Examination of Witness (Questions 220
- 225)
TUESDAY 26 MARCH 2002
MR PETER
JONES
220. What factors have combined to make some
parts of the EU perform to a much higher standard, in your opinion,
with regard to the industry and the implementation of the regulations?
(Mr Jones) The underpinning driver that differentiates
mainland Europe from us is this preparedness that there is a better
way to handle end life materials than throwing them in the ground.
They have land fill tax fees which are triple and quadruple what
we have in this country. They have put a guillotine on the cheap
exit route. Although we are a substantial landfill company, it
is something that we do not like; we see landfill as a dying technology.
We want to exit from that. Secondly, they are far more proactive
when it comes to discussions with the manufacturing supply chains
in the form of integrated pollution prevention control and integrated
product policy, IPP, and producer responsibility, this concept
that, if you make something, you are going to be liable for it
even when it is scrapped at the end of its life cycle.
221. When you say "they", do you mean
governments must set the framework and commercial organisations
will respond?
(Mr Jones) That is the true role of government, we
believe: to take these holistic views as to how these nitty-gritty
levels of chaos could be avoided. Both in Brussels in the EU and
in the constituent national governments that make that up, we
detect a strong proactivity towards zero emissions, but we do
not get into this silly argument of not being able to manage these
global warming gases. They just take the view that in Germany
we have 2,000 tonnes of global warming potential gases. How can
we, through the regulations, the technology and the funding programme,
make sure that that gets to zero? They have teams. When I talk
to Europeans, they say that we in Britain are one nation that
does not seem to have an integrated approach of strategic hit
squads, if you like, that assess and evaluate these things, whether
it is for the size of bananas under EU regulations or whether
it is about integrated pollutant product strategy on fridges or
anything else. From our own experience, frankly, in the waste
industry, we send poorly qualified people into Europe to negotiate
on these directives and they come back with absolutely ludicrous
time spans, the latest example of which, outside fridges, is the
Landfill Directive. We are going to refuse, frankly, but we have
been asked by the Agency to put in a response, because they wasted
11 months and two weeks on transposition of the Landfill Directive.
To get back to that deadline, we now have two to three weeks to
respond with 38 page questionnaires on each of 50 landfill sites
when there is no statutory guidance being produced. This is absolutely
shambolic and we cannot keep going on like this. It is totally
stupid.
Patrick Hall: Maybe we will keep going on like
this.
Mr Lepper
222. We are going to get a repeat performance
on landfill directives and on the Vehicle End of Life Directive
and on the Waste Electrical and Electronic Equipment Directive?
(Mr Jones) This will compromise a whole series of
liabilities which will come over the barrier. There is a whole
swarm of these now that are just going to come in. It is really
around these three dimensions. The technology is not a problem.
The preparedness is there; the technology is there to reduce huge
levels of emissions to zero but who is going to fund this, how,
through what sort of transparent mechanism so that nobody is going
to run off with the money once it is paid over? Secondly, who
is going to regulate it and define the technology? There are issues
there with the Treasury. If you go back to fridges, the cost,
as I pointed out in my submission, of ending up with, shall we
say, a perfect world in fridge management at around £50 million
to £60 million a year, is roughly approximate to the VAT
that is paid by importers and manufacturers of fridges. I know
there are complications with regard to rebating VAT liability
but for me as a simple layman there ought to be a simple mechanism
where the Treasury could say, "Rather than take a big inflationary
hit", which is another of the Chancellor's concerns for these
environmental issues, "let's think of ways in which we can
have a `pensions holiday' for VAT and gradually reduce that over
a period." In this country, it seems to us as Biffa that
we have two Treasuries. We have a Treasury that raises money and
a Treasury that gives it away. You try and draw an umbilical cord
and say to the ones that raise the money that they should use
that as part of their expenditure pattern; it is easier for me
to put my name down for an Everest expedition.
223. I am sure that ministers and officials
in the DTI, DEFRA and officials in the Environment Agency will
be looking very carefully at the written submissions that have
come to this sub-committee and the transcripts of the evidence
sessions as well. They are probably here this afternoon, listening
carefully to what has been said. Most of the evidence that you
have provided to us quite rightly has been about the chronology
and so on of this particular issue and that has been very illuminating.
