Contaminated Land (Householder Responsibility)

David Heath Excerpts

Tuesday 10th February 2015 Westminster Hall

[Mr David Heath (Somerton and Frome) (LD)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am particularly pleased to have secured this brief debate on an issue that affects perhaps only a limited number of people, but in a substantial way: the liabilities of householders when contamination is found on their land, whether that is their home or business. I will deal in particular with domestic householders and their property, which is governed by part 2 of the Environmental Protection Act 1990, as amended by the Environment Act 1995. I look back on the 1990 Act with some fondness, as I was at that time employed as a consultant by the World Wildlife Fund to help it with the passage of that Bill and therefore had a lot of dealings with it. It contained a very important principle: where land is polluted, it is right that the polluter pays to clean up what he or she caused.

The 1990 Act provides for what is termed a class A person: the polluter, or someone who knowingly allows land under their control to be polluted, and provides that, in the first instance, they should pay for any remedial action. It also introduces a separate, class B person—the so-called “appropriate person”—if the class A person cannot be identified or is no longer in existence. They are the current owner or occupier of the land.

That causes a potential difficulty, which was drawn to my attention in the first instance by Dr Jeff Downing, who was the contaminated land officer for South Somerset district council. He came to see me in a personal capacity as a constituent because he was so worried about the consequences of his work for a particular couple who lived in my constituency. He saw a problem with the system and he wanted me to find whether there was any way to alleviate that. I am particularly grateful to Dr Downing, who no longer works for South Somerset and has moved to another council, for his help in spelling out the situation and how the arrangements were working against the principles of natural justice and perversely in public policy terms.

Dr Downing drew my attention to the situation of a retired couple in Langport—I will not mention their names because I have not got their explicit agreement to do so and I do not want to embarrass them in any way—who, following an inspection from South Somerset district council, found that their house and garden had contaminated land from former gasworks. They were completely unaware of that and they could not have not been aware—there had been no failure of appropriate searches when they bought the property some time ago—so it came as a complete bolt out of the blue that they were the proud owners of contaminated land.

The difficulty arose that the cost of removing that contamination was substantial: the estimates on the first assessment were about £260,000 to £270,000. That sum was well beyond their means; in fact, I suspect it was well beyond the value of their house, so there was no question of using a charge on the house or some other mechanism even if that were fair.

Dr Downing pointed out that the arrangements contain certain inflexibilities. First, the council has a statutory obligation to search and identify contaminated land. It has no discretion on that and certainly if a suspicion of contaminated land is reported, it has to investigate and add that to its records. Secondly, once it has identified such land, it has a statutory duty with a small professional discretion about the nature of the contamination to register that land as contaminated land. Thirdly, it has a statutory obligation to ensure that remedial action, normally removal of the contaminated soil, takes place if, in its opinion—this is the only area where I think it has significant discretion—there is a significant possibility of significant harm: the so-called SPOSH, an inelegant acronym on which it applies its professional judgment. However, such discretion is purely professional; it has to make a judgment on potential significant harm and if it thinks that there is potential significant harm, it must take action.

If all those tests, in which the council has little discretion, are passed, costs—they are significant in this case—must fall on someone and, in the absence of a class A polluter, they fall on the householder. In this case, despite the best efforts put into finding the successors connected to the original industrial activity, the couple were found to be liable.

In each of those steps along the way, the council cannot take into account the circumstances of the person on whom the liability falls, save for the very last step, which is whether they waive any part of the cost of remedial action. That has happened on occasions in the past few years by use of the contaminated land grant, provided by the Government through the Department for Environment, Food and Rural Affairs. The difficulty lies in the fact that that grant has been shrunk and will disappear completely by April 2017.

