Environment, Food and Rural Affairs Committee
Environmental Audit Committee
Oral evidence: Pre-appointment hearing: Chair of the Environment Agency, HC 546
Tuesday 5 July 2022
Ordered by the House of Commons to be published on 5 July 2022.
Environment, Food and Rural Affairs Committee members present: Sir Robert Goodwill (Chair); Ian Byrne; Barry Gardiner; Dr Neil Hudson; Mrs Sheryll Murray.
Environmental Audit Committee members present: Philip Dunne (Chair); Duncan Baker; Barry Gardiner; James Gray; Caroline Lucas; Jerome Mayhew; Dr Matthew Offord; Claudia Webbe.
Questions 1 - 63
Witness
I: Alan Lovell DL, Government’s preferred candidate, Chair of the Environment Agency.
Witness: Alan Lovell DL.
Q1 Chair: Welcome to this joint meeting of the Environmental Audit Committee—we are joined by the Chairman of that Committee, the right hon. Philip Dunne—and the Environment, Food and Rural Affairs Committee, and I am the Chair of that, Robert Goodwill. We are very pleased to be joined by Alan Lovell, who is the prospective chair of the Environment Agency. This is a pre-appointment hearing and I hope this will give us an opportunity to get to know you a little bit better, to ask you some questions pertinent to your appointment, and also for you to learn from us the sorts of issues that these two Committees may wish to pursue with you in more detail should you be affirmed in this position.
Looking at your CV, Mr Lovell, I see that you spent the latter part of your executive career as a turnaround specialist, rescuing companies in trouble and turning them around. What persuaded you to seek appointment as chair of the Environment Agency? It is a completely different task in hand.
Alan Lovell: It is, and I would not want to give the impression that the agency is in need of the turnaround treatment that I have been engaged in recently. To be fair, over the last 15 years as much of my time has been spent in developing renewable energy projects, which is a little nearer to the remit of the agency. I am a country boy, I am an enthusiast and I am passionate about the environment. I hope that this combination of getting through some pretty tough situations in companies under some stress, together with my interests in the renewable energy field, and also the balance between some public sector along with predominantly a private sector background make for a good mix. I am absolutely passionate to do the job to the very best of my ability, and I hope that background will be of service to the agency.
Q2 Chair: From my own point of view, I was pleasantly surprised and intrigued that somebody going for a role like this is not one of your usual quangocrats who has come up through lots and lots of Government appointments. Were you approached and encouraged to apply for this role or did you spot it and think, “That’s the thing for me”?
Alan Lovell: I was a candidate six years ago, so I have had this somewhat on my agenda previously, but I did not realise that the years had passed so quickly. I was approached by headhunters and asked if I would be interested.
Q3 Chair: You had been one of the close contenders last time around and they remembered you. That is good to know. What skills from your business career do you think you will find particularly relevant to this role?
Alan Lovell: It is important to stress that this is, in no sense, a turnaround. My observation of the agency is that it is running very effectively. Equally, we are all conscious that these are some tough times and I am sure that there will be some pressures on resources; indeed, there are now. Therefore, I would imagine that some familiarity with enhancing efficiency, focusing on the things that really matter and engaging with staff to the full, all of which are absolutely vital in the context of a company under stress, would also be very valuable in this role.
Q4 Chair: Understood. You say you are a son of the soil, a country man. Do you feel you have enough environmental knowledge for this role? Generally, we get people coming to these sorts of roles who know a lot about the environment and have been activists but have maybe never run a big organisation.
Alan Lovell: Yes, I am conscious that I am certainly not an activist, but I might give you a little bit of my environmental credentials. My father, both grandfathers and all four great-grandfathers were farmers in Hampshire and Wiltshire, so I can speak the language. Unfortunately, my father was a younger son and went into the dairy business so I never lived on a farm, but I am very familiar with the industry and I think I can talk sensibly to farmers.
I got engaged, as you know, in a renewable energy business in 2006. It was owned by Terra Firma, that first one. It was one of the sponsors of Al Gore’s visit to the UK in 2006 to launch An Inconvenient Truth. I was one of the 80 or so trained up to be a presenter of An Inconvenient Truth, and I did that 30 or so times.
Q5 Chair: I would have thought they were evangelists, weren’t they?
Alan Lovell: We were somewhat evangelistic, I agree.
Barry Gardiner: They were ahead of their time, Chair.
Alan Lovell: I did that several times, 30 or so times, often in schools, and that felt very worthwhile.
I also have a wood, the one remaining piece of my family farming legacy. I have a 40-acre broadleaf woodland on the Wiltshire-Berkshire border. Tragically, having been hit by the second great storm around 1990, it has now been hit by ash dieback so I am faced with replanting for the second time. That is my background.
I am very proud of the strong commitment to the environment that some of the organisations I have been involved with have taken. I might mention particularly the University of Winchester, where I was a governor for 10 years and chairman for five. It regards itself as the university for sustainability and social justice. It has an excellent record in the field of caring for the environment and all aspects related to climate change. Indeed, it is sure to give all students some insight into climate change and its impact. Finally, I had four years as chairman of the Consumer Council for Water. Therefore, I feel that along the way there has been enough for me to have a decent grasp of environmental issues without, as you say, being a real campaigner for it.
Q6 Chair: Opinion seems to be divided, indeed quite polarised, as to whether people in politics or public appointments should have outside interests. Some say it is a great thing because you know what you are talking about; others say it could affect your opinion and your view. I see that you have declared an interest in the form of a shareholding in a renewable energy company working with Government. You have stepped down as the chair of the company and propose that the financial interest can be managed by recusing yourself from relevant discussions. Would it not be more effective or less of a risk to divest?
Alan Lovell: I do not feel I need to do that, Sir Robert. At one level I would hope that the Committees would be pleased that I have been engaged in investment in very important sectors. I regard the CCS and hydrogen sector as an extremely important one. I have been an investor in it since 2009. It has, as you know, been selected by the Government as the co-ordinator of one of the two clusters that they are backing.
