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Mr. Michael Meacher (Oldham, West): Will the Minister, on the central point of this debate, address himself to the key issue? Contrary to the agreement that seemed to have been reached on 15 December 1995, the regulations will permit retailers to use transit packaging arising in their own back yard, to meet their obligations. That will increase the pressure on other packaging industries upstream and will undermine the viability of Valpak. How does the Minister justify that?
Mr. Jones: The hon. Gentleman must have missed what I said about retailers a moment ago. Retailers cannot fulfil their obligations simply from their own back yard packaging. They do not have packaging arising in all the categories that we are talking about, so they could not meet all the targets. The hon. Gentleman said that that was the key point of the debate, but I believe that there are a number of key points. If I can make a little progress, I shall highlight them. I believe that one of the main points of the debate is to ensure that we do not go down the road that some other countries have travelled--particularly the Germans--of creating a monster that is environmentally damaging as well as extremely costly.
I was talking about Valpak. Perhaps I should also tell the House that there is a second scheme, aimed at the dairy industry, called Difpak, whose members have recently announced their intention to proceed. Such schemes are run entirely by business. Any business that joins an approved collective scheme is entirely exempt from the regulations, as long as the scheme achieves the aggregate recycling and recovery obligations of its members. I hope that the House agrees that that is a substantial encouragement to join a business-run scheme.
The regulations impose three main obligations. First, there is a registration obligation: businesses must register with one of the environment agencies and must provide packaging data by 31 August 1997 at the latest. In other words, they must choose whether to carry out their obligations individually or to join a collective scheme. Secondly, from 1998 onwards, there is a recovery and recycling obligation. Businesses must take reasonable steps to recover and recycle specific tonnages of packaging waste, which are calculated to take account of the amount of packaging flowing through, the function that they perform in relation to the packaging--that means, for example, whether they convert packaging or fill packaging--and the UK targets, which are 52 per cent. recovery and 16 per cent. recycling for each material by 2001.
Sir Jim Lester (Broxtowe):
Some small companies are concerned about whether they might be discriminated against if they do not join one of the major schemes. Will my hon. Friend confirm that there will be no difference of approach in regard to individual companies that seek to register on their own and those that choose to do it together?
Mr. Jones:
That is true--the smallest companies are exempt from the regulations, although the slightly larger ones will be caught as the phasing comes in. I can confirm that if people want to go it alone and create their own
Thirdly, there is a certifying obligation. Businesses and schemes must certify annually that they have recovered and recycled the required tonnages of packaging waste.
The Environment Agency, in England and Wales, and the Scottish Environment Protection Agency will monitor compliance with the regulations and will have enforcement powers comparable with those that they exercise in relation to their other responsibilities. Businesses following the individual route will need to pay a registration fee to the appropriate agency of £750, while schemes will pay a fee in relation to their membership.
The primary purpose of the regulatory regime is to discourage free riders. Industry told us clearly that that was a basic requirement if the initiative was to succeed. It is therefore important that the enforcement role of the agencies is credible and effective. Much of the agencies' effort will be devoted to education, promotion and assisting industry, but enforcement will be necessary. A public register of businesses and schemes will list all those who have registered and who have self-certified performance of their obligation.
The agencies will also have an important role in relation to data--aggregating information from businesses, to provide a more accurate national picture of how and where the 8 million tonnes of packaging is created. That role also responds to an important industry request for much better data, which are essential to ensure a fair distribution of obligation, as well as to ensure that the United Kingdom is on course to achieve its targets.
I now refer to small businesses. While we have accepted the industry's request for a shared approach, many people have also accepted that it is neither efficient nor profitable to place an obligation on every business, such as the 200,000 or so small shops. The regulations therefore apply initially only to businesses with a turnover of more than £5 million. We estimate that 4,000 businesses with a key role in the packaging chain will be affected. In the year 2000, the threshold will drop to a turnover of £1 million, and we estimate that 9,000 businesses will be affected, including wholesalers who, from that year, will pick up the selling obligation of the small shopkeeper. We believe that large and medium-sized businesses are best placed to ensure that the system is up and running as smoothly as possible.
One of the key features of our approach is that it is based on recycling and reprocessing, not simply collection. If we briefly consider what has happened in Germany, the advantages of our approach become clear. The German householder has five separate dustbins; each German household is served not only by the municipal collection lorry, but by a separate lorry run by the Duales System Deutschland--DSD. The two are not co-ordinated, and there are extremely high targets for recycling and recovery.
The consequences are well known: in its early years, the German system was collecting vast quantities of waste, for which it has struggled to find a use. Today, there is still a significant trade in exporting plastic waste, often with a dowry, to third-world countries, where reprocessing is a euphemism for environmental degradation. The current cost of the German approach is £1.7 billion per annum--an approach that we have wholeheartedly rejected.
When the Select Committee, under my chairmanship, published its report on recycling in 1994, we drew particular attention to the issue. I hope that the House will forgive me if I quote from the press notice that launched our report:
Mr. Sheerman:
I and most people who know anything about the subject would agree with the Minister about not wanting to go down the German track, because we do not want that sort of bureaucracy, but at least in all the other systems that I have seen, there is a regulator who conducts audits and checks that the recycling is being done. Is the Minister sure that the Environment Agency has the capacity and the ability to check, audit and control?
Mr. Jones:
I have every confidence in the Environment Agency, which does a good job in respect of all its responsibilities. I have never heard anybody suggest that the agency is incompetent in this respect. I am interested in the hon. Gentleman's comment about not wanting to go down the German route--that contrasts with the remarks of the hon. Member for Oldham, West (Mr. Meacher) who, when speaking to the Environmental Services Association not long ago, praised the way in which the Germans operate.
Mr. Meacher:
That is a complete falsehood--I have never said that this country should adopt the German method. It is far more expensive per capita, I have never supported it and the hon. Gentleman should withdraw--
Mr. Deputy Speaker (Mr. Michael Morris):
Order. Before appealing to the Minister, the hon. Gentleman should rephrase the word "falsehood".
"On the subject of recycling targets, we recommend that the aim of local authorities and other bodies should not just be the collection of recycled material. Collection should be viewed as the first stage of the recycling process; it is equally important to develop market demand and adequate processing capacity. We believe that this should be taken into account by the Department of the Environment and the European Union in the formulation of policy, in order to avoid the surplus of collected material as resulted from the German DSD scheme."
By contrast, we have taken great pains to build our approach on the views of business, and we have harnessed the expertise of those with practical knowledge of the industries involved. That is the basis for the regulations. By allowing for business choice, they provide the stimulus of competition. By providing for business self-assessment and self-certification, they offer a deregulatory approach to monitoring and compliance. By providing for exemption for an approved business compliance scheme, they encourage business to develop cross-sectoral co-operation, efficiency and incentives. By focusing on the reprocessing end of the cycle, they ensure that we do not collect material that cannot be used and that the full range of businesses involved have an incentive to find new markets for recyclate.
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