Government rejects environmental safeguards in Deregulation Bill

Attempts by Labour to ensure that deregulation proposals are accompanied by an assessment of their environmental effects and of the costs that they may transfer from business to third parties have been rejected by Ministers during the Committee stage of the Deregulation and Contracting Out Bill in the Commons. The Government has also resisted amendments intended to introduce extra procedural safeguards against excessive use of the Bill's deregulatory powers by Ministers. But the Committee proceedings have brought one token and one financially significant concession for the scrap metal industry in its battle to be relieved of the burden of waste legislation.

As explained in January, the Bill's deregulation provisions are in two tiers (ENDS Report 228, pp 36-37 ). A small amount of legislation will be deregulated directly by the Bill itself. But the bulk of the deregulatory work will be effected by means of a new power for Ministers to amend or repeal any legislation they choose by order. The principal safeguard on the use of this power will be provided by two new parliamentary committees which will scrutinise draft orders.

On 24 February, a key Committee debate on several proposed Labour amendments to the Bill, including one dealing directly with the environment, highlighted the lop-sided nature of its general provisions.

Under the order-making power, Ministers will be able to repeal or amend legislation which they consider to impose a "burden", as long as this can be done "without removing any necessary protection". In explaining the purpose of an order to the new scrutiny committees, they will have to set out what cost savings they expect it to achieve.

The amendments tabled by Labour on 24 February sought to expand on these requirements. They would have obliged Ministers to explain what impacts on the environment a deregulation proposal would have, as well as "any disbenefits affecting third parties that are expected to flow from the removal or reduction" of a regulatory burden.

Outlining the purpose of the amendments, Labour spokesman Derek Fatchett said that "they would require the Government to make a minimum level of commitment to the environment and ensure that they ask how particular regulation and deregulation initiatives will make an impact on the natural environment....The 'burden' [imposed by existing legislation] would be costed; the effect on the environment would be assessed; and what is meant by 'necessary protection' would be considered."

The only opposition to the amendment came from Tory MPs. Henry Bellingham (Norfolk North West), an adviser to the National Association of Waste Disposal Contractors, said that it would "give every environmental organisation an open day to have their say which would place a huge burden on whichever Minister was involved." And Keith Mans (Wyre) argued that it would "allow any group to forestall and prevent legitimate modification of the Environmental Protection Act 1990 or the various rules surrounding it, which would probably improve the cause of the environment."

John Heppell (Lab, Nottingham, East) countered that the amendment would only concentrate Ministers' minds on the need to consider the environmental impacts of deregulatory measures. "What is wrong", he asked, "with considering in addition to the savings to be made from reducing burdens, the costs that may arise from reducing the burdens? What is wrong with considering the disadvantages that might arise for a third party as well as the benefits to the people from whom the burden is being removed?"

For the Government, Corporate Affairs Minister Neil Hamilton opened by responding to Labour suggestions that the amendment would help it to honour the commitments it made at the 1992 Earth Summit in Rio. "I went to Rio for the day once," he commented, "not so much for environmentally-friendly reasons but more to help British industry export weapons of mass destruction. I regret that I was unsuccessful in securing the necessary contract."

The amendment, Mr Hamilton said, was necessary neither to honour the Rio commitments nor to force the Government to take into account environmental concerns, since the Bill already required consultation on these. True, he conceded, the amendment "may make more explicit what is already implicit," but "where it is appropriate, the consultating [sic] process will be as extensive as felt necessary by those who are worried about the effects on the environment."

Mr Hamilton went on to give an example of how "substantial" costs on business could be reduced by trimming environmental legislation - in this case provisions in the Clean Air Act 1993 dealing with the prior approval by local authorities of boilers, furnaces, chimney heights and abatement equipment.

The Department of the Environment (DoE) consulted on proposals to repeal these rules last year (ENDS Report 222, pp 32-33 ), but until now there has been no official estimate of the costs that may be saved. According to Mr Hamilton, the repeal would avert the need for some 400 applications for prior approval per year. These, he claimed, cost an average of £300, so the total annual cost saved would be £120,000 - not, as it turns out, a "substantial" sum at all.

"Necessary protection", the Minister added, would be provided by the powers available to local authorities to "prevent" statutory nuisances under the 1990 Act.

That presentation glossed over several important points. Although the responses to the DoE's proposals have not been made public, the National Society for Clean Air says that it found virtually no support for them, among its industry as well as local authority members. The prior approval powers are well tried and accepted by industry, it says.

Mr Hamilton's suggestion that statutory nuisance powers could be used to "prevent" pollution was also wide of the mark - they can invariably be used only after pollution has occurred, and rectifying it can cause significant additional expense for companies if boilers have to be modified, chimney heights increased, or abatement equipment upgraded.

