Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of Witnesses (Questions 980 - 999)



  980. When we have not got that in place as far as we would like to have, the recycling initiatives and so on, it will have to be an evolutionary approach. Could that not be met better through the Challenge Fund?
  (Mr Timms) We have set very clear targets in the Waste Strategy for increasing the proportion of waste that is recycled. There will be statutory targets set for local authorities in the New Year and I think there will need to be a variety of mechanisms used to achieve those targets. We are completely committed to achieving the targets and I think the mechanisms that we have put in place will allow us to deliver them. The point I want to emphasise is that we see PFI as contributing to each of those targets and not in conflict with them.

  981. We have had eight waste PFI schemes that have been funded, how many of those have gone to the construction of an incinerator?
  (Mr Timms) I do not know the answer to that. Certainly there will need to be more incineration in the future than there is at present. I think it is the case that incineration is an element of most, if not all, of the eight. The new criteria that we have introduced following the publication of the Waste Strategy will give, and do give, a new priority for recycling that we do expect future bids to reflect.

  982. I know you have got new criteria but how new are they? Would those criteria have affected those more recent bids from these eight local authorities, or is it something you are now putting into place?
  (Mr Timms) They came into place following the publication of the Waste Strategy in May, so in that sense they are very new. I do not know how the previous projects stack up against those criteria but certainly there is a new emphasis on recycling that has followed the publication of the Strategy.


  983. You were not certain but you have implied that all eight went for incinerators, is that right?
  (Mr Timms) I do not know whether that is the case or not.

Christine Butler

  984. That is what we are trying to find out. Could we know for certain?
  (Mr Timms) That could certainly be done. I imagine Michael Meacher will certainly know about all of those in some detail when he appears before the Committee, but I can make sure that we provide that information before he comes.

  985. We are looking at a rigorous approach from the Treasury as well as from DETR. Do you not think there has been too much subsidy for incineration up until now? How would you like to take matters forward as far as the Treasury commitment is concerned?
  (Mr Timms) I do not think there has been a subsidy for incineration.

  986. We have had PFI schemes, we have had NFFO and rates, all sorts of ways of subsidising incineration, and not very many ways of subsidising recycling, composting and so on in the Waste Strategy.
  (Mr Timms) I do not see PFI as being a vehicle for subsidising incineration. PFI is simply a vehicle for procurement and, as I have said, we expect to see—

  987. May I rephrase that then. I think it encourages waste disposal authorities to go for that option rather than maybe for an evolutionary approach, a more complex way of dealing with waste streams, which is actually part of the Government targets in trying to get more composting and more recycling instead, but the rapacious jaws of incineration really would not be helpful to that objective, would it? The waste disposal authorities tend to go always for a stronger element of incineration than perhaps is necessary.
  (Mr Timms) Let me comment on that and then I will ask Patricia to do so as well. PFI is a vehicle that makes it easier and in many ways better for local authorities and other public sector bodies to carry out investment projects. PFI does not bias them, in the case of waste projects, towards incineration at all, inherently there is no reason why it should, it is simply a vehicle for making capital investment easier and more readily feasible for local authorities. That is a very beneficial impact of PFI. I do not accept that it introduces a bias towards incineration because I do not think that is the case.
  (Ms Hewitt) I just want to draw the Committee's attention to one example, which is the local authority I know best in my own City of Leicester, which has recently announced one of the largest PFIs, a very recent one, for a new waste treatment plant. That is a local authority that already has a track record of commitment to the environment, is very conscious of the new targets that it has been set under the Waste Strategy and, as I understand it, PFI will deliver to that City a state of the art plant for separation and treatment of different sources of waste, substantial improvements in recycling of waste, including composting which of course there has not been effective facilities for until now, and incineration will simply be a part of that. Certainly the experience there has not been that PFI has driven the local authority towards inappropriate use of incineration; instead it has enabled them to finance a major capital investment that deals really with the whole life cycle of waste after it has been generated, and I think that is very valuable. On the broader point about the subsidies, I think it is fair to say that because energy from incineration was included under the NFFO that did represent, if you like, a subsidy towards incineration. Of course that has now come to an end, we are not entering into new contracts under the Non Fossil Fuel Obligation and we are proposing to exclude energy from waste incineration from its replacement, which is the renewables obligation.


  988. On this plant in Leicester, how much flexibility will the incinerator have about the calorific value of material that goes into it?
  (Ms Hewitt) That I do not know, Chairman. Either the Committee could ask the City Council or I would be delighted, on your behalf, to make sure they give you some details.

  989. Is that not one of the crucial questions, that if we are going to push up recycling rates there is a likelihood that the calorific value of the materials going into the incinerators will go down and, as I understand it, normal incinerators, to get maximum efficiency, are geared to a particular calorific value of the import material?
  (Ms Hewitt) I understand the point you are making and I can see that could indeed be a theoretical and perhaps practical possibility, but the local authority is also absolutely conscious of having to achieve its targets for recycling and recovery. They have embarked upon that with the way they are collecting kerbside waste, but they need to go much further in order to achieve the targets, which is why they are making this new investment.

