SUPPLEMENTARY MEMORANDUM BY THE GUARDIAN
(DSW 11(A))
LANDFILL TAX AND THE LANDFILL TAX CREDIT
SCHEME
Further to our submission in April 2000[237],
and publication of documents on The Guardian website, a
large number of individuals and organisations have contacted us
with additional information. We have also been asked to make two
factual corrections to our original submission and have included,
as a matter of courtesy, two letters of clarification received
from the Tidy Britain Group/Going for Green and SWEET.
As well as providing this addendum to the Minister
of State and the Select Committee we have, at their request, submitted
copies to HM Customs and Excise, the National Audit Office, the
Audit Commission and ENTRUST.
Information listed below has been confirmed
with the organisations involved or from two or more sources. Information
we have been unable to confirm has not been included. We have
received an enormous amount of correspondence from concerned individuals
and community based organisations as to the health, environmental,
social and economic implications of specific landfill sites and
incineration plants. This material has not been included in the
submission unless allegations have been made as to the use of
Landfill Tax Credits to influence planning consents.
ONYX ENVIRONMENTAL
TRUST—PAYMENTS
TO LOCAL
AUTHORITIES
The following payments have been made to Local
Authorities[238]
in addition to those identified in our original dossier. In cases
where Authorities have received further payments to those noted
in our original dossier we have listed the accumulative total.
Landfill Tax Credits paid to Parish Councils are not included
although, in total, these amount to £64,822.
— Wandsworth Borough Council—£170,000*
— Hampshire County Council—£195,009
— Rugby Borough Council—£178,150
— Telford & Wrekin Council—£337,000
— Coventry City Council—£80,000
— Nottinghamshire County Council—£60,000
— Fareham Borough Council—£60,000
— Basingstoke & Deane Council—£50,000
— Essex County Council—£66,000
— Tendring District Council—£11,000
— Walsall Metropolitan Borough Council—£40,000
— Newark & Sherwood District Council—£20,000
Payment of £19,234 was also made to the
Environment Agency.
The payment to Wandsworth Borough Council is
recorded in Council papers[239]
as a "contribution from Onyx" with no reference to the
Environmental Trust or the Landfill Tax Credit Scheme.
John Kutner, Board Director, Onyx Environmental
Trust, in relation to the information noted above made the following
statement:
You have identified 12 Boroughs plus the Environment
Agency to which the Onyx Environmental Trust has made grants.
This information is freely available in the public domain and
from the Trust's Annual Report and it is information which the
Trust is proud to publish.
These grants are carefully audited and no council
can receive Trust money without first having been seen to spend
it on the project for which it was agreed. This audit process
is carried out fairly and diligently by the Trust and is also
monitored by ENTRUST.
Out of the 12 mentioned, Onyx Group currently
has contracts with three of the councils.
Wandsworth Council papers
Regarding Wandsworth Borough Council Papers,
the Trust feels strongly that it cannot be held responsible for
the way in which the council publishes its committee reports.
There has certainly been no intention by the Trust to deceive,
if that is the implication. This would seem to be an administrative
oversight.
Croft Farm Landfill, Doncaster [see page 231]
Onyx Environmental has made it clear that should
this scheme go ahead, landfill tax credits will arise and, as
a result, there will be an opportunity for local community projects
to apply to the Onyx Environmental Trust for a grant. Any resulting
applications will have to meet the usual criteria imposed by the
Trust and by ENTRUST.
In this respect, Onyx Environmental Group is
simply reaffirming its commitment to both the principle and the
spirit of the landfill tax credit scheme and to the law as it
currently stands.
Making this information known to the local community
is our duty. This is not a question of a PR offensive".
DARP ENVIRONMENTAL
BODY, DEVON
Attached as Appendix 1 is a report received
from DARP Environmental Body in Devon together with comments from
various organisations noted in the report. This is included as
an example of the practical difficulties faced by community based
Environmental Bodies. The appendix also highlights tensions and
conflicts of interest arising from different perceptions of the
Landfill Tax Credit Scheme held by the waste industry, the community
sector and local government.
CHESHIRE ENVIRONMENTAL
SERVICES LIMITED
The Project "Land Reclamation, Sandiway,
Cheshire" has now received over £4.5m and is expected
to require even more funding.
THIRD PARTY
FUNDING
Our major concerns in relation to third party
funding were raised in our initial report but an Environmental
Body has brought a further concern to our attention that we felt
worthy of drawing to the attention of the Minister and the Select
Committee. The EB claims that HM Customs and Excise were perfectly
happy with third party payments being made directly to an EB as
long as the sums involved were identified in a separate account.
The EB argues that it was ENTRUST that insisted upon payments
being made to a landfill operator. Some EBs therefore had to establish
trading companies to receive third party contributions from charities
as such bodies are prohibited from making "donations"
to companies that are profit making. Donations are therefore made
to the trading company of the Environmental Body and then passed
on to the landfill operator.
CROFT FARM
LANDFILL, DONCASTER
This potential landfill site has been drawn
to our attention as a result of major environmental and social
damage resulting from planning consent being agreed. It was not
included in our initial report as, at that time, we saw no link
between the site and the manipulation or abuse of the Landfill
Tax Credit Scheme. We are now informed that an integral part of
the PR offensive by Onyx UK, the company hoping to establish the
site, was that Landfill Tax Credits would be made available to
the local community if planning consent was forthcoming. The proposed
site is not for "local" waste and is on the most important
aquifer in Northern England.
ANGLIAN WATER
We received a copy of a circular sent to managers
of landfill sites used by Anglian Water. The letter, dated 9 June
1998, signed by Dr Stephen Bolt, Head of Environmental Affairs
at Anglian Water, is headed "How To Become Listed As One
Of Anglian Water's Preferred Landfill Sites".
This circular refers to the company's "recent
initiative to support the establishment of the Anglian Water Environmental
Partnership—a non-profit distributing environmental body
formed under the Landfill Tax regulations." The letter goes
on to say that landfill site operators could contribute to this
Environmental Body and that "Anglian Water is prepared to
finance the 10 per cent part of the contributions to the Anglian
Water Environmental Partnership. As a result you are able to donate
Landfill Tax to Anglian Water Environmental Partnership and it
will not cost you a penny."
