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8.20 pm
The Minister for Competitiveness (Mr. Alan Johnson): I congratulate my hon. Friend the Member for Warrington, South (Ms Southworth) on securing the debate and on her thoughtful and well-informed speech. I am aware of the tireless efforts that she has made to ensure that the importance of the United Kingdom aluminium industry and its products are properly recognised by the Government and others, especially through her role as chair of the all-party parliamentary group for the aluminium industry and through her membership of the Select Committee on Trade and Industry. I am also grateful to her for giving me advance notice of the issues that she has just brought to the attention of the House.
The subject of the debate is important, as recycling is one of the key ways in which the metals industry can contribute to the greater goal of sustainable development. The Government are keen to work with the aluminium industry to find efficient ways of recycling this important material. The effective management of waste is central to achieving sustainable development. The Government are committed to achieving substantial increases in recycling rates. Our draft waste strategy, published last year, set out our goals of recycling or composting 25 per cent. of household waste by 2005 and, by the same date, reducing the amount of industrial and commercial waste that we landfill by 15 per cent. as compared with 1998 levels.
Increasing recycling rates will help reduce the environmental impact of using primary raw materials and energy, and disposing of waste. It also offers a competitive opportunity to those businesses that can supply and use recycled materials.
We have in place a number of measures to encourage increased recycling rates. The landfill tax encourages greater diversion of waste from landfill, and the standard rate is going up by £1 a tonne each year until a review in 2004. The producer responsibility initiative means that several industry sectors--including the packaging sector--are taking action to increase re-use, recovery and recycling rates. A Department of Trade and Industry recycling programme announced last October will tackle the market and technical barriers to increasing the use of recycled materials by manufacturing industry. Following that, the DTI and the Department of the Environment, Transport and the Regions are jointly developing proposals for a programme to promote more sustainable waste management and expand the market for secondary raw materials.
The Government are grateful to the UK aluminium industry for the commitment that it has shown in its negotiations with DETR on an agreement to reduce energy consumption and emissions of greenhouse gases. I understand that the Aluminium Federation is at the forefront of the energy-intensive sectors involved in these discussions, and that it expects to be one of the first trade associations to sign heads of agreement during the coming weeks. Once a full agreement has been concluded, eligible sites within the sector will be able to benefit from an 80 per cent. discount in the rate of the climate change levy.
It is useful to have my hon. Friend's views on the climate change levy. I emphasise that the Government are seeking to design and implement the levy in a way that maximises the environmental benefits and safeguards competitiveness. We have been trying to work with business as much as possible on the design of the levy, and we have been listening to its views.
My right hon. Friend the Chancellor responded to concerns expressed by business about the impact of the levy on competitiveness by announcing, in his 9 November pre-Budget report, a number of refinements to the original proposals. My right hon. Friend announced a discount of 80 per cent. for those sectors entering energy use agreements with the Government, and reconfirmed the exemption of electricity used in the primary smelting of aluminium. Those are moves to safeguard the competitiveness of energy-intensive sectors of industry exposed to international competitive pressures. However, there was much more in the pre-Budget report announcements for all sectors of business which, in the context of aluminium, means both primary and secondary producers.
All sectors will benefit from the proposed reduction in the main rates of the levy from those published at the time of the 1999 Budget. All sectors will gain from the trebling of Government assistance to business for energy efficiency measures, including the introduction of a new system of enhanced capital allowances. All sectors can lower their levy liabilities by using electricity generated in good-quality heat-and-power plants or from new forms of renewable electricity.
I acknowledge the concerns that my hon. Friend the Member for Warrington, South expressed so eloquently about the impact of the climate change levy on aluminium recycling. I emphasise that we take that issue very seriously. We are working to ensure that the climate change levy should not cut across other environmental policy objectives. We certainly do not want to discourage aluminium recycling, which is one of the success stories of greening business, as my hon. Friend said. The Government are trying to deal with this issue in the context of the negotiated agreements. We are giving careful consideration to proposals on this issue which have been made by the Aluminium Federation.
The question of eligibility for the climate change negotiated agreements has also been raised. Not all businesses engaged in aluminium recycling are eligible. We have said that eligibility will be determined on the basis of regulation under the European Union integrated pollution prevention and control directive. Installations covered by IPPC will be legally identifiable and subject to a regulatory requirement, in terms of having to operate in an energy-efficient manner, to which other non-IPPC sites will not be subject.
