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Census
Motion made, and Question put forthwith, pursuant to Order [25 January],
Mr. Deputy Speaker (Mr. Michael Lord):
With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Kevin Hughes.]
Ms Helen Southworth (Warrington, South):
I am grateful for the opportunity to discuss both the effects of Treasury fiscal policy on the recycling of aluminium and concerns that the climate change levy may create a perverse incentive that makes aluminium recycling economically less competitive.
In my constituency, Latchford recycling plant--Europe's first dedicated aluminium can recycling facility--clearly demonstrates that aluminium recycling is one of the success stories of greening business. Commissioned in 1991, with investment of £28 million, it has sufficient capacity to recycle every aluminium can in the United Kingdom. Since 1991, the plant's output has grown by 40 per cent., and it recycles more than 4.5 billion cans a year. It provides employment for 143 people in Warrington.
At the other side of the constituency lies one of the UK's biggest landfill sites, a huge hole in the countryside that consumes waste from a wide area, including greater Manchester. Unsurprisingly, local residents do not like being neighbours to a landfill site. They want people to sort at source and to recycle their waste rather than dump it.
Last year, a local community association charged an entry fee of one aluminium can for recycling at its summer fair, recognising the crucial relationship between aluminium's intrinsic value and the fact that recycling can release that value and reduce landfill waste. Around 4.2 billion aluminium drinks cans were sold in the UK in 1998. If every can used in the UK were recycled, 13.5 million fewer dustbins would go into landfill. We would also save 280,000 tonnes of carbon dioxide.
Aluminium is the most widely used non-ferrous metal in the world. Annual production of primary aluminium amounts to 20 million tonnes, which gives some idea of the size of the global market. It has a wealth of applications from transport to packaging, and from construction to engineering.
Perhaps the most important point is that aluminium enjoys significant environmental advantages in comparison with similar materials. The low weight of aluminium frames used in cars and other vehicles means that the energy required to power them is significantly lower than would be the case for most other metals. A life cycle analysis of aluminium--taking into account the product's environmental impacts from cradle to grave rather than just its manufacturing costs--shows that a vehicle with an aluminium chassis may be 100 kg lighter, meaning a reduction in fuel consumption of 0.6 litres for every 100 km travelled. A tonne of aluminium used in place of steel would save 20 tonnes of carbon dioxide emissions over the lifetime of a car.
That environmental advantage was, no doubt, considered when the Government took their welcome decision to exempt energy use for electrolysis in primary aluminium smelting from the new climate change levy. By its nature, aluminium electrolysis has extremely limited scope for reductions in carbon dioxide emissions. The Government's decision was an important step
towards safeguarding the competitiveness of the UK aluminium industry. Given the savings in energy that can result from use of aluminium rather than other metals, that was a wise decision, making environmental and economic sense.
Generations of children know that the way to a "Blue Peter" badge lies in collecting aluminium milk bottle tops. Aluminium is infinitely recyclable, and it therefore has a high intrinsic value. Scrap metal can be refined or re-melted to make new aluminium products with virtually no degradation in quality. It can be recycled again and again, almost limitlessly.
It is important to climate change that the energy required for secondary aluminium production amounts to just 5 per cent. of that needed for the primary product. Primary aluminium consumes 148,000 MJ of electricity per tonne of output. Secondary aluminium uses just 8,100 MJ for the same output. Recycling aluminium is a green activity.
Secondary aluminium production has made enormous strides in the improvement of its energy efficiency. Part of that has been achieved simply by better housekeeping, but the industry has made a large investment in improving efficiency--£170 million over the past nine years. That has included sophisticated melting technology, new furnace design technology, burner design, energy recovery projects and fume arrestment equipment. Many producers have also been audited by bodies such as the energy technology support unit under the energy best practice programme.
The industry plans to invest similar amounts over the next nine years, in order to make further efficiency improvements. It is a green industry with an environmental conscience.
Most important, the industry has invested heavily not only in the infrastructure required to collect material for recycling, but in the educational programmes that encourage consumers to recycle--to change their normal practices. That has been at no cost to the taxpayer. It means that more aluminium is now recycled in Britain than ever before, in an increasingly energy efficient manner.
In 1990, 503,000 tonnes of aluminium were recycled in the UK but, by 1998, as a result of the investment programme, the amount had increased to 858,300 tonnes--a 71 per cent. increase. To produce that amount of aluminium by recycling instead of by producing primary material effectively prevents 4 million tonnes of carbon dioxide emission. That is a significant amount; not least because it is more than the whole UK annual commitment under the Kyoto protocol.
Recycling rates are now as high as 90 per cent. in the transport sector and more than 70 per cent. in the building and construction sector. Even the packaging sector--the most important sector for my constituency--which has innate problems due to the logistics of recovering small quantities of used packaging from millions of households throughout the country, has now built up to a recycling rate of 36 per cent. for used drinks cans. That is the most recycled post-consumer beverage package in the UK.
Higher rates of recycling mean that there is less demand for alumina and thus a correspondingly lower demand for bauxite ore. Recycling means that there is less need for bauxite to be mined in the first place, thus offering environmental protection. Nationally, aluminium
packaging recycling is a booming business in its own right. There are now five million recycling transactions every year. There are 50,000 collection groups nationally--20,000 of which are schools and colleges, which are recycling money back into their own operations. Britain has 400 aluminium recycling centres, as well as 120 collection programmes run by community groups. The industry provides jobs--at least 750 new jobs in aluminium packaging, collection and reprocessing in the past decade.
Aluminium scrap has a high value. Collecting aluminium packaging to sell as scrap to secondary aluminium producers provides funds to numerous charities and local community groups--£10 million for local communities and charities every year. In 1998-99, the "Blue Peter" appeal collected 500 tonnes of aluminium, providing funds to build three new schools in Mozambique.
