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20 Mar 2003 : Column 1141—continued

Mr. Drew: Does the hon. Gentleman recognise that the contradiction at the heart of the waste problem is that unless individuals and families are prepared to take personal responsibility for creating less waste, we are all on to a loser? The basic problem with incineration is that it requires scale. If that scale goes against the proximity principle, no individual will take responsibility. That is where the problem of incineration really lies—it is somebody else's problem and there is no personal responsibility.

Mr. Lidington: The hon. Gentleman makes a reasonable point. What worries me, though, is meeting councillors who tell me that they now see incineration as the only way in which they will be able to deliver in time the reduction of landfill use that is required if they are to meet the Government's targets, which flow from the target arrangements in the European directive.

Norman Baker: I agree with the thrust of the hon. Gentleman's arguments so far. Will he accept my view, which is that the Bill tends to put incineration on a level playing field with recycling and composting, notwithstanding the Minister's hierarchy? The landfill tax is the only tax that discriminates. Would it not be helpful if there were financial disincentives for incineration?

Mr. Lidington: The hon. Gentleman is right. The key point is that we need to consider landfill, recycling and

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incineration together. The Bill, by omission, makes an artificial distinction between different methods of waste disposal and the incentives or penalties that we would wish to associate with them. They should be considered strategically together, which the Bill fails to do.

My second illustration concerns the new rules that are being introduced on the separation of waste. Recycling will work only if there is effective separation of different categories of waste material. Within a few years, we will face the waste electrical and electronic equipment directive, which will require everything from television sets to electronic greetings cards to be dealt with separately from other household waste streams. New definitions and new rules for the disposal of hazardous waste are being introduced, which will also impose further duties on local authorities. I would be interested in the Government's assessment of how those rules will interact with those inherent already in the landfill directive. Have the regulatory impact assessment and the costs to local authorities of implementing article 5 of the landfill directive been underestimated because we have not yet added into the sum the further duties that may be imposed on them by the WEEE directive and the hazardous waste regulations?

Paddy Tipping: The hon. Gentleman makes some important points about directives. Does he accept, that the way that this House and the Government deal with European directives is not satisfactory? Our legislation is now driven from Europe, we have made bad mistakes, and we can improve, but it is incumbent on us to look more closely at the way that we handle and consider directives.

Mr. Lidington: I agree wholeheartedly with the hon. Gentleman. To show that I am speaking in a genuinely bipartisan fashion, I will tell him that I spent my first five years in the House serving on one of the European Scrutiny Committees, and I know that the problems of which he speaks are not new to the present Administration. I remember learning a great deal on that Committee by studying the example of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), as she interrogated a series of Ministers of the then Conservative Government about why they had signed up to this or that detail of various European directives. As he will understand, this subject is worth a long debate in its own right, and I shall not go further into it now. I agree with his general point, however.

I want to return to the point made by the hon. Member for Stroud (Mr. Drew) in his intervention. He was right to say that the success of recycling in particular, and, therefore, indirectly, the success of a tradeable allowances scheme, will be delivered only if individuals feel that they can take ownership of this matter for themselves and that they have some vested interest in a desirable environmental outcome. It also relies on two further things: on local authorities having the capacity to sort and recycle more waste than they do at present; and on the private sector coming up with a profitable end use for recyclates. Otherwise, we will collect, sort and recycle and end up putting the recycled materials back into the landfill tip, because we cannot find an economic end use for them.

Some important questions arise out of this Bill in relation to the impact on local authorities' costs. To start with, there are the administrative costs of setting

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up and running the scheme, which the Local Government Association estimates to be in the order of £15 million nationally. Subsequently, there are far greater costs, which the Minister acknowledged indirectly in his remarks about the need for large-scale new investment in recycling capacity: the costs of installing and operating recycling facilities that do not exist at the moment.