Landfill site operators were then informed that
if a "donation" were made they would be placed on "Anglian
Water's list of preferred sites." The letter ends with the
statement that, "It will be assumed that you do not wish
to be listed on Anglian Water's preferred landfill site list,
and that you do not wish to make a free donation to the Anglian
Water Environmental Partnership, if we do not receive your completed
form by 10 July 1998."
At the time of the circular being sent The Earl
of Cranbrook, Chairman of ENTRUST, was a member of the Board of
Anglian Water.
In a statement to The Guardian Graham Frankland,
a spokesman for Anglian Water, said:
"This information is now out of date. We
did write a letter to our suppliers to inform them about the new
opportunities under the Landfill Tax Credit Scheme. But we had
no intention of making them participate as a condition of becoming
a supplier. In the end we did not go ahead with a preferred supplier
list."
We urge the Minister and the Select Committee
to consider the implications of such demands being placed on landfill
operators and to ask if this proposed use of Landfill Tax Credits
falls within both the spirit and the letter of the law.
ENTRUST
Independent Improvement Panel:
Early in April 2000, around the same time as
publication of The Guardian articles noted in our original
report, a questionnaire was sent to MPs, MSPs and Members of the
Welsh Assembly from the ENTRUST appointed "Independent Improvement
Panel". The Panel is described as consisting "of a small
group of people who are conversant with the scheme but are not
representative of any interested parties"[240].
We make no comment on the value of the questionnaire as we assume
that such judgements will be made by Members of Parliament. However,
we were approached by a number of Environmental Bodies requesting
information on the nature of this Independent Panel. We therefore
asked ENTRUST for details of the people involved.
There are currently two Panel Members—John
Hardy and Jonathan Eyre. Mr Hardy is a founder member of Ebco
and was formerly involved with RSNC. Mr Eyre is an officer with
York City Council and has been involved in negotiations with John
Hardy over the use of Yorwaste Landfill Tax Credits and access
to Biffaward/Hanson funds. We understand that Yorwaste is the
LAWDC associated with York City Council. Whilst accepting the
assurances of ENTRUST that the Panel Members are not representative
of interested parties it would appear that those involved have
represented interested parties in the past.
ENTRUST Limited/Environment Trust Scheme Regulatory
Body Limited:
In examining the accounts and the memorandum
and articles of association of "ENTRUST" we identified
the following procedure by which the first "private"
Regulatory Body was established.
— ENTRUST Limited—It is stated
that this company was established to claim the name ENTRUST. The
company was established as "off the shelf and limited by
shares" and the sole Director (until 14 January 1999) was
Peter Neill with Roger Hewitt as the Secretary. The original company
was incorporated on 7 December 1995 and became ENTRUST Limited
on 1 July 1996. As of 14 January 1999 all the ETSRB Directors
were appointed to the Board of ENTRUST Limited. The shares in
ENTRUST Limited are held by ETSRB Limited.
— Environmental Trust Scheme Regulatory
Body (ETSRB) Limited—This is a company limited by guarantee
(£1 per member—the members being the Directors). The
company was incorporated in July 1996. This is ENTRUST as the
regulatory body identified by those associated with the Landfill
Tax Credit Scheme.
Article 6 of the Company's original Memorandum
of Association stated:
"The income and property of the Company
shall be applied solely towards the promotion of its objects as
set forth in this Memorandum of Association and no portion thereof
shall be paid or transferred, directly or indirectly, by way of
dividend, bonus or otherwise howsoever by way of profit, to members
of the Company, and no member of its Council of Management shall
be appointed to any office of the Company paid by salary or fees
or receive any remuneration or other benefit in money or money's
worth from the Company.
Provided that nothing herein shall prevent any
payment in good faith by the Company:
(a) of reasonable and proper remuneration to
any member, officer or servant of the Company (not being a member
of its Council of Management) for any services rendered to the
Company."
The Memorandum of Association allows "reasonable
and proper out-of-pocket expenses" and payment to other companies,
where Council of Management Members have less than 1/100th part
of the capital of that company.
At an Extraordinary General Meeting of ETSRB
held on 13 May 1998 the following special resolution was approved:
"(i) Article 6(a) of the Company's Memorandum
of Association be amended by deleting the word "not being
a" and adding the words "including any" in their
place;
(ii) all payments of fees, expenses and other
remuneration made to the Members of the Council of Management
of the Company in the course of their duties in the previous financial
year, notwithstanding that the payment thereof was in contravention
of the Memorandum of Association of the Company at the time of
payment, be hereby confirmed, ratified and approved."
The Directors are the only members of the company
and at the AGMs on 29 January 1998, January 1999 and January 2000
retiring Directors were re-appointed.
All payments made to the Chairman and Board
Members prior to 13 May 1998 were therefore not in conformity
with the company's Memorandum and Articles of Association although
the situation was formalised and brought within the Company's
Memorandum and Articles of Association as of this date through
the special resolution taking retrospective effect.
Payments prior to 13 May 1998 include:
The Earl of Cranbrook £17,863 (1996/97)[241]
Directors' fees £65,000 (1996/97)[242]*
*Although £65,000 is recorded as payment
in the Company Accounts for the periods ending 1 August 1997 and
1 August 1998 we have been informed by the Chief Executive of
ENTRUST[243]
that:
"The £65,000 for Directors' fees in
1996-97 again represents a provision that was adjusted during
1997/8. During 1996/97, no director (including the Chairman) actually
received any fee, due to the timing of contributions to the Scheme,
but provision had to be made nonetheless and was retrospectively
adjusted in light of attendance."
Further payments prior to 13 May 1998 include
a proportion of the £19,807 paid in Directors' fees for the
financial year ending 1 August 1998 and a proportion of the Earl
of Cranbrook's remuneration of £20,200 for the financial
year ending 1 August 1998.
ENTRUST Finance:
In addition to payment of Board Members prior
to May 1998 there are further aspects of ENTRUST finances we draw
to the attention of the Minister and the Select Committee:
(a) There is "Provision for accrued expenditure"
of £1,489,978 as of 1 August 1999[244].
In response to a query from The Guardian as to why such a large
sum is kept as a "provision", Richard Sills, Chief Executive
of ENTRUST, explained:
"The Provision is an obligatory item of
ETSRB accounts to pay for the second and subsequent years' verification
activities for funded projects that last for more than one year.
