COMMISSION ON THE POWERS AND ELECTORAL ARRANGEMENTS OF THE NATIONAL ASSEMBLY FOR WALES

MINUTES OF PROCEEDINGS

of the

EVIDENCE OF:

Helen Phillips and Nigel Reader,

Environment Agency Wales

 held at

St George’s Hotel,

Llandudno

on

Thursday, 27th March 2003

LORD RICHARD: Thank you very much for coming. You know what we are engaged upon. Would you be kind enough to identify yourselves to the Commission, and then open up the subject for us. We will then ask limited questions. Would you like to proceed?

Dr HELEN PHILLIPS: Thank you Lord Richard. I am Helen Phillips, Director of the Environment Agency Wales, and we thank you for the opportunity to come and give evidence to the Commission this morning. And on my right is my colleague Nigel Reader. Nigel is Director of Finance in the Agency, and he is also the Director with the lead responsibility for managing the Agency's interface with Whitehall. This should add some perspective to our discussion this morning.

NIGEL READER: Good morning and thank you for inviting us. Yes I am Director looking after, as Helen says, Finance, Corporate Planning and some of the national support services that provide services to Agency Wales including ISIT. And as Helen said, I have a custodial responsibility for relationships with Whitehall. This is a fairly loose arrangement but it is for me to keep an eye on so hopefully if you have interest in the relationships I can talk about how it works with Wales.

LORD RICHARD:  Where are you based?

Dr HELEN PHILLIPS: Environment Agency Wales head office is in Cardiff and we have offices in wider Wales. By way of opening remarks, there are a couple of points I would like to make. The current Devolution arrangements have allowed us to achieve real environmental improvement and outcomes in both an expeditious and cost-effective way. And we have benefited from the underpinning UK and indeed EU legislative framework. That has really enabled us in Wales to commit our energy and resources to look at Wales’ priorities. And indeed to ensuring that Wales’ priorities are effected in the UK and EU agendas.

I think another feature of Devolution that is enormously helpful is the more joined-up relationships we have in Wales between ASPBs, the Assembly, and indeed Local Government. It has brought a better kind of cross-fertilisation of ideas and enabled us, I think, to get a sense of distribution and allocation of resources. I think the importance of that ‘team Wales’ concept really has been underestimated.

SIR MICHAEL WHEELER-BOOTH: Could I interrupt you for one moment? This is a very important point because one of the selling points about the 97/98 Devolution package was that there will be better oversight of your sort of body, quangos – this would have better supervision and it would be more economic. So if you had an example of the general proposition that you have just made it would be very useful to have them on the record.

Dr HELEN PHILLIPS: I think there are probably a number of examples. The kind of close-working team Wales approach example that first comes to mind is the Wales Waste Strategy. Where we have got, in terms of Wales, a clear aim and priorities, as for other environmental issues, within an EU and UK framework.

We have a situation in England where we have not really yet had any successful waste strategy, and yet Wales has identified this as a key environmental priority which produced a strategy, and put in place arrangements to ensure that we are working towards delivery of the strategy. There is a special dedicated Assembly unit that supports this very joined-up working.
Also by way of opening, I think it will be fair to say that the environmental priorities in Wales are different to those in England.
We have a reflection of this in the Section 4 guidance the Assembly gives to the Environment Agency. That is effectively the Assembly's articulation of the contribution we expect Environment Agency Wales to make towards sustainable development. What has been enormously refreshing is the way in which the Assembly has welcomed our contribution to the wider sustainable development agenda, not only for advice or professional services in terms of our traditional roles, but also our advice and support on issues such as transport, energy and indeed spatial planning.
That has steered us towards a more joined-up and indeed imaginative approach to making contributions as team Wales players. There is further scope obviously for bodies in Wales to get together effectively and to be supportive of the Assembly. And again, so far, I think this has been achieved with the support of the Assembly and the contributions of other players. I think in the future we need to wait to see how we get even more benefit from that.
Two final points. Whilst we have had the benefit of being able to focus on Wales’ priorities, we have also had the infrastructure and mechanisms to effectively deal with cross-border issues without the complexities experienced elsewhere. I think the example I give here is Central Europe where they are in a process of preparing for the Water Framework Directive. And because they have traditionally not had the same degree of cross border management of environmental issues with neighbouring countries, they are having to make an enormous investment to get that right. We currently have that right. It is important we acknowledge the value of that.
And the other point I would make is the extent to which we are focusing on Wales priorities, having the support of a larger organisation. We fondly refer in Wales to our back-room people, ie our colleagues in England from whom we get quite a range of specialist advice and services. Nigel has already mentioned some, for example I S I T, but we have economies of scale, for example delivered through England and Wales Laboratory Services, and a critical mass of skills, for example in specialist centres for nuclear regulation to salmonid fisheries and indeed a wide range of things in between. I think by way of introduction that is all we want to say.

TED ROWLANDS: Can I ask you to give an idea of budgetary arrangements for Environment Wales? Please tell us for the record.

NIGEL READER: Yes there is a separate budget for Environment Agency Wales. The funding for part of the work done in Agency Wales, comes from the National Assembly. Grant aid probably represents only about a quarter in total funding. Other funding comes from charges on, those that we regulate in England and Wales. The charges schemes operate on a national basis. So there will be an allocation of budget from that income to Agency Wales and according with need and priority.

PETER PRICE: When you say national?

NIGEL READER: To England and Wales yes.

LORD RICHARD:  Can I ask please who does that?

NIGEL READER: Allocation in terms of the – it is done. ?