It is not good enough for the Government to argue, as they seemed to do in the other place, that local authorities have plenty of money with which to deliver those objectives. The money comes to local authorities from two sources. The first is the national waste management and recycling challenge fund, which has helped a number of local councils but has rejected bids from others, and all local authorities are at risk of financial penalties under the landfill directive. The other source of funding to local authorities is via the environmental, protective and cultural services block of local government finance. That, of course, must also cover such matters as flood protection, coastal defence and emergency planning, all of which are under considerable pressure at the moment, and are areas of local government responsibility in which councils are being urged by the Government, and by others, to spend more money rather than less.

I want to make three suggestions to the Minister about finance, and I hope that they will be constructive. First, he should hypothecate any revenue from fines back to local authorities to allow improvement to their collection and recycling services or to the private sector as an incentive to develop markets for recyclates further. Secondly, he should consider doing the same thing with the increased revenue that the Government plan to raise from their proposed large increase in the landfill tax. It was interesting that Lord Whitty seemed to suggest in the House of Lords that the Government were considering such measures, although he declined to be drawn on the detail.

My third suggestion is for the Government to give local authorities the freedom to offer incentives to householders who reduce their waste and sort recyclable products. Incentives will probably work better than penalties, which deals with the point raised by the hon. Member for Stroud. If people risk facing a penalty, they will be tempted either to fly-tip their rubbish or to place it surreptitiously in their neighbour's bin. If people were offered an incentive such as a small council tax rebate, they might be tempted to follow good practice.

Dr. Whitehead: I was interested to hear the hon. Gentleman suggest using incentives rather than padlocks on wheelie bins. In the light of his remarks about hypothecation, will he tell the House whether he would support the recent changes to the administration of the landfill levy set out in the pre-Budget report, which will place tax forgone into the realm of larger recycling and reuse schemes rather than into the present system?

Mr. Lidington: We will want to examine the Government's proposals in detail and especially in the light of what the Chancellor of the Exchequer proposes in a few weeks' time. I was outlining the principle that if the extra revenue that the Government are committed to take from the tax increase is to produce the benefits that

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they claim, it must be ploughed back into recycling capacity and markets for recyclates. Otherwise, they will take more money in tax without improving recycling rates.

I want to ask the Minister about a couple of the more technical aspects of the Bill that we will want to explore further in Committee. First, several hon. Members talked about the relationship between waste collection and waste disposal authorities in a two-tier system. The Bill provides for a county council to be fined if a district council fails to separate waste effectively. The Lords sensibly amended the Bill by inserting a requirement for a joint municipal waste strategy. However, there is still a question of whether the waste disposal authority—the county council—should be able to impose penalties on a district council that does not do its job correctly. We shall want to debate that in more detail but I should be interested to hear the Government's intended approach to that.

Secondly, there is the question of the relationship between the Department for Environment, Food and Rural Affairs and the devolved Administrations in Scotland, Wales and, possibly again in future, Northern Ireland. My understanding is that under the directive, the United Kingdom collectively will be fined if European targets are not met. Clause 9 provides for fines to be shared out within the UK as a whole if collectively it breaches its landfill targets in the target years. I was not certain from the Minister's opening speech whether the fines for a failure in one part of the UK would have to be borne by it or whether, for the sake of argument, a failure by England to deliver on its landfill targets would have to be picked up by Scottish, Welsh and Northern Irish taxpayers as well.

That is an important point because, as the Minister said, Scotland and Wales have the freedom to design their own schemes. The last note that I read suggested that the Scottish scheme would involve tradeable permits which, however, would not be tradeable across the border. It also suggested that the Welsh scheme might not allow the trading of allowances at all. The different parts of the United Kingdom will design their own schemes, which may or may not be equally effective. Do the Government believe that the ineffectiveness of a particular scheme means that the entire UK will breach its targets and become liable for the failures of the scheme in one of its component parts?

We look forward to exploring the Bill in detail later. We have reservations, not so much about its content but about the fact that it is being considered in isolation, separate from broader questions about climate change and waste management policy. If it makes a constructive contribution to delivering good environmental outcomes, we shall not oppose it, but shall do our best to make constructive criticisms and give overall support.

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