Aluminium foil and can recycling has become a core activity for a growing number of social employment projects that provide skills and personal development training in a workshop setting. There are almost 40 projects providing aluminium recycling services for 70 local authority areas. Many of those are part of the new deal programme; not only do they produce valuable income, they give unemployed young people independence, self-esteem and structured work patterns and the opportunity to gain qualifications that lead to outside employment.
Such projects combine environmental and social benefits and encourage the public to donate aluminium to benefit directly their local communities. It is no exaggeration to say that aluminium recycling proves that there can be a triple bottom line that works simultaneously in the economic, social and environmental spheres. For example, not only would the cans and foil currently recycled each year fill the dome, they would be worth more than £10 million to collectors. Perhaps more disconcertingly, we could still recycle another two domes-full--products worth £25 million are currently going into landfill.
The competitiveness of secondary aluminium producers is finely balanced. The price of scrap metal is high and the infrastructure required to collect it is expensive. The costs of changing public behaviour to promote recycling are largely borne by the industry. Over the past 10 years, more than £40 million has been spent on the marketing, promotion and collection infrastructure in cans and foils alone.
Recycled aluminium competes with primary aluminium in a market in which end prices are determined internationally. Currently, the cost of each is similar. As British primary aluminium electrolysis is made exempt from the climate change levy, recycled aluminium could be at a disadvantage. It is not only potentially anti- competitive, but illogical, to tax recycling as part of a levy whose stated purpose is to encourage energy saving and environmental best practice.
Another key consideration is that scrap might be contaminated with paint, grease, oxides, plastics and so on. The more impurities that are present in the metal being recycled, the more energy is required to re-purify it. As the recycling of scrap metal increases, the greater proportion of impurities in the scrap means that it becomes more expensive to produce, and recycled aluminium becomes less competitive against aluminium produced from bauxite.
Companies aiming for stringent targets in energy consumption, under the negotiated agreements, are likely to refuse to process low-grade scraps, with low metal yield and contamination that must be removed--for example, coated foil. Those materials will end up as landfill--as waste. That is the precise opposite, environmentally, of what the climate change levy intends.
The Government's decision to exempt the energy used by the electrolysis of primary aluminium is sensible and welcome; it safeguards the competitiveness of British industry within an overall framework of making the market work for the environment through incentivising energy efficiency. The Government's integrated climate change policies make them a pathfinder in European environmental policy, and we can justly be proud of that.
At the same time, the Government have also shown that environmental policy can be sensitive to the needs of business and to the imperatives of competitiveness. The decision, announced in the pre-Budget statement, to increase the level of rebate to 80 per cent. for those businesses that have made negotiated agreements shows clearly that the Government's approach is environmentally and economically sensible, and was arrived at by listening to responsible industry voices.
However, there is a danger that secondary aluminium will face a blow to its competitiveness by having to pay the climate change levy, while primary aluminium--due to the electrolysis exemption--receives a cost advantage. That situation would upset the fine balance of competitiveness between primary and secondary aluminium.
It would be most inappropriate if the levy were inadvertently to penalise the aluminium recycling sector, which is one of the success stories of greening business. There is a real risk that the climate change levy could make the use of recycled aluminium more costly than that of primary aluminium and thus undermine the levy's environmental intentions.
What might happen if secondary aluminium production is liable for the climate change levy, but electrolysis in primary aluminium smelting is not? Secondary aluminium would rapidly become less competitive than its primary counterpart. Demand for scrap metal in the UK would fall as the cost base increased. Aluminium scrap would then be exported to other countries.
However, Britain would be exporting much more than scrap metal. Jobs in the secondary aluminium industry would also be exported and, given that a company producing 25,000 tonnes of aluminium ingot employs between 70 and 100 people, the number of jobs lost would be substantial. If companies have to relocate to places where energy costs are cheaper, Britain would also be exporting the tax revenues of those companies. The total annual value of the annual production of recycled aluminium from the UK's 60 reprocessing companies is £1.1 billion.
Perhaps most ironically, Britain would be exporting the energy savings that can be made by the secondary aluminium industry. We have already seen how much less energy-intensive secondary aluminium production is than primary aluminium. If Britain inadvertently pushes secondary aluminium abroad because of the unintended effect of an environmental tax, we shall have made a grave error in terms of unemployment and lost a great opportunity
for energy savings that would count towards our Kyoto targets and our national contribution to safeguarding our planet's future.
That the words in item 1 'indicating whether an individual form is being completed by that member', the words in item 2 'and relationship to householder or joint householder or to the first person mentioned in the return, and, as the case may be, where there are 5 or less persons in the household, the relationship to each of the previous persons mentioned in the return and where there are 6 or more persons in the household, the relationship of the sixth and subsequent persons to the two previously mentioned persons in the return', the words in item 6 'and if married whether first or subsequent subsisting marriage', items 7, 10, 11, 12, 13, 14, the words in item 15 'or was on a Government sponsored training scheme', items 16, 18(c), 25, 26, 27, 28 and 29 of Schedule 2, and items 1, 2 and 3 of Schedule 3 to the draft Census Order 2000, which was laid before this House on 10th January, be approved.--[Mr. Kevin Hughes.]
Question agreed to.
That the draft Competition Act 1998 (Land and Vertical Agreements Exclusion) Order 2000, which was laid before this House on 19th January, be approved.
Question agreed to.
That the draft Competition Act 1998 (Determination of Turnover for Penalties) Order 2000, which was laid before this House on 19th January, be approved.--[Mr. Kevin Hughes.]
8.4 pm
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