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20 Mar 2003 : Column 1147—continued

Mr. Jonathan Sayeed (Mid-Bedfordshire): I have heard a slightly different story. British Airways made some money out of the Government by doing what it intended to do anyway, by selling off part of its air fleet, particularly the budget side. It got money from the Government because British Airways thereby reduced its emissions, but it did not reduce the emissions overall. All that happened was that another company took up that fleet, ran the budget airline and produced the same emissions. That does not seem to be the best use of public money.

Mr. Kidney: Clearly, that is why the hon. Member for Aylesbury raised the question for the Minister to answer when he winds up. I suspect that the airline industry is not a good example for us. Nevertheless, in defence of

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the private sector companies taking part, I would say that from the scheme has flowed a greater appreciation of their responsibilities. To mention Barclays one last time—it was an excellent dinner, after all—it has a presence in something like 60 countries around the world, and its environmental strategy that started in the UK is now applied across virtually all those other parts of the world. We are exporting very good practices, which is encouraging, to say the least.

The new trading scheme could not be described as tough if there were no credible sanctions for the participants. The Bill introduces the fines that will be levied if participants fail to comply with their commitments under the scheme. So here are two new trading schemes. In both cases, the UK leads the world. Of course, being the leader means that there is no template to follow, and we might not get everything right first time. In regard to the emissions trading scheme, the European Union is developing an EU-wide scheme that might require changes to be made to our scheme.

Taking those things into account, it should not be surprising that the Bill has to provide for future changes in certain respects, some by statutory instrument, others by ministerial power. In respect of the powers to make changes, I would like to make a plea for the involvement of the Select Committee. I am not a member of the Committee, so this is not special pleading. The modern legislative process is complex and time-consuming, and not everything can be achieved by primary legislation. The House should be involved, however, in the exercise by Ministers of the powers that we grant them. What better way is there for that to happen than through our well-developed system of Select Committees? I congratulate the Government on their enterprise in developing these trading schemes, and I wish them well in making a success of them.

4.11 pm

Norman Baker (Lewes): I am happy to follow the hon. Member for Stafford (Mr. Kidney). I agree with his last point about the Select Committee. Indeed, this is one of those pleasurable occasions on which there is a good deal of agreement on both sides of the Chamber. The Liberal Democrats support the Bill, and I do not imagine that there will be a Division tonight, but if there is, we shall support the Government in the Lobby. That is not to say that everything about the Bill is perfect, but—credit where credit is due—its principle is absolutely right and the Government are ahead of the game in using economic instruments in this way.

The use of economic instruments throws up a potential problem, although it is definitely right to go down that road. In a different capacity, I remember being in a room with Chris Patten back in 1989, when he was involved with the Pearce report, which looked for the first time at the use of economic instruments in an innovative way. I was sorry that the work that he did seemed to run into the sand two or three years later, because there was an opportunity then to grasp the importance of merging the economy and the environment.

I seriously believe that, if we are to make good progress on the environment, we must do so in conjunction with economic instruments—which means,

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effectively, in conjunction with the Treasury. I am not sure that the mechanisms of government would allow us to do that effectively, however. We have, necessarily, a straitjacketed departmental arrangement whereby Departments do not always talk to one other. They have their own responsibilities, they build their own walls, and they have their own jealousies, which they guard. I sometimes think that, with the changes that are now taking place in government, some of those barriers could be broken down.

I represented my party this morning on a statutory instrument Committee on the climate change levy. My party had decided that I should be there because that was an environmental matter. The Government and the Conservative party were, understandably, represented by a Treasury Minister and shadow Minister. The discussion was on financial matters and was very dry and arcane, and there was not much said about the environment, although the implications of the climate change levy are enormous for it. We need to find a way of having more effective cross-departmental working. I know that the Minister has started his Green Ministers Committee, which is helpful, but not necessarily enough.

I do not want to stray too far from the Bill, Madam Deputy Speaker, but let me just make this point. We have discussed combined heat and power, which is covered by the Department for Environment, Food and Rural Affairs. The rest of energy is covered by the Department of Trade and Industry, and the Treasury is the Department that was running the show this morning. Directives that are clearly germane to the Bill and to the Government's waste strategy, such as the packaging directive and its amendments, and the waste electronic and electrical equipment directive, are being snaffled by the DTI rather than being dealt with by the Department that I think should be dealing with them—DEFRA. I am not convinced that the mechanisms are helping the Government to deliver their own agenda, and I hope that that can be looked at.

I agree with the hon. Member for Aylesbury (Mr. Lidington) that the Bill is like the dog that did not bark in the night. It is what is not in the Bill that is disappointing, rather than what is. It would certainly have been helpful to have the Government's response to "Waste Not, Want Not" before Second Reading and indeed before the Committee stage. I do not know whether the Minister can give us a definite date, but obviously the sooner we have a response, the better.

