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22 May 2002 : Column 130WH

Recycling (Cornwall)

1.30 pm

Matthew Taylor (Truro and St. Austell): I am pleased to secure this important debate. I welcome the fact that the Minister for the Environment is here to respond. He has a good record on campaigning in the Government for stronger environmental measures, and I suspect that he and I would not disagree about the need to tackle waste and improve recycling and reuse. If his reported comments were accurate, we would not disagree about concerns about incineration compared with other waste-to-energy techniques that are being developed. I do not think that we shall disagree on the basic issues.

I requested the debate because Cornwall has plans that I believe fulfil all the Minister's objectives. All that we need from him and the Department for Environment, Food and Rural Affairs is the go-ahead. I shall make the case for that and outline our disappointment—at least our disappointment in the Minister's officials; it remains to be seen whether that disappointment lies with the Minister—that there has not been a positive decision, which we expected some time ago.

Looking at the specific needs of Cornwall and our current recycling performance, it is clear that action is needed. The availability of landfill is rapidly diminishing, although the Minister and I share the worry that we should avoid unnecessary landfill. In Cornwall, 94 per cent. of waste goes to landfill. Cornwall has a poor recycling rate of 9.5 per cent. County targets for 2005 are 12 per cent. and national targets for 2005 are 25 per cent. of household waste. We are clearly a long way off those targets. However, there are reasons for that. The rates are not untypical of similar rural counties, and I do not want to be unfair to those in county hall or County Environmental Services, which is the main company that deals with the county's waste. However, we do not have a good record, we do not beat the averages and we are a long way from meeting the Government's national targets.

We have the additional problem that, in pure environmental terms, it is important that we meet the need for increased recycling and reuse and do so in the most environmentally friendly way. Cornwall is very far from established markets for recycled materials. Penzance is more than 75 miles from Plymouth, more than 200 miles from Bristol and more than 300 miles from London. However, if one examines the established markets, the figures are even worse. Paper processing occurs 350 miles away from Cornwall and sites for metal processing are further away. Glass and plastic processing occurs 400 miles away.

Significant distances must be covered to tackle the problem, which is why we believe that it makes sense not only to develop the ability to collect and separate materials, but—this is the key to the private finance initiative proposal—to make use of the materials locally. That would greatly improve the economics and environmental factors of recycling, keeping traffic off the roads and creating more jobs. The scheme works very well in terms of joined-up government. It fits in with objective 1, the process of economic regeneration in the country's poorest county, and it meets the Government's environmental targets.

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Money is needed not only to establish the markets and the processing facilities, but to improve collection services in Cornwall. Like most rural areas, it is difficult to collect for recycling because the communities are spread out, which makes such a process much more costly. Cornwall is both heavily populated and widely dispersed. Compared with Devon, it does not have wide-open spaces, but village after village. We do not have a Plymouth or Exeter where the collection schemes for recycling are a little easier to establish. The population density is lower than any other south-west county and only 30 per cent. of the Cornish population live in towns of more than 10,000. The figure nationally is 80 per cent.

The other good aspect of the project is that it has brought together the districts and the county in a consortium that works together towards achieving the Government's targets. In an area without a unitary authority, that is difficult to achieve because districts have different priorities for collecting the waste from the county that is responsible for it. All six locally elected district authorities and the county are in partnership, but the delay in gaining approval is putting strain on that partnership. All the authorities have Government-set targets to meet in respect of improving their services and they are becoming increasingly nervous that, without a decision being made, they will be left stranded and criticised for falling far short of what the Government demanded of them.

The scheme is receiving receive strong support from the population in Cornwall. Much campaigning has taken place, and the one matter on which all the campaigners are united is the need to improve recycling and reuse. Whereas what happens with the waste-to-energy scheme may be controversial, the bid for the scheme to improve recycling and reuse has total support. Hopefully, it will minimise the need for a waste-to-energy scheme, although some form of one will be needed. I hope and strongly believe in a campaign, not in an incinerator. I think that the Minister may share my view.

Andrew George (St. Ives): On a waste-to-energy scheme, does my hon. Friend agree that, in Cornwall, technology is very much at the cutting edge in the sense that more energy is being generated proportionately through geothermal sources? We have a higher level of wind energy in proportion to population and land mass than elsewhere in the country. The proposal has at its base the fact that Cornwall is more receptive to acceptable waste-to-energy techniques than many other places.