It is quite different from the reserve, which is normal contingency."
The contingency totals £55,413[245].
Verification activities required expenditure of £229,611
during the financial year ending 1 August 1999. There appears
to be little relationship between £229,611 expenditure over
a 12 month period that included delayed expenditure from the previous
financial year, and a contingency for the next 24 months of £1,489,978.
(b) Accounts for the financial year ending 1
August 1999 show expenditure of £93,491 on Directors fees
including £20,792 remuneration in respect of the Chairman,
the Earl of Cranbrook. Directors' expenses amounted to £11,227
for the same period.
Audit Committee:
The Audit Committee of ETSRB is made up of three
members; The Chairman, Richard Wilson and Messrs. Hewitt and Neill.
We find it surprising, in light of questions being raised as to
the influence of the waste industry on ENTRUST, that the Audit
Committee is so constituted.
ENTRUST, in a statement to The Guardian, said:
"Contributing Third Party (CTPs)
CTP payments must be made to a LO, otherwise
the contribution could not be qualifying. It follows that ENTRUST
only insisted that CTP payments are not made to EBs because that
is the only way in which the scheme can work. Customs insisted
that CTP payments must be made only to LOs, for the same reasons.
EB trading companies have nothing to do with
CTP payments; indeed, ENTRUST has never insisted that trading
companies of any type be formed by any EB. Recent Charity Commission
rulings permit charities to make donations (as CTPs) to LOs but
only if the money is used exclusively for charitable purposes
and infra-vires. Contributions that are subject to any payment
of CTP donations from EB to LO will be ruled invalid because,
technically, the EB would also be a CTP and, therefore, in breach
of benefit criteria.
The Improvement Panel is simply a working term
for two external advisers, as identified, contracted on a part-time
basis, to play a part in ENTRUST's overall communication strategy.
Fees paid to Chairman and Directors
At a preliminary stage, the original Working
Group (1995-96) envisaged that the regulatory body might become
a registered charity. A company lawyer was therefore instructed
to draft the Memorandum of Articles and Association in standard
form for a charity, to be overseen by a Council of Management.
In the event, the regulatory function is not deemed to be charitable
and, although the ETSRB is not-for-profit and limited by guarantee,
it is not a registered charity. With legal advice, the Memorandum
and Articles have progressively been amended to remove anomalies
reflecting the original misconception by the working Group.
One feature of charitable status is that trustees
(Council of Management) may be reimbursed expenses but not paid
fees or salaries. In the first difficult year of the operation
of ETSRB, as you have noted, the Chairman and directors deferred
all fees/salary due to them, so any incompatibility with the M&A
did not come to light. Subsequently, as soon as the anomaly was
appreciated, legal advice was sought and appropriate remedies
applied under Company Law, so that directors could be fairly rewarded
for their services.
Strictly speaking, therefore, the early payments
could be characterised as ultra-vires. However, they were procedurally
correct by measures taken in full conformance with Company Law.
Provision and Contingencies
£229,611 was spent on external contracts
under audit and verification. The figure on which provisions are
based includes internal contributions associated with this activity
(eg salaries, pensions, travelling); hence, the total associated
costs are substantially higher. The accounting procedures and
provisions are approved by the Company auditors.
This is an internal committee only. It was, and
remains, the opinion of the Board that Audit Committee members
are directors who are well qualified to fulfil this function.
Other things to note in your supplementary report
Please avoid confusing references, such as ENTRUST
scheme, it is actually the Landfill Tax Credit Scheme. Also ENTRUST
is not responsible for allocation of funds. This is the responsibility
of Landfill Operators and it is confusing to refer to ENTRUST
funding."
CORRECTIONS TO
ORIGINAL DOSSIER
Swansea County Council: Wales Environment Centre
should read Swansea Environment Centre.
British Waterways: This body is a "Public
Corporation" rather than a Plc.
LETTERS OF
CLARIFICATION:
Wherever possible, organisations mentioned in
this and the original report have been given the opportunity to
correct information or to comment upon any reference to their
activities. In certain instances the original draft has been corrected
therefore ensuring that comment from the organisation in question
is not included in the final report. The responses, other than
that received from the ESA, in relation to this supplementary
report are included in the sections to which they refer. Despite
a number of requests we have been unable to obtain a comment from
the Greenbank Trust.
A letter, dated 16 August 2000, from the Chief
Executive of the Environmental Services Association, in reply
to our request for a response to references to the ESA, is reprinted
below as it appears to be of a general nature rather than specifically
related to sections of this report:
"ESA was not consulted about the articles
that appeared earlier in the year and I would first like to make
the general point that recent coverage by The Guardian of matters
relating to the waste management industry may have over-stepped
the ideal constitutional boundary between reporting the agenda
of others on the one hand and, on the other, creation of an agenda
by the media.
This is among the matters on which we may wish
to comment to the Select Committee and it is particularly unfortunate
that this has occurred in a context where journalists have demanded
total transparency in others but failed to disclose their own
personal interest, including directorship, in Landfill Tax Credit
Scheme Environmental Bodies.
Since the Maastricht Treaty, there has been an
effort at the level of the EU to start to reduce the reliance
of the productive economy on virgin materials and a programme
of measures to develop waste management. The Landfill Directive—the
UK's route to implementation of which is to be found in the National
Waste Strategies—sets challenging targets for the UK.
The Government's only chance of enabling the
UK to comply with the Landfill Directive is to treat the waste
management industry as a partner and to create the conditions
to enable this industry to provide what is needed.
It may help to recruit new members to some organisations
to paint the waste management industry in unflattering tones,
but it certainly does not help to deliver sustainability.
Indeed, to the extent that your paper has set
false hares running, the cause of sustainability has been harmed.
There are unregulated criminals whom the Members
of ESA—at least as much as anyone else—want to see
convicted but your paper would better serve the Country if it
readily acknowledged both the high levels of vocation and technical
expertise in the waste management industry and also that Britain's
waste management industry is already among the very best regulated
in the world.
The concept of paying a lesser amount of tax
if private money is spent on an approved purpose is not confined
to the Landfill Tax Credit Scheme. Such matters are the prerogative
of Parliament but the Scheme is, as a matter of fact, a regulated
voluntary private sector scheme. One advantage to the Government
is that money attributed to the Scheme falls outside public spending
figures and this facilitates macro-economic management by the
Treasury.