Mr. Lidington: Budget day?

Norman Baker: Quite possibly.

It would also be better if we had a waste management strategy or, as I prefer to call it, a resource management strategy. This is only one part of the equation, and until we are confident that the rest of the jigsaw fits together, we cannot be confident that the Bill will deliver the Government's aims. There is, for instance, nothing about incineration in the Bill apart from ancillary references, and nothing much about fly tipping, waste minimisation and a host of other matters that should be considered together if we are to deal with waste in a sensible and co-ordinated way.

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The Minister was honest enough to say—he is always honest about environmental matters, and doubtless about other matters as well—that we have a long way to go. Not only our waste arisings but our landfillings are increasing: recycling is not catching up with the increase in the amount of waste. That is a silly situation for us to be in environmentally, in terms of the Government's meeting of the targets in the European landfill directive. The Minister is right to draw attention to those facts and to say that drastic action is needed, and I think that the Bill responds to the challenge; but I am not convinced that it will achieve what it seeks to achieve.

Is the Minister seeking to achieve compliance with the landfill directive in 2016 or in 2020? There seems to be some uncertainty about that. On 24 February, when I asked him about the matter, he said:

Clause 23, however, refers only to implementing the directive in 2020. I am not sure whether it is an escape clause in case the Government undershoot by four years, or whether the Government are banking on a 2020 implementation and 2016 is merely a theoretical target.

I do not intend to repeat everything that has already been said by others, including the Minister, but I would like to mention some issues that have not been raised in the Bill or in much detail today. I have already referred to penalties in an intervention on the Minister. I am not sure whether the penalty system will work, although I hope that it will. Waste disposal authorities are having to deal with the increased waste arisings, but the Bill expects them to have the same amount of waste landfilled in the first year of the Bill's operation as in the year before. There is thus an immediate target to be met, and I am not sure that local authorities are up and running in that respect. Despite the best endeavours of many of them, and the exhortations of the Government and others, we are still lagging behind other countries with only a 12 per cent. recycling rate, and no indication that it is rising fast enough to deal with the situation.

There is therefore a real possibility that, in the first year, a huge number of local authorities will fail to meet that immediate target. They will not be able to cope with the extra waste being created by the 3 per cent. annual increase in waste arisings. If most do not meet the target, not many will have permits for sale; they will all be clamouring to buy them. But where will they buy them? If only a few authorities manage to meet the target, the price of permits is likely to be high—even astronomical. I cannot envisage local authorities giving them away, although that is allowed for in the Bill. Authorities in possession of a piece of paper with some value will want to redeem that value by selling it.

If the price of permits is indeed high, authorities may wonder whether it is better to default and face a penalty or to pay an enormous amount for a permit. If they choose to default and pay a penalty, it will reduce the amount of money that local authorities have to spend on recycling, and that could start a vicious cycle that would make it less likely that they would meet their targets in future years. The Government might have to use the power in clause 26(1)(c)(ii) which gives the allocating authority carte blanche to waive penalties. The

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allocating authority might have to say, "We accept that most waste disposal authorities do not have permits to trade and the price is very high, so we will waive the penalty." In that case, we would have made no progress and the trading scheme, which I support, would be undermined at an early stage.

The market will need to work—if it does, we will welcome it—but the initial trading is the most difficult to achieve. The market will work only if the targets effectively enable local authorities to take action to meet them. If they cannot meet those targets, the market system will collapse. The Local Government Association has already said that it has some doubts about the initial phases, not least because some local authorities will rely on incineration. If they do, they will need public inquiries, planning permission and long lead-in periods for building. East Sussex is running away, I am sorry to say, with an attempt to build an incinerator in my constituency. It has even signed the contract before the public inquiry takes place, which must be something of a record, but even with that accelerated time scale, the incinerator will not be operational until 2009. I am not sure how the Government's targets can be reached, because it will be very difficult to do so.

Some extra money will have to be provided to local authorities, at an early stage, to enable recycling, composting, reuse and waste minimisation to take place and the targets to be met—even half met. Local authorities face huge council tax increases this year. I do not understand that, because the Government say that they have given every authority an inflation-plus increase and they are all better off. However, every authority in my area, whether Conservative, Labour or Liberal Democrat, appears to have a massive tax increase, so I do not understand how the system has worked—or not worked. In any case, local authorities do not have lots of money to spend on such schemes.