For a start, this project is going to go ahead. It has good enough backing from the Government that it is going to go ahead, so I do not believe there is any issue on that score. The extent to which it is coming to the Environment Agency will be for planning and permitting consents. These would be around the edges, I would say, in respect of the value of the company. Further, I shall not be on the environment and business committee of the agency that will consider permitting and planning issues. Finally, the chief executive is clear that between us we can be quite adamant about my not being involved in any decisions that come to the board. I take confidence in the fact that he himself is confident about that, and I feel it is okay for me to retain that investment.
Q7 Chair: That is understood. Do you have any other interests we should be aware of that might be relevant?
Alan Lovell: I do not know whether a wood constitutes an interest. I declare that.
Q8 James Gray: Where is it?
Alan Lovell: It is on the Hampshire-Wiltshire-Berkshire—
James Gray: Whereabouts?
Alan Lovell: It is called Botley Wood just near Shalbourne.
Chair: James is a Wiltshire Member.
Alan Lovell: It is just in Wiltshire, then. I have a small, less than 0.5%, interest in a tidal energy business, which is currently operating only in the Bay of Fundy in Nova Scotia, and I have a small interest, again less than 0.5%, in Highview, which is a liquid energy storage company. I believe they should be properly recorded, but I do not see a conflict in respect of those.
Chair: That is understood. Caroline Lucas has a short supplementary.
Q9 Caroline Lucas: It is a short supplementary. I noticed on your list of other things that you do that you are a chair of the Association of Lloyd’s Members. Clearly, there could be some conflict of interest there, given the interest of the Environment Agency in issues around flooding and insurance. I noticed it said that you would step down in October. Can you assure us that you would step down before starting this post?
Alan Lovell: If you insist. It is on 5 October, when we have the autumn members’ meeting, which is 10 days after I am due to start on 26 September. I hope you might grant me that 10 days’ grace. It would be better to do it then.
Chair: A rounding error.
Alan Lovell: I would hope so.
Q10 Chair: I have one last question. I know organisations often have people working in them who want to raise concerns, often described as whistleblowers. What would your approach be to whistleblowing within the EA? It is sometimes dealt with well but sometimes dealt with badly. Have you had experience of whistleblowers, and what would your general approach be?
Alan Lovell: I have certainly had experience, and they are taken extremely seriously. I think that is vital. To be honest, I am not sure which way the agency has fallen on whether to do it internally or to have an external party looking after issues. I have had mixed experience on which of those is better. People are sometimes more inclined to go to an external party, so I perhaps slightly favour that. Either way, it has to be something that is taken very seriously.
Q11 Mrs Sheryll Murray: Have you had any significant interactions with the Environment Agency in past corporate roles?
Alan Lovell: Some of my businesses have, but I never had because of not being at working level. I think that is the right answer. My first renewable experience was in landfill gas with Infinis, and then I started an anaerobic digestion business. All of its new sites will, of course, have been through the EA process in order to secure permits. I was aware of those going on but nothing of such importance that it came to the board, so I did not directly. In the Consumer Council for Water, I was aware of the Environment Agency but had closer contact with Ofwat in that role than I did with the agency. Not directly, is the answer.
Q12 Mrs Sheryll Murray: Could you expand on that and tell us if any of those companies with which you held senior leadership positions has ever been sanctioned by the EA while you were in post?
Alan Lovell: Not to the best of my knowledge.
Chair: My co-Chair, Philip Dunne.
Q13 Philip Dunne: Mr Lovell, picking up on the question you have just been addressing about your role at the Consumer Council for Water, that is very much a consumer champion entity, in contrast to your previous roles where you have been essentially providing business services rather than championing customers of those businesses. What did you learn from the Consumer Council for Water that might make this a suitable role? Do you see this more as championing the consumers rather than the providers?
Alan Lovell: I see it above all as championing the environment and responding to its stakeholders, who will be both the providers and their consumers. I learned a lot. It was very different, as you say, from what I had done previously. I learned about consumer complaints. We did a good job of continuing a trend of reducing complaints. I learned about looking after vulnerable consumers and a lot about leakage, which is a very relevant issue for this, and about resilience.
I am glad to have done a consumer role, but it is fair to say that there were times when I found I wanted to encourage them to look at a bigger picture in a way that was sometimes difficult to achieve. We were very strongly evidence based, so we were responding directly to consumer issues. There were some on which I thought I wanted to give them some training first before they came to the answer, if I may say so without being incorrect in terms of influence; for example, smart meters. It seems to me that water is such a critical resource that we should be much more positive about implementing smart meters. Consumers tend not to like them, particularly if they think it is going to increase bills. We were obliged to represent the consumer line. I was a little uneasy about that because it did not feel to me to fit well with the big picture.
More than that, there is such focus within the Consumer Council on talking to consumers, of course, about the level of bills, and the same is true, in my opinion, of the economic regulator Ofwat, that it has been under pressure to keep bills down. That has caused me some worry in terms of the long-term future of the water industry in particular. One of the many reasons why I am extremely keen to do this role is to play a larger part in the water sector as a whole and making sure that we are fit for 50 years’ time.
Q14 Philip Dunne: I am very encouraged to hear you say that. It has been a big focus of our Committee’s work, and I am going to ask you one or two questions about that a bit later. You mentioned metering for the water sector. The Environment Act is introducing a requirement on water companies to monitor water quality, to a degree they have never done before, in real time. Would you as the incoming chair of the EA encourage innovation not just in the water sector but across the sectors to allow the benefits of the digital revolution that is coming with 5G, not just to help consumers but to help the EA to do its role properly? There has been a criticism that we have seen whereby the EA has been very slow to adopt innovation and tended to rely on its trusted means of monitoring, which has palpably failed, particularly in the case of the water sector.
Alan Lovell: I believe it is critical that the work should be modernised and digitalised. The issue of sewer overflows has been one where a more digital and more data-rich approach would have come to an answer sooner. My belief is that, on the regulation side, there are aspects throughout that are in need of some modernisation. I understand that DEFRA has some resources available for improvements in this field, and I very much hope we would be on the case with that.
I am used to it. The construction industry as a whole, sadly, has been relatively behind in embracing new technology, and it has been an important part of the work in several of the companies I have been in. It is equally important.