The Landfill Tax Credit Scheme must be—and
be seen to be—clean. This has a number of implications which
your paper shows no signs of having grasped: which is a pity,
because we would have been more than happy to provide you with
appropriate briefing before you first went into print.
It is good-not bad-that, as the sectoral trade
association, ESA is planning a code of conduct for our Members
as regards operation of the scheme. We were planning to release
such a code in the spring of this year but felt that your paper
and others would misconstrue our intentions if we appeared to
act in the light of your article. We delayed release of our code
for a date in the autumn. You should expect the code to include
reference to donations to local authorities which, contrary to
your assertions, ESA has not ignored.
It is an impertinence to assert that the role
of the ESA is in conflict with the original aim of the Landfill
Tax Credit Scheme and nothing could be further from the truth.
In a context where ESA last year advised the
Government to extend the Scheme to cover recycling, it is particularly
mischievous—and frankly demonstrates ignorance—to
suggest that the industry is somehow thwarting the Scheme. We
were asked first to concentrate on helping communities near the
industry's activities: we did. There has been no disagreement
between the Government and us that, as the Scheme has expanded,
more should be spent on developing sustainability: we have.
Contrary to what you allege, ESA does not run
ESART. Inaccurate—but not disinterested—assertions
are an affront to those associated with ESART whose credentials
are impeccable and of the highest possible calibre.
ENTRUST was awarded the important—and essentially
straightforward—job of regulating the Landfill Tax Credit
Scheme. This core function is compromised if your paper—or
anyone else—pressurises ENTRUST to take its eye off that
core task by attempting to adopt a more expansive remit. Your
paper is among those who have completely missed the obvious point
that the board of directors of a body with a functional regulatory
task such as that given to ENTRUST should consist primarily of
those best qualified to add value as regards that core task.
ESA agrees with the Government that there is
a need to change public attitudes and habits towards the creation
and management of waste and it may be that WRAP will be among
those who can add value in this context.
Contrary to what you may imagine, I have never—on
any occasion—ever heard any Member of ESA speak in the context
of the industry somehow having a divine right to waste: the substance
and tone of our discussion continues to focus on the need for
society to minimise its waste in the first instance, but—once
produced—for it to be effectively managed to the highest
standards, recovering value in the form of materials and energy
wherever practicable.
Assertions made in your paper's coverage have
created a strong sense of grievance among many who dedicate their
working lives to enhancing the environment in this Country. In
turn, this has been seen as an unhelpful contribution at a time
where a more consensual mood across key players (political parties,
the industry, waste producers, environmental NGOs and the wider
public) had started to emerge on waste issues, built on sound
scientific foundations."
Tidy Britain Group/Going for Green:
"The Guardian article on Landfill Tax, sub-headed,
`Going for Green and Tidy Britain Group' (Website 25 April) raised
many questions about our funding—yet based all its assumptions
on out of date information and contained a number of inaccuracies.
The article begins by claiming that we were criticised in 1999
for funding activities `outside the statutory authority under
which the grant had been paid.' In fact, there was some criticism
of DETR (not ourselves) for not giving specific guidelines on
what our grant should be spent on. No blame at any time was apportioned
to Tidy Britain Group/Going for Green on how we were spending
public money.
The article then says that Tidy Britain Group
`spends more on fundraising than any other charity in Britain'—a
claim built on figures published in our 1996/97 accounts. The
98 per cent quoted actually refers to the cost of staging major
national campaigns and publishing information sheets, as well
as fundraising. This year fundraising has been shown separately
in the annual accounts—and is less than 4 per cent of the
contributions received. Finally, Going for Green's £1 million
pound sponsorship deal with Tesco/Biffaward is listed as missing
from our annual accounts of 1997/98. The first instalment of this
income was not in fact received until 1998/99 and is fully recorded
in our accounts of that year. Tidy Britain Group/Going for Green
believes that improving the environment is an all inclusive mission
and therefore prides itself on having an open-door policy to the
public. That includes having its funding scrutinised. But if our
accounts are going to come under the spotlight, can at least the
most recent report be looked at and the organisation given the
chance to qualify its position?
Surely that is not too much to ask."
Alan Woods, Chief Executive, signed the letter.
SWEET:
"I have read your special report on the
operation of the LTCS with particular interest, and would like
to compliment you on the quality and depth of your research and
the breadth of this timely and important report.
Because there are several references to SWEET
in the report, I thought I should write to explain a bit more
about the company and respond to your uncertainties.
Firstly, the operational structure of SWEET is
entirely simply. Our Board has six directors who receive no remuneration.
They are: Dr. Robert Keen, formerly of U of the West of England,
teaching in waste management and related subjects; Robert Brown,
formerly Waste Management Director of Wiltshire County Council;
Dr Caroline Jackson, MEP; Ian White, formerly MEP; Kevin Gibbs,
formerly a partner at Lyons Davidson; and Paul Hardman, partner
at Lyons Davidson. Originally, it was believed that landfill operators
would donate their tax credits to SWEET and this board would be
responsible for distributing them. The structure mentioned in
your articles was based on this premise. However, that structure
never emerged, as more and more landfill operators established
their own distributive environmental bodies. As a result, SWEET's
board acts as an advisor to the staff, as well as setting company
policies.
As a company, we believe that transparency, accountability
and probity are essential as part of our normal working practice.
We, therefore, welcome all inquiries about our work.
Secondly, the report on the St Werburgh's project
is only partly accurate. Bristol City Council was urged by an
active group of residents to purchase a small piece of land from
British Rail, to stop it being developed. The Council had sufficient
funds (I believe it was around £5,000) to purchase the land
but not sufficient funds to comply with the requirement to erect
safety fencing around the site. Mr Gibbs was able to persuade
a local landfill operator to provide the funding for the fencing,
thus enabling the sale to be completed (hence the title of the
newspaper report). The land is on a long-term lease to the St
Werburgh's City Farm, and forms part of that very useful resource.
