last amendment in this grouping. I, too, very much welcome what the Minister said in relation to Amendment No. 13. The noble Lord referred to the forthcoming draft regulations for the offshore oil and gas industry. My only concern in tabling the amendment was the fact that that industry has had some informal talks with the DTI, which is its regulator; it is not regulated by any of the agencies responsible to the Minister's department. The industry has not seen any draft regulations as yet, though no doubt it will have taken note that they will be forthcoming. But it expects full consultation to take place on such regulations.

I am sure that the Minister can give that assurance, but the purpose of my amendment was to make it absolutely clear that the discussions which the industry has already had will not be relied on as complying with the subsection in the Minister's amendment so that it will be said, "Oh, we have talked to them already. That was consultation". However, the answer is that it would not be consultation that would comply with the Minister's regulations if it happened after the Bill became an Act. That was my sole purpose for tabling the amendment.

Lord Whitty

For the sake of clarification, I can confirm that "consultation" in these terms means consultation on draft regulations. We have had substantial discussions with the offshore oil industry, but it will also need to consult on the regulations which, I understand from my colleagues in the DTI, will shortly be forthcoming.

Lord Dixon-Smith

I beg leave to withdraw Amendment No. 8.

Lord Jenkin of Roding

I beg leave to withdraw Amendment No. 9.

Amendment No. 9, as an amendment to Amendment No. 8, by leave, withdrawn.

Amendment No. 8, by leave, withdrawn.

[Amendments Nos. 10 to 12 not moved.]

Lord Whitty had given notice of his intention to move Amendment No. 13:

Page 2, line 11, at end insert— (" (4A) Before making any regulations under this section, the Secretary of State shall consult—

1. (a)the Environment Agency if the regulations are to apply in relation to England or Wales;
2. (b)he Scottish Environment Protection Agency if the regulations are to apply in relation to Scotland;
3. (c)such bodies or persons appearing to him to be representative of the interests of local government as he may consider appropriate;
4. (d)such bodies or persons appearing to him to be representative of the interests of industry as he may consider appropriate; and
5. (e)such other bodies or persons as he may consider appropriate.

(4B) Consultation undertaken before the passing of this Act shall constitute as effective compliance with subsection (4A) as if undertaken after that passing.").

[Amendments Nos. 14 to 20, as amendments to Amendment No. 13, not moved.]

[Amendment No. 13 not moved.]

5.45 p.m.

Lord Whitty moved Amendment No. 21:

Page 2, line 12, leave out subsection (5) and insert— (" (5A) The power to make regulations under this section shall he exercised by statutory instrument. (" (5B)A statutory instrument containing regulations under this section, if made without a draft having been laid before, and approved by a resolution of, each House of Parliament, shall be subject to annulment in pursuance of a resolution of either House. (5C)But no regulations to which this subsection applies shall be made unless a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament. (5D)Subsection (5C) applies to—

1. (a)the first regulations to be made under this section which apply in relation to England;
2. (b)the first regulations to be made under this section which apply in relation to Wales;
3. (c)the first regulations to be made under this section which apply in relation to Scotland;
4. (d)regulations under this section which create an offence or increase a penalty for an existing offence.").

The noble Lord said: This amendment and the others in the group deal with the procedure of making regulations. I believe that the principle of my amendment has been widely welcomed and, in my view, it would meet the suggestion of the Delegated Powers and Deregulation Committee that regulations we bring forward should be subject to the affirmative procedure when they are first made, rather than as specified in the original Bill, and that the affirmative procedure should apply to any amendments in the future to regulations which create new offences or increase penalties for such offences.

The Delegated Powers and Deregulation Committee also called for the affirmative resolution procedure to apply to any regulations which amend primary legislation. As I understand it, that is the aim of Amendment No. 23 (an amendment to my amendment), tabled in the name of the noble Lord, Lord Jenkin of Roding. Most of the impacts on primary legislation are identified in Schedules 2 and 3. However, if any more become apparent as the regulations are finalised, we shall endeavour to deal with them in the first set of regulations which would, if the amendment were to be carried, be subject to the affirmative procedure.

It is always possible that some impacts may only arise from subsequent changes to regulations. If these are minor and consequential, I am sure that most noble Lords would agree that it would not be proper use of parliamentary time for them to have to follow the affirmative procedure. Therefore, Amendment No. 21 gives the Secretary of State discretion in those circumstances to use whichever procedure seems appropriate—a choice which will in fact be available for any type of amendment to the regulations or any new regulations.

If we were required to use the affirmative procedure in every case, the pressures would be substantial and would inevitably lead to delays in parliamentary procedure. I should point out that the amendments tabled in the name of the noble Lord, Lord Jenkin, would lead to some slight difficulty of interpretation in terms of the drafting. As it stands, I hope that the use of the word "But" at the beginning of subsection (5C) of my amendment helpfully indicates that this subsection qualifies the choice of procedure provided for in subsection (5B) by introducing the important exceptions where the affirmative procedure would still apply. The deletion of the word would remove that clarification.

Once again, because we have two amendments tabled to my amendment, it might he appropriate for us to look at the implications involved to which noble Lords may wish to speak shortly. Thereafter, because the principle of Amendment No. 21 is broadly acceptable, perhaps we may proceed on the basis that we will actually vote on it on Report, having taken into account any remarks which other noble Lords wish to make today in pursuit of the two amendments to my amendment. I believe that that would be a tidier way to proceed. Incidentally, it would enable me make clear on Report the totality of our response both to the report of the Delegated Powers and Deregulation Committee and to any subsequent discussions which we might have on the basis of that report, as we discussed when dealing with the first group of amendments earlier today. I beg to move.

Lord Jenkin

of Roding moved, as an amendment to Amendment No. 21, Amendment No. 22:

Line 8, leave out ("But").

The noble Lord said: In moving the above amendment I shall speak also to Amendment No. 23. Amendment No. 22 seeks simply to remove the word "But" from subsection (5C) of Amendment No. 21. One of the things that I was always brought up to believe is that you do not start a sentence with the word "But". I understand what the Minister said, but I wonder whether it really does help with the understanding of the clause. It would be better English and provide exactly the same meaning if the sentence started with the word "However", followed by a comma. It is rather unusual to find that in primary legislation and I suspect that the right answer is not to have what I believe to be an adverb included in the subsection but simply to move straight into the wording. Nevertheless, I shall not spend any more time on that detail.

Amendment No. 23 is infinitely more important. It is aimed at the Henry VIII clause. I understand what the Minister said; namely, that he hopes that all the substantive matters will come in the first set of regulations, which will he covered by the affirmative procedure. He also indicated that new offences and other such matters would also be subject to the affirmative procedure. He then invited us to agree that minor and consequential changes in Acts of Parliament that have passed through the whole process should be undertaken by the negative procedure. It is well known that this Chamber has always objected to that procedure. Indeed, there have been votes in that respect: sometimes they have gone one way and sometimes they have gone the other way.

This is a matter which is eminently suitable for discussion in the forum suggested by the noble Lord, Lord Shepherd, some time ago. I ask Members of the Committee to recognise that the Government seek a power to amend parliamentary legislation by statutory instrument, subject only to the negative procedure. I believe that that requires a very substantial justification. Indeed, if I may say so, in a week during which Members of the House of Commons have been sent home, I find arguments about there being insufficient parliamentary time to be a hit thin. If the matter is sufficiently important to require a debate, time must be found. That is absolutely at the heart of our parliamentary constitution holding the Government to account. It is part of the checks and balances to which I referred earlier. However, let us discuss it in the forum.

