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Beyond red tape: smart regulations are key to delivering UK industrial and environmental ambitions

7th December 2017

Today the Aldersgate Group launches a report by engineering consultancy BuroHappold, Help or Hindrance? Environmental regulations and competitiveness, which looks at the impacts of ambitious environmental standards on business competitiveness, skills and innovation.

The report, which is based on interviews in the waste, construction and car industries, concludes that well-designed environmental regulations can deliver positive economic outcomes in the form of increased business investment in innovation and skills, better quality products and infrastructure, greater business competitiveness and job creation. 

This report will be launched at an event in Parliament today, 7th December with keynote speaker Claire Perry MP, Minister of Climate Change and Industry [1].
 
The report, commissioned by the Aldersgate Group and written by BuroHappold, is based on business interviews studying the impacts of three key environmental regulations in the buildings (London Plan), waste (Landfill Tax) and car (EU Regulations on passenger cars) industries. It concludes that the compliance cost attached to each regulation has been more than offset by the economic benefits they have triggered. These include increased business investment in innovation and skills, better quality and performing products and infrastructure, greater business competitiveness and net job creation.

Examples include:

  • The low carbon infrastructure (heat networks and renewables) development required under the London Plan for building planning applications in 2015 is estimated to have created around 4,000 full-time equivalent jobs in the design, consultancy, construction and manufacturing parts of the supply chain;
  • The Landfill Tax helped trigger significant investment by the waste industry in new infrastructure and services (such as investment in waste recovery, sorting and recycling facilities), while also cutting the amount of waste sent to landfill by 72% in 20 years;
  • The EU passenger car and light vehicles CO2 regulation has provided a consistent and clear legal framework. Car manufacturers and suppliers have responded by developing an innovative, competitive and highly collaborative industry, with automotive companies now ranking third in R&D investments globally.

However, the report also highlights flaws in each of these regulations (from poor regulatory enforcement to a lack of focus on supply chain skills), which hold valuable lessons for designing the policies needed to deliver the Government’s objectives under the recently published Industrial and Clean Growth Strategies. To maximise environmental and economic benefits and avoid unintended impacts, well-designed regulations need to:   

  • Be pitched at the right geographic scale;
  • Provide a clear, stable sense of direction;
  • Be coherent with existing policies;
  • Be implemented in a way that works with business timescales;
  • Be accompanied by complementary policies (such as on skills and regulatory enforcement). 

Nick Molho, Executive Director, Aldersgate Group, said: “With clean growth positioned as one of the four Grand Challenges of the Industrial Strategy [2] and the recent Clean Growth Strategy promising to drive growth of the UK’s low carbon industries, the report comes at a crucial time to show how environmental regulations can act as a help rather than a hindrance to innovation and growth, whilst also delivering positive environmental outcomes.

The government recognised in the Industrial Strategy White Paper that regulations shouldn’t just be seen as red tape; on the contrary, they can also act as an important tool to support business innovation and competitiveness. The challenge ahead will be to ensure that regulations to deliver the UK’s environmental and industrial objectives are sufficiently ambitious, stable, practical and compatible with other policy objectives.”
 
Duncan Price, Director of Sustainability, BuroHappold and author of the report, said: “There is no inherent conflict between well-crafted policy and economic gains. When well designed and complemented by effective economic and industrial policies, smart regulations can deliver positive environmental and economic outcomes. Insights derived through this work hold valuable lessons for the government as it works to deliver its Industrial and Clean Growth Strategies.”
 
Sarah Cary, Head of Sustainable Places, British Land, said: “British Land is supportive of Government regulation to drive carbon efficiency in real estate and construction, helping the UK to lead the world in developing low carbon systems and services. A clear medium-term vision for future energy and carbon policy will drive millions into construction product innovation investment and upskilling for hundreds of thousands of workers. And, in challenging the industry to innovate, Government creates an opportunity for UK architects and manufacturers to become global leaders in energy efficient building design.”
 
Dr. Adam Read, External Affairs Director, SUEZ, said:
“Regulation has been at the heart of the positive evolution of the UK waste and resources sector, driving quality, delivering recycling and reducing our reliance on landfill, and landfill tax has been critical to this journey. We now have the opportunity to look to the future with an Industrial Strategy and a new Waste and Resource Strategy due where policy, regulation, and market incentives can come to the fore to help shape the Britain of tomorrow.”
 
Andy Walker, Technology Director, Johnson Matthey, said: “Regulating emissions at source is not only beneficial to the environment and human health, but also strongly drives innovation. Well considered regulations taking account of local and global considerations, signalled far enough in advance, provide scope for companies throughout the supply chain to innovate and plan for commercialisation, thereby maximising the economic benefits that can accrue from reducing the environmental impact of the vehicle fleet.”