Thirdly, we have a relationship with three other
Environmental Bodies to provide an administrative and company
secretary role. Pilsworth Environmental Company is one such company,
as is Bristol City Environmental Body and South Gloucestershire
Environmental Body. Both PEC and BCEB were established by Viridor
Waste Management. (Please note that BCEB did not make a submission
to Viridor's planning application appeal, because it was our view
that this was not a relevant planning issue and would be seen
as a conflict of interest). If you would like information on either
of these bodies, or their directors, you can contact me. I am
aware that ENTRUST still retains, and uses, PEC's old address
and company secretary as the contact address and person; this
is despite their being written to on at least three occasions
to advise them of the change. This is the least of our concerns
about ENTRUST.
Your report notes the qualifying contributions
received by SWEET from Viridor. These contributions were directly
related to discrete projects and information on these is obtainable
from this office. Our web site, currently under construction,
will mention many of them.
As a company, SWEET has always encouraged the
use of independent Environmental Bodies by landfill companies.
In my evidence before the Environment Sub-committee I tried to
stress the importance of independent bodies, only to hear the
trade representatives (ESA) say that all bodies were independent.
As your article indicates, independence is compromised when a
body is distributive, or receives all its funding from one source.
We maintain that the spirit of the Regulations rests with independent
bodies, and hope that this view will be reflected in future changes
or directions of the LTCS. Further, we believe that regional independent
Environmental Bodies would be able to provide unbiased and local
focus for distribution of LTC.
Should you have any queries about any matter
raised in this letter, please don't hesitate to contact me."
Sally Campbell signed the letter.
FINAL COMMENTS
The Guardian welcomes the response from the
Minister of State for the Environment, the National Audit Office,
the Audit Commission and HM Customs and Excise and, particularly,
commitments given to investigate the issues raised. We welcome
the announcement of the Environment Sub-committee of the House
of Commons Select Committee on the Environment, Transport and
Regional Affairs (27 July 2000) that a further inquiry, within
the context of sustainable waste management as a whole, is to
be held in relation to the Landfill Tax and the Landfill Tax Credit
Scheme.
We have been more than willing to respond to
points of clarification and letters of correction in a manner
requested by the bodies involved. We are, however, surprised at
the comments made by the Environmental Services Association, totally
at odds with other responses, that the Report "was subjective,
ill-informed and trivialised important issues"[246].
The ESA claim, as a trade body controlled by and representative
for the waste industry, that it is the organisation, in co-operation
with ENTRUST, "to draw up a code of conduct for landfill
operators donating to environmental bodies"[247].
The ESA, in the same publication, state that "what will not
pay for the National Waste Strategy is the voluntary private sector
Landfill Tax Credit Scheme" and that "those who argue
that a portion should be diverted to local authorities for capital
expenditure both fail to understand the drivers behind the phenomenal
success of LTCS and the wholly different orders of magnitude involved."
The ESA therefore choose to ignore the current Landfill Tax Credits
being given to local authorities and the need for public accountability
in relation to what most people understand as public money. The
attitude that the Landfill Tax Credit Scheme should only be used
in the interests of the waste industry and spent by bodies controlled
by the waste industry is incompatible with the original aims of
the Scheme and in conflict with aims of the Scheme as highlighted
in sections 3.31-3.35 of Waste Strategy 2000[248].
In drawing upon comments received since publication
of our initial report, we would emphasise that the original aims
of the Landfill Tax Credit Scheme cannot be implemented unless
control of the Scheme is removed from the waste industry.
Concerns as to the role of the ESA, in particular
its running of ESART and ESTET, are compounded by references in
Waste Strategy 2000 in relation to these bodies controlled by
the waste industry.
The waste strategy states:
"The Government and the National Assembly
welcomes the setting up of an Environmental Body (the Environmental
Services Association Research Trust—ESART) for research
and development."[249]
The document goes on to state:
"The waste management industry, with the
help of the DTI as the industry's sponsoring department, is making
efforts to address the public's perception of waste issues and
management. An industry led group, representing a wide range of
interests, has begun to look at this issue with a view to making
recommendations on best practice in building public confidence."
And that "this group is working closely with the Environmental
Services Association Research Trust, and a research project funded
from the Landfill Tax Credit Scheme is now underway."[250]
We urge the Minister and the Select Committee
to refer to our initial submission and the manner in which the
role of the ESA is in conflict with the original aim of the Landfill
Tax Credit Scheme and the spirit and wording of the Landfill Tax
Regulations.
We welcome the proposal in Waste Strategy 2000
"to establish the Waste and Resources Action Programme as
an independent company limited by guarantee, able to accept voluntary
contributions for approved activities under the Landfill Tax Credit
Scheme" and hope that this is a step towards public accountability
and transparency of the Scheme as a whole.
We highlight the information provided above
as to the working of ENTRUST and the fact that a regulatory body
feels it appropriate to change its Memorandum and Articles of
Association in order to bring ultra vires payments to Board Members
within the law. We believe such action by a body responsible for
regulating the awarding and expenditure of millions of pounds
is sufficient action on its own to deserve suspension of the Board
and a full inquiry into its activities.
David Hencke, Steve Parry
The Guardian
August 2000
APPENDIX 1
DARP Environmental Body, Devon
Rather than attempt to interpret information
provided by this Environmental Body we reprint the report as received
from DARP;
INTRODUCTION
The DARP Environmental Body became registered
with ENTRUST in December 1998 after undertaking six months research
into the lack of facilities, within the UK, capable of extracting
Ozone Depleting Substances (CFCs and HCFCs) from the foam blowing
agents of domestic refrigeration waste. During this period, the
Environmental Agency confirmed:
(a) "There is no such facility capable of
extracting the ODS located within the foam insulation of refrigeration
waste within the whole of the UK. Should such a plant be successfully
established within the UK, however, the agency would recommend
its use as the best practicable environmental option."
Current UK legislation 3093/94 only demands
the removal of ODS, where practicable. The removal of the ODS
present in the insulating foam has been considered "too expensive"
to be practicable, hence no attempts have been made to remove
these gases from the foam before disposal, leading to ODS blowing
agents continually being released into the atmosphere.
Once released, ODS perpetually destroy the Ozone
Layer, allowing excessive amounts of UVB rays to reach the earth's
surface. Scientific research has now proven, beyond all reasonable
doubt, that these rays are major factors to Climate Change, whilst
also effecting the "cell structures" within plants and
causing fatal skin cancers within humans.
