Official Report: Minutes of Evidence

The Chairperson (Ms D Armstrong): I welcome the following officials to the meeting and invite them to brief us: Mr Keith Carlisle, head of the waste legislation branch at DAERA; Mr Philip Walker, head of the budgetary reporting branch at the Northern Ireland Environment Agency (NIEA); and Mr Colin Millar, head of waste permitting at NIEA. Thank you.

Mr Keith Carlisle (Department of Agriculture, Environment and Rural Affairs): Ms Chairperson and Committee members, thank you for the opportunity to come here today to provide you with a briefing on the Waste (Fees and Charges) (Amendment No.2) Regulations (Northern Ireland) 2026.

The Northern Ireland Environment Agency, hereafter referred to as NIEA, operates an annual charging policy to recoup the costs of its regulatory activities. The charging policy covers eight separate charging schemes, including the waste management charging scheme. Waste fees and charges legislation must be laid to bring the waste management charging scheme into operation. The NIEA charging policy adheres to the principles of 'Managing Public Money Northern Ireland' and operates on a full cost recovery basis. Under that approach, NIEA charges operators of regulated activities the full cost of the regulatory services that they receive, with no subsidy from the taxpayer.

The fees and charges covered by the charging policy are reviewed and uplifted annually, typically in line with the GDP deflator figure that is published by HM Treasury each December. However, over the past two years, the GDP deflator figure has not been sufficient to cover the staffing and overhead costs. Charging policy provides the Department with the flexibility to apply an alternative methodology, where appropriate, to maintain a full cost recovery, thus preventing any potential departmental losses.

Analysis undertaken by NIEA finance branch concluded that a 4·02% increase in fees and charges is required for the 2026-27 year to support full cost recovery. The uplift applies across the schemes covered by the Waste Management Charging Scheme (Northern Ireland) 2026. If NIEA had used the HM Treasury 2026-27 GDP deflator figure of 2·23%, it would have led to an under-recovery of approximately £207,000 across its charging schemes. That would have required the shortfall to have been met from the public purse.

The statutory rule (SR) that brings the waste management charging scheme into operation each year is normally laid under negative resolution procedure. However, as the regulations are made under schedule 4 to the European Union (Withdrawal) Act 2018, they must follow the draft affirmative resolution procedure, unless they are amending a fee or charge to reflect the changes in the value of money. As the fees and charges are being uplifted by a figure that is higher than the annual GDP deflator, the Waste (Fees and Charges) (Amendment No.2) Regulations (Northern Ireland) 2026 are required to be laid by draft affirmative resolution.

We are happy to answer your questions, where possible.

The Chairperson (Ms D Armstrong): Thank you for that, Keith.

How does the proposed 4·02% increase compare with fee increases applied by equivalent environmental regulators in other UK jurisdictions?

Mr Philip Walker (Northern Ireland Environment Agency): I do not have the figures for comparable agencies, but I would be amazed if they were materially different. We can compare it with previous years. Last year, the figure for NIEA was 6·19%, and, in the year prior to that, it was 9·5%. Therefore, the increase is fairly modest when compared with some of the larger increases that there have been in the preceding and anteceding years.

The Chairperson (Ms D Armstrong): You mentioned the 2021 consultation. Has there been a more recent consultation to discuss the proposed mechanisms for increased rates and charges?

Mr Walker: The most recent consultation was on the current regulatory charging policy for NIEA. That charging policy has not materially changed. That is the latest policy. This proposal effectively falls within that policy, which is simply full cost recovery for the agency's various regulatory charging schemes.

The Chairperson (Ms D Armstrong): What assessment has been made of that 4·02% increase on regulated businesses?

Mr Walker: Regulated businesses are aware that there is an inflationary increase each year, so they are always keeping an eye out for when that increase is due to come through. It is probably fair to say that businesses would rather have no increase each year, but, as they are aware of the underlying inflation in the economy, they were probably expecting something of that order.

The Chairperson (Ms D Armstrong): Is there any concern that this may move regulated businesses away and that there may be an increase in waste disposal elsewhere?

Mr Walker: It is a very modest increase, so I would be very surprised if there were displacements elsewhere. Most underlying activities within the economy are inflating at about that rate. This is simply to tread water and to allow the agency to keep pace with its costs. It does not enhance its cost recovery level. All that it does is allow the agency to tread water and not to be in a position in which the taxpayer has to subsidise the regulatory activities.