The landfill tax, which is going up on an escalator—if that is not a dirty word in the Treasury these days—is not going up fast enough. It can still be more expensive to recycle than to landfill. For example, I visited a site—it may even have been in the Minister's constituency—where they were trying to recycle windows from a tower block that was being demolished. The local authority had to choose between paying £9 to recycle them or £5 to landfill them. There is, therefore, a perverse incentive to landfill at the moment, although the landfill tax will increase over time. It will cost local authorities more to act in an environmentally responsible way, at least in the short term, than to be irresponsible. That cannot be right. We need some early financial changes if we are to increase recycling and if the market system is to work. Otherwise, the Minister and the scheme will soon face problems, which would be regrettable, especially as it is a good scheme in principle.

I am not an expert on Northern Ireland, but it is difficult to see how cross-border trading could take place. Local authorities in that area might have arrangements to dispose of their waste in the Republic, and I am not clear about how that fits with the UK's target under the landfill directive and what allowance will be made for exports of waste from Northern Ireland to the Republic. I do not know whether that has been taken into account or whether it is banned. I profess

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myself ignorant on that issue, but it needs to be sorted out. Perhaps the Minister will be able to answer when he replies.

I turn now to incineration, which has been raised by several hon. Members, including the hon. Members for Stoke-on-Trent, North (Ms Walley) and for Stroud (Mr. Drew). The Minister may have failed to understand the point to do with clause 17(3) made earlier by my hon. Friend the Member for Guildford (Sue Doughty). The Minister spoke about the waste hierarchy. He is clear in his own mind about what it is, as I am, but in practical terms it means that landfill is at the bottom of the pile, with everything else above it. The Bill does not make the necessary differentiation.

Clause 17(3), which deals with waste that should have gone to landfill being diverted, states:

There is no difference, separation or hierarchy in that: all options are treated equally. Local authorities are now faced with a requirement not to landfill, and there is a genuine uncertainty about whether they can meet their communities' recycling aspirations. I am worried that they will opt for incineration. The hon. Member for Aylesbury referred to the genuine concern and fear of local authorities that there is no way to meet the targets without incineration. That is what local authorities around the country have told me—and, apparently, the hon. Member for Aylesbury—yet the Minister maintains that incineration will be only a small part of the solution and that it will not be used much at all.

I do not think that that is the case. Unless the Minister takes action to incentivise recycling, reuse and waste minimisation, and to disincentivise waste incineration, incineration will become the preferred solution for waste disposal authorities up and down the country. They will go for incinerators, because they offer an easy way to deal with big percentages.

It is much easier for an authority to sign a contract with a private company that promises to deal with 25 per cent. of that authority's waste in one big hit than it is for it to deal with myriad complicated schemes that will take time to sort out. Although the different ways that such schemes may deal with that 25 per cent. of waste may be preferable, they would be much more complicated. Faced with a succession of small schemes or one big scheme, I fear that local authorities will go for the one big scheme, unless the Government produce incentives for them to do otherwise.

We all know the problems with incineration. They go beyond the emissions problem, which I think is overblown. Incineration diverts the waste stream away from recycling, ties local authorities into very long contracts and involves substantial transport movements. Also, the incinerators themselves—which are big beasts—blight the local landscape.

Incineration undermines the proximity principle, on which the Minister is very keen. So am I, but the principle does not apply if one local authority can send the waste that it generates a long way away by lorry to be incinerated somewhere else. Where is the link then between the waste producer and the waste disposal? There is no link. Authorities can use incineration to put

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waste out of sight and out of mind. They have no incentive to recycle or deal with waste themselves. The hon. Member for Stroud said that the desire to deal with waste should be engendered in people, but that is undermined by incineration. Incineration is not available on the doorstep, unless one is very unlucky. People in Newhaven in my constituency may be unlucky if the county council has its way and puts an incinerator there. Incidentally, the proposed site is next to the national park, on which the Minister is also very keen.

Incineration is immensely unpopular. Local authorities are caught between a rock and a hard place—they do not want incineration, but feel that they have to have it. However, local communities are up in arms whenever it is proposed to build an incinerator in a particular area. We need to disincentivise incineration. We need an incineration tax, to put it more on a level with landfill and to make local authorities look seriously at the alternatives. If such a tax is not forthcoming, there will be incinerators all over the country, and we will not have the recycling that the Minister wants.

We also want the Bill to contain an approach to fly tipping, an issue that is germane to the Bill. As we increase the price of landfill and make it more difficult to deal legally with waste, the tendency will be for more and more waste to be thrown away in our countryside and towns. This must be looked at in parallel with the Bill. If not, we will find more and more waste strewn across the countryside. A parliamentary answer to me on 4 March from the Minister provided me with an astonishing statistic: the amount of material fly-tipped in the countryside in 2001 on agricultural land was 600,000 tonnes. That will get worse and we must deal with that in parallel.

The Bill is a good idea and the Government are moving in the right direction, for which they deserve credit. They are right to use economic instruments to try to achieve environmental ends, but there are problems that I have identified, which I hope that the Minister will take seriously, because I want the Bill to work, as he does.

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