LORD RICHARD:  Wales and England.

NIGEL READER: By the Environment Agency nationally as regards the resources that it's collecting from charges. As regards the grant aid allocation to Agency Wales that is direct funding out of National Assembly.

HUW VAUGHAN THOMAS: The budget – the UK budget. What are the charges and what is the need?

NIGEL READER: The England/Wales budget is about £800 million annually, and the Agency Wales proportion of that is about £60 million. In addition to shared services which are enjoyed by Agency Wales over and above that. Of the total £800 million in England and Wales, nearly half of that is spent on flood defence – and risk management .
PAUL VALERIO: They are entirely on the remit?

NIGEL READER: The Scottish Environmental Protection Agency – is a creature or a body sponsored by the Scottish Executive. - Not sure this fits??

HUW VAUGHAN THOMAS: The charges cover a proportion of the budget.

NIGEL READER: Charges cover about 30% of total, that is the regulatory charges that have been raised – perhaps a bit more, 35 per cent of total. I am talking England and Wales now. Grant in total accounts for between 20 and 25 per cent. [I will get my percentage wrongs when I add this up at the minute – always risky for a Director of Finance]. But the balance and the biggest chunk of funding comes from levies for flood defence that we raise upon Local Authorities for flood risk management activity. So the balance about 35% - 40% . That adds up roughly. The main regulatory charges are for environmental protection, and for abstraction of water from the water environment.

LORD RICHARD:  Is it all – sorry one more question. Is there any sort of set format it might be coming to Wales out of total?

NIGEL READER: Well, it's not as simple as a single allocation. The grant in aid comes from the National Assembly and will be determined on the basis of the National Assembly's determination.

LORD RICHARD:  I was thinking about the –

NIGEL READER: In terms of the allocation out of the funding that is raised through charges, through environmental protection charges. It will be based on assessed needs of regulatory effort required.

Dr HELEN PHILLIPS: I think perhaps the shorthand figure I keep in my mind is that there is a net subsidy at the moment from England to Wales of around £2 million in terms of the environmental protection responsibility. In terms of our defence, flood defence responsibilities, if they were to be for example reorganised on a political basis there will be a need for the order of an additional £1.7 million per year.

TED ROWLANDS: 1 7.

SIR MICHAEL WHEELER-BOOTH: Do you have the comparable figure for Scotland?

Dr HELEN PHILLIPS: I am sorry I don't.

NIGEL READER: No. We don't. Scotland is again – a mixture of some charging income, and some grant from the Scottish Executive.

LORD RICHARD:  Is this structure of finance, is it something that you have inherited or something that has emerged recently?

NIGEL READER: Flood defence funding has been unchanged for a long time; that is therefore an inherited situation of money raised.

Dr LAURA McALLISTER: That is pre-Devolution.

NIGEL READER: Indeed. Charging for regulatory activities, again it existed in our predecessor. The National Rivers Authority used to charge for abstraction from and for discharging to the water environment and that has been inherited. Essentially it is an inherited situation. I would say that we are trying to make it more rational. I think that in the submission that came to you there was reference to the complexity of our funding sources which in an ideal world we would like to see simplified.

LORD RICHARD:  You what - if it is reinforced?

NIGEL READER: Indeed.

TOM JONES: You talked of the value of the background back room providing extra expertise as and when you required it. The alternative I suppose is to us would have been the CW alternative where it is Wales’ only body, wherein therefore all the expertise it acquires is based within Wales and it is a wider remit that you have.

And the advantage of having that coming from Wales - but to what extent do you try to provide some centre of excellence within Wales to England? Are you based on what is particularly important for Welsh-based needs? Have you got any conscious effort being made within the Environment Agency to move resources out from head quarters to Wales, in any particular field?

Dr HELEN PHILLIPS: I can give you a few examples. As a principle we are very conscious when we make decisions about how we organise the business in England and Wales, that there needs to be a sensible distribution of services, expertise and indeed jobs.
For example we have the national salmonid centre in Wales - that is not surprising - but we also run the National Air Quality Monitoring Centre in Wales. That is largely to do with decisions on where we source our expertise. We do endeavour to strike a balance.

Dr LAURA McALLISTER: Could you explain to us how your loop of accountability has changed post-Devolution in terms of your liaison with Assembly and Subject Committee and so on?

Dr HELEN PHILLIPS: Yes, perhaps if I describe what our accountability looked like in Wales then Nigel will be able to put it into an England and Wales context.
We are accountable to the Assembly through our remit letter which describes what the Assembly want us to deliver in the coming year. And then we enjoy the scrutiny of the EPT Committee once a year, describing how it is we are progressing towards the targets that are set for us. And then, in addition to that we have, for example, quarterly sponsorship meetings of officials to make sure that there is good progress towards these annual targets.
And perhaps that is not the most important feature of why it is a good environment in which to be doing business. We have unprecedented access, I would say, to Ministers, which gives us a real opportunity to be responsible in terms of some of the emerging policy requirements. It gives us a lead time and remit to improving support at the right time.

Dr LAURA McALLISTER: Before we talk about England and Wales side, not that much of a comparison you can probably make, but is there a comparison to the situation pre-Devolution? What is your opinion on that?

Dr HELEN PHILLIPS: I used to support Nigel in a previous life in our interface with Whitehall and it is very, very different. I think that there is a very clear articulation of what Welsh environmental priorities are. There is a huge political will to make progress on them and there is, going back to the earlier comment, the opportunity for us to join in with regulatory partners and other environmental bodies, from CCW to RSPB Cymru and beyond. I think it really oils and speeds up the extent to which we can deliver real outcomes for the money that is available to us.