[1] Help or Hindrance? The role of environmental regulations in the Industrial Strategy. This event will be held from 9.00am-11.00am on 7th December, 2017 in the Macmillan Room, Portcullis House, Westminster. The event, hosted by Peter Aldous MP, will feature a keynote speech from Claire Perry MP, Minister of State for Climate Change and Industry and Duncan Price, Director of Sustainability at BuroHappold. Panellists include Emma Howard Boyd, Chair, Environment Agency, Sarah Cary, Head of Sustainable Places, British Land, Dr. Adam Read, External Affairs Director, SUEZ, and Graham Willson, Chief Executive, British Tyre Manufacturers' Association Ltd. 
 
[2] Industrial Strategy: building a Britain fit for the future, HM Government, November 2017 https://www.gov.uk/government/publications/industrial-strategy-building-a-britain-fit-for-the-future


EU environmental legislation adds value to UK businesses

22nd February 2016

Reacting to the Prime Minister’s announcement today on an EU referendum to take place on 23 June, the Aldersgate Group issued the following statement on the importance of EU environmental legislation for UK businesses.

High quality environmental legislation is good for the economy, for business and for citizens. EU environmental legislation has provided to date important benefits for UK businesses and the environment. Many environmental issues such as climate change and air quality are transnational in nature and other environmental issues, whilst not always or necessarily transboundary (e.g. water pollution), are common to many member states.

Whilst some improvements must be made, EU legislation has helped tackle some of these challenges in a more environmentally and economically effective manner by pooling the resources of different member states to address a particular environmental concern and driving environmental and business innovation across the EU. Membership of the EU has also strengthened UK diplomatic efforts in international negotiations such as recently at the climate change summit in Paris.

The UK has at times been a major player in the improvement of EU environmental legislation such as on emissions trading and industrial pollution; however, EU legislation has often resulted in standards that have resulted in a higher degree of environmental protection than would have otherwise applied in the UK. For instance, EU legislation has been the principal driver of rising UK standards on air and water pollution with major health benefits - the Bathing Water Directive has driven real improvements in beach water quality and benefitted tourism. The Environment Agency has stated that the Landfill Directive has changed for the better the way that waste is managed in the UK. The Birds and Habitats Directives have led to substantial improvements in the standards of protection for habitats and species in the UK.

In addition to addressing environmental issues cost-effectively, EU legislation has resulted in the introduction of common environmental and product standards which have been beneficial to UK businesses by providing more of a level playing field across different member states and providing clear market signals on the standards that products and services being developed on the Single Market need to meet. These standards have also often resulted in cost reductions for consumers, for instance DECC predicts that tighter efficiency standards for household energy appliances are expected to deliver an average annual saving of around £158 per household in 2020 (including around £25 per household through more efficient TVs and set-top boxes, £25 through more efficient consumer electronics and around £20 through more efficient lighting).

There are undoubtedly areas of European environmental legislation that could be improved and made more effective, in particular through more consistent implementation across member states and a greater focus on looking at environmental issues as a whole when developing policy to avoid unintended impacts. This could help avoid instances where some areas of EU legislation undermine its environmental objectives such as the European Court of Justice ruling last June that the UK’s reduced 5% VAT rate on energy-saving products was in breach of EU laws. However, the UK is most likely to have some influence in supporting these improvements and ensuring that the interests of its businesses are recognised and promoted if it continues to be part of the EU.

Should the UK leave the EU, the government must ensure that the UK continues to abide by environmental standards of at least a similar threshold to those contained in existing European legislation and applied across the Single Market. This is particularly the case in key areas such as product efficiency, fuel efficiency, industrial pollution and climate change. However, no clarity has been provided to date as to how this would be done and how the future development of these standards and legislation could still be influenced by the UK in the event that it was no longer part of the EU. 

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Aldersgate Group supports Defra regulation challenge

24th September 2012

The Aldersgate Group is working as a key stakeholder on the Department of Environment Food and Rural Affairs (Defra)'s "Smarter Environmental Regulation Review". This review seeks to build on the findings of the Red Tape Challenge, reforming legislation over the long term.

Peter Young, Chairman of the Aldersgate Group and a member of Defra's Critical Friends working group, said the priority is "to reduce the burden of environmental regulation whilst securing better environmental outcomes."
 
Defra has submitted suggestions for changes to guidance and reporting requirements to ministers and an announcement is pending.