There will be two consequences. First, if no funding is available for the removal of contaminated land––a public good––to help people who had no direct involvement in the polluting but find themselves victims of circumstances beyond their control, that will be a manifest injustice. That is simply not right. Secondly, councils could subvent the costs of remedial work from their own funds. However, that is difficult—I would say impossible. Dr Downing told me, “There are probably still hundreds of properties that are affected by pollution where this may apply in one small district council area alone.” That is a massive capital sum, well beyond what the local authority can reasonably bear. That is difficult in itself, but it also provides a massive disincentive to the authorities to carry out the statutory duty we want them to perform, which is to look assiduously for pollution and deal with that effectively for the safety of the environment and the local population. The system has a built-in disincentive.

I suspect that when the decision was made—the Minister knows that I know only too well the Department’s budgeting difficulties, both currently and over the past few years—there was perhaps a thought that the contaminated land grant had served its purpose. It is, after all, 15 years since the regulations and statutory guidance came into effect. The Department perhaps thought that most of the contaminated land had been identified and dealt with, but in reality, as I am told by someone who deals with the matter face to face and day by day, that is not the case. A lot of unidentified contaminated land still needs to be dealt with. If that was the Department’s assumption, it was incorrect. It might have been thought that the £500,000 available in the current year was sufficient, but it clearly is not. Spread across the whole country, that money is nowhere near enough. I quoted a figure for one single garden in one single property, and 10 such properties have been identified already in the area that I am describing.

We have a significant problem of public policy. I wrote a little while ago to the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall (Dan Rogerson). I received a response from Lord de Mauley. I am grateful for his letter, which was sympathetic and clearly recognised the difficulties that my constituents found themselves in, but at the end of the day it provided scant support. One thing may have happened in the interim, but Lord de Mauley said that my constituents are having the cost met by the district council. I am not convinced that that is the case, and I am trying to establish whether it is, but let us not rest the case on their circumstances. I hope that it is the case, but the last I heard from the council, it was looking at a loan or other means of spreading the cost, rather than removing the cost from the couple. The more important point is that nothing is available this year.

Lord de Mauley’s letter states that the property

“meets the criteria for a priority category 3 site…but does not meet the criteria for a priority category 1 site requiring urgent remediation. We are therefore unable to offer funding for remediation this year as the contingency fund has been fully allocated to higher priority sites.”

I understand the idea of priority, but it does not help under the circumstances. Lord de Mauley continues:

“the Environment Agency has approved in principle the provisional sum of £50,000 contribution to the remediation.”

That is certainly welcome, but goes nowhere near meeting the total cost. I accept that the cost might be driven down further, were there a competitive tendering process. We are not quite at that stage yet, but there appears to be a substantial gap between the cost as originally estimated and the support that may or may not be available.

To return to where I started, I am not yet convinced that I have a solution for people who are extraordinarily and quite reasonably worried about whether they will lose their entire life savings, the value of their house and more to meet a circumstance that is of no direct benefit to them other than the fact it would make their house saleable again. This is the Catch-22, of course: if contaminated land is not removed once it has been identified, there is still a problem because the land is unsaleable, so its owner has lost the value anyway. It is a conundrum. The couple are worried that they still face a substantial bill that they are not sure they can meet. That is a huge worry for a couple on a fixed income with no obvious means of finding alternative borrowings.

There is also the wider question, because the case demonstrates a clear failing in the architecture of the system. The system was always based on the idea that those who caused the pollution dealt with the pollution. It was never intended to penalise those who unknowingly occupy that land much later on and find themselves saddled with an enormous bill. Where those circumstances applied, it was always assumed that the local council would have the support of public funding to make good the land in question in the public interest. Remove the contaminated land grant and a massive loophole in the system is created that threatens to make the whole thing not function properly and, in the process, cause many who find themselves in such circumstances sleepless nights and a great deal of concern, and that is entirely unjustified.