I very much welcome what the Minister said about not moving his amendment at this stage. We can look at it in the round at another stage. However, I warn him that I shall wish to press this matter fairly hard in any discussions that we may have that I may be privileged to attend and when we return to the matter again. There may be others who take the same view. I beg to move, as an amendment to Amendment No. 21, Amendment No. 22.

Lord Renton

I have such admiration and respect for my noble friend Lord Jenkin of Roding and such a friendly attitude towards him that it is with the greatest diffidence that I dare to express a doubt about anything that he has ever said or done. However, on this occasion when he is proposing a Henry VIII clause which does not appear to me, nor so far to the Government, to be necessary—

Lord Jenkin of Roding

I am not proposing it.

Lord Renton

What about Amendment No. 23?

Lord Jenkin of Roding

I beg my noble friend's pardon. I seek to insist that the affirmative procedure should apply to any Henry VIII clause. That is the effect of my amendment. If it does not do that, I am afraid my drafting is singularly inauspicious; it is riot right.

However, I think that is what it does. It makes sure that the exceptions which require the affirmative procedure should include any Henry VIII clause. I am sure that my noble friend and I are absolutely at one on that.

Lord Renton

I am pleased to hear that, but I must say that that was not the way that I read the provision. But I am not saying that my noble friend is wrong. He has perhaps given much deeper thought to the matter than I have. At any rate, on the face of it that is what it seemed to be. If it had that effect, of course I would oppose it. But if my noble friend assures me—I must say I would need a little assurance because that is not the way I have read it—that it does not add to the powers of the Government to amend or repeal existing Acts of Parliament, whether they are to be subject to affirmative resolution or not, I hope I may be forgiven for perhaps misunderstanding his intention, although I must say that on the face of it I did not think I had done.

Lord Jenkin of Roding

The proposed new Subsection (5C) of the Government's amendment states, no regulations to which this subsection applies shall be made unless a draft". That is to say, it introduces the affirmative procedure. The proposed new Subsection (5D) states, Subsection (5C) applies to—

1. (a)the first regulations … which apply in relation to England;
2. (b)the first regulations … which apply in relation to Wales;
3. (c)the first regulations … which apply in relation to Scotland;
4. (d)regulations under this section which create an offence or increase a penalty".

I have sought to insert the words, include provisions to amend or repeal any Act of Parliament or which". I am making certain that anything which seeks to amend an Act shall be subject to the affirmative procedure. That is how it works. I hope that my noble friend is reassured.

Lord Renton

It had not occurred to me that the Government were taking power to amend or repeal an Act of Parliament, but if they are, my noble friend is fully justified in moving his amendment.

The Earl of Mar and Kellie

In Clause 2 we learn that this legislation will be pre-commencement legislation. I am obviously about to ask a question about Scotland. The Minister's proposed new Subsection (5D) (c), states, the first regulations to be made under this section which apply in relation to Scotland". Will the Minister explain to us at what point this legislation would be transferred to the Scottish parliament? In some respects does paragraph (c) imply that the Scottish parliament will not receive this legislation until this United Kingdom Parliament has made the regulations?

Lord Whitty

I think the answer to the noble Earl, Lord Mar and Kellie, is that it is hoped that this legislation will be pursued—although the speed which we anticipated may be slightly modified by the action of Members of the Committee today—in the coming two or three months and the regulations will therefore follow from the legislation. The primary legislation will be a matter for the United Kingdom Parliament. The first regulations under that would be subject to the same procedure as elsewhere, but thereafter the Scottish parliament would make the regulations. I hope that that is clear to the noble Earl; if not, I can clarify the matter further in writing. In view of the difference in interpretation between the noble Lords, Lord Jenkin and Lord Renton, and the query of the noble Lord, Lord Jenkin, with regard to the parliamentary draftsman's grammar, I had better withdraw the amendment, consider the points that have been made and I hope return with a watertight amendment at Report stage that will meet with general approval.

Lord Jenkin of Roding

I beg leave to withdraw Amendment No. 22.

Amendment No. 22, as an amendment to Amendment No. 21, by leave, withdrawn.

[Amendment No. 23, as an amendment to Amendment No. 21, not moved.]

Lord Whitty

I beg leave to withdraw Amendment No. 21.

Amendment, by leave, withdrawn.

[Amendment No. 24 not moved.]

On Question, Whether Clause 1 shall stand part of the Bill?

Lord Renton

I wish to make a short point. In view of the splendid attitude of the Minister in deciding to reconsider the drafting of really the whole of this clause and in view of the constitutional and practical importance of the matters contained in it, I think it would be in accordance with our usual practice for the amendments to be recommitted or, if it is decided to withdraw the clause as a whole—which I would very much hope the Government would do as a result of our discussions—for the new clause in place of Clause 1 to be subject to a recommittal. Then we can consider this complicated and important matter in detail with greater freedom at a later stage. I do not ask for an answer now, but I hope that the noble Lord, Lord Whitty, will seriously consider doing that because it would then be in accordance with our usual practice.

Lord Whitty

I am not sure I concur that it is in line with normal practice in these circumstances. Earlier I indicated that I would consider whether any or some of this Bill should be recommitted. However, for the moment I wish to resist the noble Lord's proposal and perhaps we can consider it in the same context as the other matters.

Clause 1 agreed to.

Schedule 1 [Particular purposes for which provision may be made under section 1]:

Lord Jenkin of Roding moved Amendment No. 25:

Page 4, line 24, leave out ("or guidance").

The noble Lord said: I shall speak also to Amendment No. 26. This is a short point, but I hope that the Minister will regard it as an important one. Paragraph 3 of the schedule enables the Secretary of State, to give directions or guidance which regulators are to comply with or have regard to". The draftsman may have said that one is not allowed to use Latin now, but the relevant phrase used to be, "redendo singula singulis"; namely, that you applied each part of the thing to the appropriate second part. But I think that that is confusing because the provision we have here gives directions with which regulators must comply and gives guidance to which they must have regard. I believe that these powers are sufficiently different that they ought to be kept separate. The schedule as drafted does not make this clear enough.

Indeed, IPPC is designed to be a flexible, site specific regime that gives the regulator scope to apply regulations that best suit the local environment and the nature of the operation. Here again, this is a case where the European Union has been persuaded to accept British principles which have applied for many years.

Guidance is therefore meant to be non-prescriptive. My amendment makes clear that the regulators need only have regard to guidance, not comply with it. This is a British system which really goes back to the alkali Acts in the middle of the last century. If I may put it in the vernacular, it has always been horses for courses. In general, conditions for being allowed to operate a plant or a process are tailored to the precise circumstances of that plant or process.

Of course the powers to regulate must be flexible enough to allow this—hence, in some cases there has to be a power to give directions to regulators and in others simply to give guidance. They need to be kept distinct, and my two amendments seek to achieve that. I beg to move.

6 p.m.

Lord Whitty

I recognise the intention of the noble Lord to distinguish between direction and guidance. Guidance is not intended to be prescriptive in that sense; it is there for the regulator to have regard to. The effectiveness and efficiency of the control system is, to a large extent, dependent upon the regulators' ability to use their judgment on a case-by-case basis. The noble Lord is correct to say that it should be non-prescriptive. It was never the intention of this drafting to imply otherwise.

I shall perhaps surprise the noble Lord by saying that on this occasion his drafting makes matters clearer. We can perhaps have one decision this afternoon: we are prepared to accept Amendments Nos. 25 and 26, and we urge the noble Lord to pursue them this afternoon.

Lord Jenkin of Roding

I am very much obliged. I do not think I need to say more.

On Question, amendment agreed to.

Lord Jenkin of Roding moved Amendment No. 26:

Page 4, line 25, after ("or") insert ("guidance which regulators are to").

On Question, amendment agreed to

Lord Jenkin of Roding moved Amendment No. 27:

Page 4, line 43, leave out ("particular") and insert ("appropriate cases").