TOM JONES: To what extent does your Committee for Wales Chaired now by Gareth Wardell say yes?

Dr HELEN PHILLIPS: I can tell you all in a moment.

TOM JONES: To what extent does that have a responsibility to the Assembly as opposed to the Chair of the Environment Agency? How do you work that out?

Dr HELEN PHILLIPS: We have a number of Committee arrangements. If I describe them briefly to you that will be helpful. There is an Environment Agency Board and there is a Chairman of that Board. That is an England and Wales Board which is responsible to Ministers, and that is the accountability route. Within Wales, Gareth – Gareth Wardell, who is a member of the Environment Agency Board, has special responsibilities for Wales. And in that capacity, for example, chairs our Advisory Panel Wales which comprises Gareth, myself and the Chairs of our three statutory Welsh Committees. These are the Regional Flood Defence Committee, the Fisheries, Ecology and Recreation Committee, and the EPAC which is the Environmental Protection Advisory Committee.

There will be close liaison between Gareth and Sue Essex here for example, in describing how the Agency is progressing against various targets, and indeed Gareth provides that link back to Environment Agency Board Wales issues and priorities. I think it might be helpful if Nigel just described the governance arrangements a little further.

NIGEL READER: England and Wales position, yes. The Agency is a non-departmental public body. It is an Assembly sponsored public body of course, as far as activity in Wales is concerned. It has a Board Chairman, appointed by the Ministers, answering through Ministers to Parliament. A Chief Executive who is also the Accounting Officer; she covers England and Wales in that capacity. Gareth Wardell is appointed by Assembly, and is the Assembly appointee to the Board. I am an Executive Director but I am answerable to the Board. I am not a member of the Board. The Board comprises 15 members including Chairman and Chief Executive; the Chief Executive is the only executive member, the rest are non-executive members; Gareth is one.

TOM JONES: If the Environment Committee for National Assembly was extremely concerned about the Agency’s work in Wales or a piece of it, how would they perceive – who would they call to provide evidence? Would they see Gareth as being diplomat, being an accountable person? Would it be Chair and Chief Executive or Environment Agency who would come down and be answerable?

NIGEL READER: Clearly, Gareth would play a role in that regard –But the ultimate accountability lies with the Chief Executive and Chairman on behalf of the Board.

TOM JONES: On the top of page two, moving away from that, and you make a very interesting observation about Devolution in reverse. Where a consequent Act actually changed the Assembly's role responsibility. Could you explain that to the Board in more detail please?

Dr HELEN PHILLIPS: Yes. The issue here is that where you have a number of responsibilities devolved to the Assembly, when you get new legislation that responsibility, or the equivalent responsibility in the new Act, is not automatically devolved to the Agency - to the Assembly, apologies. Which can effectively appear to reduce the extent of the devolved powers. We would really suggest that where there is a new Act, the powers should generally be transferred to the Assembly.

The more fundamental issue is that, unlike the Scotland Act of 1998, which transferred general legislative and Ministerial competence in the devolved area to the Scottish Parliament and to the Scottish Executive respectively, the Government of Wales Act generally provides that discrete powers not be transferred by the order or by primary legislation. So the Scotland example would be that general legislative competence in the environment or agriculture is with Scottish Parliament. The NAW only have those powers within the field of the environment or agriculture that have been transferred to it.

TOM JONES: Is that a problem? Have you had cases where that has been a problem?

Dr HELEN PHILLIPS: Let’s say sometimes we have to find pragmatic solutions while the legislative framework catches up, and the example on the top of page two is precisely such a case.

LORD RICHARD:  Can I ask you two other examples you have quoted in the page too - similarly activities different in England and Wales in the conservation and regulation.
Now, you say recent consultation further increases the difference. Can you expand on that a bit and the one also where you say the two countries diverge. Why do you believe they diverge?

Dr HELEN PHILLIPS: It is really meant to be an illustrative point more than anything else. Our primary concern is to ensure that Wales enjoys the same standards of environmental protection as England, and this is one example where there is a divergence and that it appears not to be beneficial to the environment.

And conservation: the amendments to the conservation regulations in England in 2000 mean that Special Areas of Conservation have a legal status in England and they don't enjoy that same legal status in Wales, and that is important.

LORD RICHARD:  Why is that, what's – ?

TED ROWLANDS: Is that not by choice about the Assembly Government?

LORD RICHARD:  That is what I want to know – what's the statutory framework for that?

Dr HELEN PHILLIPS: I am not enormously au fait with the legislative details of this particular example, but perhaps if we could talk about the wider principle. It is where you get a legislation or amendment to some piece of legislation in England and where there are devolved powers within the Assembly to effect that legislation. And the extent to which that takes place in a parallel or sequential process.

Tto pick an example, which might be the Animal By-Product Regulation Order, the Agency is not the competent part of that, but it is an EU Regulation that must be enacted on the first of May.There has been consultation in England with regard to what that enactment would mean, but we have not yet had that consultation issued in Wales. So –

LORD RICHARD:  What happens?

Dr HELEN PHILLIPS: It is a very good point. The conundrum for a body such as ourselves is that do we, for example, continue to provide exemptions for some activities such as land spreading of some of these products under existing legislation. Or do we say that we are cognisant of the fact that there is an EU Regulation coming into place on the first of May, which must be implemented. Early indications from the Assembly are that we should act with existing legislation, but of course we could be open to legal challenge on that, and that is less than an ideal situation.

