Examination of Witnesses (Questions 980
TUESDAY 28 NOVEMBER 2000
TIMMS, MP, MR
HEWITT, MP, AND
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
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
(Mr Timms) I do not think there has been a subsidy
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
(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
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.
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.
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.
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 CommitteeI think that commitment
has already been madewe 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.