The noble Lord said: I am much encouraged to express the hope that perhaps the Minister may be persuaded similarly on this amendment.

I said a moment ago that IPPC is in general a site-specific form of regulation and it is very good that this has now been adopted by the European Union. The standard permit conditions may be acceptable in some cases, but this needs to be handled with care. It is only appropriate for standard permit conditions to he applied to sectors where activities are homogenous from site to site. This might include agricultural activities, such as intensive pig and poultry farming, where effluent, I suspect, is fairly standard across the sector. In these cases, the use of a standard permit condition would reduce the administrative burden on the operator and the regulator.

This would be particularly welcomed by small and medium-sized enterprises which do not always have the specialised staff to handle complex IPPC matters. In industry, standard permit conditions might be appropriate in processes such as paint spraying or other similar processes using solvents. It would not be appropriate to apply standard permit conditions to complex processes such as those undertaken in the chemical industry or where the processes or emissions vary from site to site. To try to apply general conditions would be contrary to the site-specific approach which is at the heart of IPPC.

Certain standard permit conditions have been shown to work in other areas outside IPPC. For example, the existing arrangements between the Environment Agency and the water industry cover discharges under the urban waste water treatment directive. The standard clause may require a waste water effluent plant to install 6rrim fine screens at the outlet to a works. Standard clauses like this should only be used in sectors where it is clear that a blanket approach may be necessary to achieve environmental quality standards through engineering solutions.

The purpose of the paragraph is to give guidance to the framers of the regulations. The Bill, as drafted, refers only to certain cases "in particular". With great respect, that gives no guidance at all to those who have to draw up the regulations. My amendment suggests that instead we use the words "in appropriate cases". That 'will focus the draftsman's attention on the need to ensure that the powers apply only where it is appropriate that they should do so. It would give the ability to challenge a regulation or a general permit condition on the ground that for a particular operator's installation the general condition is not appropriate. It is hard to see how the words "in particular" in the Bill could achieve those purposes. I think my amendment is an improvement and I hope that the Government will be able to accept it. I beg to move.

Baroness Farrington of Ribbleton

The noble Lord makes a point with Amendment No. 27 about the importance of site-specific determinations. However, there are some sectors where operators are particularly homogenous and where it makes sense to develop standard permit conditions. It would allow for a quicker determination of "best available techniques" in those sectors and should lead to a lower cost of regulation. The proposals have been welcomed by respondents to our consultation exercises who might benefit from them.

Nevertheless, the site-specific principle will remain paramount and the use of standard procedures will always be optional on the part of both regulator and operator. There will also need to be a certain level of support within a particular sector for standard conditions to be considered. These safeguards will ensure that they are only ever used when appropriate.

As the Bill currently stands, the sub-delegation power in Clause 1 (4) (a) which was considered earlier would confer a discretion on the regulators to come up with conditions which are appropriate in each case and to use standard conditions only where appropriate. I can assure the noble Lord that the Bill protects the current flexibility of the regulators to determine permit conditions, which we both wish to retain. In urging the noble Lord to withdraw Amendment No. 27, we will obviously consider carefully before Report stage the detailed points he has put forward.

The Duke of Montrose

Perhaps the Minister will clarify at this stage what the introduction of these permits will mean to people on the ground. As has been drawn to your Lordships' attention earlier, this is a skeleton Bill—and perhaps I am going into rather more detail than I should at this point—but can the Minister say something about how the permit implementation might be introduced?

The notes on the Bill say that it will take the place of Part II of the Environmental Protection Act. As a farmer, I have to declare an interest in rural and agricultural pollution. The Department of the Environment is currently issuing permits using the previous legislation under the ground water regulations. It is suggested that authorisation gained under this ruling might be accepted as a permit under the new IPPC regulations when they are introduced. Is it the Government's intention that this method of excluding the necessity for further application should be carried forward? Another question for those involved in an industry as complicated as farming is whether multiple disposals require multiple permits.

Baroness Farrington of Ribbleton

If Clause I (4) (a) were removed from the Bill, which has been pressed on the Government as a response to the Select Committee on Delegated Powers and Deregulation, we would need to amend Schedule 1 carefully to retain the flexible approach which has been sought in the consultation with industry. With regard to the specific question on the application for farming and whether a groundwater permit will count for IPPC, no, it must cover all modes. That is my understanding, but if that is incorrect I shall write to the noble Duke. In the light of those replies, I hope that the noble Lord will feel able at this stage to withdraw his amendment.

Lord Jenkin of Roding

I am grateful to the noble Baroness, who seems to be as forthcoming as her colleague in undertaking to consider what we have said. I can understand that all the respondents are pleased with the way that this is being carried out in general, but it is up to us to make sure that we get exactly the right words. The noble Baroness used the word "appropriate" three times in her speech, indicating that "appropriate" really is the most appropriate word. However, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Jenkin of Roding moved Amendment No. 28:

Page 5, line 6. leave out ("Restricting") and insert ("Controlling").

The noble Lord said: We are dealing here with changes in operations or changes to plants. Article 12 (2) of the directive lays certain duties on member states, including the duty to take steps to ensure that, no substantial change is made without a permit". By using the word "restricting" in the corresponding paragraph of the Bill the draftsman is implying that changes are bound to damage the environment and that therefore they have to be restricted. In practice, of course, many changes may well reduce emissions or improve the quality of discharges or even eliminate some emissions altogether. If we were ever to move to an effective system of tradable permits, many changes would achieve just that. Therefore, to use the word "restrict" would not be appropriate in the circumstances. Of course a fresh permit or a permit variation would be required but that would not be to restrict the making of changes. It would be part of a system of controlling changes.

The main purpose of the directive, of the Bill and of the regulations is to protect the environment. Appearing to restrict beneficial innovations would be bizarre and counterproductive. That is why my amendment proposes the word "controlling" instead of "restricting". I hope that the Government may feel able to take a sympathetic view. I beg to move.

Lord Renton

It is not often that one word replaced by one other word has such vital importance. I warmly support my noble friend on his amendment. I think it is worthy of support from the Government.

Baroness Farrington of Ribbleton

I must resist this amendment. The directive, for good reason, requires that a regulator should have the power to restrict, if necessary, changes which an operator wishes to make to an installation. This is not a new power. It is also an essential tenet of the current system which must be maintained. The directive requires that no change can take place without the regulator first being notified. For substantial changes to the substances or amounts emitted from an installation the operator must first obtain the regulator's authorisation to change the permit conditions.

Having said that, it is not the intention that the pollution prevention and control system should handicap industry by imposing unnecessary delays or restrictions. The flexibility of the system means that any proposals for changes can be assessed sensibly and on a case-by-case basis. The general presumption in the vast majority of cases is of course that, if a change is compatible with best available techniques, it can go ahead. That would be overridden only if there were some other good environmental reason for preventing the change; for example, if it would result in a breach of European Community environmental quality standards, such as the standard set for local air quality.

We must remember that we are talking here about a fundamental feature of pollution control which the noble Lord's amendment would remove. The regulator must be able to decide whether to allow a change to proceed which would have an effect on the environment. If an operator is not prepared to offer to carry out a change in a manner compatible with best available techniques, the regulator must have the ability to refuse to allow the change. The amendment is not compatible with our obligations under the directive or with a credible system of pollution control. Therefore, I ask the noble Lord to withdraw it.

6.15 p.m.

