Select Committee on Trade and Industry Minutes of Evidence

Letter to HM Treasury


  In your Consultation Document published in July you listed six Environmental Objectives—viz Climate Change, Air Quality, Water Quality, Waste, Land use and Toxicity—and we would fully endorse the importance and value of those objectives. We would wish to add Sustainability, since in a world of finite resources it must surely be beholden on each of us to minimise the use we make of the materials and energy that we use, and after use, to recover as much as possible of these resources from the waste stream.

  Specifically you refer to the desirable reductions in greenhouse gas emissions and air pollution emissions from transport—to which we would wish to add a desirable reduction in overall road congestion from the minimising of road haulage journeys.

  You then rightly target a reduction in water consumption and in waste water production. Equally, you cite the need to reduce the volume of waste produced, to reduce the volume of waste sent for disposal, reduced hazardousness of waste sent to landfill and the reduced potential for contamination of land.

  Since we find ourselves in total agreement, you may perhaps understand our frustration and incredulity that Treasury policy so heavily penalises the one material which meets all these criteria—plastics!

  Not only do maintenance-free plastic components confer so much towards light weighting all our road and rail vehicles, they play a vital part in every walk of life, from our homes, schools and offices through to our hospitals, building construction and agriculture. Plastics also constitute a major component of packaging and perhaps today more than two thirds of everything we buy retail is at some stage packaged in plastic films.

  Yet almost all these conversion processes are essentially pollution free, they use little water and the materials are non-hazardous and will not contaminate the land.

  However, when the application of the Climate Change Levy was announced, it was also made possible for sections of industry to enter into agreement with DEFRA whereby they might secure a CCL rebate of up to 80 per cent as part of a negotiated energy reduction programme. The criteria for such negotiated agreements required that the manufacturing sites in that specific industry sector were registered under the IPPC regime, ie, they were to be the most heavily polluting processes.

  So we find, in the particular example I quoted of packaging, that the competing materials sectors,—glass, metal, and paper—are all supported by CCL rebate arrangements, but the one material that can bring about the environmental benefits we all seek, does not qualify and must therefore be penalised.

  How can an anti-competitive measure of this type possibly conform with Treasury policy on the environment?

  A CCL rebate does of course fall under the EU classification of State Aid to Industry and under the original EU Guidelines it was clearly stated that State Aid should not be used to "conceal the true costs of pollution". I suggest therefore that not only is the criteria for a negotiated rebate anti-competitive but it is also contrary to the letter and spirit of these EU Guidelines.

  Your comments would be much appreciated.

J R Pugh

Chief Executive

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