Official Report: Minutes of Evidence

The Chairperson (Mr Butler): I welcome Mr Colin Breen, the assistant director of environmental resources policy division (ERPD); Mrs Carmel McDowell, acting head of waste legislation branch at DAERA; Mr Mark Cherry, head of waste regulation unit at the Northern Ireland Environment Agency (NIEA); and Mr Philip Walker, the deputy head of financial planning at NIEA. Take your time to get yourselves settled, guys, and, when you are ready, feel free to brief the Committee. Thank you very much.

Mrs Carmel McDowell (Department of Agriculture, Environment and Rural Affairs): Mr Chairman and Committee members, thank you for the opportunity to provide you with a briefing on the Waste (Fees and Charges) (Amendment No. 2) Regulations (Northern Ireland) 2025.

The Northern Ireland Environment Agency (NIEA) operates an annual charging policy for regulatory activities. The charging policy covers eight separate charging schemes, of which the waste management charging scheme is one. The waste management charging scheme requires legislation to be laid in order to make it operational. The NIEA charging policy is governed by the principles of 'Managing Public Money Northern Ireland' (MPMNI) and operates under a full-cost recovery model. That means that the NIEA charges operators of regulated activities the full costs of those regulated activities and that those costs are not subsidised by the taxpayer.

The fees and charges covered by the charging policy are uplifted annually, normally by the GDP deflator figure, which is issued by Treasury in December of each year. However, the charging policy allows the Department:

After analysis by the NIEA finance branch, it was agreed that the fees and charges for 2025-26 should be uplifted by 6·19%. The uplift applies to the schemes in the waste management charging scheme 2025. Had NIEA used the 2025-26 GDP deflator figure of 2·39%, as issued by Treasury, the agency would have lost an estimated £750,000 in fees and charges across all the schemes. That would have to have been paid by the public purse.

Normally, the statutory rule (SR) required to bring the waste management charging scheme into operation each year is laid by negative resolution. However, these regulations are made under schedule 4 to the European Union (Withdrawal) Act 2018, which stipulates that such regulations are subject to the draft affirmative resolution procedure unless they alter a fee or charge only to reflect changes in the value of money. Therefore, because the fees and charges are being uplifted by a figure that is not a standard inflationary measure, the Waste (Fees and Charges) (Amendment No. 2) Regulations (Northern Ireland) 2025 are required to be laid by draft affirmative resolution.

If you have any questions, we will be happy to answer them, where possible.

The Chairperson (Mr Butler): Brilliant. Thank you so much. The percentage uplift looks and sounds pretty reasonable. Obviously, there are good reasons for doing it for cost recovery, if not for profit-making. To set the scene more clearly, whilst the uplift seems pretty reasonable, you pointed out that not making it would result in a £750,000 loss. Will you set out more of a picture of what that amounts to for the carriers and companies that do waste management? Is it envisaged that it will be in any way a burden for them?

Mrs McDowell: I can go through some of the fees that operators will get. For example, 71 operators in 2024-25 paid £338: they will pay £359 this year, which is an increase of £21. Thirty-five operators paid £3,218 in 2024-25: they will pay £3,417 in 2025-26, which is an increase of £199. The highest fee in 2024-25 was £10,297: that will go up to £10,934 in 2025-26, which is an increase of £637. I know that NIEA operates a debt policy: could you talk a wee bit about that, Philip?

Mr Philip Walker (Northern Ireland Environment Agency): Invoices are raised, and operators have 30 days in which to pay. Operators sometimes fall outside that payment regime. Where there is hardship, we try to facilitate a payment plan or late payment. It is certainly not a case of being draconian and pushing operators over the edge. There is a facility whereby operators can apply on the basis of hardship, and we ease the conditions in such cases.

The Chairperson (Mr Butler): OK. Does the higher figure of £637 refer to one operator?

Mrs McDowell: That is one operator.

The Chairperson (Mr Butler): That is fine. I hoped that that was the case.

The briefing paper states that a specific consultation was not considered necessary, as the increase in fees and charges is in line with the charging policy that NIEA previously consulted on, and that no issues were raised at previous Committee meetings. However, the proposed increase of 6·19% is significantly higher than the GDP deflator figure, which is 2·39% for the current year. Can you explain that a wee bit better? Did that not warrant further consideration?

Mr Walker: The policy asks us to use the GDP deflator figure, but, if using it does not recover the full cost, we have the right to move to an alternative method. The most suitable alternative method for calculating the increase was looking at actual costs. The overwhelming majority of our cost increases are staff-related. That is where the 6·19% comes from. In the past, the GDP deflator served us well simply because pay increases applied to the Civil Service had been modest. Therefore, the GDP deflator has been in the region of 1·5% to 2·5% over the past number of years. Pay increases in the Civil Service — the increase in salary costs — have been around that range, so the GDP deflator has served us well. Only in the past couple of years have there been slightly better pay increases for civil servants. That pushed the salary cost up, and, as a result, pushed the regulatory cost up.

The Chairperson (Mr Butler): Percentage-wise, are staff fees the bulk of the cost?

Mr Walker: On average, of a £130 bill, roughly £100 is direct staff costs. That would be the cost of the staff directly involved in those regulatory activities. The additional £30 would relate to overheads such as accommodation, the depreciation of the vehicles used to inspect sites and corporate services overheads for services provided by the parent Department and third-party providers such as IT Assist, HR Connect and Account NI. Roughly £100 of that £130 goes on direct staff costs.

Mr McAleer: Thank you for your presentation. You said that operators can apply for hardship. Is there a possibility that those increased fees could a negative impact on small-scale or community-led recycling initiatives? Are supports or exemptions available for those?

Mr Mark Cherry (Northern Ireland Environment Agency): Small-scale or charity initiatives?

Mr McAleer: Yes.

Mr Cherry: I am not aware of any at the minute. I am not too sure if the fee increase will have any impact on those, so I could not give you a direct answer.

Mr McAleer: Is there a possibility that the fees could discourage some smaller operators and thereby have a negative impact on compliance? Has that been considered?

Mr Cherry: This is only my personal opinion but the fee increase this year will be 6%. Scaling across some invoices for smaller fees of around £300 or £400, 6% is not much of an increase, to be honest. A figure of £10,000 was quoted for bigger operators for whom the fee increase could be substantial, but they would be significant operators in the waste industry and in the sector.

Mr McAleer: You mentioned hardship. Perhaps you could come back to us about whether the increase in charges will have any impact on community-led initiatives and whether there are exemptions for them or discounts.

Mr Cherry: I do not have figures in front of me. We on the regulation side of the house issue the invoices. We had no real negative feedback on the increases last year. This year has yet to go out. Our debt recovery in that area is quite low, so we have not seen an increase in debt recovery for that period.

Mr McAleer: Thank you very much.

The Chairperson (Mr Butler): It is obvious that the cost of recovery for you guys will be passed on to those seeking the services of the waste operators.

I have a final question, if that is OK. It was not felt necessary to do an equality impact assessment in this instance. Will that be revisited, or has it been assessed that it will be done only if there are operational changes or changes to the law around the costs?

Mr Walker: Our current regulatory fees and charges policy is due for renewal fairly shortly. I do not have an exact date for that, but the next review stage of that would be a useful opportunity to undertake that.

The Chairperson (Mr Butler): Thank you very much. I cannot promise that you will get off as lightly next time.