Matthew Taylor : I agree with my hon. Friend. It is worth bearing in mind that the PFI bid is purely for recycling and reuse, which is stage 1 of the process. I am glad that stage 2 has not revolved around an incinerator. It covers a waste-to-energy scheme, but alternative technologies are being explored actively. The key aspect of the bid is that it will put back the need for waste-to-energy schemes for some years, because it will be possible to start meeting the Government's targets on reuse and recycling and minimise the use of landfill. It will allow the pyrolysis and gasification scheme that the county is examining to be proven as technology. As the

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Minister will be aware, the manufacturers of such technologies are making big claims about them. I hope that they are right but, as yet, in this country they are relatively unproven. The bid will allow that better scheme to come forward.

It is worth saying that one of the core themes of objective 1 is to build on the environmental technology base in Cornwall and the perception of high environmental quality. The scheme will help to build the cutting edge in Cornwall's development of the new technologies for not only waste, but energy. The scheme fits in with objective 1 status. It is not reliant on objective 1 funding because the area would allow that to be received. That is why we need the Government's approval for the PFI. It ties solidly into the themes of the objective 1 programme.

As I said, the proposal has received much support from the local population. In Chacewater, we have a pilot scheme, by a company called Rag and Bone, to create a one-stop shop for all recycling. It has received huge local support that goes well beyond the target that was set.

I turn to the most crucial point. I have said that it is necessary to meet the Government's recycling targets in the waste strategy of 2000. If the bid is approved, the recycling rates will jump from 9.5 per cent. at present to 35 per cent. by 2008, which is in excess of the Government's target of 33 per cent. by 2015, and well ahead of their time scale, even with regard to the interim target of 2010. If the bid is not approved, and even if best practice is employed, the conclusions of the consultants that the county has taken on and the analysis that has been conducted by its own staff suggest that we could achieve recycling rates of only 18 per cent. by 2005, when Government targets demand 25 per cent. of household recycling by then.

That shows the difference between taking the lead and exceeding the Government's targets, and inevitably falling behind them because of our geography and our relative position with regard to other markets. The sooner that this project is approved, the more likely it will be that the targets are met. The original bid was based on the assumption that, by now, we would be in the early days of making that happen, but we are already, in effect, up to a year or more late. If the project is approved, that will help investment, the economy, jobs, transport and the environment.

As I have said, it is a two-stage plan. Stage 1 involves the PFI bid that is before the Minister and his officials, which allocates £25 million solely for investment in enhanced waste recycling and recovery, along with the target of 35 per cent. by 2008–09. It includes improved civic amenities, kerbside collections, new composting through an on-farm composting network processed and used on the farms to minimise transportation, and the development of Glasphalt schemes with quarries to surface roads. All seven local authorities support giving financial assistance to the ReMaDe scheme, which is prioritising materials to be recycled even before markets can be found. It covers all waste streams, and it can bring huge benefits. It meets the criteria for everything that the Minister is concerned with. Also, every aspect of it will lead to more jobs in the county, and creating jobs is another Government target. We all welcome that, so we want to see it put into practice.

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I turn to stage two. Originally, the county was asked to put together a bid for the entire scheme. Then it was told that the amount of money was cut, and that the whole issue of waste-to-energy was not included. There is a stage 2, but it is not committed to mass burn incineration, which the Government rightly appear to be moving away from. Instead, it is committed to looking at emerging technologies and matching them to the county's needs; depending on the success of stage one.

We will see how much we can achieve through recycling and reuse before we even examine waste-to-energy; when we come to address that, it will be the new technologies, rather than the incineration technologies, that we look to. I understand that plans with regard to that matter will come forward shortly, but that is not what is up for consideration here; the scheme is aimed entirely at increasing recycling. The Minister may be aware that the Waste Strategy 2000 includes levels of waste reduction that can be achieved only through extensive mass burn, but that is not part of this plan.

I will finish by addressing the more negative matters; only because I want the Minister to understand the process that we have been through from our side. I have no doubt that, from the point of view of officials and the Department, that process may have seemed rather different.

In June 2000, Government officials suggested to the county that it might wish to consider a waste management PFI application. The county was very keen to take Cornwall to the cutting edge with regard to this technology, and it quickly set out to meet the Government's timetable. It hired PricewaterhouseCoopers, Eversheds and Arthur Andersen as consultants to its bid; blue chip consultants at the highest level. By September 2001, it was possible to put forward an outline business case.

However, the county council was advised that it should hold back to meet new criteria that would come into effect from the end of September, the key element of which was the reduction of the ceiling from £50 million to £25 million. Splitting the application into two stages, given the uncertainty over waste-to-energy policy, has actually been very good for the project and very helpful to the Minister in approving the bid.