Q15 Philip Dunne: At the Consumer Council for Water you touched on the challenges coming from consumers. In this role you will find challenges coming from NGOs across the environmental space, often raising concerns to the EA. Have you given any thought to the extent to which you will seek to address their concerns, prioritise their concerns, or is that a matter for the executive and the officers on the ground?
Alan Lovell: I am sure it is a matter for the executive, but equally I will be happy to give counsel on that matter where appropriate. It is hard to take a general view on that. Clearly, each of those needs to be viewed on its merits, but equally we should be open to listening to what they have to say.
Q16 Philip Dunne: A final quick question, if I may. I noticed from your CV that you stepped into Carillion months before its collapse. Can you talk us through your thought process for why you were prepared to try to take on that challenge and what went wrong?
Alan Lovell: It was 10 weeks, actually. If I can be useful in a very difficult situation I will take it on, regardless of the fact I knew this was 80% likely not to work. I was asked to take on a situation that was very damaging to large numbers of people and organisations. If I can, by any chance, make a difference on that, I am going to do it.
This is very different from doing due diligence before you become chairman or chief executive of a business that is doing well, in which you will be expected to go on and do great things. Everybody knew the situation. I did no due diligence; I was just asked to take it on, and I did it. It was very disappointing. On the morning on which the Government, quite understandably for political reasons, decided not to support, I was involved in meetings with advisers to two groups of lenders who might possibly have put together a package; it was not very far away. It was not hopeless, but I knew what I was taking on and I was happy to do it.
Q17 Caroline Lucas: The nature recovery Green Paper raised the prospect of a so-called reform of the Environment Agency. The current CEO has said a restructure would only be worthwhile if the benefits significantly outweighed the costs and disruption. What is your view on the suitability of the current Environment Agency structures, and what problems in particular do you think a restructuring would be trying to solve?
Alan Lovell: If you were starting from scratch to devise a number of bodies to take on responsibility in this field, I do not think you would do it as the Environment Agency is set up at the moment. You would have closer links between the Environment Agency and Natural England, and you would have closer links between the various people involved in the water sector in particular so as to produce some of the longer-term benefits that I touched on. It is an appropriate question to be asking, and I fully recognise it is one on which the Secretary of State will be looking for me to investigate the pros and cons and to help with a proper cost-benefit analysis to determine whether it is right as it stands.
I have a few points. First, I went out on my first visit to a site last week, to a small flood defence project on the Test at Romsey. I saw somebody from the flood defence side, somebody from the planning side and somebody from the local teams of the EA. I was frantically impressed by all that they showed me, but most of all I was impressed by the obvious close relationships that existed between the three parts of the organisation. That led me to think there was more commonality between the two principal parts of the EA than I had perhaps recognised previously. That is one point.
The second point, and the current chair and chief executive have been clear about this, is that there is inevitably risk in restructuring and it is fair to point out that this is a particularly delicate time. I believe the agency has 10% vacancies at the moment and the staff, like all others, are facing a difficult cost of living position over the next couple of years. Therefore, they are rightly worried about the impact on the excellent staff in the agency.
Finally, I hope a great deal can be done by working closely together. I know this has been a constant challenge, and people have been working on it for a while, but I have had a good discussion already with the chair of Natural England. He has proposed that there should be an integration committee established involving EA, Natural England and the Forestry Commission, under ministerial leadership, which I think would give an opportunity to see if closer co-operation could be achieved without the disruption that would be caused by a reorganisation. That is well worth looking at; similarly on the water flood side, looking at catchment-area basis and so on.
I am genuinely open-minded on this. My past history probably says that if something does not look right, it is better to take it on early, and odds are you will feel it was the right thing to do. However, in this case there are a number of mitigating factors that we would also need to take into account. I am anxious that the hardworking staff of the EA should not be too disrupted by a process. For sure we will work very hard on close co-operation with Natural England and with the other water regulators and people involved, and it is possible we can achieve a large proportion of the envisaged benefit in that way. All of this, of course, needs to be subject to rigorous cost-benefit analysis on an outcomes basis, taking good evidence from all parties.
Q18 Caroline Lucas: On the integration committee, can I be clear that it does not necessarily have the end goal of greater integration as its purpose? Its purpose is to explore whether and where. Integration is a very strong word in the sense that, if you are not careful, it can also mean eliding together and combining, so I want to probe that a little more.
Alan Lovell: It is honestly too soon to say. The principal objective would be very close working together and ensuring a consistent approach to regulating farming, for example, in a way that all would approve of. In a way, the better that works, the less one would need more disruptive integration in the way you describe.
Q19 Caroline Lucas: To be clear about what the aim would be of a restructuring, what would the purpose be? Closer working, but to what end?
Alan Lovell: A combination of more consistent regulation and one where there are no gaps and no overlap. Particularly in the regulation of farming, that could be an issue. Undoubtedly, a task for us in the agency is also clearly to respond to funding pressures. An aim of reorganisation could be some element of efficiency savings in a way that any business would contemplate.
Chair: There would be one chairman rather than two, wouldn’t there, if it was amalgamated?
Q20 Caroline Lucas: I am slightly surprised that the first aim that came to your mind was not about reversing nature decline, given the role and purpose of the Environment Agency and given that we know the UK is off target on a whole range of nature targets. Surely any restructuring would be aiming to improve nature. The question then becomes: what kind of restructuring could deliver that end?
Alan Lovell: It is a fair point, and I think efficient regulation both encourages good practice and supports the recovery of nature at exactly the same time as stamping on bad practice. I do not regard that as in any sense a distinctive issue.
Q21 Caroline Lucas: The language around efficiency gains is quite often a very nice way of meaning job cuts and not as much work being done as there was before.
Alan Lovell: I accept the risk on that. I am under an obligation in this position to review the opportunity for that. Equally, I see no reason why that should result in less work being done. Indeed, in many areas I am very conscious that more work needs to be done.
