New EA charging regime to start in April

The Environment Agency (EA) has announced it will be implementing its new charging regime at the start of the new financial year, stating in response to industry concerns over the increase in charges and the timeframe for their implementation that the changes are unavoidable due to financial pressures.

A consultation on the proposed changes to the EA’s charging and permits regime was launched at the end of last year (30 November) and closed on 12 January in what has been the biggest review of charges ever carried out by the EA, involving heavy engagement with trade associations and businesses set to be affected by the changes.

The changes, set to enter into force from 1 April, are designed to simplify the charging regime and to reflect the amount of regulatory work required by any given site to permit it to handle waste, shifting the financial burden for the use of EA services onto businesses and away from the public purse.

Put simply, well-managed and low-hazard businesses presenting a low environmental risk would be charged less, while higher-risk or poor-performing businesses would be charged more.

This has led the EA to introduce supplementary application charges where ‘extra or unusual’ regulatory work is required by EA staff; these will be charged on top of application and annual subsistence charges. The EA will charge £240 an hour for ‘key technical work’ involving nuclear regulation, and £125 an hour for other technical and support work.

Consultation response

During the consultation process, consultees raised several concerns with the new charging regime, which the EA attempted to address in a consultation response document. Consultees called for more transparency around the makeup of charges, and flagged up issues with the timing of the charging changes, suggesting an implementation date of 1 April 2019 would be more feasible to allow industry to adjust its budgeting for the financial year.

In response, the EA cited financial pressures to explain why the implementation of the new regime cannot be delayed until April 2019, saying that it is required to cover the costs of its regulatory services by the government, which has become more difficult due to the recent economic climate. Between 2011/12 and 2017/18, the EA’s income from charges has increased by 1.5 per cent, while cumulative inflation in the same period has been 15 per cent. In addition, the EA has seen its government grant for environment and business activities reduced.

Regarding concerns over how the charges have been calculated, the EA response states that it has followed the Treasury’s Managing Public Money and Classification of Receipts guidance and the approach has been based on ‘assessing full cost recovery, identifying efficiencies and exploring opportunities to improve the service’ offered. Further information on the makeup of the charges is provided in Annex 4 of the response document.

On the land spreading of waste in agriculture, such as biofertilisers derived from anaerobic digestion or composting, the increased charges will not be adjusted, with the EA stating that such a rise ‘cannot be avoided’ due to the cost of dealing with environmental risks and compliance levels in the sector.

WEEE

In the EA consultation document, changes were proposed to how the EA recovers the cost of regulating the WEEE system, which will be applicable from 1 January 2019.

The EA stated that the response to these proposals, especially the introduction of an annual £12,500 subsistence charge for Producer Compliance Schemes (PCS), was ‘favourable’, though respondents felt the increase in charges across the board was too great and would negatively affect smaller obligated producers. Respondents also suggested the fall in income resulting from lower charges could be offset by increasing charges for waste treatment facilities and exporters.

The EA stated in response that it would reduce charges for non-VAT registered producers and overseas producers. The annual producer registration charges from 2019 will be:

• £30 for each member of the scheme who is a small producer
• £100 for each large producer not registered for VAT
• £100 for each large overseas producer not registered for VAT
• £375 for each large overseas producer registered for VAT
• £750 for all other scheme members

Charges will not be increased for waste treatment facilities and exporters, as this could create a ‘barrier to entry’ for small waste treatment facilities. Changes will only apply to producers in England, with fees for businesses registered in Scotland, Wales and Northern Ireland remaining unchanged.

The decision by the EA to increase annual WEEE charges has been met with criticism from Recolight, the leading WEEE compliance scheme for the lighting industry. Commenting on the news, Recolight CEO Nigel Harvey said: “It is disappointing that the EA did not take on board comments made during the consultation process. This increase will be particularly difficult for small and medium sized companies.

“The EA were presented with alternative, fully costed funding options that would have limited the impact on businesses with a turnover below £1 million. These alternatives would have spread the increase more fairly across the range of operators in the WEEE system. However, they were ignored, in favour of this excessively costly solution.”

You can view the EA’s response to the consultation on the new charging regime on the EA website.