I ask the Minister to look again at the situation—I appreciate that it is not his direct responsibility, so he will need to talk to colleagues in the Department—and potentially go back to the Treasury and say, “This is a capital grant. It is not a revenue grant, although it is paid out of departmental revenue.” We as a country need to identify the problem so that those who in all innocence find themselves facing it are not put in the same position as my constituents. Most of all—laying aside that equity issue for those individuals—if we want public policy to work properly and if we want councils to look for this land, identify it and deal with it, we cannot give them a massive disincentive to doing so, because frankly it will not work. I look forward to the Minister’s response.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

I congratulate the hon. Member for Somerton and Frome (Mr Heath) on securing the debate. I assure him that representing as I do a seat with towns built on the sites of 18th and 19th-century tin mining, I am well aware that contaminated land is still an issue in many parts of the country and that it has in no way gone away. The idea that it has is not the driver behind some of the changes we have made.

Contaminated land is a complex area and can cause hardship and anxiety for people, particularly where their homes are involved. The case that the hon. Gentleman mentioned, where he suggested the cost could be £270,000, very much demonstrates that point. An estimated 90% of the remediation of contaminated sites is market-driven and occurs under the planning regime, but there will continue to be sites that are not suitable for further development, but require remediation.

I was interested to hear about the hon. Gentleman’s involvement in the passage of the Environmental Protection Act 1990. As he knows, the contaminated land regime, as set out in part 2A of that Act, provides a risk-based approach to the identification and remediation of land where contamination poses an unacceptable risk to human health, property or the environment. Responsibility for identifying that contaminated land rests with the local authority, as set out under part 2A. Changes made to the part 2A statutory guidance in April 2012 have resulted in a more risk-based approach to identifying and remediating contaminated land, meaning that more resource can be directed to those sites most in need. From our discussions with local authorities, we know that the new statutory guidance is proving helpful to them and has helped to simplify a complex area.

Part 2A, as the hon. Gentleman pointed out, is based on the principle of polluter pays. Therefore, liability will always be apportioned in the first instance to the company or person that caused the pollution or knowingly permitted it to be caused. However, it is not always possible to identify the polluter. In some cases, the pollution was caused long ago, and the company responsible may since have folded. When that happens, the costs of remediation can fall to the site owner or the occupier of the land. That might be the local authority itself, but it can also be individual private householders. Crucially, however, local authorities are required to take into account the hardship that may be caused if all costs, or partial costs, are to be apportioned. When local authorities are reaching decisions over cost apportionment, hardship must be considered on a case-by-case basis, with regard given to the principles set out in the statutory guidance.

Turning to the hon. Gentleman’s constituency matter relating to the Whatley gasworks in Somerset, I understand that in the case of the home owner on that site, no liable polluter could be identified. Although the Department for Environment, Food and Rural Affairs was unable to offer further funding this year, as the contingency fund was allocated to higher-priority sites, I can confirm that in previous years, capital grants totalling almost £90,000 have been issued for the same site to cover the costs of investigation. The hon. Gentleman was unclear about this, but my understanding is that, in the end, the local council agreed to bear the costs of remediation because it determined that hardship would be caused to the householders who owned the affected property had they been made to pay. I know that he questions whether that is the case, and I am more than willing to clarify that point after the debate, but my understanding is that the costs will be borne in this instance.

A related point about part 2A is that it is clear that where a class B person owns and occupies a dwelling on contaminated land, the council should consider waiving or reducing the costs of recovery if the person did not know and could not reasonably have been expected to know that the land was contaminated when they brought it. My understanding is that the people in the case raised by the hon. Gentleman did have a survey carried out when they purchased the property many years ago, which is also a mitigating circumstance.

[Mr Heath]

The local authority has been as helpful as possible in this case and did identify both of those factors as arguments for waiving the fees. Nevertheless, it expressed concern that a number of other properties around the district council area will end up in similar circumstances. That would mean a substantial capital sum mounting up very quickly, which would be difficult for a small district council to support.

[George Eustice]

I understand the hon. Gentleman’s point and hope to reassure him in a moment when I discuss some of the other things that we are doing to move from looking only at the hazard of contaminated land to a more risk-based approach. From 2012 onwards, we have taken a number of steps to ensure that councils do not unnecessarily identify sites that may well have some contamination but are not a priority. I am pleased that the case he has raised appears to have been resolved satisfactorily; however, he has put his finger on an important point, because other sites might be affected.