Q22 Caroline Lucas: As you have alluded to, your corporate background and history of being brought in to turn around businesses has raised questions in some people’s minds about whether that means structural reform is more likely than less likely. Can I paraphrase what I think you have said today, which is that you are not any more minded to one outcome than another? You are not necessarily minded to think that restructuring is necessary, but you have a genuinely open mind.
Alan Lovell: Correct. You may, thank you.
Chair: Thank you, Caroline. Barry has a short supplementary.
Q23 Barry Gardiner: You gave inconsistency, gaps and overlaps as the reasons why restructuring might be important. Can you give us some examples of the inconsistencies you see at the moment between Natural England and the Environment Agency?
Alan Lovell: I am afraid I cannot yet.
Q24 Barry Gardiner: What about gaps and overlaps?
Alan Lovell: It has been put to me that a more integrated approach to farmer regulation could be of benefit, both in terms of gaps and overlap, but I do not feel qualified to answer in any detail on that subject.
Q25 Barry Gardiner: I have to say it seems strange that one would be countenancing the exploration of greater integration between the organisations and giving those reasons of inconsistencies, gaps and overlaps if one had not actually ascertained that there were inconsistencies, gaps and overlaps.
Alan Lovell: Somebody who knows the position much better than I do, the chairman of Natural England, to whom I spoke yesterday, is in favour of this. He is absolutely for the encouragement and recovery of nature, and this is what he has suggested.
Q26 Barry Gardiner: I am very happy to speak to Tony about that. Last week, just a few days ago, I spoke with a previous chair of Natural England, who was very open about the fact that once you are in the chair you have to do with your masters tell you and that he believes that Natural England is completely underfunded for the job it needs to do. You will be aware that, originally, Natural England was formed from the Countryside Agency, English Nature and the Rural Development Service. There is a pattern here, is there not, of agencies that have very distinct, clear roles for environmental protection and enhancement being amalgamated and cost savings resulting from that but the environmental work not being enhanced? There is a real concern here.
Perhaps I should ask you this. Give me an example of where you have stood up to Ministers? What would be your grounds for resigning this post were you to get it? What would have to happen by ministerial diktat for you to say, “Right, enough is enough. I cannot with any credibility any longer stay in this role of chairing an organisation that is supposed to be enhancing environmental protection when it has declined by so much”? We will get on to that later.
Alan Lovell: First, when have I stood up to Ministers? Perhaps slightly different from that, I was certainly taking big issues to Thérèse Coffey when I was at the Consumer Council for Water and taking a robust line with her on behalf of consumers. On your second question, I think we are all agreed that no reorganisation should take place without there being clear benefits, and not just cost benefits.
Barry Gardiner: By which you mean environmental benefits?
Alan Lovell: Of course. Not just cost benefits but primarily environmental benefits. If the evidence behind such an analysis produced a recommendation that it would be disadvantageous for a reorganisation to proceed and if the Minister decided otherwise, I feel clear that that would be a resignation matter.
Q27 Barry Gardiner: Will you set out for us, then, the positive enhancements to the environment that you would wish to see as a precondition for any amalgamation of the bodies going ahead? What would be the targets?
Alan Lovell: I think it is fair that I should take notice of that question and come back to you in six months with my view of the things that can be improved.
Barry Gardiner: That is absolutely fine.
Alan Lovell: At the moment I have no sense of where they lie, but I do think it is an aspect we should be taking seriously.
Q28 Barry Gardiner: I would agree with you that we should always be looking to see how we can enhance the natural environment through the work of these NDPBs and arm’s-length bodies. However, only if we can see clear ways in which it would enhance it should we consider amalgamation. You spoke of funding pressures and you spoke of the synergies that might be made, but you will be aware that the back-office functions of both Natural England and the Environment Agency are one and the same. There is no chance of getting the opportunity to make cost savings there. Where exactly would the cost savings be made? The Chairman gave one example, which is that there would be one chair, but beyond that it would be a very odd basis upon which to—
Alan Lovell: It would be, yes. I agree.
Barry Gardiner: Where could cost savings be made if not in environmental protection and enforcement?
Alan Lovell: It is broader than the chair, isn’t it? There would be some executive savings.
Barry Gardiner: Very minor.
Alan Lovell: I agree that that is not a—
Q29 Barry Gardiner: The Environment Agency budget is, as you know, a very large budget and Natural England’s budget is a very small one, but the back-office functions of Natural England are provided by the Environment Agency.
Alan Lovell: Yes, I agree that it would be a relatively small item. The areas of potential savings, I guess, are through a joint effort on modernisation, which we talked about earlier, and conceivably, if there are any, areas of overlap.
Barry Gardiner: I will leave it there, Chair, and come back with further questions.
Alan Lovell: I fully recognise that I will be coming back to talk about this very important issue, and I will give you a full answer to that question.
Barry Gardiner: Should you be appointed.
Alan Lovell: Indeed. All of this is subject to the appointment, granted.
Q30 Duncan Baker: To build on some of the funding pressures, probably more akin to some of the questions Caroline was asking, it is quite clear that the pandemic has brought enormous pressures on to the public purse and the Environment Agency. In my constituency I have the Norfolk Broads. We see it all the time, where it is asked to do far more with far less money. In light of that, if you were chair of the Environment Agency, how would you react if the Chancellor cut your grant-in-aid for 2023-24? Would your first call be to the Secretary of State to ask for more money, or to the chief executive to ask for greater efficiency?
Alan Lovell: It all depends on the circumstances, but in principle both of those. I do think that we should be looking to see if there is room for efficiencies, and any organisation should do that. I am not aware that the Environment Agency is in need of that more than any other organisation I have encountered, but it is good practice and we would certainly be doing that. Do I see it as my remit to defend the existing spend of the Government, the grant-in-aid? Yes, of course. Anything else would be completely inconsistent with the whole objective of creating better places for people and wildlife. We shall do anything we can to maintain that. I do not see any inconsistency with doing what any business does in the way of searching for enhanced efficiency while defending the financing and finding alternative ways to increase resources from elsewhere.
Q31 Duncan Baker: To me, if you place the environment at the heart of what you are doing, the first thing you want to be doing is defending and getting the income levels in rather than cutting the services out.
