Consultation outcome

Environment Agency charge proposals from October 2021: summary of consultation responses

Updated 16 December 2021

In July 2021 we published our consultation ‘Environment Agency charging scheme proposals from October 2021’:

(i) applying EPR and abstraction charges to the Isles of Scilly

(ii) amending EPR charges to include fusion activities in nuclear regulation

These proposals and the decisions reached following consultation will help to ensure:

• people only pay for the service they receive
• we reduce reliance on taxpayer funds that might otherwise be needed to support this work

1. Purpose of this document

The purpose of this document is to:

• summarise the responses received during the consultation
• provide our reply to these responses
• confirm the final decisions

This document also describes how we carried out the consultation and who we consulted.

2. Background

The consultation proposed changes to our charges for The Environmental Permitting Regulations 2016 (EPR) and The Water Resources Act 1991 to make sure we fully recover the cost of our activities.

2.1 Isles of Scilly

Customers on the Isles of Scilly were previously exempt from charges under the Environmental Permitting Charging Scheme and the Scheme of Abstraction Charges. However, the government made an order in 2020 that enables us to recover the costs of regulation in this location. We therefore propose to apply the existing charging schemes to customers on the Isles of Scilly. This will provide consistency for our customers now that the exemption no longer applies.

2.2 Specified radioactive substances activity – fusion

We propose to include fusion activities in the Environmental Permitting Charging Scheme by extending the definition of a ‘specified radioactive substances activity’ (S-RSA). The proposed change will enable us to recover the costs of regulating the emerging fusion industry.

The proposals were developed in accordance with HM Treasury’s Managing Public Money handbook. This ensures we recover the costs of providing our services through charges to the customers receiving those services. As a result, our approach is designed to achieve full cost recovery.

3. How we ran this consultation

We opened this consultation on Friday 16 July 2021. It ran for 8 weeks until Friday 10 September 2021. Consultees were able to respond online or by post. We provided a contact number and address for queries. We ran the consultation in accordance with the criteria set out in the Cabinet Office’s consultation principles guidelines.

The consultation proposed changes for implementation on 1 October 2021. However, we have revised this date and now intend to apply any changes from 1 April 2022 for these reasons:

• it aligns with our charging cycle and is therefore more administratively efficient
• the extra time will provide further opportunity to promote understanding with communities on the Isles of Scilly about who will be subject to regulation and charges, which may allay concerns expressed by consultees
• many will fall outside of specific licensing and permitting requirements and therefore charges – there is an opportunity for those with any remaining questions about the range of exemptions to contact the Environment Agency for further clarification if this is required

4. Response from consultees

4.1 Overview

This section explains the main themes raised during the consultation and the Environment Agency’s response to each.

We received feedback for the consultation from 23 respondents:

• 11 were on behalf of organisations
• 12 were from individuals

Sixteen respondents provided yes or no answers for consultation questions relating to Isles of Scilly (questions 1 to 4).

Eight respondents provided yes or no answers for consultation questions relating to fusion (questions 5 and 6).

The following chart presents a breakdown of the yes, no and not applicable responses. Most responses were accompanied by further explanation from the consultees. Responses to the individual questions are discussed in the following sections.

Response	Yes	No	Not applicable
Q1 Isles of Scilly: Extend EPR charges	7	9	0
Q2 Isles of Scilly: Extend Abstraction charges	8	8	0
Q3 Isles of Scilly: EPR charges economic impacts	4	12	0
Q4 Isles of Scilly: Abstraction charges economic impacts	4	12	0
Q5 Fusion: Charging	7	1	2
Q6 Fusion: Economic impacts	5	2	2

4.2 Principle of extending regulatory charges to Isles of Scilly

Questions 1 and 2 asked consultees whether they agreed with our proposal to extend the existing Environmental Permitting Charging Scheme and Scheme of Abstraction Charges to cover the Isles of Scilly. Responses to these questions are as follows.

Question 1: Do you agree with our proposal to extend the existing Environmental Permitting Charging Scheme to cover the Isles of Scilly?

The responses were:

• 7 said yes
• 9 said no
• none said not applicable.

The 7 respondents (44%) that agreed with extending the Environmental Permitting Charging Scheme to cover the Isles of Scilly recognised concerns about environmental status and agreed that regulatory costs should be met by those being regulated. They also noted concerns around:

• having to use boreholes
• how water and waste would be managed
• how the regulation would work

Respondents who disagreed:

• suggested that the current approach works
• queried how the regulation will work, including how water and waste would be managed
• raised concerns about higher costs

Question 2: Do you agree with our proposal to extend the existing Scheme of Abstraction Charges to cover the Isles of Scilly?