LORD RICHARD:  Is that analogy to the fact that the Assembly has not actually got on with doing the consultation in time or is it to due to the structure of the consultation in England?

Dr HELEN PHILLIPS: I think there is huge pressure on the legal resource not only in the Assembly but I think it would be fair to say DEFRA also. Governments generally are being faced with whole rafts of legislation from Europe. I think it is an enormously important area to invest in. Fundamentally, the whole purpose of this Commission is to look at expanded powers of the Assembly – however, you have to get your policy capacity right in terms of deciding what it is you want to do, as a precursor to having the legislative powers with which to do it.

It is very much the same, really, with implementation of some of the EU legislation. There is a whole host of possible options as to how they are implemented and there is potential for perhaps an improved level (not a diminished level but an improved level) of compliance in Wales. But in the absence of the intellectual rigour applied to the problem in the first case it is difficult to get that.

SIR MICHAEL WHEELER-BOOTH: The regulation was made by the Council, by the Commission.

Dr HELEN PHILLIPS: It is regulation that goes into direct effect. I think it has to be a Commission one to go into direct effect doesn't it?

SIR MICHAEL WHEELER-BOOTH: The Council would have agreed to it won't they? So our Minister was a party to this regulation?

LORD RICHARD:  But is not - precisely it is not the origin of the regulation.

Dr LAURA McALLISTER: It is a fact it is coming into force on the –

LORD RICHARD:  Different method of the consultation.

SIR MICHAEL WHEELER-BOOTH: But it's the going one step back – if it was too quick to do it, sometimes happens. We had somebody at the Council or whole affair or in the Commission that should have objected early.

Dr HELEN PHILLIPS: Through Europe it would have been a dialogue between the UK and the Council and the Commission about this regulation. And there has been some quite effective engagement, for example there is a UK (I don't know if derogation is the right technical term) – there has been some kind of agreement of slippage in terms of the cooking oil element of Animal By-Product Regulation.

There is a wider point because there is a bigger challenge in Wales given the size of the agricultural sector and the importance of the agricultural sector to the wider economy. Whilst there is an argument that we should have a long timetable to think about implementation of some of these measures, and indeed take more of a risk-based approach, we need to be making that representation in Europe through UK Government, which obviously has not been successful in its entirety on this occasion.

PETER PRICE: Can I pick up a couple of things first I as I understand the picture you have just painted? Your concerns about the possibility of divergence in the law between England and Wales as effectively your area you're in attributing the divergence not to choice but to the lack of resources to carry forward legislation in parallel with the lack of resources available to the National Assembly Government. Is that a direct correct impression and to what extent could it that be mitigated and isn't it at the moment being mitigated by good collaboration with DEFRA?

Dr HELEN PHILLIPS: I think that there are two aspects to it. As you have outlined there is the issue of resource and I am sure that mitigation is entirely possible by joined-up working with DEFRA and indeed, you know, a real Wales presence and voice in UKREP for example.

Coming back to your question of choice though, I think that is an important one, because that really brings us to consider the policy development and indeed advocacy capacity of the Assembly in order to really be shaping what it is that these lawyers should be bending their minds to.

TED ROWLANDS: To follow through after that I am not very clear. What we are trying to get at from you is whether it is a matter of power? Isn't it partly a matter of powers? Assembly has the power to implement these directives by statutory delegated legislation. It has not done so in this case, or perhaps the resource reason or others – it has not chosen not to do it or actually not got around to it is that what you're saying in the case of the animal by-product?

Dr HELEN PHILLIPS: In the case of Animal By-Products; in the case of other legislation it may not have the powers but in this case it does.

TED ROWLANDS: In the case of the kinds of special area of conservation that you mentioned is that a case of not getting round to it, or the adding – it does not want to follow that model I mean?

Dr HELEN PHILLIPS: I think it is a bit of both to be honest.

LORD RICHARD:  It is that Brussels thing is it? Special area of conservation.

Dr HELEN PHILLIPS: It is not a Brussels thing. If we take our example, where there is more progress being made. There is a PSA target, which effectively drives the contract between Treasury and English Nature. Which means that they have a requirement to have 95 per cent of SSSIs in favourable condition by 2010, that PSA target is actively driving key milestones towards that end objective. And at the moment there is already 58 per cent achievement – they are on a kind of straight line to the end point.

We don't have the same drive in Wales at the moment, but we do have a backstop which is the Water Framework Directive. But the Water Framework Directive would not require that to happen until 2015. So it could in theory, take us five years longer to get the same point in Wales as in England, which we would argue was undesirable. As indeed is the lack of that clear drive in terms of the milestones, even between now and 2010.

PETER PRICE: So far as we are dealing with resource as the problem, and dominantly in the example you've stated it is the lack of resource in the Welsh Assembly Government that is leading to divergence predominantly where you have cited examples which you thought was 50/50, choice and perhaps I am applying mathematics to something that you said both there. But it seems resource is the bigger of the two issues rather than choice of divergence down to the extent that it is resource. How far could this be further addressed by better elaboration of DEFRA in turning this the other way around? Is there a lack of good collaboration with DEFRA from your perspective as an outside body in the relationship between you two, but one that is very close to what is going on?

Dr HELEN PHILLIPS: Obviously, you're aware this is an outsider perspective. We do perceive a lack of resource and perhaps a lack of focus and direction of the available resource around some of these issues. Albeit I would say that this is a second order in the equation.

With regard to the relationship between NAW and DEFRA, I think that there are some good working relationships in place, but I think it is fair to say that DEFRA themselves struggle with a lot of this. Which in turn makes the burden on Wales even greater. I think Nigel you probably see that better and more closely than I do.

