Interview: Paul Leinster, Environment Agency

To the casual observer, the Environment Agency looks like a fairly typical non-departmental public body: a regulator and service delivery organisation, it’s tasked by policymaking departments with a set of tasks around conservation, sustainability and public safety. Look closely, though, and the picture becomes more complicated. Over the years since its foundation in 1996, the EA has accumulated a diverse set of responsibilities covering industrial pollution, water management, waste regulation, fisheries, conservation, climate change, and even marine navigation. Each of these have their own requirements and sometimes these come into conflict, requiring the agency – squeezed by declining revenues – to make tough choices on how to meet its various briefs. After all, as every environmental activist knows, there are many shades of green – and some of them clash.

It’s probably best, then, that EA chief executive Paul Leinster isn’t an environmental activist, but an environmental engineer. Born in North Yorkshire’s Catterick Barracks – his father was attached to the chaplain’s office – he spent his childhood globe-trotting with the British Army: his first school was in Berlin and his last in Cyprus, “with others in between.” There followed a 20-year career in the world of business, working in pollution management and environmental health for chemical and pharmaceutical firms, before he joined the EA in 1998. He became chief executive five years ago, since when he’s faced many of the difficult questions that arise when one area of the EA’s portfolio clashes with another.

Take the balance between industrial pollution and climate change, for example: some equipment that reduces factories’ emissions of sulphur dioxide uses large amounts of energy, creating CO2 emissions and a question for Leinster: “What’s the right balance between the additional carbon that it’s going to use, and the sulphur that it’s taking out?” Or take how to weigh the prize of low-carbon power against the ecological costs of laying a barrage across the mouth of the Severn? “The big question there was around wildlife habitats against electricity generated,” he recalls. “Very tricky questions!”

On that occasion, the habitats won: in September, the government said the case for the barrage remains unproven. But sometimes, there’s no obvious way to resolve these conundrums. If there’s one government body that should be hitting its CO2 emissions reduction targets, it’s the EA: unfortunately, the agency has fallen victim to the very problem those targets are meant to tackle, as our increasingly unpredictable weather requires it to burn more fossil fuels.

Never rains then it pours
“In March 2012, we were in drought,” Leinster recalls, then we had “the wettest summer we’d ever seen.” Since he joined the EA in 1998, the “received wisdom that the flood season runs from about October to May” has gone out of the window, with rainfall patterns ever more changeable. But the agency is responsible for both minimising flood risks, and for keeping our rivers flowing, so “we pump water either when it’s dry, or when it’s wet.”

With much of that pumping diesel-powered, the effects of climate change are wrecking the EA’s efforts to minimise its own contribution to the problem: the agency’s CO2 emissions in 2012-13 were 15% over its target, and internal estimates have suggested that it’ll only get halfway towards its 33% reduction target by the deadline of March 2015. The agency’s run a competition through one of the technology strategy boards to decarbonise its pumping operations, Leinster comments, and “we think we’ll be closer than that.” He also hints that the EA might not have given the target enough thought: “Back in 2006, which is when we set ourselves the 30% reduction target, that was quite a benign weather year.” But the reality now is that the EA’s performance against its CO2 target will depend on it getting lucky: “Some of it will depend on the weather,” he acknowledges.

With both water and climate change, Leinster promotes “the so-called twin track approach”: working to both reduce the scale of the problem, and to better meet remaining needs. So his agency tries to cut domestic and industrial water use, for example, whilst transporting water and reducing leakage in order to protect supply.

The latter is primarily a challenge of finance and engineering: one key aim is to “get greater interconnectedness between the different water companies, so you can get water being transferred across the regions,” he says. Reducing water use, though, involves shifting public opinion and challenging vested interests. Awkwardly for the EA, people are becoming “less accepting” of hosepipe bans “because everybody wants things now.” With people demanding higher levels of customer service, such rigid controls sit oddly in today’s economy – yet “the water restrictions are part of the water companies’ management plans,” says Leinster. “I’m not sure how many of the public understand that [a hosepipe ban] is an active management decision rather than just a point of failure.”

The population would probably be still less accepting if they realised that half of our abstracted river and seawater is used by power stations – many of which, by burning fossil fuels, are in turn strengthening climate change and increasing the likelihood of further water shortages. The Environment Agency has argued for reform of our water abstraction licensing system but, asked whether the current system fairly reflects the environmental impacts of water use, Leinster sidesteps: that’s a policy matter, he says, and a question for Defra. It’s a line he declines to cross on several occasions during the interview – and, given the complexities and tensions within the EA’s basket of responsibilities, he must be glad of this cast-iron sicknote.

Heavy weather
On climate change, the twin-track approach means both working to reduce CO2 emissions, and preparing for the consequences of a warming planet. So the EA has a role in administering mitigation strategies such as the EU Emissions Trading Scheme, and in protecting the peat bogs that lock in CO2. It’s also charged with helping departments adapt to climate change: the EA will offer “advice and guidance” to departments, says Leinster, to help them and their “communities of practice” prepare for challenges such as hotter summers.

The EA’s own adaptation work involves a lot of building levees and drainage systems: the agency will spend £500m this year on constructing and operating flood defences. And here Leinster is clearly glad that the government’s given him a long settlement, running to 2021 and “set to increase with inflation or cost pressures, so there is more money going in now than in the past.” He adds that under the new “partnership funding” system, the government is also contributing to schemes part-funded by local councils and businesses. However, once again he hasn’t quite answered the question posed by CSW: are we spending enough to prevent the risk of serious flood damage from rising? And it’s clear that, whilst the schemes funded by government represent very good value for money, there are plenty of laudable projects that aren’t receiving funding – leaving homes and businesses at risk of floods.