Although Industry Minister Tim Sainsbury had argued earlier in Committee that the Clean Air Act powers were no longer needed because "modern furnaces increasingly use cleaner fuels", an example of the problems which boilers can still cause was given on 24 February by Mr Heppell.

A factory in his constituency burns wood, and "the problem is that much wood in modern furniture has plastic lamination, so the horrible black smoke from that furnace still needs to be regulated," he said. "A burden was placed on that factory that it had to have cleaner smoke and that it must not emit so much grit or soot.

"However, a burden was also placed on my constituents. When they went into their gardens, they found that their plants were dead because of the emissions from the furnace. They suffered further burdens: their cars were covered in black soot and the window frames in their houses rotted." It may be, of course, that this particular plant may now be subject to prior approval under the 1990 Act, but it is by no means impossible to conceive of smaller boilers outside the scope of this regime causing similar problems.

The Bill raises another problem in this area. It will oblige Ministers, before making an order, to consult organisations which they consider to represent interests liable to be "substantially affected" by a deregulation proposal. However, householders liable to be so affected by the repeal of the Clean Air Act provisions have no representation and cannot be consulted.

In the face of Government opposition, Labour's amendment on the environment was defeated in Committee - as, indeed, were all the amendments it tabled to the Bill's general provisions. One such amendment sought to probe what the Government had in mind in using the term "necessary protection". This, suggested Andrew Miller (Lab, Ellesmere Port and Neston), was "vague and airy-fairy", but Industry Minister Tim Sainsbury said that the term had been deliberately left undefined. "An unreasonable decision about what is 'necessary protection' could be challenged in the courts. What 'necessary protection' means is common sense," he insisted.

Likewise, Mr Hamilton rejected an amendment which would have allowed deregulation of measures only if they imposed a "significant burden" rather than a simple burden. The Minister contended that "just as it is difficult to define 'burden' with precision to cover all circumstances, there is a large element of subjectivity in the word 'significant'."

Mr Hamilton sought to reassure MPs that "the sort of measures that we shall seek to change by means of the order-making power are not likely to lead to controversy....if we try to slip things in by the back door or do controversial things by means of processes that are not designed to deal with such matters, one of the principal objects of the initiative will be defeated and its credibility will be greatly reduced."

Mr Fatchett seized on this apparent reassurance to press for a promise that the Government would not proceed with a deregulatory measure if it gave rise to any controversy. But Mr Hamilton declined, commenting that "we would have to argue whether opinions were genuinely controversial" - prompting Mr Fatchett to observe that in doing so he had negated his earlier reassurance.

The Government also resisted repeated attempts to amend the deregulation procedure. For example, the Bill obliges a Minister to consult "such organisations as appear to him to be representative of interests substantially affected" by a deregulatory proposal. Arguing that this would give Ministers too much discretion, Labour tabled an amendment to require them to consult "any persons or organisations who may have a legitimate interest in the proposals or who represent individuals who may be affected by the proposals."

On 24 February, Mr Sainsbury resisted this amendment as well, arguing that it would make consultation "completely unworkable in many instances". The new scrutiny committees, he pointed out, would be able to invite any evidence or representations on a draft order, and this would provide an important safeguard.

However, in a later session, the value of that reassurance was again undermined when he commented that "we would not expect the scrutiny committee to carry out very many inquiries as...consultation with interested parties will already" have been carried out by the Government, and so "in many cases the committee may not need further information."

Labour also failed with an amendment intended to make the deregulation process more transparent by obliging the Government to publish lists of respondents to consultation papers. The Bill provides that Ministers may not disclose any information relating to a respondent except with his consent, and Mr Hamilton argued that it was a necessary safeguard that "those who believe, for whatever reason, that their position may be prejudiced and who would be inhibited from participating in the process, are given the opportunity to keep confidential the source of their opinions."

The role of the scrutiny committees also came under examination. Labour questioned whether the Bill would confer adequate powers on them. Parliament, said Mr Fatchett, "has become less robust and more supine", and the record showed that the Government has been defeated in standing committees on just 15 occasions since 1979. Labour therefore tabled an amendment to ensure that the Government would be bound by recommendations from the new committees, and when this failed sought assurances that it would at least accept any recommendation by them that a proposed deregulation order was so important that it should be dealt with by primary legislation instead.

All that the Government was prepared to give, however, was a reassurance that if a scrutiny committee's view was unanimous then its importance to the Government would be "reinforced". Mr Hamilton argued strongly that "the scrutiny powers that are provided must not be so all-embracing that they ultimately frustrate the achievement of an objective that everyone believes is good."