The responses were:

• 8 said yes
• 8 said no
• none said not applicable

The 8 respondents (50%) who agreed with our proposal to extend the existing Scheme of Abstraction Charges to cover the Isles of Scilly:

• recognised that regulatory costs should be met by those being regulated
• queried how the regulation will work
• noted concerns about using boreholes

Respondents who disagreed with this question (50%):

• suggested that the current approach works
• queried how the regulation would work
• noted concerns about higher costs

Environment Agency response

The Isles of Scilly are one of the most isolated communities in England. The islands are considered to be sensitive in relation to environmental issues including the quality, vulnerability, and availability of groundwater.

Historically, little environmental regulation has been applied to the islands. Investigations in recent years have shown that human activities on the islands can and are impacting environmental quality, especially groundwater used for abstraction.

Without modern regulation to minimise and control any impacts, groundwater could be further impacted to the detriment of people and wildlife. Discharges of treated sewage effluent to the designated marine environment also require regulation to ensure they do not cause marine pollution which could impact local beaches.

Environment Agency staff will conduct regulatory compliance inspections for permits and licences. These visits will ensure that people or businesses who need a permit or a licence are operating according to conditions that protect the environment for people and wildlife. The charges associated with permits and licences for abstraction or effluent discharges are necessary to ensure this regulation is funded and that the environment and islands’ sustainability is not placed at further risk.

Studies on the larger volumes of groundwater abstracted for human consumption show that it has to be carefully managed and regulated under licence to support the needs of residents and tourists as well as water dependant conservation areas, especially on St Mary’s. The islands have limited supplies of groundwater which have to be regulated according to licence conditions especially during hot summers and where drought conditions may arise.

The extension of these charging schemes to the Isles of Scilly will also fund the work required to allow abstractions on the islands, both now and into the future. This work will improve the resilience of the water system for the long-term future and during periods of water stress.

In addition to the points above, respondents also noted some economic concerns which are addressed in the following section. Legislation to require permits and licences for abstraction and discharges already applies on the Isles of Scilly. The application of a charging regime is necessary to ensure compliance with regulatory conditions that protect the environment on which people and wildlife depend.

We have considered all the feedback. Whilst there were some suggestions about limiting the scale of charges, no responses suggested alternative options that we could implement to fully recover the cost of regulation in this location. We plan to implement this proposed extension of our existing Environmental Permitting Charging Scheme from 1 April 2022. As noted in the consultation document (sections 2.3 and 3), we also consulted on changes to the Scheme of Abstraction Charges. Subject to the outcome of that consultation, the charges in the revised Scheme of Abstraction Charges will also apply to the Isles of Scilly from 1 April 2022.

4.3 Economic impacts of the application of regulatory charges to the Isles of Scilly

Questions 3 and 4 asked consultees whether they agreed with our assessment of the economic impacts of the proposals to extend the existing Environmental Permitting Charging Scheme and Scheme of Abstraction Charges to cover the Isles of Scilly. Responses to these questions are set out below.

Question 3: Do you agree with our assessment of the economic impact of the proposal to implement the Environmental Permitting Charging Scheme on the Isles of Scilly?

The responses were:

• 4 said yes
• 12 said no
• none said not applicable.

The 12 respondents (75%) that disagreed with our economic assessment of the proposal to implement the Environmental Permitting Charging Scheme on the Isles of Scilly were concerned about:

• the proposals making costs higher
• charges being excessive
• how regulation would work

They suggested that the existing approach already works. Impacts of coronavirus (COVID-19) were noted as well as issues about using boreholes.

Question 4: Do you agree with our assessment of the economic impact of the proposal to implement the Scheme of Abstraction Charges on the Isles of Scilly?

The responses were:

• 4 said yes
• 12 said no
• none said not applicable

Key themes noted by respondents who agreed with our economic assessment of the proposal to implement the Scheme of Abstraction Charges on the Isles of Scilly related to concerns over environmental status.

Respondents who disagreed with this proposal (75%) provided further comments relating to increased costs and some suggested that charges were perceived as excessive. They were concerned about the islands’ economy and disagreed with assumptions that charges would be tolerable for customers on the Isles of Scilly as they are deemed to be tolerable on mainland.

Environment Agency response

In response to these concerns, we have carried out more detailed analysis of the types of customers likely to be impacted. There are 21 licence holders holding 44 licences. The charges range from £639 to £4,247 for subsistence and £125 to £4,170 for application. In almost all cases, the higher charges will fall on businesses and organisations for whom the impact of the charges will be small relative to their turnover. Looking at the licence holders, we found only one small company that needs to have a licence. Individual households and small companies may incur charges in the low hundreds but, in many cases, will be exempt from requirements to hold a permit.

