The desultory fines handed out to water companies that breach environmental rules are part of a much wider problem
A couple of weeks ago I spent a very pleasant evening at The Oval watching Surrey take on their local rivals Middlesex. It was a Friday night, a beautiful summer evening, and the cricket, despite a cameo from the great Ricky Ponting, was not at its most captivating. Consequently, the full house crowd at the Oval engaged in what full house crowds at the Oval always do when the home side are winning comfortably and enthusiastically par-took of the hospitality on offer from the bar. The net result is that at around the 15 over mark in the second innings the game was briefly interrupted by a streaker who made it past the first wave of stewards, ran round the square for a few seconds, before eventually being hauled to the ground by the high-vis clad protectors of the wicket.
It prompted a brief conversation in the crowd about why you don't see many streakers at sporting events these days. I say brief because the reason for this decline was immediately apparent - a £1,000 plus fine, a ban from the ground, and a night in the cells with the very real prospect of legal action is enough to deter all but the most exuberant of drunken exhibitionists. The juvenile desire to disrupt the game is almost certainly as present as ever at large sporting gatherings, but the penalties and condemnation that come with them are now so severe that the streaker has become as rare a species as an Australian Ashes winner.
I was reminded of this shift in sporting mores by the news over the weekend that water companies have been fined just £3.5m for over 1,000 breaches of water regulations in the past nine years. It is the corporate equivalent of giving a drunken streaker a £20 fine and a stern talking to from a copper.
In fact, the details of the Observer's investigation into the enforcement of water regulations make for even worse reading than the headline figures. Only a third of the 1,000 incidents recorded - that is almost one every three days - resulted in any sort of fine and then the average fine only amounted £10,800. That is a £10,800 penalty for breaching established rules designed to protect the environment imposed on an industry that made £1.7bn in pre-tax profits in 2010-11 and stands accused of handing out dividends like the proverbial candy.
The litany of regulatory breaches ranging from overflowing sewage to polluted rivers is worth reading in full, but the really worrying aspect of this story is that it is part of a pattern whereby relatively strong environmental policies are backed up by weak enforcement and desultory fines.
We've been tracking this trend for some time and you see it repeated time and again. The Carbon Reduction Commitment remains the government's flagship policy for driving carbon management up the corporate agenda, but when four firms failed to comply with the rules they shared fines totalling £99,000, enough to focus minds perhaps, but hardly punitive. It is an open secret in the building industry that energy efficiency standards are now relatively demanding, but are rarely enforced. Fines for breaches of air pollution rules are similarly infrequent and modest, while the reckoning the government should face over its continued failure to meet EU air quality rules seems to be perpetually deferred. In addition, Conservative Ministers seem to be waging an ideological war against modest fines designed to discourage people from parking in places that cause congestion and encourage them to recycle properly.
The one area where there has been some encouraging activity is in tackling waste crime, where the Environment Agency has targeted resources at the problem. As a result detection rates almost doubled and fines soared last year from £800,000 to £1.7m. But even here industry insiders are concerned fines are still often too low to discourage environmentally damaging activity, while fears remain Defra could impose further cuts on the Environment Agency that would jeopardise its recent progress. Across all departments with an environmental remit, enforcement activity has often been the first in line for cuts when the Treasury comes knocking.
I've always found it bizarre that many of the same politicians who take a "hanging's too good for them" approach to personal crimes are so relaxed about corporate crime, just as I find the complaints about the level of parking fines rather strange when it is possible to avoid them by simply abiding by the rules and not parking illegally.
The problem with weak enforcement and low penalties for breaching environmental regulations is that it sends a signal about the level of importance the government attaches to these issues. Ministers may argue that the reputational impact of being in breach of rules designed to protect environmental and public health is penalty enough, but if reputational pressures really were the only consideration all rules would be complied with and as an added bonus no company would continue to avoid tax - sadly this is not the case.
Businesses are understandably reluctant to lobby in favour of higher penalties, not least because a common reaction to a firm being caught breaching regulations is a resigned "there but for the grace of God go I" from its rivals. There is a mutually assured destruction pact across many industries, which prevents firms from calling for tougher penalties and enforcement. But as the gap between green business leaders and laggards continues to widen this pact needs reassessing.
Just as those companies that pay their fair share of tax have realised they are subsidising rivals who avoid their obligations, those who abide by water, air and corporate reporting rules need to realise that rivals who do not are guilty of freeloading. They are nakedly disrupting the game for everyone, and, unlike cricket's now lesser-spotted streakers, they are not even paying a significant price for doing so.
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