The debates also revealed that not all deregulatory orders will necessarily be examined in detail by the scrutiny committees. Ministers indicated that draft orders would be subject to a preliminary "sift" by their chairmen. That, commented Mr Fatchett, would be "completely unacceptable", and was yet another example of the "autocratic powers" which the Bill establishes.

Opposition concern about the Bill was not alleviated when Mr Sainsbury goaded MPs with the prospect that it would be the vehicle for a permanent deregulation revolution. There was "every prospect", he said on 17 February, that the current phase of the deregulation initiative "will identify many more measures to remove or reduce bureaucratic burdens....They would therefore be suitable candidates for the use of order-making powers in the Bill.

"Deregulation must be...a continuous and rolling programme. That must be so, not only because of the number of provisions in current legislation that we can now identify as imposing burdens on business, individuals and voluntary organisations, but because - the essential point - circumstances change as society and technology change."

Amidst all the concern which the Bill has provoked among constitutionalists, the deregulation initiative continues to show another face - the investment of a great deal of time and energy in ideas for abolishing red tape and cutting business costs which actually mean very little in practice.

On 10 March, the Committee devoted an afternoon to a debate on waste regulation. This focussed initially on clause 20 of the Bill, which will amend section 34 of the Environmental Protection Act 1990 to provide that a single transfer note will suffice to cover repeated consignments of the same kind of waste between the same parties.

Explaining the purpose of clause 20, Mr Sainsbury said that "the main uses of a single description covering a series of transfers will be the regular collection of bins and bags of waste from small businesses such as shops, offices and restaurants." A year, he added, would be "a reasonable stretch for a single description to cover."

But the Minister then conceded that clause 20 was designed to avert a hypothetical situation. "Most" small firms have not been required to fill in separate transfer notes for each waste consignment, he said, because waste regulation authorities (WRAs) have accepted that this was not the purpose of the 1990 Act. Section 34 was not as clear as it might be, and the purpose of clause 20 was simply to put its meaning beyond doubt.

The debate then turned to the scrap metal industry - specifically its long-standing plea to be exempted from waste management licensing on the grounds that scrap metal intended for recycling should not be treated as "waste", as well as its more recent demands to be exempted from the waste transfer note provisions of section 34 on the grounds that the industry is already obliged to keep a record of its scrap inputs under the Scrap Metal Dealers Act 1964.

The industry has had temporary exemptions from waste licensing requirements, but these are due to end on 1 May, when the new licensing scheme under the 1990 Act comes into force. In representations to the DoE, the British Secondary Metals Association (BSMA) has claimed that the UK's 10,000 or so licensable scrap metal sites will face extra costs of £428 million in the first year after the legislation is implemented, and recurring annual costs of £257 million in subsequent years.

As a result, it claims, many sites will go out of business, threatening the recycling infrastructure. But the industry got short shrift from Mr Sainsbury. "Scrap metal remains waste until it is recovered or recycled," he said, and that was the view of other EC and OECD countries. Scrap recyclers will therefore be subject to licensing and the "duty of care" from 1 May, and this should indeed be "helpful to the properly licensed scrap industry, because it makes it unlawful to deliver scrap to an unlicensed site."

The Minister was prepared to offer one concession. Responding to the BSMA's claim that the term "waste management licence" was detrimental to the industry's image, he said that the DoE had agreed that licences issued to scrap processors should be called "metal recycling licences" instead.

That promise appears to have taken the DoE by surprise. But the change of name is no more than that. The term "waste management licence" is enshrined in the 1990 Act, and the DoE says that it will be for WRAs to use the term "metal recycling licences" at their discretion - the move will have no other implications.

Deregulation, for this industry, evidently does not mean a great deal. However, Mr Sainsbury offered one further concession, promising that the current records held by scrap processors could be used as a basis for the waste transfer notes required under the 1990 Act. This appears to meet one of the BSMA's demands, and is likely to reduce the sector's costs of compliance with the new rules by some 20%.

A further concession was made to the industry at the end of March. The scheme of cost-recovery charges which will be introduced with the licensing system on 1 May includes a new low-tonnage band (see pp 33-34 ). Scrap yards receiving less than 5,000 tonnes of metal waste per year will pay 25-30% less in charges than anticipated - but still a great deal more than the BSMA had been demanding. The annual "subsistence" charge for sites in this category, for example, will be £1,000, compared to the £50 sought by the BSMA.

Even so, the fees for sites in the low-tonnage band will leave WRAs receiving 30% less money than the Government itself believes they will need to recover their costs in full - including the costs of meeting the minimum site inspection frequencies which the DoE will be recommending shortly. Exactly who will pay for this "necessary protection" remains obscure.

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