Lord Jenkin of Roding

I shall want to study that reply rather carefully. I can see no reference to the word "restrict" in the Council directive. It may be there. It is a long document and perhaps I have not looked at the right paragraph. The noble Baroness is right to say that the regulator must have the power to refuse a permit for a change. None of us would quarrel with that. However, I still maintain that there is art unhappiness about the word "restricting" which "controlling" does not convey. There may be a better word still. I shall want to study with my advisers what the noble Baroness has said and see whether we can come up with a better solution. In the meantime—

Lord Renton

Before my noble friend withdraws his amendment, I would just mention that the word "restricting" is entirely negative in its effect, whereas the word "controlling" can be positive if necessary.

Baroness Farrington of Ribbleton

I do not know whether it will help the noble Lord, Lord Renton, but the sentence included the words "have the power to restrict" rather than "always restrict".

Lord Jenkin of Roding

I shall study the noble Baroness's words. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Jenkin of Roding moved Amendment No. 29:

Page 5, line 24, leave out from ("substances") to ("how") in line 25 and insert ("and of').

The noble Lord said: In moving this amendment, perhaps I may speak also to Amendment No. 34. We now come to the question of charges on operators for the cost of regulation. Paragraphs 9 and 10 of Part I of the schedule deal with schemes for charging fees and charges to cover the cost of the regulation process. Paragraph 23 in Part II is supplementary in requiring, inter alia, that the fees and charges shall cover specified expenditure. These two paragraphs raise a serious issue which deserves airing in a substantially more populated environment than we have today.

Under the Environmental Protection Act 1990 there are already powers to make changes to charges of this kind, so the power which is being sought in the Bill is not of itself new in principle. However, in the past few months, if I may coin a phrase, under this Government, arguments have broken out over what costs it is proper to cover by charges to operators and what costs should be met from public funds. Clause 8 of the Environmental Protection Act 1990 was limited and quite specific. It states: The Secretary of State may … make … a scheme prescribing—

1. (a)fees payable in respect of applications for authcrisations:
2. (b) fees payable by persons holding authorisations in respect of, or of applications for, the variation of authorisations; and
3. (c) charges payable by such persons in respect of the subsistence of their authorisations".

Those words are quite specific—authorisations, variations and subsistence, which is to say on-going costs. That is not present government policy and it ought to be recognised that there has been a substantial change.

Last November, the Director General of the CBI, Adair Turner, wrote to my noble friend Lord De Ramsey—who, as he reminded us earlier, was chairman of the Environment Agency—to complain about increases in the charges. I think that it would be proper to read Mr. Adair Turner's letter virtually in full: The CBI has recently come upon a paper … from the Agency's Finance Director. It advocates increases in charges which in all cases exceed inflation and, in some, of up to 15 per cent. This statement of intent follows increases of up to 14 per cent. in the current financial year. The paper lists the factors driving the increases. It assumes inflation of 3 per cent., which is above current levels, and asserts that business chargepayers should support higher pension contributions by the Agency, following the removal of tax credits, and further year 2000 compliance expenditures. There is no justification of why business chargepayers should pay for items which are arguably part of central overheads, nor is there any indication of how big a contribution business is called upon to make in relation to that coming from the Agency's grant in aid. At a time when the economy is likely to slow and parts of manufacturing are in recession, a further year of increases in charges on the proposed scale is unacceptable. I urge you and your colleagues to challenge the proposals and rein them back. If the Agency is bidden to assume new responsibilities, they should be borne by the taxpayer, not by very heavy imposts on business I am copying this letter to Michael Meacher and John Battle. That was followed by a much longer and more detailed letter from the CBI to the Environment Agency's finance director, Mr. Huntley. The Committee will be relieved to know that I do not propose to read the whole of it. However, I must quote one passage, on page 2: The letter accompanying the consultation document indicates that by far the greatest proportion of the increase of 15 per cent. is due to a shift"— I ask the Committee to hang on to the word "shift"— of the funding of chargeable activities from Government grant-in-aid to charges; i. e. of the 15 per cent. 11 per cent. is due to the shift, with 4 per cent. due to the expected rise in Agency's costs. The consultation document notes that this shift from grant-in-aid to recovery occurred as a result of a review by the Government and its Agencies under the Comprehensive Spending Review. The polluter pays principle is well understood by business but there is totally inadequate explanation of what element of cost of services provided to business were not being borne by business. Until there is far greater transparency on the part of the Agency in terms of its cost structure, and the actual items that are chargeable to IPC operators. there will be no confidence that these Agency charges are appropriate. It is not a foregone concept to business that licensing and authorisations to operate within a framework of high legal and environmental standards is a value-added service provided by regulators. We find ourselves with the concept of a shift. That letter argues in effect for the two amendments that I tabled. If the Government are abandoning—as appears to be the case, although I have detected no public announcement to that effect—the specific and limited charging regime in Section 8 of the 1990 Act, what are the new limits?

Paragraph 10 adds three new heads— (a), the testing or analysis of substances; (b), validating such testing; and (c), assessing how the environment is affected by any substances. It goes on to say that charges for those may be included in the scheme.

Sub-paragraphs (a) and (b) may be acceptable, provided they are limited to substances that are actually used by applicants or those with permits but (c) appears totally open ended. It goes far wider and could force industries to pay for other regulatory activities that have nothing to do with those industries.

The polluter pays principle is sound. The issue is what the polluter should be expected to pay. Amendment No. 29 is inelegantly drafted but the intention should be clear. Its purpose is to limit assessing under sub-paragraph (c) to substances tested under (a) or validated under (b). The charges levied by regulators should be ring-fenced and spent only on defined regulatory activities, not used to subsidise other, unrelated activities outside the context of process authorisation. That was the position under the 1990 Act and should remain so under the Bill. If that is not done, increases of 14 per cent. or 15 per cent. per annum of which the CBI has complained are yet another surreptitious tax increase, about which we have not been told.

The second complaint is lack of transparency. Industry does not know the costs that it is required to pay. The CBI believes that there is a serious lack of transparency surrounding the charges that the Environment Agency and SEPA—the Scottish body—levy on business. The agencies do not publish sufficient information to enable business or other interested bodies to judge the proportion of costs of regulating environmental licences that the agencies are recovering from industry. Nor do they disclose how that income is spent. That is a matter of widespread business concern, following the substantial increases to which I referred.

The CBI's opinion is that the Environment Agency in particular has failed adequately to justify the reasons for the increases and that it is impossible for businesses to make a judgment as to whether those charges are set at the appropriate level because of the lack of clear, published accounts. The CBI strongly recommends that that situation is not allowed to continue. Enforcing authorities should be required to publish proper accounts of their income and the Bill should specify how it is to be spent.

My second amendment requires the regulators to publish separate annual accounts for every scheme so that each is ring-fenced. Given the profound anxiety that the huge increases have created and the Minister's repeated profession of the wish to engage in open government, that is the least they should do.

If those accounts show that the shift referred to in the correspondence that I quoted means that industry is expected to pay far more than the direct cost of being regulated, as was the case under the 1990 Act, Ministers must come clean. They must acknowledge that it is in reality a tax increase introduced at the instance of the Treasury.

Section 8 of the 1990 Act was clear, specific and limited, and was acceptable. This legislation seems to give the Government an open-ended licence to allow the regulators to charge what they like. The shift described in the letter that I have quoted demonstrates all too clearly that that is what they want to do. It is up to Parliament to expose this for what it is and to put limits on this new power to tax industry. My two amendments may seem a modest step in that direction, but they bring to light a serious situation. I beg to move.

6.30 p.m.

Baroness Farrington of Ribbleton

The Government are under an international obligation to introduce a mandatory scheme to control the use and discharge of chemicals into the marine environment by the offshore oil and gas industry. Under the scheme, which is already accepted by the industry on a voluntary basis, individual chemicals and mixtures of chemicals must be assessed for the potential harm that they might cause and the limits put on their use.