In order to stop any further Ozone Depletion,
the current UK legislation is being replaced with a completely
new Regulation, which has removed the "where practicable"
clause. The DTI have confirmed that the new Regulation will demand:
(a) "Such gases contained in domestic refrigerators
and freezers shall be collected for environmentally sound destruction,
recycling or recovery from 31 December 2001. In order to reach
this target a means of safe extraction of these gases would be
needed."
The aims of our project, known as the Devon
Appliance Recycling Project, are to:
1. Undertake a Technology Review and identify
the Technology best suited for use within the UK.
2. To develop a "blue print" for
the construction of a pilot Refrigeration Recycling facility within
Devon.
3. To locate and secure the required "investment"
to develop a pilot Refrigeration Recycling facility within Devon.
4. To undertake market development for the
reclaimed materials in order to reduce the "gate price"
for the recycling of domestic refrigeration waste.
5. To supply "consultation services"
to any interested party and help to reduce the financial impacts
of reclaiming ODS from refrigeration waste.
6. To establish a Community Recycling Business,
to provide training in the Recycling of all White Goods Waste,
to provide the required "skill levels" to undertake
the recycling of all White Goods, including the operational skills
for the Refrigeration Recycling Plant.
7. To duplicate the Pilot Refrigeration Recycling
Plant and Community Recycling Business on a national basis, in
time for implementation of the New Regulation.
8. To share our knowledge, whenever requested,
by any party interested in reducing the amount of waste reaching
landfill sites.
Armed with the above information, Devon County
Council advised that the Research and Development of Refrigeration
Recycling would be suitable for funding from the Landfill Tax
Credit Scheme and suggested that we make contact with Haul Waste.
Haul Waste verbally advised our organisation to become a registered
Environmental Body with ENTRUST and once project approval had
been received to apply for Landfill Tax credits via the Greenbank
Trust and/or Ugbrooke Environmental Ltd.
APPLICATIONS MADE
Haul Waste (Viridor Waste Limited since October
1999)
(a) January 1999—via The Greenbank Trust—this
application was turned down, no explanation was offered.
(b) March 1999—resubmitted via The Greenbank
Trust, after receiving letters of support from the Environment
Agency, Greenpeace and the Sheffield University Waste Management
Department—this application was turned down, once again
no explanation was offered.
(c) March 1999—application completely re-written
and submitted via Ugbrooke Environmental Limited, further information
was requested for consideration at their next available meeting.
(d) June 1999—the requested information
was supplied to Ugbrooke Environmental Limited, this application
was turned down, with no explanation offered except that they
had 12 other applications to consider.
(e) November 1999—application concentrated
solely on undertaking a study of the Life Cycle of Refrigeration
Waste was submitted via Ugbrooke Environmental—this application
was also not successful.
Devon Waste Management
(a) February 1999—approached Devon Waste
Management direct and forwarded copy of project outline—no
official reply was received.
(b) April 1999—re-submitted project outline,
were verbally informed that all Landfill Tax Credits were allocated
for a "number of years" to projects such as the Local
Agenda 21. This allocation had been made while Devon Waste Management
was managed by Devon County Council.
UK Waste and Biffa Waste Management
(a) May 1999—Approached UK Waste direct—Barbara
Herriage was sent to Devon to discuss the project aims and sites
visits made with our partnering community groups. We were informed
that our project was suitable for assistance with figures of between
£40,000 and £200,000 discussed. No guarantee of support
was given, which would require the approval of the entire board,
but that "if there was a way" she would find it.
(b) June 1999—UK Waste felt that other
Waste Management Companies should be involved and agreed to discuss
our project with Biffa Waste Management.
(c) June 1999—Peter Jones of Biffa Waste
Management contacted our organisation, but felt that our project
was not suitable for funding from this source—the following
reasons were given:
"Our central misgiving on this project lies
in the fact that Landfill Tax monies will be committed to indefinite
financial support for a process which applies an "end of
pipe" solution. We believe this is a back to front approach
in so far as such initiative should be solved by Producer Responsibility
being placed upon the supply chain or the manufacturers of the
product who would recover the externality end life process costs
as an internality at the point of sale. Thereby the manufacturing
and supply chain process is incentivised to redesign the product—either
in terms of material content or design efficiency and life span.
Such initiative need to be coupled to landfill bans on the disposal
of such products—either from civic amenity sites or car
fragmentation plant. These measures would then ensure that such
consumer products bear to full externality economics that are
recognised at the point of sale.
Currently, the demand on Biffaward exceeds the
supply of available funds by a ratio of 10:1; thus we are clearly
under pressure to ensure that funding flows go to projects with
clear deliverability, capable of economic viability from day one.
Regrettably the DARP project does not meet these criteria."
(a) September 1999—contacted by Barbara
Herriage and informed that she would be leaving the company to
work for Waste Watch, an Environmental Body funded by Landfill
Tax Credits, she further explained that UK Waste was currently
up for sale. Biffa Waste Management was the probable purchaser
and any Research and Development allocations would probably go
to Biffa approved projects.
(b) November 1999—we received confirmation
from UK Waste that our application was not successful.
SOUTH WEST
WASTE ACTION
South West Waste Action had been originally
"thought up" by the Chief Environmental Health Officer
of Plymouth City Council, Mike Studden, in 1997. Haul Waste are
understood to have "recognised the importance" of his
idea for Integrated Waste Management Action Planning for the South
West Region at this stage. The timings for this project are as
follows:
(a) 1998—Mike Studden left Plymouth City
Council and established Foundation Research—a Not For Profit
Company Limited by Guarantee—which was designed to become
"a vehicle to undertake research".
(b) Working closely with Haul Waste, Mike Studden
resurrected the South West Waste Action project and prepared a
Proposal and Research Plan, which was given to the Cornwall and
Devon Environmental Trust (CADET).
(c) CADET applied to ENTRUST for project approval.
(d) October 1998—project approval was received.
(e) October 1998—funding approval received
from Haul Waste, subject to English Partnerships paying the 10
per cent third party contribution.
(f) English Partnership's third party contribution
did not materialise and CADET subsequently ceased operations.
(g) The project was transferred to the South
West of England Environmental Trust (SWEET).
(h) May 1999—£80,000 of landfill tax
credits were supplied to SWEET by Haul Waste.