An abstraction needs to be in excess of 20,000 litres per day to require an Environment Agency abstraction licence. There may be some smaller businesses who exceed this but the number is thought to be quite small.

Many local people will be unaffected by our charging proposal as they will either be exempt from the need to hold a discharge permit or will be regulated through general binding rules.

In most cases, domestic properties using septic tanks and boreholes will be exempt from the need for a permit or licence and will therefore attract no charges. There may be a small number of properties who require a permit if their septic tank discharge to ground is within 50m of a borehole used to abstract drinking water. This is required as the risk of the septic tank discharge contaminating drinking water is higher and therefore needs greater protection and regulation.

If customers abstract via a water company supply they would not require an abstraction licence, but would incur charges levied by the water company. If customers discharge to a water company sewer network they would not require a discharge consent, but would incur charges levied by the water company.

Most of the major abstraction on the Isles of Scilly for which abstraction licences and charges are required is undertaken by South West Water who now provide wastewater and drinking water services to the Isles of Scilly.

The proposed charges were based on our assessment of the effort necessary to carry out this regulatory activity and, in accordance with HM Treasury’s Managing Public Money handbook, we should recover costs of providing this service through the regulatory charge. We have kept costs as low as we can by utilising our existing scheme and its specific charges. This is more efficient than creating a bespoke scheme which may also have involved higher costs such as Environment Agency travel to the Isles of Scilly. We plan to implement the proposed extension of the existing Environmental Permitting Charging Scheme on 1 April 2022 and charges for customers on the Isles of Scilly will be set at the same level as charges on the mainland.

4.4 Fusion activities

Questions 5 and 6 asked consultees if they agreed with our proposal to introduce a new ‘specified radioactive substances activity’ (S-RSA) definition in the Environmental Permitting Charging Scheme and whether they agreed with our economic assessment of this proposal.

Question 5: Do you agree with our proposal to introduce a new specified radioactive substances activity definition (c) in section 2(1) of the Environmental Permitting Charging Scheme?

The responses were:

• 7 said yes
• 1 said no
• 2 said not applicable

The 7 respondents that agreed with broadening the S-RSA definition to include fusion activities (88% of the yes and no answers) commented that specialist regulatory advice is necessary and that those who are regulated should pay for that regulation.

Respondents that disagreed (12%) commented on the difference between test and commercial reactors and the radioactive waste generated by fusion.

Question 6: Do you agree with our assessment of the economic impact of this proposal to broaden the specified radioactive substances activity (S-RSA) definition in the Environmental Permitting Charging Scheme?

The responses were:

• 5 said yes
• 2 said no
• 2 said not applicable

The 5 respondents that agreed with our economic assessment for fusion activities (71% of the yes and no answers) commented that regulatory costs were relatively small in comparison to business costs. They recognised that regulation is necessary to support UK delivery of fusion.

Respondents disagreeing with this question said they felt the economic estimate lacked detail and one commented on additional business costs for safe use of technology.

Environment Agency response

We welcome the recognition of the need for specialist regulatory resources to regulate the fusion industry and that the industry should pay for this regulatory effort which aligns with the principle of ‘polluter pays’.

Question 5 (which asked whether consultees supported this proposal) received a single ‘no’ response highlighting the potential significant waste arisings from commercial fusion and the potential uncertainty of the regulatory framework for fission-fusion hybrids. These points are not relevant to this consultation which is solely focussed on our charging regime for fusion regardless of waste arisings and future regulatory framework. We note that government is currently consulting on the future regulatory framework for fusion.

A further response suggested that the lack of a fusion-specific siting policy indicates a disjointed approach across all stakeholders. We acknowledge that government policy for fusion is still developing but this is not relevant to this consultation. We currently regulate fusion in England and the changes proposed are to ensure we can regulate existing facilities and future facilities effectively. We will consider the impact of future government fusion policies as these are confirmed.

In responses to question 6 (economic impact) we welcome the recognition from a majority of respondents that our regulatory costs are relatively small compared to the development, deployment and operating costs associated with fusion. Although we acknowledge that the estimate given is not detailed, this is due to the fact that the fusion industry in the UK is growing and we are unable to specify the precise costs until we know how many fusion developers we will be engaging with and the level of engagement they will seek. The estimate we provided is based on information that is available at this time.

Overall the response was positive and consultees supported this proposal. We propose to implement the change as proposed and the planned implementation date is 1 April 2022.

5. Decisions reached

None of the consultees suggested alternative proposals that we feel could be implemented to improve the charging scheme. We therefore intend to implement all the changes set out in our consultation and the likely implementation date will be 1 April 2022.

6. Next steps

We intend for the proposed charges to come into force on 1 April 2022. In the case of water abstraction charges, (subject to the outcome of the consultation and approval) the new charges implemented following our separate consultation will apply.