The purpose of paragraph 10 of this schedule is to enable the costs incurred by authorities as part of the permitting process to be recovered. It is not intended that the costs of general research or work which is not in anticipation of or in connection with an authorisation should be recompensed.

An example may serve to illustrate the use to which these powers might be put. Under the required mandatory scheme it is intended to reduce the cost to industry by keeping a register of categorised chemicals, thereby avoiding the need for the impact of a chemical to have to be demonstrated each time a permit is applied for. The categorisation will be made by the regulator or person authorised based on the results of standard tests undertaken on behalf of the manufacturer at independent laboratories. Clearly there needs to be a means of recovering the small cost of perhaps a few hundred pounds associated with categorisation.

When issuing a specific permit, the regulator would use the register as input to his assessment of the impact of the risks associated with using the specific cocktail of chemicals proposed. That assessment would take the form of applying analytic techniques as against further laboratory testing or research. Again, provision must be made to recover the moderate costs involved in that assessment.

As I hope that example illustrates, there is no intention to use these powers to recover the costs of general research even if it is in the same broad area as the use to which the permit is to be put. Indeed, my understanding of the current wording of the paragraph is that it would specifically prohibit such an exercise.

The second amendment tabled by the noble Lord, Lord Jenkin, relates to the transparency with which the regulators set charges for permits. I entirely agree with the sentiment behind the amendment. Companies which pay charges to the Environment Agency and the Scottish Environment Protection Agency should be able to see how those charges are justified. The agencies' pollution control charges are made currently in accordance with Sections 41 and 42 of the Environment Act 1995. Each charge relates to the particular purpose or function for which it is raised, and income from one charge is not to be used to subsidise charges for another. The agencies' pollution prevention and control charges will be made under the same existing legislation and not under the provisions in this Bill.

The Government will be asking the agencies to provide in their corporate plans greater clarity and detail in their charging proposals. To make that clear, we shall ask that the objective of transparency in the presentation of expenditure plans charging proposals is included among the 10-point action plans which form the heart of the corporate plans. We do not need to have the powers provided by this Bill in order to do that. The noble Lord's amendment is therefore unnecessary. We shall nevertheless be acting to ensure that its intentions are fulfilled. For that reason I shall urge him to withdraw the amendment.

The noble Lord, Lord Jenkin, raised the issue of increases in agency charges. Regulators are required to recover in full from permit holders the costs incurred to monitor and administer the pollution control system. The Government's Comprehensive Spending Review last year found that the Environment Agency was not doing so in the case of an integrated pollution control system and that the taxpayer, through the agency's grant-in-aid, was subsidising permit holders by around £3 million a year. Far from being a tax increase, this is the withdrawal of the subsidy. The Government propose to address that deficit in a way that would minimise the impact on industry, in particular by phasing the increases over two years. The increases were well foreshadowed in advance of the agency's corporate plan and were explained in consultation exercises. The Environment Agency's proposal for a 15 per cent increase this year represents the final stage of the recovery of the subsidy. My department is currently considering responses to the consultation exercise.

The noble Lord also raised the issue of pension costs. The charges share a proportion of the agency's administrative costs and overheads with grant-in-aid from the taxpayer. A proportion of the agency's administrative costs are part and parcel of its function in controlling pollution and should rightly be passed on to the polluter. Every effort is made to reduce overheads using total administrative cost control. In fact, TAC is continuing to fall, as is the proportion of the agency's costs, due particularly to increases in efficiency and rationalisation of accommodation. The Environment Agency envisages year on year efficiency savings of £12 million—about 2 per cent. of its running costs.

The Scottish Environment Protection Agency currently prepares a summary in its accounts of each of the charging schemes. I suspect, however, that industry is much more likely to be interested in the contents of the agency's charging proposals rather than looking at figures after the event. The accounts are a rather formal device and may not allow the flexibility required to meet the information needs of industry. Responding to specific points with appropriate tables may be of more value and more appropriate.

Should there be any particular points that the noble Lord wishes to raise in detail which I have not covered in my reply, I shall of course write to him. But in the light of my reply, I hope that he will feel able to withdraw his amendment.

Lord Jenkin of Roding

I am grateful to the noble Baroness for a full and considered reply. I recognise that she and her advisers have clearly understood the purpose of these two amendments.

To take the second amendment first, the provision of annual accounts was in a sense a peg on which to hang the argument about transparency. I wish to study the Minister's words carefully. As I understood her, she appears to accept the argument that there is a need for much greater transparency. She also appears to accept the argument that the fees paid by an operator should relate only to the costs incurred by the regulator in regulating that operator. If that is indeed the case, much of my argument has been met. I merely point out to the noble Baroness that the main industrial representative body, the CBI, indicated as recently as last month--in the letter that I quoted earlier from Dr. Janet Asherson, who heads the environment section—that it has as yet absolutely no confidence that it has the information that would enable that process to be monitored in any way. It seems sensible that there should be an early meeting between representatives of the CBI and representatives from the noble Baroness's department so that its concerns can be aired.

It is interesting that in her letter Dr. Janet Asherson states that the CBI is extremely concerned that there appears to be "inadequate mechanism" for dialogue between the agency and business in respect of charges and that the CBI would expect a fuller explanation of the justification for the proposed increases. That does not apply only to the Environment Agency; there are no doubt other regulators as well. It therefore seems that the least the Government ought now to be able to do is to follow this matter up and see that these deeply felt concerns are properly aired.

The noble Baroness's opening words were reassuring. It is not intended to cover the general costs of the Environment Agency in the charges. She made that clear. As I understood her, it is to be only in relation to the regulation process. That is reassuring.

We shall want to look carefully at the rest of what the noble Baroness said. She read a carefully prepared statement which was technical and went into some detail and I am not sure that at this hour of the night I was capable of absorbing it. I ask her to believe that out in the country there is considerable concern. People have faced two years of substantial increases in charges for which they appear to have had no sufficient justification. The noble Baroness's speech appeared to offer some justification. If there was indeed a subsidy, it may well be right that it should be dealt with. However, the people have no information as to whether or not that is true; they have to take it on trust. Therefore these two amendments hang together and we shall want to consider the matter very carefully. Having said that, I beg leave to withdraw the amendment

Amendment, by leave, withdrawn.

Lord Luke moved moved Amendment No. 30:

Page 5, line 38, at end insert ("including, in particular, the impact of any regulations on the agricultural and food industries").

The noble Lord said: This amendment seeks to ensure that food manufacturing and agriculture receive as much advance warning as possible of regulations under the new regime which may affect them. I hardly need to say that farming is in very poor shape generally and any new impositions by way of extra costs could cause some operations, at least, to close altogether.

As has been said by several Members of the Committee, this is a skeleton of a Bill and I should therefore like to ask some questions and briefly give detailed examples to give point to the anxieties widely felt, particularly in agriculture.

As a matter of definition, does pollution of the air in the countryside mean "smelly"? I take it as such as applied to sewage farms and the laying of shoddy and slurry. Is it proposed that large dairy operations or large flocks of sheep should be included under regulations? As the Minister knows, regulations already exist to prevent livestock units becoming a "nuisance". Is that another word for pollution through smell, noise, flies, rodents and dust?

Manure is to be incorporated immediately into the soil, except on grassland. Is the Minister aware that this makes very little sense in that units providing livestock manure are cleared out on to arable land, usually in September and in October? It is impossible to follow a spreader at the same speed as not only are good soil conditions for spreading not good conditions for preparing a seedbed but also the tractor doing the spreading is often the same tractor that will be used for incorporating by pulling a plough or cultivator some time later.

While incorporating manure into the soil rapidly may minimise the release of ammonia into the air, it will not minimise the smell, which comes from the spreading of the manure, and rapid incorporation will increase the amount of ammonia going into the groundwater.