NIGEL READER: I was going to add I think it takes two to collaborate of course, and I think that DEFRA themselves would in some areas be desperately short of resource in lawyer support and policy support in relation to waste in particular. And I think that their ability to collaborate with National Assembly officials is somewhat limited and may not be at the top of their agenda either. I think that improvement could be made, but what I am saying it is a two-way thing; it is as much with DEFRA I think as it is with National Assembly.

PETER PRICE: I want to pick up something that you said a moment minute ago, I didn't have a chance of picking up then that was about the retrogression of power to the Assembly and this issue again of whether this is by choice or accident. Where you have new legislation that appears to take back to Whitehall power that under previous legislation was in Wales, in your experience this has been always by accident or something that has failed to notice it. And, therefore, that the machinery is not good enough at the moment for dealing with that, or in principle that its need is too complex or are choices being exercised in this?

Dr HELEN PHILLIPS: My experience so far is that it has often been Environment Agency bringing to the attention of NAW that in fact this diminution of powers either occurred or is on the verge of occurring.

PETER PRICE: That was in Whitehall accident or choice?

Dr HELEN PHILLIPS: In Whitehall I have no idea.

NIGEL READER: Cock-up or conspiracy?

PETER PRICE: No evidence. I mean, when the issue was taken up with them, is there a tendency to say good heavens is that what we have done, or to say oh yes that is exactly what we have done?

Dr HELEN PHILLIPS: Well discussions with lawyers usually look closer to the former than the latter don't they?

LORD RICHARD:  He is a lawyer.

TED ROWLANDS: When I read your page two almost from after the first paragraph, the end of your answer, what struck me was this curious ambivalence you have got between on the one hand you like a bit of divergence but not too much. It is sort of there is that sentence you want the megawatt electricity power planning position transfer; you want an attainable [inaudible] in energy again in the subsequent paragraph. Are you saying that to the Commission that you want to shift – you think that there is more room for Devolution or is it about writing this whole environment balance about right? What are you advising us? What is the message you want to - I get a rather ambivalent feeling for your page two.

Dr HELEN PHILLIPS: Let me try to clear that up. I am sure Nigel will want to comment also. What we want to do is ensure that there is a minimum level of environmental protection and standards across England and Wales and indeed preferably beyond. And you get all of the benefits that come with that,in terms of creating a level playing field for industry across England and Wales. You could say that there should not be any divergence at all.
I take you back again to the example of the Waste Strategy for Wales. In that respect we enjoy Devolution enormously. And I suppose that the wider or perhaps more fundamental question is the opportunity and scope it gives for the NAW to think in terms of policy development and whether or not they wish to go above that level playing field in terms of environmental protection, principally for the benefit of the wider sustainability that it would bring.
An example would be the way in which we all perceive Sweden and the fact that it holds its environment in high regard, and this provides them with competitive advantage. So the opportunity for Wales to make those decisions to make that investment we would regard as being very healthy.

TED ROWLANDS:  It is question of investment or a question of primary legislative powers required to do that or what secondary powers. You have got to improve standards. How far could it go outside European directives?

Dr HELEN PHILLIPS: There is a hierarchy of stages. The first is getting the policy right so you know what it is you want to do. The second is using the legislative powers that are currently at your disposal, and you know it is clear from some examples that we are not getting the maximum benefit out of that. The third stage is primary legislation, and the decisions you need to make around that.

First of all it is almost as much an emotional decision as a logical decision in many ways, but it is a political decision at the end of the day. The balance is around the extent to which you believe there is the need to spend money to maintain ground. So you would have a big investment in keeping up with the legislative requirements coming from Europe that affect Wales; currently we can piggy-back on the back of the UK legislative process.
At the moment, if I can describe it crudely, in many ways we get our cake and our jam and eat it all because we get the business delivered and then we can turn all our energies and attention into saying exactly what we want, how we want, some modification and are we going to spend extra money here there or elsewhere. I think that primarily legislation would undoubtedly give freedom where you have got more radical policy decisions, but there will be a consequence with that,in the cost to the NAW previously described and the cost to the Environment Agency, around issues of critical mass skills, economies of scale, £2 million subsidy in terms of EP and £1.7 million buffer in terms of our flood defence functions.

TOM JONES: When you compare that through Wales – your position to reflect the environmental needs of Wales with Scotland, bearing in mind that everything happens in the European framework; that something has put into Brussels thinking that at an early stage rather than a late stage, the wishes and sensitivity of the Scottish environmental to Wales is, that do you think that you are piggy-backing and trying to influence your colleagues in the England and Wales Agency is as effective as the counterpart in Scotland who may not be able to go more directly to Brussels?

Dr HELEN PHILLIPS: The Brussels angle is an interesting one. Just before we go to the Brussels angle though it is probably worth pointing out to you that our parallel body in Scotland (SEPA) buy into services provided by the Environment Agency in England and Wales. A good example would be RIMNET, which is to do with nuclear incident management, and our flood warning services. So, effectively, there is joined up working already with Scotland.

The answer to your question is the extent to which you believe the formal lines of communication with Europe are as or more effective than the lobbying routes. And we can probably debate that for the rest of the day. I think that Wales’ voice is under-heard in the formal channels, compared with the extent of what we do with DEFRA.

LORD RICHARD:  Is this something going through Brussels which you have said you have got views on it? You can't get any documents direct can you.

Dr HELEN PHILLIPS: There is two ways we would do that. We would do it through DEFRA, so that the UK voice was heard, and through the Wales European Centre.