Has there been any representation made to government at any level
by, for instance, the Environmental Services Association or indeed
individual companies about the much wider issues that you have
been talking to us about this afternoon; or has all the negotiation
and discussion been about how do we deal with this particular
problem at the moment?
(Mr Jones) Most of it, to my understanding, is around
the specifics, on a reactive basis. Our stance as a company has
always been to be much more proactive and to try and shape a much
wider field. We have tended to do that in fairness because trade
associations are fine but it would not come as a surprise to the
head of our own trade association to know, because we have said
it to him in the past, that they have to be adopting the position
of first among equals or sometimes lowest common denominator.
As a brand, we are not happy with that position. We believe that
the United Kingdom ought to be far more adventurous, far more
proactive. We see huge opportunities out of this. Behind the adoption
of systems that can uncomplicate the funding and the level playing
field on enforcement and regulation lie huge opportunities for
British industry. Why are we having to import German, Swiss and
Scandinavian technologies to process these fridges? It is because
those countries have had regulations in this area for decades,
in some cases, longer than us. We have known about these for years
and we have a British company now that has entered that race,
but I am not entirely convinced that their specification stands
accountable to some of these established, continental ones. To
answer your question, yes, we are probably a bit further ahead
of the eight ball in some of these areas.
224. Biffa have decided they are not going to
invest in this now. You have talked about the levels of risk involved
generally. Ministers, on the other hand, seem to be fairly confident
that, by the summer, we will have the capacity set up to deal
with the problem. Are you as sanguine about the situation?
(Mr Jones) Every month, you have a boat load from
roughly that wall down to the end of the House of Lords coming
out of the system somewhere, because fridge ownership is more
or less stabilised now. Some people do retain a second fridge,
but you need ten machines to cope with this. The more mobile machines
you have, you may need 12 or 13 machines because their process
rate is lower. I do not believe we will be in equilibrium with
the output of this waste stream for at least another eight to
nine months, most optimistically. I plotted it somewhere; I can
let the clerk have a note afterwards. If you plot the steady 200,000
to 250,000 that is chonking out each month and you build in the
fact that the first machine might get going in August and you
assume that you are going to have two, then three and then four,
you will find that we are going to be in this mess for another
two years yet. If you then put the money underneath that, because
nobody is going to take these machines legitimately—we do
not think it can be done and we are absolutely convinced it cannot
be done to these standards for less than £20 to £25
a fridge. I agree that it can be done for £15 to £20
a fridge if you ship them to Germany because there is a glut in
the market there. Some of those machines are being uprated but
even so you are talking about, worse still on the bottom line,
250,000 times £20. This clock is going to be running at about
£5 million a month, rolling forward over the next 18 months.
There will be 100 million sitting in this ticking time bomb and
these are just off the cuff calculations, before we are in equilibrium
for the processing capacity to match what is coming out at the
back end. Someone somewhere will be £100 million in hock.
They will have either taken 100 million or they will have that
liability if they keep those fridges in their possession. That
is why the retailers stopped taking these things in November,
because they could not export the third to Africa that went, which
really provided the economic funding to send the other two-thirds
to the ferrous scrap industry which was then dealing in scrap
prices that were considerably harder than they are now. We are
talking big sums of money here.
Chairman
225. Thank you very much indeed. You have covered
a lot of territory in a relatively short space of time. Thank
you again for the very useful written evidence which we will study
with renewed interest in the light of your remarks. If there is
anything else—you were kind enough to volunteer some more
information—we would be delighted to receive that and anything
else that you would like to tell us. The only thing you cannot
do though is to retract anything that you have said.
(Mr Jones) As a post script, because
it is a fairly material fact pertinent to my submission on 1 March,
I did say in my evidence that I had no recorded reply to my letter
of 19 March to the head of regulation at the Environment Agency.
In fairness to poor Steve Lee, I did get a reply from him on 28
March. It was a holding letter. On 12 June—I will let the
clerk have copies of these letters—Liz Parkes responded
from the Agency. Basically, she just bounced it back and said
that DEFRA and the DTI were looking at it. I was maligning the
agency in those areas.
Chairman: Thank you for that extra point of
accuracy and clarification.
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