Alan Lovell: I agree, but that is still not inconsistent with a proper review and particularly with modernising systems, which could deliver some benefits.
Q32 Duncan Baker: If we accept that the headcount within the Environment Agency seems to be reducing on balance, or certainly the Environment Agency’s delivery of what I experience in my constituency continues to dwindle, what would your reaction be if you were asked to cut the headcount by a further 20% to make some of those efficiency savings?
Alan Lovell: I have given the answer on that, that we must provide good evidence of the impact and fight our corner, I daresay with this Committee and certainly with the Ministers.
If I may, it is not just that there may be calls for efficiency savings. There is also the challenge that the task is increasing in some respects, particularly in the context of a large flood expenditure over the next five years. That happens with people and, just as importantly, the maintenance of it happens with people. The more assets we have, the more maintenance is required. A cut on the sort of scale you are talking about would inevitably be damaging for the environment, and I would feel it entirely appropriate for the chief executive and me, and anybody else, to defend that and to fulfil our primary role.
Q33 Claudia Webbe: I am going to ask you about the Office for Environmental Protection. I note that DEFRA has not listed, as part of your accountabilities, any responsibility to the Office for Environmental Protection. From your perspective, how do you see that relationship? Do you see it as important?
Alan Lovell: I see it as extremely important. It was entirely appropriate to set up the OEP in place of the role that the European Commission was previously fulfilling. Everybody tells me that the OEP has an excellent chair and that she has developed a good organisation. It is entirely appropriate that we, the EA, should be subject to that sort of scrutiny and we shall be very happy to learn from it.
Q34 Claudia Webbe: What do you see as your priorities in working with the Office for Environmental Protection?
Alan Lovell: The office is going to measure our suitability for doing the role and our effectiveness at regulation. I hope it will judge that both in the sense of enhancing the positive aspect of regulation as well as taking out a heavy stick when needed. Our role will be to give it satisfaction that we are carrying out that role appropriately.
Q35 Claudia Webbe: Can you give an example of where you have been significantly challenged by an agency of that capacity and size on behalf of the public?
Alan Lovell: No, I have not previously been in a position that would have given me that pleasure, but the EA is clearly subject to it at present in the context of its investigation into the sewer overflows. I can say on behalf of the agency that it is welcomed. I say “we”, but let me put it correctly. The agency believes it handled that properly, but it is also very open to learning from any findings of the OEP investigation and hopes to benefit from the investigation in how it does business, both on its own account and in conjunction with Ofwat and other regulators.
Q36 James Gray: Mr Lovell, I have been very impressed by the robustness of your defence that environmental standards must be more important than anything else, whether it be institutional amalgamations or public sector spending cuts. You are quite right. However, in an era when we are talking about public sector tightness and/or amalgamations of institutions, surely by definition under those conditions there will be a reduction in environmental standards. There will have to be, surely.
Alan Lovell: I really hope not. We will have failed if that is the case. Partly I say that with some confidence because I think there has been a sea change among the public and among the business community about the importance of climate change and other environmental issues over the last five years. Therefore, I do have some optimism. I hope I shall not be disappointed on this. but I do have some optimism that the need for regulation in some areas will be reduced. What I can say for sure is that there is a completely different backdrop to any meeting that a chairman and chief executive of a listed company has with its shareholders these days. The ESG generally but the environment in particular is front and centre of every one of those conversations. There is no doubt in my mind that that is having a very beneficial impact on the way that companies behave.
The current chair made some very powerful points yesterday in respect of greenwashing, and she is right to do so because, of course, some of the statements are not entirely based on truth. However, let’s set aside the fact that some of them are not right. There has undoubtedly been a sea change in attitudes. Certainly, the companies that I have been involved in are hugely more involved and anxious to do the right thing, and I am really optimistic about that. I do think they have got the climate change message and are anxious to do something about it.
I would also love to see them getting the message about biodiversity, nature recovery and some of the other aspects that are vital, and of course climate change-linked. If we can also make some progress on those, including waste disposal and all those aspects—I hope I am right—there are some areas where regulation may be a little easier. In those cases we will have two options, either of which is attractive. Either we can tighten the standards or we can release some funding to go and do some other work elsewhere.
Q37 James Gray: It is very encouraging from the point of view of both of these Committees to see a new chairman arriving with that kind of determination. Surely that is the right way to approach the new job. It will be interesting to see if we have you back here, as we no doubt will every year, whether you are able to say that you have achieved that.
The EA is halfway through its five-year action plan. Which bits will be the lodestar? How will we judge whether you have achieved what you intend to achieve from the things that are in the five-year plan? When you come back here in 12 months’ time, I will be sitting in this chair and you will be sitting in that chair and I will say, “Mr Lovell, have you achieved that?” Name a few. I would like to see a few.
Alan Lovell: The five-year plan sets some very clear targets. You ask me which are the most important. I would put the flood defence one at the top of the list, and I recognise that the agency is a little behind its target for the first year, having done extremely well in the previous five-year period. That is certainly one you will be right to be quizzing me on. You will also be right to be quizzing me on water quality and the sewer issues. That is an area, particularly because of its prominence at the moment, that clearly needs very clear attention over the next year.
Q38 James Gray: A detail, purely from a constituency standpoint because I represent the upper reaches of the Thames, is how you can deal with the whole issue of slow water and the flood risk downstream if EA has no responsibility for streams and small rivers upstream. You have no responsibility for the streams and rivers in my constituency in North Wiltshire, but you do have responsibility for the Thames. If all my farmers are clearing out all those waterways and the water rushes all the way down to Reading—
Alan Lovell: I favour catchment-area landscape work to seek to deal with those sorts of issues. That is the direction in which the agency and DEFRA as a whole should be going. That is what would enable us to have a better grasp of those issues.
Q39 James Gray: The EA gave up responsibility for small waterways when I was special adviser to the Secretary of State 25 years ago, so blame me, if you like. I think it was a great mistake.
Alan Lovell: Management of water on that catchment basis is a very important element, and it is something on which I will be keen for the Environment Agency to play its part.
James Gray: See you in 12 months.