TOM JONES: That is the relative thing isn't it? What I was asking you about was the input at the beginning of it you see, is not Brussels – then you find at a later stage, heck this will effect Wales in a certain way which will contravene or contradict our established policies here so it is getting that in early enough.
The question was whether the Scottish Environment Agency is able to do that because of its extra responsibilities or not?

Dr HELEN PHILLIPS: The first thing to say in going back to your point about needing to be in Europe is that we have now got better joined-up working between the Agency and DEFRA. Traditionally, we have not necessarily been welcomed with open arms in that debate in dialogue and they have seen it as something for civil servants to do. .
Going back to WEC. I don't see that as entirely reactive. There is huge opportunity for us to be proactive there. We have had a secondee from the Environment Agency in the WEC for the last year who has been very good at identifying what some of the potential issues and challenges for Wales are in the forthcoming legislation. The extent to which Scotland is more effective than England in making the European connection is questionable.

TOM JONES: And Wales – the Wales end of it?

NIGEL READER: I don't think I would be qualified to judge effectively in terms of the European agenda. It is certainly getting better – the route through for the Agency in England and Wales with DEFRA; there is much more of a joining up in terms of the influence going into Europe. Now in part that trend has been accelerated by – the financial management and policy review of the Agency, which recognised that the Agency could do better, but also the things that DEFRA could do better for the Agency or with the Agency. One of which was giving the Agency an influence in respect of what DEFRA was doing in Europe.

LORD RICHARD:  You haven't actually had a case yet have you where your Welsh views look of legislation radically differs from the English view? What did you do there – about you know you might say I suppose nothing – there is nothing we can do about it?

Dr HELEN PHILLIPS: There are probably two things that would happen. Firstly, we would seek to influence colleagues who are making that representation.

LORD RICHARD:  In Government?

Dr HELEN PHILLIPS: In Government and also through UKREP. . The other thing we do pragmatically is endeavour to design slightly modified implementation regimes .

LORD RICHARD:  It strikes me using your evidence that it all works really reasonably well provided that Wales and England want the same thing - its when you know there are diversions then there is problems. If the divergences don't get deeper there will be problems.

Dr HELEN PHILLIPS: Yes. There will be bigger challenges and issues to manage. We can't sit here and pretend that they will be insurmountable because clearly they are not, and we see models elsewhere that have been managed. But I suppose that it is just acknowledgement of what those challenges are and the costs associated with them.

SIR MICHAEL WHEELER-BOOTH: I would like to follow up this point about the influencing of European draft legislation and the early stage. My first question is does the National Assembly play a part on this, if so is it effective? That is the first question?

Dr HELEN PHILLIPS: The National Assembly has a direct route through lobbying and, in terms of the reconstitution of the WEC and the establishment of the National Assembly office as part of new arrangements, they have a route there. They don't have an official voice as a distinctive Member State in the type of official representation delegation.

SIR MICHAEL WHEELER-BOOTH: The reason for asking this is that years ago I was concerned with the European Communities Committee in the House of Lords, and it had a sub-committee on the environment, and it had people on it like Lord Ashby, Lady White, and it had Wales advisers like Professor Ron Edwards from Cardiff. And they went over to Brussels and they had an intellectual dialogue with the people in the Commission, and to a much less extent in the Council. And they often won the argument but this is my impression, I am not an expert. Now does that kind of thing happen from Wales now through the Assembly or in any other way?

Dr HELEN PHILLIPS: We have limited exposure to the decision making or indeed the opportunity to influence that decision making in Europe.

SIR MICHAEL WHEELER-BOOTH: Going back to your point, it is about getting in early and that is much more effective than trying to stop people doing things at the last moment. In a way that is what seems to me in going back all these years from the House of Lords in the 70's with this, the 70's, they were getting in early, and they were winning the argument. They were making complete fools of the people in the Commission indeed DG[?] whatever it was but.

LORD RICHARD:  The Commission is a very able body. If you want to talk to the Commission you go to them and say presumably if you don't go and talk to them, it is because you feel inhibited doing it rather than that there is a bar at the other end.

Dr HELEN PHILLIPS: Interesting observation because we recently had the Chair of the Environment Committee come and speak to the Chair of our Committees.

LORD RICHARD:  Your Committee? In this Assembly?

Dr HELEN PHILLIPS: In Europe.

PETER PRICE: Which institute in Europe? Parliament?

Dr HELEN PHILLIPS: The MEP running the environment.

PETER PRICE: Caroline Jackson.

Dr HELEN PHILLIPS: Caroline Jackson. She was lamenting the extent to which Member States effectively engage with Parliament. She said the level of challenge she has experienced is paltry.

LORD RICHARD:  That is down the road to Parliament. The people you have got to get at in Brussels is the Commission when they are thinking about policies and my experience of Brussels was that the Commission was very open to discussion.

TED ROWLANDS: You did not as a Welsh Agency go to the European Commission without permission from headquarters?

Dr HELEN PHILLIPS: No.

LORD RICHARD:  Without clearing it with the UK body?

Dr HELEN PHILLIPS: No, we would have dialogue with colleagues in England., largely in order to tap into the policy advice and expertise that would reside there as to how to make our case in the Commission. Hopefully, that will be effective.

