Examination of Witnesses (Questions 210-219)
MR PETER
JONES, MR
PHIL CONRAN
AND MR
DAVID SAVORY
WEDNESDAY 22 JANUARY 2003
Chairman
210. Welcome, Mr Jones, Mr Savory and Mr Conran.
Thank you for being here today. I hope that you found the previous
session interesting. Thank you for your memorandum. Is there anything
that you would like to add?
(Mr Jones) No, I will leave you to it,
if I may. If I can just introduce my colleagues, if I may, Chairman.
Phil Conran is equivalent to a general manager in our business.
He looks after the entire separate division we run for recovered
products and recycled materials and he has got particular skills
in tradeable permits, particularly in connection with the packaging
and electrical regulations. David is an equivalent specialist
but around planning, consenting and looking to forward planning
issues in terms of the numbers of sites and so on for the industry
or our business in five, ten years' time.
Mr Thomas
211. Good afternoon. We heard in the earlier
evidence session some of the concerns and difficulties around
the fact that our present strategy concentrates so much on municipal
waste and leaves the other parts of the waste stream untouched
virtually. I know that you share those concerns because it is
in your memorandum, that there is an over-concentration on domestic
waste strategies. What sort of strategies do you think government
should be adopting for dealing with the other things that we have
discussed: hazardous waste, industrial and construction waste,
agricultural waste, whatever it may be? Do you have any firm thoughts
as a business on what would be the strategies that would help
you work within that field?
(Mr Jones) Absolutely. In fact, I was involved from
the early days of the Cabinet Office work that they were doing.
I was rather alarmed by the time it got to March/April last year
when it was becoming apparent that the focus was going to be fairly
narrow in the context of so-called domestic waste. I think we
will come later possibly to the definition of municipal waste.
That is why we have produced this publication, Future Perfect.
The dimensions to that strategy are if you look at the total solid
material, ie waste that the layman would understand that we throw
away in this economy, the total solid waste amounts to something
of the order of 460 million tonnes and that is what we would regard
as a national waste strategy, thinking in really grand terms.
The reason that figure is very high, of course, is that it looks
at mining spoils and agricultural spoils which are a significant
plus. If you look at controlled waste then we believe that government
should be considering this in the context of 120, 140 million
tonnes. Data is an issue, of course, in terms of accuracy here.
It is accepted to be 120 to 140 million tonnes of material that
is of interest to the regulator as being potentially an issue
for the public, including hazardous. To focus on a mere 30 million
tonnes that comes from households (of which 15 million tonnes
is essentially industrial and commercial because it relates to
materials that certainly we believe in ten years' time will be
covered by producer responsibility) is actually a waste of a lot
of people's energy and efforts. In terms of the instruments, as
you commented earlier, we have had lots of complex consultations
and documents over the years, both in Select Committees and from
specialist agencies. The reality is if you take out the rocket
science that is being applied to this process, it is about economics,
it is about technology, it is about information and standards,
four simple things. The technology is out there. Companies like
us and our competitors do not invest in that technology because
the economics are wrong. There is no point investing in state
of the art equipment (as was the case in fridges and flourescent
lamps) when it is absolutely clear that there are either no standards
in place or no preparedness to operate a level playing field on
enforcement from the regulator. This is mainly about economics.
Economics is not purely Landfill Tax, it is an integral process,
it is about an integrated mixture of virgin input taxes, end of
pipe taxes (like landfill and those on discharge consents) and
fines prosecutions. Really it should be built around industrial
supply chains. The whole of our economic activity in this country
(that is driving all this waste pouring out the back end) is focussed
around the food industry, the non-food industry, fridge industry,
clothing, agriculture, aggregates, building and construction,
and so on. To develop a strategy which does not align itself with
the way we organise our inbound economy for a strategy that would
work at the back end seems to us to be slightly peculiar, shall
I say.