Q40 Chair: I am encouraged that you focus on flood defence. You will find the frustration is that the BBC never goes to film the house that is being protected by your most recent schemes.
Alan Lovell: I know.
Chair: It is very hard to get any credit for that.
Q41 Dr Matthew Offord: It is interesting to see on your CV your links with Winchester Cathedral. As you are someone who, like me, comes from Hampshire, I am sure you will know that the South Downs way starts in Winchester.
Alan Lovell: Indeed.
Dr Matthew Offord: The first thing you see when you walk down the South Downs way is a chalk stream, and these are some of the finest quality rivers in this country. I am sure you also know that the Office for Environmental Protection has launched an investigation into whether the EA, Ofwat and DEFRA have failed to comply with their duties to manage discharges from CSOs. What are your views on the current model of water regulation and division? Do you think the responsibilities are in the hands of the correct organisations?
Alan Lovell: This is a very big topic on which my thoughts will, I hope, develop over time. I also think I have covered some aspects of it. There needs to be better integration of the total water policy landscape. There are three regulators. It is curious. There is not a body looking after our water resources in 50 years’ time. The reservoir to be built in my county, finished by 2029, will I think be the first since 1971. I do not have the data, but that does not feel right. It feels to me as though that is an area that we need to do more on. On the other side, on the CSO issue, as I mentioned earlier, it is good that the OEP is going to be looking at the regulation within that space. If we can do it better, we shall be pleased to learn.
Q42 Dr Matthew Offord: One of the issues of concern—and I look to my colleague on the left—is that South West Water has the highest water bills in the country. The reason for that is that, back in 1988, it was necessary under EU regulation to clean up the beaches in the south-west, which resulted in high water bills. Now the focus of attention—perhaps because of the efforts of the person second from my left—has been upon our rivers in the United Kingdom and their cleanliness. Other parts of the United Kingdom do not have as high water bills, but the rivers in the United Kingdom have been left polluted and have not been cleaned up in the way that the sea has in the south-west. Do you think it is possible to have cheap water and also clean rivers, or can we expect higher water bills and a better quality of water in our rivers?
Alan Lovell: First, having clean water is fundamental and is worth paying a high price. We have to find a way of doing it. Secondly, I think water bills represent astonishingly good value for money by–
Dr Matthew Offord: Not in the south-west they don’t.
Alan Lovell: I accept that they are high in the south-west. You have a little assistance still, don’t you? Am I right that that has prevailed? All the same, I know they are high and it is unfair that you are looking after an awful lot of coastline. I am right with that as a challenge.
However, in general, I think water bills, by comparison with other utilities, do represent good value for money for clean water and sewerage. The challenge is how we fund major new capital expenditure on water projects of the sort that the National Infrastructure Commission has called for because there is no organisation that can readily set that in motion at the moment. I perceive that to be a challenge.
The Thames Tideway, of course, had a bespoke funding model. My instinct is that it is worth looking at for other major water schemes. We have to find a way of carrying out some of the work that the NIC has called for—which may be reservoirs, may be more transferring of water—because, particularly with the climate change impact, it is bound to become an increasing issue over the next 20 years.
Q43 Dr Matthew Offord: Water companies are private companies, and they were privatised for the very reason that they could not only raise money on the open market but they could use the profits from water bills to pay for the infrastructure, so it concerns me when you talk about national infrastructure. These are private organisations; they do not belong to the Government.
Alan Lovell: No, I agree. Clearly, they were not founded on an altogether beneficial basis. There have been mistakes in that, which I think is generally acknowledged.
The funding of something like Thames Tideway, as you know, is partly looking for all those who will benefit to make a contribution, so it has breadth to the funding need. Of course, those companies—be they listed or private—should be playing their part in the overall plan for water infrastructure looking forward.
Q44 Chair: When the Environmental Audit Committee visited the River Windrush, which Philip and I visited in Oxfordshire, it was quite clear that the biggest problem is the impact of new development and the increase in sewage being produced. Do you think there is a role for developers to play by, for example, installing sewage tanks to store and pump sewage?
Alan Lovell: Unquestionably. It is a complete mystery to me that developers are not tasked with doing their part in making a contribution to the work in their area.
Q45 Philip Dunne: Would you, therefore, welcome an amendment to the Bill before Parliament at the moment to allow water companies to receive the new infrastructure levy, which is replacing section 106 or the community infrastructure levy? At the moment they are not eligible to receive any of that.
Alan Lovell: Personal view, yes. That feels to me like a sensible way of making some progress on this issue.
Q46 Philip Dunne: The environmental principles policy is being introduced by the Government now. In future, Ministers will look at the extent to which new policy conforms with environmental principles, one of which is “polluter pays.” The outgoing chair has made some comments on what that might mean.
Do you think, for example, it might be appropriate for some of the very heavy fines we were just talking about—the fines that some of the water companies have been levied as a result of enforcement action taken by the EA through the courts—to be used to remedy the harm that is applied to rivers, for example, that have been badly polluted?
Alan Lovell: I do think so, yes.
Philip Dunne: At the moment, of course, those fines get absorbed by the Treasury.
Alan Lovell: Into the Exchequer.
Q47 Philip Dunne: If we were to suggest such a thing, would it get the Environment Agency’s support?
Alan Lovell: No, it would get my support. I do not think you can say it would get the Environment Agency’s support until I have had a chance to put my stamp on it, or that stamp on it. It would have my personal support.
Q48 Philip Dunne: The outgoing chair also said that “polluter pays” should perhaps also be taken into account when water company boards, for example, set bonuses for directors, if they have been fined for significant enforcement breaches. Do you have a personal view on that?
Alan Lovell: I have a strong personal view that it is appropriate, yes.
Q49 Chair: A more contentious issue, where you have houses already on a flood plain, is whether it would be advantageous to encourage developers to build on that flood plain but put flood defences in for the existing houses as well as the new ones. That is quite a tough one to try to sell.
Alan Lovell: I agree that is a tough one.