IPPC captures the main energy-intensive sectors of industry. However, the Chancellor said in his pre-Budget report that the Government would still be prepared to consider suggestions from business for alternative approaches to IPPC, provided those targeted the discount on energy-intensive sectors exposed to international competition. However, any alternative proposals would have to meet certain criteria: they would have to have a clear rationale, provide legal certainty, have administrative simplicity and be consistent with EU state aid rules.
I know that several industry trade associations have made representations on this issue--and that the Aluminium Federation is a party to one proposal, put forward jointly by a group of trade associations. We shall give fair consideration to all other suggestions received--in advance of the forthcoming Budget.
However, I believe that it is important to make clear exactly what is at stake. The Government are offering the 80 per cent. levy to those in negotiated agreements but in return for commitment to challenging energy use targets, which will entail significant investments. The result should be environmental and competitiveness gains.
The Alcan recycling plant, which is in my hon. Friend's constituency, is a key part of the infrastructure in the UK for achieving the recovery and recycling targets in the EC directive on packaging and packaging waste. The directive requires us to recover 50 per cent. of all packaging waste and to recycle 25 per cent. in 2001. They are particularly challenging targets for us in the UK because we have started from a lower base than many of our European neighbours.
We are committed to achieving the targets in the EC directive through the UK's packaging waste regulations. These form part of the UK's producer responsibility initiative, in which a number of sectors are taking action to increase their levels of re-use, recovery and recycling.
In recent years, there has been increasing awareness that market failures may affect the expansion and development of the UK's recycling activities. New and proposed EU legislation on waste, and the review of the waste strategy for England and Wales, have highlighted the issue.
The market development group set up by Department of the Environment, Transport and the Regions in July 1998 has investigated the barriers to expanding the markets for recycled goods. The group's key recommendation was that the identification and development of new markets for recycled goods should be taken forward as a priority measure. In the case of aluminium, though, the group found that the main barriers to increased recycling were the quality and quantity of the metal collected: more metal could be recycled if it could be collected economically. There did not appear to be any failure in demand; the key issue, therefore, was one of supply.
In line with the commitment given in our draft waste strategy for England and Wales, the Government are now considering options for establishing a joint DETR-DTI sustainable waste action programme. The joint programme would promote an integrated approach to materials resource use and waste management.
Valuable lessons are being learned from the DTI's own one-year recycling programme, which is being seen as the precursor to the joint programme. The DTI programme expects to attract a number of worthwhile projects designed to create demand for recycled materials by overcoming technical and market barriers.
Local authority waste collection authorities are under a duty to collect household waste, including recyclables. Many provide kerbside facilities to facilitate recycling and therefore encourage the public to recycle. Waste collection authorities are also under a duty to draw up and implement waste recycling plans. The DETR issued guidance in March 1998 on "Preparing and Revising Local Authority Recycling Strategies and Recycling Plans", and asked waste collection authorities to investigate whether their plans needed updating. Most authorities have undertaken the investigation and are revising their recycling plans.
Waste disposal authorities have to provide recycling facilities in the form of civic amenity sites. The provision of such sites encourages residents to recycle. Historically, there has been an operational role for both private sector companies and the public sector in waste disposal.
Waste collection authorities and waste disposal authorities are being encouraged to work together on integrated waste management to promote recycling more effectively through the use of joint waste management strategies. The Government expect waste disposal authorities and waste collection authorities to work as one in the delivery of waste management services--encouraging, for example, joint municipal waste strategies and joint waste management contracts under best value where appropriate.
Co-operation and good communication between collection and disposal authorities, waste planners, the Environment Agency, industries and voluntary organisations provide maximum benefits from an integrated approach to municipal waste management. Local authorities also promote recycling through education--for example by giving presentations to schools. The Government also work with the local authority recycling advisory committee, which has a major influence on recycling, with meetings and activities taking place nationally and regionally.
In summary, aluminium, like the other major non-ferrous metals, is infinitely recyclable and therefore well placed to make a valuable contribution to sustainability and a better quality of life for all. The Government will continue to work closely with the industry to ensure that policy continues to improve the recycling performance of aluminium. The Government are keen to keep up the momentum generated by these events so that the global benefits of continuing to use and reuse these metals are available for future generations.
Question put and agreed to.
Adjourned accordingly at twenty-six minutes to Nine o'clock.
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