With poultry units the best way to regulate smell and create dry manure is to use cages, which, by virtue of the high density of the birds, maintain a high house temperature, but they are to be banned. On the other hand, barns and free-range poultry farming create much more smell and much more ammonia. Where does the priority lie—with prevention of pollution or with animal welfare?

I am sorry that some of this is rather detailed and technical, but I think it shows how important proper communications are between the regulatory authorities, whether at national or local government level, and the farming industry.

I could give examples from the food industry, but I shall spare the Committee that except to remind Members that if heavy new manufacturing costs are incurred as a result of the new regulations, they are bound to affect the price of food to the consumer. I beg to move.

6.45 p.m.

Lord Whitty

I never have the temerity in this Chamber to claim to be an expert on agriculture. I think we need to concentrate only on those areas where there are agricultural and food installations to which the regulations will apply and to which regulations have not previously applied.

As I understand it, we are bound under the directive to include within the pollution control system intensive pig and poultry units above certain thresholds. Those thresholds are quite high. We expect about a thousand of the larger pig and poultry farms in England to be affected, as will certain parts of the food industry, slaughterhouses and renderers which exceed prescribed thresholds. Apart from those fairly large operations, there is no extension into the other areas to which the noble Lord referred. Installations of that size are substantial, with significant potential to pollute land, water and air and it is right that they should be regulated in the same way as other industries with similar potential.

We agree, particularly in the present state of the agricultural industry, that any regulatory regime should seek to minimise burdens and costs while still remaining effective. The agriculture and food and drink industries will be subject to the same requirements of "best available techniques" as other sectors. The Ministry of Agriculture and the Environment Agency have been assisting the agriculture and food and drink industries in considering measures for minimising emissions which might fall within the new pollution control regime. We are also looking at what is done in other member states to ensure that, as far as possible, we retain a level playing field for our industry, though it is the case that prior to this directive some member states already had strict controls in place on the storage and spreading of manure and slurry

The regime is not intended to exclude all country smells. It applies to intensive farming and to large installations and therefore is aimed at dealing with the greatest inconvenience to both country dwellers and others, but it is not intended to restrict the distinctive odour of many parts of our countryside.

When dealing with new regulations, particularly when they apply to sectors which have not previously been covered, we are committed to publishing regulatory appraisals of all proposals which will have an impact on businesses, and that includes the agricultural business. We have published a regulatory appraisal of the Bill and in the documentation there is a draft regulatory appraisal of the regulations we propose to make. Those are already out for public consultation. However, it is axiomatic with a pollution control system based on a flexible concept such as "best available techniques", where what is required varies site by site as well as industry by industry, that there is little that is specific which one can say in advance about the impact the system will have. As far as industry is concerned, and the agricultural industry in particular, it faces a choice between up-front, explicit emission levels, which can be costed in advance, and a flexible, site-specific system, which by definition cannot be costed in advance.

Industry will, oi' course, be fully consulted as the guidance is drawn up. So far, all indications are that the agricultural industry and the food and drink sectors, which are affected for the first time, prefer the latter approach— a site-by-site approach—rather than an a priori laying down of emission standards, even though the preferred approach involves some degree of uncertainty. We are involved, and will continue to be involved, in consultation with, and providing information to, the sectors concerned. It may be that in the light of that consultation certain changes to our approach will be necessary, but the noble Lord can be assured that that process is taking place and therefore I believe that his amendment is not necessary.

The Duke of Montrose

I thank the Minister for reassuring the Committee that in the matter of smells the Government are moved to consider merely large pig and intensive poultry units. At this stage we are not sure what the Government mean by "large", but obviously the noble Lord has a specific level in mind in referring to the numbers that may be affected. Even so, the issue in agricultural terms is not entirely clear because the third consultation paper relating to the IPPC directive covers industries that produce significant levels of biological and chemical oxygen demand (BCODs). These are listed as not being trivial emissions under the IPPC regime. One of the difficulties for agriculture is that a great many of the activities produce matter that can be considered as biological and chemical oxygen demand material. The phrase that is used is "emits

significant quantities". One would like to know at what level the Government pitch their idea of "significant quantities".

Lord Whitty

As I understand the situation, the established thresholds are a read-over from those in other sectors. It is therefore that which has led us to say that only about 1, 000 pig and poultry units will he directly affected by the regulations. I understand that the approximate figure for pigs is 2, 000 production pigs or 750 sows. The approximate threshold for poultry is 40, 000. If there are more complicated read-overs than that I am afraid that the noble Duke will have to await clarification in writing.

Lord Luke

I am grateful to the noble Lord for his reassurance on the several matters that I raised. I believe that my noble friend the Duke of Montrose is also happy. In those circumstances, although I reserve the right to pursue this matter at a later stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 31 to 34 not moved.]

Lord Jenkin of Roding moved Amendment No. 35:

Page 7. line 22, at end insert—

("Restrictions on disclosure of information . Sub-paragraphs 12 (b) and (c) do not require the disclosure of commercial information the disclosure of which would significantly harm the legitimate business interests of the business from whom the information was initially obtained.").

The noble Lord said: Amendment No. 35 raises the question of commercial confidentiality. My central point is that this should be in the Bill and not left to he dealt with as currently proposed. In the Environmental Protection Act 1990 Section 22 refers to the exclusion of confidential information. Section 20 (1) of that Act imposes a duty on an authority to maintain a register containing matters prescribed in regulations. The subsequent regulations which introduced the register (SI 1991 No. 507) direct the authority to maintain particulars subject to Section 22 of the Act. I believe that this provision should also be in the Bill.

This matter is raised with me at the instance of the offshore oil and gas producers whose industry is regulated by a different department. I believe that they are legitimately anxious. The regulator will need to have a good deal of information, including accounting and technical information. It is very important that the regulator recognises that some of this information may give rise to considerable intellectual rights of commercial value that must be protected. I give an example. If an operator is to justify a decision to modify an offshore power generation plant the regulator will require significant levels of detail of the technical and economic state of the installation, the reservoirs from which it gathers its fuel and the power plant itself. This will inevitably contain information of intellectual and commercial value, particularly to the power plant supplier, and information about the performance of the oil or gas reservoirs that feed the installation. The regulator must be aware of this and take action to protect the information which the industry advises is confidential. Such information disclosed by the operator should not be held in registers that are open to the public. My amendment is intended to make that perfectly reasonable requirement a statutory obligation in the same way that has been done in earlier legislation. I beg to move.

Lord Whitty

I trust that I can reassure the noble Lord in one respect. I appreciate that his example relates to the offshore oil industry. However, referring to the draft regulations that have already been produced, Regulation 29 uses a form of words that in effect, reflects Section 22 of the Environmental Protection Act 1990 to which the noble Lord referred. It is obvious that in ensuring that the public have access to information the presumption must be that details about emissions are as full as possible. However, it may well be necessary to exclude information that the operator deems, and the regulator agrees, is commercially confidential and to give a right of appeal to the Secretary of State in cases where the operator and the regulator take a contrary view.

That provision is clearly reflected in our draft general regulations. I have every reason to believe that it will be similarly reflected in the DTI's system that applies to offshore installations. I hope that in the light of that reassurance the noble Lord will feel able to withdraw his amendment.

Lord Jenkin of Roding

I am not wholly satisfied. The previous government thought it right to deal with this important matter in primary legislation. It would be perfectly simple to include it in this Bill. I shall study carefully what the noble Lord said, but as I listened to him I saw absolutely no reason why this matter should be left to regulations. It is a sufficiently important matter that applies across the board to be within the main body of the legislation. Perhaps the Minister is prepared to go a little further and say that he will look at it again. This is regarded as of enormous importance by industries of all kinds. I believe that that is the least that they can reasonably expect.