PETER PRICE: Can I take up the issue of how much legislative space there is to be divided between the UK and Welsh levels? The point being in very large areas the legislation is in fact EU legislation, and if I can just try and see what the picture is of where the areas of legislative competence are within the UK, to be split up. Would it be accurate to say standards are set for air, water, soil, and waste all at the level of EU legislation, and that in those areas, what we are talking about is our monitoring and enforcement, with the possibility of tweaking the standards a little, not really very much? And that if we are talking about monitoring and enforcement given that there is a divergence of structures between England and Wales. For example, in local authorities, and some other agencies, inevitably there are going to be growing divergences in issues to do with monitoring, and enforcement, requiring different legislation or whoever passes it for England and Wales. Is that any kind of accurate snapshot?

Dr HELEN PHILLIPS: I was with you until you got to the point of saying that there will be monitoring and enforcement done by separate people in separate places. What was your point after that?

PETER PRICE: That the structures for example, in local Government in Wales, as compared with Local Government in England, are increasingly divergent, and that because the agencies in Wales that are going to be involved in monitoring and enforcement, are differently structured, that inevitably, that means that the e-legislation governing them, whether it be primary or secondary, has to be different. To what extent is that true and at WEC?

Dr HELEN PHILLIPS: I would not digress from that proposition.

PETER PRICE: In what ways?

Dr HELEN PHILLIPS: If we are talking about creating a level playing field or indeed settling for a minimum standard across Europe, you want bodies, however discrete and divergent, having a shared and common understanding of the required outcome. I think that is huge. We are currently involved in new legislation and getting into the detail of implementation.

And we neglected to talk about what the environmental outcome is in adequate detail, so that all these different bodies can be aligning themselves around delivering that outcome. So I would hope that even with divergent structures you would get a greater degree of commonality in terms of the end product that is being delivered.

TOM JONES: In one sense I think earlier on you were critical of the fact that quality of SIs in Wales and England was not of the same order because on the one hand the Treasury was directing targets for this nature, another had increased the quality of an SI with a different mechanism. You haven't got to have that sort of target setting because the quality of the piece of land can be to encouragement of voluntary process as well as the protected process. So the environment scheme for Wales could achieve the same outcomes for sensitive evidence meant as could be a protective negative position of the blanket negativity. So, what I am saying is that divergent policy can actually achieve the same European-wide standard, the flexibility for that.

Dr HELEN PHILLIPS: I think what you are actually describing for me is divergent implementation not divergent standards. So I think that we can now have commonality of standard and an agreement about environmental outcome. I think that there are huge opportunities for that possibility in terms of how this is delivered.

TED ROWLANDS: That is what Brussels and Treasury and everybody else has to do to have adjusted. The Commission is looking at the alternatives; the obvious alternative model is the Scottish model. To what extent from your experience, is the Scottish model appropriate as an alternative to the England and Wales model? In other words are there any material differences in environmental issues between the Scotland and England relationship, between England and Wales relationship, that would not make the Scottish model particularly appropriate to apply?

Dr HELEN PHILLIPS: I don't know if I am qualified really to comment on the Scottish legislative process. I suppose the only thing I may be able to offer on that is some help in that looking at our parallel bodies in Scotland and comparing and contrasting them, which I am not sure is entirely the gist of your question. But when you look at the SEPA, there are positives and negatives. Things that would frustrate me enormously working in SEPA are that they are only kind of half a body in many ways – have got all the environmental protection function of the Environment Agency and a flood warning responsibility, but they have no wider flood defence responsibilities. So they miss huge opportunities for real integration, particularly in terms of river basin management.

The other frustration I would have is the fact that they have no powers to refer cases to Court. It all has to be done through the Procurator Fiscal. Whereas in England and Wales we have no such requirement to go through the Crown Prosecution Service.
There are other areas where they are making significant progress, for example Sustainable Urban Drainage. I think SEPA would be considered to be way ahead of the Environment Agency in England or in Wales. But I think that that is more an issue of turning your mind to the particular priority rather than any information structure or internal arrangement. Is there anything you want to add Nigel?

NIGEL READER: The issue was looked at again as part of the financial management and policy review in terms of looking at the SEPA model for the Environment Agency. The balance of judgement was that the model we have now is better. The benefit I think is the access to the critical mass, and the economies of scale; you can get diseconomies of scale of course. We do watch carefully, to ensure we have got a fair proportion of costs and funding to Agency Wales. The balance of judgement is that the current arrangement is a more efficient and effective set-up.

TED ROWLANDS: You mention that there was this interaction was it ‘F’ something?

NIGEL READER: FMPR – financial management and policy review, also known as a quinquennial or five yearly review .

TED ROWLANDS: When did it take place?

NIGEL READER: Two years ago. It reported at the beginning of last year.

TED ROWLANDS: That is a document you have.

NIGEL READER: Yes we certainly have it. I’m happy to make that available.

TOM JONES: The issue there was because at the same time the Assembly was doing a review of the County for Wales. And they could look at the two individual organisations in depth and detail which they did. But what they could not do is actually take a more localistic view of the environmental responsibilities and protection on a Wales basis because you are an England and Wales body, that we were a Wales-only body – they could not actually rejig the whole thing. So that you came to an end at that point, but you couldn't take a broader change.

Can you tell me, being accountable to the Assembly you obviously presumably meet Sue Essex the Minister and your officials on a fairly regular basis. Have you been before the Environment Committee and have you noticed any change in their capacity to question you from the earlier days, in that we are told that now they have a policy capacity which helps Assembly Members or the Committee who are not Members of the Assembly Government, to scrutinise and to ask questions of detail. Are you aware of anything, any sort of deepening of their interrogation of you?