We originally expected a decision in early 2001 but, at Easter, the Government questioned the role of the waste company operating in the county, County Environmental Services, and asked the waste applicant to produce a public sector comparator. It was an odd request, because at that stage it would have been illegal to deal with waste in that way. However, the county produced one. Still we heard nothing.

Three civil servants have taken the lead in the relationship with the county. A new manager on the project said that the application was in the Minister's box and that there would be a reply by Christmas. Hopes were very high, and I was told that an announcement was expected at any minute. However, nothing happened. A third civil servant is now taking the lead on the matter, which we understand is in the final stages. We last heard that the application was about to go to the Minister. The debate may have affected the process somewhat, because the Minister will have been briefed on the matter. We understand that it is now—once again, at any moment—likely to reach the Minister.

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Meanwhile, the county council put the PFI bid together back in October 2000. It had a dedicated waste management team working on the project. It has spent £150,000 preparing the outline business case at a time when, as the Minister is well aware, all local authorities face very challenging budget restrictions. A huge amount of hard work has been done in-house and by the consultants. There was a lot of popular support, and we really felt that we were doing everything that the Government had asked of us.

I wrote on 27 November, expecting an imminent response. I had an acknowledgment of my letter but still have not had a reply from the Minister. I chased that up with a parliamentary question on 25 January and wrote again on 12 April, but we still have received nothing but a holding reply to the parliamentary question. As far as we can tell, there is good will at the Minister's end and at our end, but the process has come off the rails.

We really need a response from the Minister. The project is good news, and the Minister will have huge support and our gratitude if it gets the go-ahead. Frankly, we cannot understand why it has taken so long.

1.47 pm

The Minister for the Environment (Mr. Michael Meacher) : Waste management is undoubtedly a key issue faced by the country; it is certainly one of the biggest environmental issues. As I would have expected, the hon. Member for Truro and St. Austell (Matthew Taylor) made his case extremely well. One of the great advantages of debates such as this is that I get an insight into how a situation looks from the other side; hitherto I have not seen it in quite that way.

I have been given a note about submissions made to me. The general application of the waste management strategy is an ongoing matter with the Department, but I assure the hon. Gentleman that, as far as I am concerned, this is the first time that I have been asked to take a specific decision on the application. He is quite right that it is now nearing the decision point. I understand his view that it has taken a long time and I apologise for that.

Cornwall's proposals raise several difficult issues relating to the changes that we must make to our current waste management practices. I was stunned to hear that the landfilling of municipal household waste in Cornwall is 94 per cent; that is quite extraordinary. However, I would like to say a few words about the overall approach.

As the hon. Gentleman rightly said, the waste strategy was published in May 2000 and I am pleased to hear that officials in Cornwall responded to it extremely quickly. The main requirements of that strategy are to tackle the continuing growth of waste—not least by finding innovative ways of minimising its creation—to maximise the amount of value that we recover from waste through recycling and reuse and to improve the very low levels of recycling that, unfortunately, have been traditional in England and Wales.

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Our strategy sets statutory performance standards for local authority recycling. Local government as a whole must double the amount of recycling within three years and triple it within five years. That is pretty testing, given the past record, but it is achievable with the extremely low starting point. The national level of recycling was 2 per cent. in 1992 and 6 per cent. in 1997; it is now 11 or 12 per cent.

Cornwall county council must achieve 12 per cent. recycling by 2003–04 and 18 per cent. by 2005–06. I am sure that the county, given the readiness with which it is facing the problem, is already taking action to deliver the first of those standards, independent of its proposals for the longer term, as the hon. Gentleman implied.

We have provided significant extra resources, although budgets are tight. In the 2000 spending review, there was an increase of £1.1 billion in the relevant standard spending assessment block over the three years covered by the review. We have also created a new £140 million ring-fenced fund that supplements the general grant provision. I understand that local authorities, including Caradon and North Cornwall councils, are currently applying for money from that fund. We have also put new money into a new programme: the waste and resources action programme—WRAP—to tackle market issues and particularly to open up new markets for recyclates. We have provided £220 million of private finance initiative resources specifically for waste management projects. When local authorities acquire a capital asset, they may choose whether to borrow the money or use PFI money. Central Government can provide revenue support towards the cost of repaying interest and capital on the loan by credit approvals and through special grant for PFI schemes.