Christine Butler

  990. Apart from reviewing the Landfill Tax Credit Scheme, is the Treasury considering other options to encourage recycling in the form of different kinds of subsidies or incentives?
  (Mr Timms) There was an announcement of a significant package in the Spending Review in July of £140 million over three years to help local authorities make progress on recycling towards achieving their recycling targets. I think that will be an important contribution. As you have said, we are looking as well at how the Landfill Tax Credit Scheme can help.

  991. I was thinking of new schemes, any new schemes which could be a real incentive through fiscal measures to encourage composting, recycling, waste minimisation, that we do not yet have in the public domain?
  (Mr Timms) What I would argue is that the variety of existing schemes and arrangements, including the statutory targets that local authorities will have to be announced in the New Year, will allow us to deliver on the very ambitious but very important targets set out in the Waste Strategy. I think we do have the mechanisms in place to deliver on those targets that we have announced.

Mr Benn

  992. You have just said you think the additional funding that the Government has put in to help local authorities will enable them to meet the targets which have been set. If that is the case, why do you think the LGA has said to us that the funding being sent their way is patently inadequate, because that is what they have said to us in evidence?
  (Mr Timms) I do not think that is the case. I mentioned the £140 million figure over three years. There was also, of course, a generous settlement for local authorities and the block from which waste activities are funded, the EPCS block, was substantially raised in the Spending Review announcements in July, so I think the funding is in place to allow local authorities to meet the targets we have set. That is certainly our view and I am sure Michael Meacher will make the same point when he comes on behalf of DETR, and I am very optimistic we will be able to achieve what we have set out to do.

  993. Why do you think local authorities, which after all have responsibility to meet the target, seem to take the view they do?
  (Mr Timms) As a former local authority leader, I certainly never missed an opportunity to lobby for additional resources, and I am sure my successors are in the same position.

  994. So you are confident that they have now got the resources they need to meet the target, so lack of resources should not be a reason for not doing so?
  (Mr Timms) I think that is the case.
  (Ms Hewitt) I wonder, Chairman, if I may just draw the Committee's attention to another programme which is going to be very important in developing the market for recycled material?


  995. Perhaps we could come on to the markets a bit later, if that is all right.
  (Ms Hewitt) Forgive me.

Mr Benn

  996. Could we turn now to the Landfill Tax Credit Scheme? Can you tell us when Customs and Excise are due to complete their quality assurance work on Entrust? Do you intend to publish the results of that work?
  (Mr Timms) I believe that work will be completed in the next few weeks and we are intending that the results of that should be sent to this Committee—I think that commitment has already been made—we also propose to send the results to The Guardian which originally raised the concerns. I think that amounts to a yes to the second part of your question.

  997. Are you satisfied with the performance of Entrust as a regulator?
  (Mr Timms) I think Entrust broadly is doing a pretty good job. We will see what the outcome of this quality assurance exercise is. They have certainly carried out a very thorough investigation of the allegations which were made earlier in the year and on a couple of earlier instances they have pursued a prosecution where there was clear evidence of impropriety on the part of a couple of the environment bodies. So, yes. Entrust, of course, is an arm's length body from the Government, it is not directly controlled by us, but we have been broadly satisfied with the way they have set about the task they have been given.

  998. One of the issues which has come up very clearly in the evidence we have received, and indeed earlier today, is that Entrust's remit is quite narrowly defined, and one of the issues we are debating is the balanced projects to which Landfill Tax Credits are given. Do you think there is a case for broadening that remit to allow Entrust to express a view about where those Landfill Tax Credits go? As we understand it at the moment, in effect they are prevented from doing so.
  (Mr Timms) It certainly is our view that the scheme currently is not doing enough to support sustainable waste management. We did make some changes, announced last January, to somewhat broaden the categories for which the funds could be made available, but the data we have so far, since that change, suggest that if anything the proportion of the funds going on sustainable waste management projects has fallen rather than having risen. So that does raise for us the need to explore how resources going to the scheme can be better used to increase recycling rates, particularly of household waste, and we will be considering all options for change. The one you have suggested is certainly one of them but we will be looking at others as well.

  999. On that very point, what is the logic of leaving the decision as to where the Landfill Tax Credits go to landfill site operators, people who are engaged in general waste operations, when one of the areas many people would like to see more funding going to is community recycling, for instance, when in truth they are in direct competition? Why are you allowing one bit of the market to decide whether another bit of the emerging market gets access to funds?
  (Mr Timms) As the scheme was originally designed there was a particular concern not to add to public spending, and that meant the decisions on where the money should go would be made outside Government, and that was I think quite an important consideration in the original design of the scheme. We will need to consider whether that remains an objective that we will want to stick with or whether the time has come to make some change on that front. There are a number of other benefits from the current arrangement, in particular that the scheme has been quite successful in drawing in other funds from third parties and others, and if we were to change the way the scheme worked we would need to be careful not to lose the benefit so far as possible of the additional contributions being made, which is certainly a good feature. The third point I would make is that in the case of some of the environmental bodies there is actually a very good record of promoting community recycling. There was an exhibition downstairs last week where a number of the environmental bodies presented what they were doing, and one of them was telling me that about 60 per cent of the funds which pass through that particular body do go towards sustainable waste management, including community recycling. So I do not think the scheme as it is currently constructed makes it impossible to achieve our aims.

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