As I said at the start of my speech, it is important to recognise that an estimated 90% of the cleaning up of contaminated land in England and Wales is carried out through the planning system under the national planning policy framework. The Government encourage the focus on a market-based approach to dealing with contaminated land. One of the financial incentives provided by Government to encourage the re-development of contaminated land is land remediation relief, which allows companies to claim back corporation tax on 150% of the costs of dealing with contaminated land and is intended to influence developers’ decisions positively by increasing the profitability of redevelopment projects. We should also note that the existing environmental permitting regime for the current activities with the greatest potential to cause contamination is designed to ensure that no new part 2A contaminated sites are created.

As the hon. Gentleman pointed out, the capital grant scheme is being phased out. I know that local authorities were disappointed when DEFRA announced in December 2013 that the contaminated land capital grants scheme would be closed. The phasing out of the grants scheme is regrettable, but it reflected a necessary shift to a more sustainable approach in the face of pressures on the public finances, of which the hon. Gentleman will be well aware, having been a DEFRA Minister himself. The cornerstone of our new approach was the revised guidance that we issued in 2012 that has saved local authorities and businesses money by giving much more clarity over how to decide whether affected sites need to be remediated.

In March 2014, we published DEFRA-funded research to develop new screening levels that will help public authorities and developers to screen out low-risk land from the need for further investigation and so prevent unnecessary remediation works. The crucial thing is to ensure that there is no obligation on local authorities to search for sites that might not be of particularly high risk and should not be a priority, thereby creating a potential liability for householders. By adopting a more risk-based, less hazard-based approach to these issues, we have helped to address some concerns.

The screening values that we published sit alongside DEFRA research that was published in 2012 on the normal background concentrations of contaminants. That forms part of a toolkit for use by the contaminated land sector that will help to ensure that pragmatic, evidence-based decisions can be taken, thereby reducing costs while ensuring a high level of protection to human health and the environment. DEFRA continues to support the national experts panel on contaminated land, the remit of which is to advise local authorities on difficult decisions under part 2A at more complex contaminated sites. The panel is available as a free resource for local authorities to access, and is intended to help where it is unclear whether a site should be determined as contaminated under part 2A. Case studies on the output of the panel’s work will be published so that all local authorities can benefit from the lessons learned.

In conclusion, we remain committed to ensuring that the appropriate policy tools are available to support local authorities in carrying out their duties under part 2A. Local authorities that require help and advice about how best to manage affected sites should obtain advice from industry experts where necessary. Authorities should also try to work with the owner of the land to see what benefits could be gained via the land remediation relief scheme. Although there will always be difficult cases that require more detailed consideration, the changes that we have introduced to the contaminated land management regime since 2012 have stimulated growth, enabled previously abandoned sites to be developed and returned to productive use, and delivered significant benefits for the economy, while maintaining a high degree of protection for human health and the environment.

I congratulate the hon. Gentleman again on bringing this debate before the House. I hope I have been able to allay some of his concerns, both on the individual case that he raised, which I understand has now been resolved, and more widely.

[Mr Heath]

I am most grateful to the Minister for giving way at this point. In the course of the debate, I have been advised that the matter has not yet been resolved. It might be a matter of loan or of grant, but the household concerned is still not absolutely clear about where the funding will come from.

[George Eustice]

In which case that is a disappointment, because I thought that we had found a solution. After the debate, I will discuss the case with my noble Friend Lord de Mauley, with whom I know the hon. Gentleman has previously corresponded. As I said, the local authority could show forbearance on a couple of grounds and waive the costs: first, on the grounds of hardship, for which there would seem to be a good case, given the high costs; and secondly, on the grounds that there was no reason why the householders should have known or had reason to know about the contamination, given that they had a survey conducted when they purchased the property. We will look further at the case and see whether a resolution can be found.