The Chairperson (Ms D Armstrong): Thank you. We will go to Aoife on Zoom.

Ms Finnegan: You have covered some of my questions, Diana.

I understand your point that businesses will always expect an increase, but we should not live in a world where that is just expected. We live in a world of communication. Has that been communicated to the businesses that will be affected by it? You say that they will be expecting it, but are they aware of it?

Mr Carlisle: The online application system and web pages will be updated once the relevant fees are live, and renewal reminders will be issued to holders with the necessary fees detailed.

Ms Finnegan: So the changes will be made before businesses are made aware of the greater fees. There will be no communication before that.

Mr Carlisle: I am not aware of any communication before that, no.

Ms Finnegan: OK. Given that there has been no communication with businesses, there has been no response to that from them. That answers my next question.

My concern, and certainly the concern of anyone whom we have dealt with from NIEA — we had NIEA officials here a couple of months ago — is that there have been lots of complaints about how it operates. They were going to look at the way in which the agency operates at the minute. That increase will cover staff costs only, though, and will not be used to increase performance levels.

Mr Walker: It will not necessarily enhance performance in its own right. It is simply there, as I mentioned, to allow the agency to tread water and recover its costs — to wipe its face when it comes to what it costs for the agency to regulate. The Committee will be aware of the variety of pressures on the agency at the minute with regard to things such as planning. Additional resources have been pumped into planning to try to improve response times. The capacity for the agency to absorb any increase that arises from that is difficult due to those enhanced costs.

Ms Finnegan: OK. I appreciate that. Thank you.

Mr Wilson: We have NIEA officials here. It is interesting that paragraph 6 talks about cost recovery being at 100% in line with the "polluter pays principle". I am curious. In instances where you cannot effectively nail down the polluter, what costs then go uncollected or are unrecoverable, and what impact does that have on your abilities, budget and reputation?

Mr Walker: There are two sides to the house: the regulatory side and the enforcement side. With most of our charging schemes, we have an application fee and then an annual monitoring charge. The monitoring would take place against the conditions of that permit or licence. At every stage, we try to bring those who are being regulated within compliance. That falls within the regulatory framework. Once we get to a point where we cannot bring those who are being regulated within compliance, we pass those activities to our environmental crime unit. We have a number of environmental crime workers who process the criminal or non-compliance aspects to the next stage. It is true to say that there is a lot of cost involved in prosecuting that. We can revoke licences. We reserve the right to revoke licences, which effectively means that a business cannot operate. At all stages, we try to prosecute or bring people within compliance, but there are costs associated with that. The punitive fines that are applied for non-compliance are limited. It is probably fair to say that the punitive fines tend to go to the Department of Justice. None of that funding tends to be hypothecated to the Department, so, quite often, that enforcement action is a baseline cost for us.

Mr Wilson: With regard to the "polluter pays principle", can you set out what the process looks like to make the polluter pay?

Mr Colin Millar (Northern Ireland Environment Agency): There are various tools. The most effective of those tools is probably the Proceeds of Crime Act 2002. When it gets to that stage, we will look to remove the proceeds of crime of that activity. That is a very effective tool. Some of that money is returned to the Department in incentivisations.

Mr Wilson: Lastly, is the outcome that everyone pays more to cover the costs of your duties in enforcing the legislation?

Mr Walker: We cannot pass the costs of enforcement action on to ordinary regulated businesses. Enforcement is beyond the boundary and has to be funded from baseline funding, or, as Colin said, if we get any funding through incentivisation, we can retain that. Any of our funding that is associated with what we are talking about today is effectively just the cost of regulation and getting people into compliance.

Once we move to enforcement, however, those costs cannot be passed on to businesses that are compliant.

Mr Wilson: Thank you.

The Chairperson (Ms D Armstrong): Members have no further questions. I thank the panel for being here today.

Following on from what we have heard today, and bearing in mind that the SL1 affords the final opportunity for the Committee to influence the policy approach, are members content that we have sufficient information in order to make a decision on whether the Committee will support the draft SR in the debate?

The Chairperson (Ms D Armstrong): The draft regulations are subject to the draft affirmative resolution procedure, so there will be a plenary debate. Are members content that the Committee supports the draft SR in that debate, subject to the report from the Examiner of Statutory Rules?

The Chairperson (Ms D Armstrong): Thank you very much, members.