Lord Whitty

In the spirit of this afternoon, noting the noble Lord's point that he reflects the widespread view of industry, I am certainly prepared to look at it again. However, I would have hoped that the good intentions of the Government were already clear from the draft regulations that are available, which I have every confidence will be repeated elsewhere. As indicated by my earlier comments, all new regulations will be subject to the affirmative procedure of the House in any case. I shall however undertake to consult my colleagues in relation to the noble Lord's request.

Lord Jenkin of Roding

I am most grateful to the noble Lord. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn

Lord Jenkin of Roding moved Amendment No. 36:

Page 7, line 39, at end insert—

("Matters pending appeal Where an appeal has been brought under paragraph 19, the operator may continue to operate an installation until the appeal has been heard and determined.").

The noble Lord said: I beg to move Amendment No. 36. The intention of the amendment is to try to avoid the problems that arise which can be quite serious if a plant or operation is required to be shut down pending an appeal. In the case of a dispute regarding enforcement notices businesses should be reassured that additional and unnecessary costs will not be imposed upon them. The noble Lord himself indicated at Second Reading that the Government wished to implement a system that minimised the burden of compliance. I believe that this amendment is therefore entirely in tune with the Minister's wish.

It is possible to envisage that an over-zealous regulator may require business to adopt costly changes that may not be justified and should be challenged. The cost of suspending operations could be substantial in monetary, and probably employment, terms and could also introduce safety aspects. In the extreme, it could result in the closure of the installation. Again this is a matter which particularly affects the offshore oil and gas industry. It has no desire to see pollution continue while it drags out an appeal. That is not the spirit in which that vitally important industry conducts its business. Where it is obvious that significant environmental damage could be sustained, the industry would expect regulators to act robustly. But there are situations where there might be differences of view of the level of impact of emissions from, say, a power plant; and it is important that the plant should be allowed to continue to operate until the appeal is heard.

These are continuous processes, closely integrated with all parts of the plant. To require one part of it to close down might well involve the closure of the whole. It could imperil the safety of the whole plant and it could lead to the situation where it might never be able to be reopened. If one is extracting, perhaps in the secondary or tertiary phase, oil from a deep oil reservoir, and one has complicated arrangements to ensure that the oil comes to the surface, once one stops one probably cannot start again. It seems to me that account needs to be taken of that kind of situation. It could have serious consequences for the industry if a regulator required closure pending appeal.

There may be serious health and safety aspects for operating personnel, not only offshore but also onshore. The chemical industry has made a similar point. Many of its plants operate continuously and can be shut down carefully in a programmed manner with plenty of notice so that it can be done safely and properly.

The amendment proposes statutory provision for those circumstances. I hope that the Government are prepared to consider it sympathetically. I beg to move.

7 p.m.

Baroness Farrington of Ribbleton

In speaking to the amendment, perhaps noble Lords will forgive me if I thank the noble Lord, Lord Jenkin, for his earlier comment on the detail of the response made available by the department. The department always wishes to respond fully to points made at any stage in a Bill when amendments are moved, not only because it wishes fully to inform members of your Lordships' House but also because of the level of knowledge among noble Lords. The noble Lord, Lord Jenkin, is one clear example of that.

Under Section 15 of the Environmental Protection Act 1990, operators are able to appeal to the Secretary of State against decisions taken by the regulator; and that right will remain under the new regime. The detail of the appeal system is to be included in the regulations for which the Bill provides. Our intentions are set out in Regulation 23 in Schedule 8 of the draft regulations consultation which ends on 28th February. They largely reflect the current position which I think it is important for me to outline briefly.

If an operator appeals against a decision to revoke the permit—the most serious action which the regulator could take short of prosecution—the revocation would not take effect until the appeal was finally determined. I hope that that reassures the noble Lord.

Where a variation, enforcement or prohibition notice has been served against an operator, bringing an appeal does not currently prevent the notice from taking effect. We propose to maintain that provision.

A prohibition notice is served where there is imminent risk of serious damage to the environment. That emergency safeguard would be ineffective if the notice were to be suspended while an appeal was heard. In the case of a variation notice served, for example, because a cleaner piece of technology had become available, the operator should also comply pending any appeal. The alternative invites wholesale abuse of the appeal system with appeals likely to be lodged as a matter of course.

The system has worked well and we see no need to change it. I hope that the noble Lord, Lord Jenkin, will feel able to withdraw the amendment.

Lord Jenkin of Roding

The noble Baroness has argued a case which we shall wish to examine carefully. On the face of it, it seems to deal reasonably with the alternative situations: first, where it would be perfectly reasonable to expect a plant to operate pending an appeal; and, secondly, the wholly exceptional emergency prohibition notice required to deal with the serious risk of damaging pollution. Somewhere a line has to be drawn.

We shall study carefully what the noble Baroness said. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1, as amended, agreed to.

Clauses 2 and 3 agreed to.

Schedules 2 and 3 agreed to.

Clause 4 [Short title, interpretation, commencement and extent]:

Lord Jenkin of Roding moved Amendment No. 37:

Page 3, leave out lines 16 to 19.

The noble Lord said: We are nearing the end of a marathon Committee stage which seems to have gone on for three times as long as anyone anticipated. I claim my share of the blame for that.

This is a probing amendment. I have already referred to the offshore oil and gas industry in a number of earlier amendments. I do not seek to argue that it should not be subject to environmental controls. Indeed, the UK offshore oil and gas industry already complies with over 200 environment regulations, 35 of those international, 48 derived from the European Union, and 159 UK regulations.

It would be helpful to clarify whether it is the Government's legal advice that the offshore industry comes within the terms of the directive. I also wish to probe the Government's intentions about their plans for the environmental regulation of the industry.

I have studied Directive 96/61/EC from beginning to end and I can find no reference to the industry. A great many other industries are described and mentioned in the various annexes, in particular, Annex 1. There is nothing about the offshore oil and gas industry.

The European Commission's Large Combustion Plant directive (88/609/EEC), which broadly has the same objective but is limited to atmospheric conditions, specifically excludes the offshore industry. I have already noted that the industry is directly regulated by the DTI, and that it has as yet seen no draft regulations.

However, there are other worrying indications. I am advised, for instance, that Denmark has indicated that it will not implement the IPPC directive offshore. What about other countries? The British Government's position reflects the stand they took with regard to the Environment Impact Assessment Directive. In 1998 the UK Government introduced regulations requiring consideration to be given to carrying out environmental impact assessment before undertaking certain offshore oil and gas activities. Those British regulations are applied to all drilling activities on the UK continental shelf. Virtually all other EU member states take the view that the directive does not apply to exploration drilling but only to development drilling after hydrocarbons are found. If the UK is going it alone and imposing more intensive environmental control on the offshore industry, will not this have significant serious implications for UK competitiveness? On Second Reading, the noble Lord, Lord Whitty, said that the Government wished to implement legislation in a way that minimises the burden of compliance. The industry very much welcome that, but it is concerned that there is a differential between the way in which the UK Government and others are interpreting the directive. It could be a very serious matter. When one thinks in terms of the enormous economic importance of the offshore oil and gas industry, one would have thought that the Treasury might have been concerned too.

It is clear from recent press reports that the oil industry is facing major structural changes in order to meet the challenges which exist under the current difficult trading conditions. Only last week a major oil company published its first ever major quarterly loss. It is having to meet the challenges of current difficult trading conditions in order to remain competitive into the next century. A recent report from Wood MacKenzie suggested that investment committed to new projects in 1998 was only £1.5 billion, compared with more than £4 billion in 1997. That is mirrored by a 35 per cent. decrease in drilling and exploration of appraisal wells last year. Therefore, a sustained period of low oil prices will not provide a reasonable or adequate rate of return for investors and we could see investments being channelled to other lower cost and less regulated provinces overseas.