With SWEET now being the Environmental Body
acting as Fund Managers and Project Auditors, the South West Waste
Action project was officially established with the following Steering
Group members:
— (Chairman) Richard May of Devon Waste
Management (landfill operator for Devon)
— Mike Hellings of Haul Waste (landfill
operator for the South West and other areas)
— Wyvern Waste Management (landfill
operator for Somerset)
— County Environmental Services (landfill
operator for Cornwall)
— David Chambers—Devon Clients
Officers Group (representing all of the local authorities)
— Government Office South West
From the £80,000 received, it is understood
after conversations with Mike Studden, SWEET deducted a 3 per
cent administration fee and ENTRUST deduced a further 2 per cent
fee, the remainder was paid to Fountain Research, as payment to
undertake this particular piece of research.
The research carried out by the South West Waste
Action project was designed to provide a comprehensive A-Z of
waste management in the South West Region, which will facilitate
better understanding of the respective roles of potential partners
and allow a more structured approach to future planning and development.
Designed as a 12 month project, it will not
be until the final report has been completed, distributed and
published on a Web Site, that anyone outside of the Steering Group
will have full access to the results of this research. It is accepted
practice that belonging to Steering Groups allow their members
"first hand" knowledge, complete with a more detailed
understanding of the Group's issues, than an outside organisation
who gain access to a final report.
In the case of the South West Waste Action Steering
Group, it is dominated by the region's Landfill Operators, which
is hardly representative of an "integrated approach".
During a seminar to promote the South West Waste
Action Group, which was attended mainly by employees of Landfill
Operators and Local Authorities, speakers were brought in from
the London Waste Action Group and Enviros RIS Limited, whereby
glass recycling was used as an example of a recycling process
needed within the South West. Richard May commented that, as a
Company, Devon Waste Management would:
(a) Consider investing in Glass Recycling if
the barriers identified through this research were overcome.
(b) Provide further Landfill Tax Credits, to
take this research further, subject to receiving support from
academic institutes, local authorities, private businesses, community
groups and the Government Office.
In response to these comments, I asked Richard
May if he was saying that should a recycling activity be identified
through the South West Waste Action project, as required in the
region, which received the support of these sectors, that he could
personally guarantee Landfill Tax funding? His reply was "yes".
I then introduced myself, and the DARP Environmental
Body, to Richard May and proceeded to explain:
(a) Refrigeration Recycling and CFC extraction
had been identified as required in the South West.
(b) Support from all sectors had already been
secured, to develop this facility within Devon.
(c) Landfill Tax Credits had not been made available
to our organisation, hence how could he say he could guarantee
it for the South West Waste Action Group?
In answer to my question, a member of Haul Waste
replied that funding research for the sake of it was not appropriate
for Landfill Tax Credits and that an organisation also had to
show that the research would be exploited and taken up by a waste
management company. Other comments were made but they appeared
to be political answers not related to the actual question.
To close the argument I gave the following statement:
"To reiterate, in order to obtain Landfill
Tax Credit, the area being researched and development must show
synergy to the strategic aims of the donating Landfill Operator.
In our case we are researching the development of CFC and Refrigeration
Recycling, but because there is no Landfill Operator with a strategic
aim to develop CFC and Refrigeration Recycling within the UK this
type of project will not get funded."
CONCLUSION
Under current ENTRUST Regulations, Landfill
Operators or Local Authorities are not allowed access to Landfill
Tax Credits and must not receive exclusive benefits from any funded
work.
In our opinion, Local Authorities and Landfill
Operators already have fully formed working relationships, and
should an employee of either organisation come up with an idea
which is "recognised" as jointly beneficial, these ideas
are easily transferred into the hands of "Third Party"
Environmental Bodies, who have nothing to do with the work, except
to manage and audit the funding.
This practice is well known throughout the Landfill
Tax Credit Scheme, however one must recognise that these "Third
Party" Environmental Bodies were established with the help
of Landfill Tax Credits and tend to have very complicated "donor/supporter"
relationships with the Landfill Operators. They have no choice
but to "go-along" with these projects in order to safeguard
their future income and continue to provide more "genuine"
projects with an avenue to Landfill Tax funding.
The idea around the Landfill Tax Credit Scheme
was a good one, however leaving it in the hands of Landfill Operators,
who obviously wish to increase profitability for their business
with as little competition as possible, has led to this wonderful
funding mechanism being manipulated in a way that thwarts the
original aims of the Scheme."
FINAL COMMENT
This report has not been written as "an
attack" on Fountain Research or any of the Environmental
Bodies mentioned. The actual quality of this research is not in
question, nor are the motives of Mike Studden, who is committed
to reducing the amount of waste reaching landfill sites. Both
Ugbrooke Environmental Ltd. and SWEET have obtained Landfill Tax
Credits for genuine "local environmental" enhancement
projects.
This correspondence from DARP is reprinted in
full as it provides a specific and practical example of situations
we receive comments on, in an anecdotal manner, on a frequent
basis.
Peter Jones, a Director of Biffa Waste Management,
responded to the concerns expressed by DARP by stating that:
"Biffa was approached by two similar projects
in this field of work both of which are genuine attempts to contribute
to a more sustainable society. Our concerns related to the use
of Landfill Tax Credits for a scheme that allows manufacturers
"off the hook" and secondly the pressure that faces
us with having to compare all applications for funding in a situation
where resources are limited.
My personal view is that the supply chain should
accept producer responsibility and that the Government should
support incremental funding for such a programme at say 100 per
cent in year one to 10 per cent in year nine with the full costs
incorporated into the supply chain by year 10. Such schemes for
the entire range of consumer capital goods could be funded from
40 per cent of available flows from existing Landfill Tax retentions
that are used for NIC reductions, of which the prime beneficiary
is central and local government, health and education as the largest
employers in the economy. Utilising scarce Landfill Tax funding
flows available under ENTRUST for this route does not provide
long term certainty and fails to tackle the long term policy blockages
needed for genuinely sustainable solutions which operate within
the context of free market forces. I hope this clarifies matters."