Q50 Dr Neil Hudson: To follow up my colleague’s question on water quality, in 2020 there were 400,000 sewage discharges, totalling over 3 million hours, yet the EA said that 99.2% of water treatment works complied with their permits for sewage discharge. It is obvious there is a disconnect there.
Do you believe that the Environment Agency, and you as the incoming chair, have sufficient teeth and sharp enough teeth to hold people to account so that these unacceptable sewage discharges can be stopped?
Alan Lovell: I believe that we do have the teeth. We are clearly dependent on the courts taking an appropriate view. I certainly welcome the large fine imposed on Southern Water. It is absolutely crucial that the level of fines exceeds any financial benefit that has accrued. It will be our job to press that case, including very possibly on the subject of the CSOs, and to deliver a result that has an impact.
Q51 Dr Neil Hudson: Can you give our Committees an assurance that you and the EA will work with Ofwat and the Office for Environmental Protection to have it as a key priority to stop these discharges? Can you give us that assurance?
Alan Lovell: I can.
Q52 Ian Byrne: The EFRA Committee has echoed the World Health Organisation’s call for the air quality target of 10 micrograms per cubic metre to be met 10 years earlier than the Government’s current aim, which is 2040. Recent research by Imperial College suggests this 2030 date is eminently achievable even with current policies, and that meeting the interim PM2.5 target could mean—we talk about numbers but this is what it actually means—388,000 fewer days of childhood asthma symptoms and 3,000 fewer cases of coronary heart disease, both annually and on average. As an inner-city MP in Liverpool, it is a hugely important subject for the health of my community. It would lead to reduced NHS costs and increased productivity totalling up to £380 billion by 2134. Those are the estimates from Imperial College. What role do you see the EA having in achieving whatever air quality target is settled on? Would you push for the more ambitious target?
Alan Lovell: First of all, it is really important. I am very happy that the EA has stood behind the 2030 ambition rather than the 2040 target—maybe I am using the wrong term. The aspiration for 2030 is entirely appropriate.
I am sorry. I know a little about water, but I am behind the curve on air quality. I would like to come back to you on that one, if I may.
Ian Byrne: That is honest. Obviously, we are talking about the human cost in communities.
Alan Lovell: It is absolutely crucial, I completely agree.
Chair: You will find, if you return to my Committee, that Geraint Davies is very keen to press you on that.
Alan Lovell: There are many things I need to learn a lot about, and I am very conscious that air quality is one of them.
Ian Byrne: Speak to Geraint. Make it your business.
Chair: You have been warned.
Alan Lovell: I have been warned, and that is fine.
Q53 Barry Gardiner: I want to focus on enforcement. I would like to get a sense of the balance you see the EA having between guidance and prosecution. The EA can issue guidance. It can issue cautions to businesses and to individuals, and it can also prosecute them. How do you see the relative way in which you would like to balance those two out?
Alan Lovell: The important thing is to have a big enough stick in my cupboard, and for it to be sufficiently backed up by the courts so that everybody knows that not only do I have it but I am willing to use it. If we are successful in that, it enables us to provide a little longer on the advice and pressure point. That is probably the best way for me to answer that.
Q54 Barry Gardiner: Are you very disappointed that, over the last nine years since 2013, cautions, which were running at about 100 a year, have gone to zero for businesses and cautions that were running for individuals at 100 a year have also gone to zero? Does that surprise you?
Alan Lovell: I do not know anything about it.
Q55 Barry Gardiner: It is the enforcement activity of the Environment Agency. If you break it down into cautions to businesses and individuals, to enforcement notices to businesses and individuals and to prosecutions of businesses and individuals, what you find is that, where nine years ago they were doing about 100 cautions to businesses and individuals, the figure in 2021 was zero.
Alan Lovell: Has it done something else instead?
Barry Gardiner: Yes, it has reduced the number of prosecutions of businesses from 120 to 15, the number of enforcement notices to businesses from 270 to 90, and the number of enforcement notices to individuals from 150 to 35. Therefore, on the whole—the graph is there, so you can check it out for yourself—we have gone from 1,075 enforcement activities in 2013 to just on 300.
Alan Lovell: I think they would say that is, at least to some extent, because of reduced need for such things.
Q56 Barry Gardiner: I do not think they would. If you look at the figures for 2017 to 2021, 1,484 reports that were originally assessed as being low category subsequently, on review, had to be reinstated as being high category. What happened was they had cut them out of the “need to do stuff to” pile until they realised these were rather important enforcement activities as well.
Would you like to reflect on how you see enforcement going forward? Of course, notes were issued to staff in the system to stop doing enforcement. Does that shock you?
Alan Lovell: It certainly surprises me if there is no alternative action being taken. I would like to find out more about that.
Q57 Barry Gardiner: What about the 116,000 potential incidents reported to the EA, of which only 7% were investigated?
You stated in your initial remarks to the Chair, and indeed in your subsequent remarks, “This is not a turnaround.” I want to know why. Why not? I want a bloody turnaround. I do not want to see the enforcement activity of our premier enforcement agency, the Environment Agency, having gone down by over a third, have a new person come in and do nothing about it. I want a turnaround. I do not want a turnaround on the financials. I would like a turnaround on the financials to get more in there, but that is not what I am looking at. I am looking at enforcement activity. I am looking at making sure that criminal offences are being prosecuted properly. They are not.
Alan Lovell: Understood.
Q58 Barry Gardiner: I want to know what you have done already to look at the shape of the Environment Agency and its enforcement activity, and how you propose to tackle that to make sure it is doing the job that it is already supposed to be doing.
Alan Lovell: I have not looked at the shape to determine what has caused that. It is clearly an issue of the utmost importance. I shall be very happy to come back and give you some appropriate answers on that, in this Committee or otherwise. From what you say, prima facie, it does sound surprising. I would like to understand more.
Barry Gardiner: I look forward to our next engagement.
Chair: Yes, I will be interested to hear the answer to that as well.
Claudia Webbe: The only thing I will say is that I hope you will come back sooner rather than later. I do not think, given the scale of what has been outlined, we should be waiting even six months. We should have a plan sooner than that.
Chair: Point taken, thank you.