Turning to Cornwall's proposals on waste and the decision-making process involved, in addition to the value-for-money appraisal, there is a policy assessment for waste PFI proposals. The hon. Gentleman referred to the fact that in September 2000 we published criteria for waste PFI projects that reflected the Government's strategy on waste. The hon. Gentleman was at pains to say that Cornwall met those criteria, which made it clear that waste recycling and composting lie at the heart of the solutions to local authorities' waste management problems. I am very keen that we maximise reuse, recycling, recovery and composting, and that mass burn or, preferably, alternatives are used only when absolutely necessary.

It is particularly relevant to Cornwall that the criteria also require proposals, including incineration, to demonstrate that all opportunities for recycling have been considered first and—this is demanding—that there is no barrier to the future development of recycling. I do not want proposals to be agreed if they could undermine future possibilities for recycling. We also stipulated that schemes should include proposals for combined heat and power, which should be appropriately sized—I think that is a code word for relatively small—and that they should include CHP where possible.

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Cornwall first submitted its outline business case to us in October 2000, which was fairly quick off the mark. That was just one month after the criteria for waste projects were revised in the way that I described. The county's proposals have changed over time, as the hon. Gentleman indicated. That is not particularly surprising as they were originally drawn up when the criteria for waste PFI projects were far less demanding than they are today. There has been considerable ongoing dialogue between officials in my Department. On our side, that has achieved a variation that I had not realised before. The dialogue has taken place because we recognise the considerable challenge that the county faces on landfill and the tight time scale that it has in which to draw up alternatives.

The proposals do, as the hon. Gentleman made very clear, have several positive aspects including an innovative proposal for composting green waste on site and on the county's own farms, and substantial work on waste minimisation. I am very keen on that. There is also a strong commitment to the project from all the local authorities. The proposals on energy from waste include combined heat and power as a strong option.

Matthew Taylor : Will the Minister give way?

Mr. Meacher : I am anxious to get on, and I think that the hon. Gentleman will be pleased if he allows me to finish.

Less compelling is the ambition to improve recycling in the county and to provide new incineration capacity. The hon. Gentleman did say that that was not a foregone conclusion. As I have indicated, we insist that incineration proposals are appropriately sized, that such proposals do not crowd out recycling and that the potential for recycling has been fully explored. Officials have highlighted to Cornwall that its headline recycling rate of 35 per cent. over the long term is low in comparison with most of the other PFI proposals that are being put to us. Many of these are planning for recycling rates of between 50 per cent. and 60 per cent. in the long term.

Before the hon. Gentleman leaps to his feet to tell me this, I recognise the county council's awareness that its case is not as compelling as others. It has said that 50 to 60 per cent. recycling rates are not, in its view, achievable in Cornwall even in the long term for geographical and economic reasons. In particular, Cornwall is sparsely populated and remote from the existing recycling materials processors, and the gross domestic product per capita in Cornwall is only 70 per cent. of the United Kingdom average.

As a part of its response, Cornwall county council has proposed to adopt a two-stage approach that will test the recycling rates. I think that that is helpful. Bidders will be asked to achieve a minimum 35 per cent. recycling rate and would be offered financial incentives to achieve higher recycling rates. However, I am not yet convinced that the recycling ambition in the county's proposals is sufficient. I am not convinced that the proposed approach on financial incentives will prevent the crowding out of recycling in future. I do not say that I am not persuadable, but, on the evidence that I have seen, I am not yet convinced. Nor am I convinced—this is my real problem—that the proposals for an incineration capacity, or possible alternative, of 200,000 tonnes is the minimum that is required.

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Obviously, I look much more favourably on pyrolysis and gasification, but my understanding is that incineration was not ruled out in the proposal made to us. To feed that kind of level of incineration, pyrolysis or gasification would require waste streams being pre-empted, which could undermine the recycling targets.

I fully recognise that Cornwall faces challenges in developing sustainable waste solutions given the economic position in the county and the nature of the area. However, the very nature of Cornwall means that we must be extra vigilant in ensuring that the recycling options are fully explored and that the absolute minimum requirement for incineration is put in place. I am conscious that we may not have been fully able to explore the issues in the course of 15 minutes talking to each other. I am aware that the hon. Gentleman

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previously wrote to me suggesting a meeting. I would, therefore, like to meet him and a delegation from the county council before reaching a final conclusion, if there are further points that he would like me to consider.

I would, of course, be especially interested in the way in which the people of Cornwall have been consulted on the county's ambitions on recycling and the new incineration capacity that may be required. Getting the support, not only of the agencies and the authorities, but the people of Cornwall, who in the end will face the consequences, is important. Subject to that meeting, I will issue a decision on Cornwall's proposals shortly, but hope to meet the hon. Gentleman before.

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