“The cost benefit of the work that we’re doing is between 5:1 and 8:1 cost-benefit ratio,” Leinster explains. “For public expenditure, that’s really good value for money. I suppose you could ask a question, which is: would anything above 2:1 be good? Is anything above 1.2:1? Where do you put that boundary?” It sounds as if projects likely to avert flood damage of three times their cost are not currently getting funding; and as if Paul Leinster would see them as a pretty sensible investment.

As a non-departmental public body, though, this kind of question is outside the EA’s brief: “We are a delivery body, and I think that’s quite helpful. It clarifies for us and for others the different roles,” he says; if people “want to talk about the policy issues, they need to be talking to the core department.”

Rising temperatures, falling revenues
Even without the policymaking role, Leinster’s agency faces a difficult task in fulfilling its many and various responsibilities – and that task is getting trickier as many of its revenue streams decline. Its total income is set to fall £47m to £1,065m between 2012-13 and 2014-15, and it’s just announced 1,600 job losses by October 2014 – leaving its workforce at 9,700.

Leinster has ensured that “our support services reduced faster and sooner than the frontline activity”, in part by getting on board with the ‘One Defra’ initiative and moving back office HR and finance work to Shared Service Centre 2. He’s also cutting spending on the EA’s “regional structure, looking at which of those activities can go down to an area level and which can come up to national. Is it possible to take about 30% out of the resource that sits at the regional level?”

Meanwhile, at the local level he wants to “work out how we engage across our widest agenda with local authorities in an integrated way, rather than down silos.” The aim is to “deliver multiple benefits through single activities” – but here, Leinster will have to work around the fact that each of the EA’s activities is separately funded: he needs to maintain “clarity of sight” over spending to guard against cross-subsidy between its different responsibilities.

Two-thirds of the EA’s income is grant funding, but almost all of that goes on flood defences. This year it’ll take £413m in charges for licensing activities such as waste disposal, industrial discharges, water abstraction and inland fishing, and here he’s tried to freeze the costs to industry and individuals: “We haven’t raised the charge levels for regulated industry for some years now,” he says, but prices “depend on how self-sustaining those areas of business are.” With its lines of spending so closely tied to specific income streams, Leinster has to find efficiencies across the EA’s work within a fairly rigid framework.

Charges of the lighter brigade
Within specific areas, though, Leinster’s team have found various ways to keep its charges down. He’s proud that “back in ’99 we started on that journey of better regulation before it had become a wider theme across government”, applying a “risk-based, targeted, proportionate approach.” Businesses are “interested in earned recognition”, he says: firms that act responsibly receive a lighter touch, whilst the EA focuses on the 3% of “bad neighbours” and “recalcitrant poor performers”. Asked whether the credit crunch has changed his views of risk-based regulation, he responds that “we’re very clear that we need to have a sufficient level of intervention to prevent [businesses rated as] an A or B from sliding into becoming a C or D.”

The EA’s also been standardising some permits, so that if a business “is willing to operate within the confines of standard permit, the charges are much lower than if they have to have a bespoke permit.” And it’s exploring ‘non-traditional’ approaches to compliance: in monitoring pig and poultry farming, for example, the agency is piggy-backing (sorry!) on farm insurance inspectors, “providing them with training and a set of questions”. If these inspectors “see something of concern, they tell us and then we’ll go in,” he explains; that enables the EA to cut the frequency of its own inspections, and thus the cost to charge-payers.

Finally, the agency is “in discussion with Defra and the Treasury” about whether it could fund some enforcement activities – currently paid for out of its shrinking grants – by using revenue from license charges. “It’s a discussion that the waste industry is interested in having, because illegal waste is a big issue for them,” he says. So industry is open to the idea? “Um, they’re willing to have a debate,” he replies cautiously, adding that such opportunities “are quite limited” in EA’s portfolio.

Under the pressures of falling income, rising customer expectations, and the deregulatory and localism agendas, the Environment Agency is trying to change its relationship with businesses, councils and communities. But perceptions are slow to change. Frontline delivery staff in other public bodies have told CSW they see the EA as a rather haughty regulator that drops in to lay down the law, before disappearing off again in a fancy Land Rover: does Leinster recognise that picture? “No, I don’t,” he replies. “I think in the past we might have, but I don’t think it’s the reality now. And I’ve given a standard offer to anybody that I meet: if you have a level of concern with either how we’re doing things, or what we’re doing, then write to me. Send me an email. Phone me. Because I want to make sure we’ve got the right professional level of interaction with those we regulate and the communities, so they feel that we’re there doing the job they need us to do: making sure that emissions and discharges from a site are properly regulated.” And will complainants receive a proper reply? “I reply,” he says emphatically. “I reply to them all.”

Like civil servants across government, the EA’s staff are not having an easy time. Under pressure to maintain environmental protection and build resilience to climate change whilst taxpayers and customers demand lower costs, the agency’s chief finds his task complicated by the EA’s multitude of vertical funding pipelines – a result of the gradual accumulation of workstreams and responsibilities over time. But Leinster seems to enjoy the complexity of his job; perhaps, given those clashing hues of green, he’s also sometimes grateful for the freedom from resolving tricky policy trade-offs that coParlmes with managing a delivery body. Anyway, it’s clear that after a childhood spent moving from country to country, and a business career spent moving from firm to firm, he’s found in the EA an organisation where he feels thoroughly at home. “I was either moving house or moving job,” he says with a grin. “Then I landed here, and I haven’t moved since.”