Q59 Dr Neil Hudson: As a Cumbrian MP, I declare a strong interest in flood prevention and protection. I was therefore encouraged by your remarks that that is a key priority for you.
We are now in the second year of the EA’s £5.4 billion flooding and coastal erosion programme. The NAO has said that skills shortages could impact on the ability to deliver some of this programme. What skills and experience do you bring to this post that you think could help address this potential issue?
Alan Lovell: It is certainly a worry for me. This is a procurement challenge on a very substantial scale, twice the size of the previous five years. The fact they performed so well in the previous period is clearly a matter that gives some confidence. Equally, this is a major issue and one that I shall focus on early, if you approve.
I have been chief executive of several construction companies, so I am used to reviewing major contracts. I also let a couple of very significant contracts when I was chair of the University of Winchester and the Mary Rose Trust Museum. It was vital to achieve both to time and to budget. Therefore, I hope I have a certain amount of experience that will enable me to give some guidance to the executive team.
In managing contractors, there are some very simple guidelines. First, setting out what is required in advance, sticking to plans, locking up the plans and not letting them be changed. Secondly, very good people. Thirdly, relationships with all parties involved. Fourthly, performance management. The last one relates to the fact that, if things are going wrong, you want to know quickly and you want to determine what appropriate measures you should take to mitigate or amend the action. I am confident that the Environment Agency is following those basic rules, but it will certainly be worthwhile for me to take a look at it.
Q60 Dr Neil Hudson: When we had the EA leadership before our Committee in May, we asked them what they would like in terms of staffing to tackle flooding. They said an increase by about 20%. They wrote back to the Committee subsequently, saying the funding should be in place to have about a 20% uplift in staff. Coming into this role, are you comfortable you have adequate staffing resources to cope with the increasing flooding pressures that our country faces?
Alan Lovell: I do not think I can be confident from the outside. It is appropriate for it to be an area that I take a good look at.
As I mentioned earlier, I am particularly bothered about the maintenance challenge on which the EA is behind at the moment. We have more capital. As it keeps on going, the assets are getting older and climate change is having an impact on their ability to do the job. Each of those is challenging in terms of the people required to ensure the highest quality of delivery, and we need to look at that.
Dr Neil Hudson: It is something you will keep a close eye on and keep under review?
Alan Lovell: Be sure it is very high on my list of priorities, yes.
Q61 Jerome Mayhew: Please accept my apologies for being so late. I had a clash of activities.
I know a lot has been asked about water, but I would like to return to one area, which is not just water quality but the availability of water. I declare an interest. I represent a Norfolk constituency that is one of the most water-stressed areas—if not the most water-stressed area—in the country. We already have competition for the availability of water between river health, particularly going down into the Broads and the environmental challenges there, and rural businesses, in particular farmers who rely on water abstraction licences to produce the food we all so badly need, particularly this year more than ever. Clearly you have a challenge on your hands between your duty as the Environment Agency to promote communities and green businesses and your duty to ensure river health among other obligations.
If you are confirmed in your role, how do you see the appropriate balance between those seemingly conflicting obligations? In particular, do you feel there is a role for transitionary approaches to allow businesses to adapt—whether by reservoirs, for example—by facilitating measures such as the filling of reservoirs with excess winter water from abstraction licences? There is a challenge there, and I am interested in your principled approach to it.
Alan Lovell: I am not sure I have any particular wisdom on this subject. There is a need for expenditure on capital assets in water, which could be by reservoir or by transferring water. I agree there are some very critical areas where it is a serious problem. Equally, you are right to say there is a balance, because we need to maintain the health of our rivers and, therefore, minimise abstraction.
It goes back to the answer I gave earlier to Mr Gray. We need to look at this on a catchment basis. That would help the concept of, for example, flood waters being retained in a reservoir for future use. Some combination of responsibility for floods and droughts, for example, would be helpful. It is not helpful that they are the responsibility of different people at the moment.
Q62 Jerome Mayhew: Although I do not want to hold your future appointment to a commitment, can you see a future whereby the Environment Agency actively supports the “harvesting” of water in winter periods, when we have more serious downpours than we used to, and capturing that for use throughout the rest of the year?
Alan Lovell: It feels to me, again from a personal point of view, that that is absolutely the right way to proceed and we should be enabling it. I do not think it is the Environment Agency’s role to do that, but it is a role in which the Environment Agency can work with others in some sort of body that takes long-term responsibility for water, so yes.
Jerome Mayhew: Thank you very much. Chair, thank you for letting me put that question.
Chair: Thank you, Jerome. I think Barry wanted to come back with one short, final point.
Q63 Barry Gardiner: Very short and unrelated to water, given we have talked a lot about water.
What do you see as the challenges to the waste industry in this country? How do you see the Environment Agency liaising and interacting with that industry?
Alan Lovell: I am a strong supporter of the circular economy when it comes to waste, and I think we need to relook at the financial incentives to ease that. We have financial incentives to favour incineration over landfill, which is appropriate. We should definitely have some form of financial incentive to encourage recycling and other aspects more strongly in preference to incineration. That is point one.
A second point is that the Environment Agency spent some time reviewing waste, particularly stuff that is going overseas. In my personal view, it is completely wrong for us to be exporting waste. We should be dealing with it, and there are several benefits related to that.
Those are my two upfront points.
Chair: Mr Lovell, thank you very much indeed for being so candid, forthright and honest with us.
I will take one or two points home with me. The first point is successful contract management. That would apply equally to projects I have been involved with. From fitting a new kitchen to building a high-speed rail line to the north of England, all those principles, as you spell them out, absolutely apply. If only people had not changed their plans halfway through, some of these projects would not have gone over budget so much.
I am certainly interested in the point you made about closer working with Natural England. The benefits of a formal merger are yet to be outlined to us. Indeed, there is no legislative hook in this session of Parliament to do that.
Finally, we very much look forward to hearing what you have to say on Barry’s previous point about the fall in enforcement activity. I know from some organisations, such as the RSPCA, that they spend a lot of resource on prosecution that then draws resource away from other things.
Thank you very much indeed for coming along today, and I think we will be looking forward to seeing you in the future.