Dr HELEN PHILLIPS: Yes absolutely. Which is super. I think that the other thing is that they are advocating greater policy focus. I think they are holding down areas where they really want to make a difference. An example would be the planning document ’Delivering for Wales’. That is something that we are really getting behind and driving through. Biodiversity would be another example where they have had a big focus, taking evidence from all sorts of people and really setting the agenda on priorities to push it forward.

I suppose the one thing I would also advocate is perhaps a bit more joining up across the Committees. For example, we had a joint Committee spanning agriculture and environment to deal with the foot and mouth crises. And now, when we talk with Sue Essex about agriculture and waste issues, we need to have a parallel discussion with Mike German because all the waste bits Sue Essex will be looking at, and the agriculture bits Mike German will be looking after. Whilst we do some joining up at official level, I think that there is that opportunity for us to encourage some more of that joining up in determination of policy setting and scrutiny.

Dr LAURA McALLISTER: I want to take you back to something you said earlier on that I found interesting, that was in connection with the relationship between policy capacity and potential for legislative change. I wonder if you could answer this within the context of the sustainable development duty that rests with the Assembly in many respects. I wondered if you could – in your paper you refer to some areas where there is clearly an overlap of policy spheres between environmental policy and energy policy, in particular the DTI impact on windfarms I think is example you give us.

I wonder in terms of that, if we are to assess the success of the Devolution settlement, which of course includes yourselves as well. Is there any weakness in it to be judged – the problem which could be solved by the transfer of specific functions or are they fundamental weaknesses which could only be solved through primary legislative capacity? I wonder if you could answer that if you can within the context of the sustainable development? Have there been times or have there been instances where problems in developing that policy could only be solved through primary legislative panels?

Dr HELEN PHILLIPS: Let us start with the energy example. I think that the energy example is a very important one because you could argue that energy policies arestrategic issues for UK Government. But then, bearing in mind the Assembly’s sustainable development duty, and indeed the recent White Paper on Energy and the importance of renewables, it is clearly important for Wales to be able to make decisions about the size, scale, pace and location of these renewable facilities. So I think that there is a balance to be struck between the Assembly's aspirations in terms of really being a sustainable country, and what could be perceived as a constraint.

But in answer to your direct question re primary legislation or transfer of powers; presumably, either legislative model would work. One example where we are pressing quite hard for primary legislation is around the Fisheries Review. We had a Fisheries Review looking at England and Wales, and there are a number of archaic practices and whole lists of by-laws and all sorts of issues that could be rationalised and moved away by a primary legislation Bill. I know we are pressing quite hard for that one.
But I am not sure that I can think of other examples. I suppose the conundrum there is whether you join in with the UK in terms of drawing up primary legislation, or whether it is something you try to tackle on your own. There are pros and cons of both.

PETER PRICE: If I may come in on the inter-dependence between your organisation and others in Wales. We have talked about the National Assembly essentially today, and we know your independence with your own parent body, but what other organisations are important to you in carrying out your trials and in what ways are they important? For example, what is the role of the authority? Can you put that in perspective of which are bodies and what are the bodies and yours in relation to?

Dr HELEN PHILLIPS: Yes, to take your lead in terms of the local authorities, hugely important, principally around where we have shared responsibilities. And there are a number of examples of that with local authorities. Contaminated land would be one, where local authorities are responsible for identifying contaminated land, indeed the designation of contaminated land. Another example would be fly tipping, where local authorities look after small scale non-hazardous fly tip waste, and the Agency look after fly tip waste at the other end of the spectrum.

Another example is where we are co-regulators.
Another example around local authorities as planning authorities, where clearly decision-making powers are theirs, but there is an advisory role for us. A notable example is development in the flood plain, where we are very dependent on local authorities taking our views into account.
There is a kind of anomaly in Wales at the moment in regard to our status as statutory consultee. We need our role to be enshrined in legislation. At the moment we are in limbo, but needless to say I am happy to report that the local authorities are general happy to have our advice. The other sector, if I could put them together, would be other environmental organisations. I would include in that the CCW, Forestry Commission, RSPB Cymru, by way of example of organisations that have aspirations or are charged with delivering certain environmental outcomes where we have an overlapping or parallel interest. I think it is fair to say that they intend to be more parallel than overlapping because obviously with the Financial Management and Policy Review and other such initiatives we have effected a reasonable mapping exercise of responsibilities. Is there any degree of duplication that we need to be seeking to eliminate or to work in a more joined-up way? Surprisingly really, duplication is marginal.
Then there are other sectors. There are community-based groups with which we interact with in two different capacities. One as a way of raising awareness of environmental issues in terms of taking some personal responsibility for good environmental management and practices. But that is notoriously hard and it is often best to tackle it on the scale of the general public rather than community groups. We do a certain amount of that. I suppose that the kind of more focused interaction is in licensing decisions where we have a frank debate with communities. The source of some of that tension is often the understanding of the extent to which they have been informed as opposed to the extent to which they are being consulted, ie what the extent of their influence is on the decision-making process.
And our legislative requirements are invariably to make decisions based on sound science. There are a number of, if I can use the planning analogy, material considerations we can take into account, for they are often not as wide as the considerations our communities would like to see. In many respects we are our own worst enemies in that way because we don't parallel track the planning applications procedure and the authorisation procedure. So communities often have had quite a long dialogue between two parties by the time any development proposal comes to fruition, and we are not best served by that.

LORD RICHARD:  Can I thank you very much indeed for coming? Clearly is very interesting and fascinating - we have heard an awful lot so far from ministerial and Government elements so it is nice to talk to you at the sharp end. Thank you very much indeed.