The effect of that would be devastating on jobs in north east England, Scotland and London. What is the Government's plan to ensure that all EU countries have comparable levels of environmental regulation in this very important area? If this is not going to happen, and countries such as Denmark are simply going to go it alone, what will the Government do to safeguard the competitiveness of the UK industry?

I am aware of the initiative which the Government are taking to investigate, through the Government and the oil and gas industry taskforce, the means by which the life of the UK Continental Shelf can be extended and can survive current low oil prices. I am sure that Ministers will recognise that this laudable objective will not happen while at the same time the Government are imposing heavier regulatory burdens on the British industry than are being imposed by partner countries on its competitors. Can the Minister indicate the current status of the work of the taskforce? Is consideration of the impact of IPPC regulation on the industry being included in its work? Will the industry's regulators be obliged to take account of the recommendations of the taskforce?

I hope that I have said enough to indicate that the industry has very real concerns and I look forward to the Minister's response. I beg to move.

Lord Whitty

I wish to reassure the noble Lord that the Government recognise the importance of preserving the competitiveness of the North Sea oil and gas industry. However, our legal advice in relation to the activities listed in the directive, and the legal advice of the Commission, is that it should apply to the continental shelf and beyond territorial waters unless there are indications to the contrary—and there are none—in the IPPC directive. The directive clearly applies to large combustion plants which are listed, and it applies onshore and offshore. Our legal advice indicates that this applies to those offshore within and beyond territorial waters. Therefore, our legal advice stresses that all member states have a legal obligation to comply with the directive and this is our way of ensuring that the UK does so. If the noble Lord is correct that another member state has indicated that it does not intend so to do, our legal advice is that it runs the risk of infraction procedures. I am sure that would be pressed on us by the British industry and would be taken up by the British Government in those circumstances.

It is true that other member states will have different and precise ways of implementing the directives, depending on their own current underlying regimes, but that is a different matter. The directive and its end result are obligatory on all member states. As the noble Lord indicated, the offshore regulation is the responsibility of the DTI rather than my department. However, I can assure the Committee that the draft regulations which apply will be published before the Report stage.

The DTI's stated objective is to maximise the economic benefit to the UK of its oil and gas resources, taking into account the environmental impact. That is why we intend to implement IPPC efficiently. It is also true that in addition there are other important improvements for protecting the environment which we shall need to make. It seems sensible, as we are doing for land-based installations, to use the powers in the Bill where appropriate to set up an efficient, coherent and consistent regime across the board.

Those other changes include improvements to the regime for the use and discharge of chemicals offshore, which the UK is required to introduce this year under the OSPAR international agreement. If recollection serves me correctly, I saw that agreement through this House when I was spokesman for the Foreign Office. We shall also need to consider the recommendations on dealing with oil spills and discharges in the review of the noble and learned Lord, Lord Donaldson, on salvage and intervention following the "Sea Empress" disaster.

I understand that discussion between the UK Offshore Operators Association and the DTI has been substantial and that my honourable friend the Minister for Energy and Industry, John Battle, had a positive meeting with it. That will continue to inform the way in which we prepare the regulations. The noble Lord asked specifically about the taskforce which is looking specifically at environmental regulations. The DTI Minister who chairs that group may be able to give in writing further information on its progress.

We consider that there is a legal obligation. We are using this opportunity to provide the basis for establishing a regulatory framework which would include dealing with other international obligations and obligations which might arise elsewhere. I hope that the discussions already undertaken by the DTI with the offshore operators association will lead to some degree of consensus on the regulations and the way in which they will be applied.

Lord Jenkin of Roding

At this hour, it would be wrong to go into the Minister's answer in detail. I seek to make only two points. It is not just the way in which different countries will administer the regulations:if most other countries do not apply the environmental impact directive to exploratory drilling but only to development drilling, whereas we are applying it to both, it is not a difference in the way of applying but it is ignoring half the regulations. The Government need to take the issue seriously. The case for having Europe-wide regulations is that the burdens are the same on everyone. There cannot be different systems with different burdens, costs and standards. If that does not happen under the regulations, one can understand why people become very cynical about them.

Secondly, Ministers in the Department of the Environment, Transport and the Regions, have been extremely forthcoming during the course of the debate. Large parts of the Bill have been rewritten. If, at a later stage, we return to issues connected with the oil and gas industry, perhaps one of their colleagues in the DTI will come along and take part. Perhaps there would not then need to be such urgent consultation. As a former Minister I would recommend that course when asked questions to which one does not know the answer. I leave that thought with the Minister. It is the Environment Minister's Bill, but the industry comes under the regulation of the DTI. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn. Clause 4 agreed to.

[In the Title]:

Lord Jenkin of Boding moved Amendment No. 38:

Line 1, leave out ("new").

The noble Lord said: With the leave of the Committee, I shall move Amendment No. 38 on behalf of my noble friend Lord Peyton of Yeovil.

This really is a "new" Bill—or will be by the time we have finished with it. I understand what my noble friend had in mind, but he is not here to make his points. It is right for me to say from the Back-Benches that we have had some extremely valuable and productive debates. Those who follow these matters from outside will recognise the value of parliamentary debate as a back-up to any amount of consultation between departments and industries. We are often able to achieve changes which those other channels cannot. We saw that in the course of today. I beg to move.

Lord Renton

I agree with my noble friend Lord Jenkin of Roding. We have had extremely valuable debates. I, and I am sure my noble friends, are extremely grateful to the noble Lord, Lord Whitty, for the way in which he responded to our complaints. He said that he will reconsider virtually the whole of Clause 1.

As to whether the Bill introduces a new system is doubtful. If we look at the second schedule the changes made in existing legislation, which at present controls pollution in various ways, are slight. The two most important references are to the Environmental Protection Act 1990--with one amendment being made to Section 9—and the Clean Air Act 1993 where there will be two minor amendments.

The existing system therefore is to continue. The Bill does not impose a new system; it adds to the present system by incorporating what is in the European directive and providing that special provision shall be made for consideration by the Welsh Assembly and the Scottish Executive. One hopes that they will find the existing system as modified as little as they require. My noble friend Lord Peyton of Yeovil was therefore well justified in suggesting that it was not really a new system; it is a new system to be adapted.

Baroness Farrington of Ribbleton

If this is the length of time it takes for minor, non-new modifications to be made to an existing system, I wonder how many hours we would have spent had it been totally new.

To describe our intentions for this Bill as ''new" or "not new" is a somewhat subjective choice. On the one hand, we are replacing pieces of existing legislation, including all of Part I of the Environmental Protection Act 1990, with a new pollution control regime; on the other, the replacement is broadly similar, albeit with a few new elements—for example, a regard for energy efficiency and application to some new sectors.

We have already debated at length the purpose of the Bill and made it clear that it arises only from the need to implement the IPC directive in a way which fits coherently into other regulatory requirements. We promised to consider amending the Bill to restrict its scope for the purposes set out in it. We published draft regulations and will do so shortly for offshore installations which describe in detail how the provisions in the Bill will be used.

I hope that, with those assurances and safeguards, the noble Lord, Lord Jenkin, on behalf of the noble Lord, Lord Peyton, will not feel the need to press the amendment.

Lord Jenkin of Boding

I should like to associate the noble Baroness, Lady Farrington, with the kind words my noble friend Lord Renton addressed to the noble Lord, Lord Whitty. Both Ministers have been extremely responsive to all points made from all parts of the Chamber and will be seen eventually substantially to improve the Bill. I do not intend to press the amendment. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

House resumed: Bill reported with amendments.