In response to the DARP comments, Richard May
of Devon Waste Management Limited stated:
"In relation to waste minimisation, we have
been focussing on the need to identify alternative markets for
the principal recyclable materials, which include glass, paper,
plastics and organic waste. In volume and tonnage terms, these
materials represent a substantial element of the waste that is
landfilled each year. Refrigerator waste, by comparison is minuscule
in landfill volume terms and with limited resources at our disposal
was not considered to be a high priority. In any case, the project
as originally proposed was said to have been commercially proven
on the Continent and this uncertainty was not helpful in determining
its eligibility for funding. In addition, CFC gases are already
extracted from refrigerators presented by the public or companies,
for disposal at the local authority household waste sites in Devon.
The local authorities in Devon are very much
aware of this situation because they have the statutory responsibility
for recycling. The idea behind the Fountain Research project was
in response to their concern and anything which improves the prospect
for increasing the level of community recycling must be a legitimate
subject for funding support from landfill tax.
I note that the article represents one person's
view and recollection of events, which are open to interpretation.
I can only correct the inaccuracies which I know about but suspect
that further changes in relation to facts may be needed. The outcome
of the seminar as reported in the article does not coincide with
my own recollections. I certainly did not offer to personally
guarantee the availability of landfill tax credit funding, it
is not in my gift to do so. As I have previously explained, my
company is not involved in glass recycling or any other raw material
processing and any implication that we are using landfill tax
money to develop commercial ventures is wrong.
A lot of good work is undertaken in the region
by projects funded by landfill tax credits and it is disappointing
that one aggrieved applicant is seeking to question the motives
behind other local landfill tax projects."
Mike Studden, Director of Fountain Research,
in a statement to The Guardian, said:
"I am at a loss as to why DARP have singled
out one of my projects as an example of shortcomings in the landfill
tax regime.
The report has taken it totally out of context,
which I find puzzling. There were probably several thousands of
projects submitted to the local and national EBs, which are referred
to and mine is not the only one that was approved in this area!
(1) The inference that our application was approved
on `the old boy's network' is somewhat off the mark. Funding was
canvassed by an independent EB in the first instance, the Cornwall
and Devon Environment Trust (CADET) which was subsequently wound
up. Having gained approval from ENTRUST and Viridor (Haul Waste
at that point in time), CADET transferred the management of the
project to South West of England Environment Trust by mutual agreement.
(2) I did not leave Plymouth to undertake this
particular study. Launching out into the private sector was to
undertake social research in the fields of environment, health
and safety and to offer consultancy services in these areas.
(3) Since setting up in business we have undertaken
projects in food safety, hygiene, sustainable energy, quality
management systems, environmental performance and waste policy
for local councils in Birmingham, Eastbourne, Tower Hamlets, North
Devon, Suffolk and private sector interests in Dublin and Devon
amongst others.
(4) South West Waste Action is only one of many
projects for many clients, funded from many sources. Like DARP,
we have also had funding applications turned down by EBs whose
landfill tax comes from Onyx, Viridor, Devon Waste Management,
SITA and Biffa.
(5) It is a fact of life that all of the EBs
are oversubscribed by a huge factor and cannot fund everything
that is thrown at them. We simply dust ourselves down and start
all over again!
(6) The need for an integrated approach to the
management of waste in the region was recognised by everyone involved
from local authorities, private sector waste companies, government
agencies to environmental interest groups and has been a focus
of discussion in many local forums for many, many years.
(7) The theme was continuously being aired by
press and media, which lead us to consider how an independent
project could be put in place to identify the barriers to effective
working across institutional boundaries.
(8) The purpose of the study is to identify the
organisational and institutional mechanisms which could unblock
the bottlenecks, leading to effective joint working and clearing
the way for proposals like DARPs to find a path through the complex
maze of waste interests in the Region.
(9) Hence the reason why I am particularly hurt
by the inferences of the DARP report. We are the ones who are
actually trying to lay the ground for co-ordinated and integrated
action across public and private sectors!
(10) The final issue about the composition of
the Steering Group for the project is puzzling. We carefully selected
the organisations invited to participate to reflect the diverse
interests in waste issues. In addition to the public and private
sector waste companies, we also have representation from the waste
collection authorities, the Confederation of British Industry,
Government Office for the South West and the Environment Agency.
Who better to steer an integrated waste management project than
the users, collectors, disposers and regulators?
(11) We held an open seminar in December 1999
to introduce the project to other interested parties and DARP,
amongst many other small organisations, were part of that.
(12) A further seminar to launch our findings
and recommendations will also encompass all interests. The final
report is public property, paid for by public money, which will
be promoted in the public domain as a lobbying tool for change
to public mechanisms. There is no hidden benefit for anyone."
If there is anything else I can do to assist
please do not hesitate to get in touch.
Good luck with your report.
Mike Studden
Director, Fountain Research
Lord Clifford of Ugbrooke Environmental Limited,
in correspondence with The Guardian, stated that Viridor were
to discuss the issues raised with South West Waste and would contact
us following these discussions. Unfortunately any response from
Viridor was not possible prior to publication of this supplementary
report. Lord Clifford further explained that:
"As Ugbrooke Environmental Limited is limited
to category E and D applicants such recycling projects as extraction
of O.D.S. from foam insulation in refrigerators is beyond our
remit and the inclusion of Ugbrooke Environmental within your
article is therefore misleading information."
"I favour the principle of removing ozone
depleting substances from facilities and machines regarded as
essential by society, but must add that Ugbrooke Environmental
Limited is the wrong machinery to execute this laudable role."
237 See DSW 11. Back
238
Onyx Environmental Trust Annual Report 1999-2000. Back
239
WBC, Environment and Public Services Committee 13 June 2000 Paper
00/423. Back
240
Letter from ENTRUST to MPs. Back
241
ETSRB Limited Accounts for the financial year ending 1 August
1998. Back
242
241 ETSRB Limited for the financial years ending 1 August 1997
and 1 August 1998. Back
243
ENTRUST letter to The Guardian, 31 May 2000. Back
244
ETSRB Limited accounts for the financial year ending 1 August
1999. Back
245
ETSRB Limited accounts for the year ending 1 August 1999. Back
246
ESA Briefing, Issue No. 40 June 2000. Back
247
ESA Briefing, Issue No. 40 June 2000. Back
248
Waste Strategy 2000, Part 1, Pages 31/32. Back
249
Waste Strategy 2000, Part 2, 4.88. Back
250
Waste Strategy 2000, Part 2, 4.90. Back
|