212. Let us just explore that a little further.
How can we develop that strategy? What sort of value would you
put on it as a company and what guidance would you give to society
as a whole? You have just mentioned the fact that technically
speaking we can do a lot more but the economics of it does not
allow us to do that. Does that not beg the question that somewhere
along the line either through regulation or taxation, or whatever,
we should put an economic value on the bits that are technically
possible to do but not economically acceptable at the moment to
do? Where should that come in a strategy that we should be looking
at?
(Mr Jones) The priority should be clearly with the
Landfill Tax. We have been asking for Landfill Taxes to start
at thresholds of £35 a tonne. It is interesting when you
hear responses from industry about level playing fields and international
competitiveness that everybody is strangely quiet when, in fact,
we are operating with Landfill Taxes that are a third of what
they are in mainland Europe. Why are we running with the hares
but not wanting to hunt with the hounds, so to speak? We certainly
need that threshold urgently—that sends very clear economic
signals. We do not see that industrially it threatens our competitiveness
because we are far behind other countries, except possibly the
United States and so on. I am talking in a European context. The
second issue is really producer responsibility. Many of the costs
that are currently incurred in the public sector (currently amounting
to £1.5 billion a year for domestic waste management) relate
to about 50% by tonnage to products that naturally belong for
funding purposes in the purchase price of the product. So the
issues that we have experienced with fridges and the issues around
local authority management of these issues that Mr Ainsworth referred
to are made over-complex by leaving the management of these products
to 400-odd local authorities when, in fact, they are manufactured
by only three or four companies and those three or four companies
can put in economically and environmentally sounder nationally
enforced solutions than hundreds of local authorities who are
under-funded. They have usually only got one person handling waste
and generally they suffer from a lack of information and knowledge.
Landfill Taxes, producer responsibility, and then (in a regulatory
framework) we need to get our act together as a nation in terms
of transposition of EU Regulations.
213. That is back to fridges again, is it?
(Mr Jones) It is not fridges really. If you look at
the transposition issues, the ticking time bomb that nobody seems
to have picked up on is that the Europeans define municipal waste
as household waste plus material from industry and commerce that
is like household waste, so it is all organic material. Why have
we got a municipal strategy that talks about households when,
in fact, we ought to be looking at pubs, hotels, restaurants,
canteens, all that inorganic fraction? In Europe they regard that
as municipal waste. We have got a transposition problem looming
there in relation to the Landfill Directive. Fridges, yes. The
Hazardous Waste Directive has not been clean in terms of definitions
and we are still in limbo land on that. There have been delays
in the site classification systems for the July deadline that
went last July on the Landfill Directive, which we are not really
much closer along the road to. David can elaborate on that. End
life vehicles, there are huge uncertainties building up. Waste
electrical and electronic equipment has been mooted. Part of the
problem is that both DTI and DEFRA are involved in the process.
We do not have clear government functionality in one department.
We have just come from the Public Accounts Committee where the
Chief Executive of the Environment Agency was asked whether or
not she felt that waste is appropriate under DEFRA. These are
the sort of questions that ought to be asked, I suspect. I do
not think she answered, or if she did I did not understand it,
perhaps because Brian Bender was there.
214. That was very useful, helpful, to outline
where we should go as a Committee. You were obviously under-impressed
with the Strategy Unit Report because that is why you produced
your own document. Do you think we have got time to implement
such a strategy as you have now outlined as the parts that we
should be looking at for targets that are looming in 2005? Is
there still time there to get these things together, whether under
DEFRA or any other government department?
(Mr Jones) We are pretty pessimistic. There is no
problem there as far as the waste industry is concerned in generating
the funding—we have all got the balance sheet strength.
Not just us but the other major players, Cleanaway, Onyx, Sita
and so on, to invest in this business and the preparedness is
there but the economic signals just are not right. When you listen,
as the CIWM commented to the Chancellor, when he is talking about
taking anything between three and six years to get to an economic
threshold on the Landfill Tax it does not fill one with confidence.
What we have here are fundamental gates coming down that are associated
with Producer Responsibility and the Landfill Directive, which
are all concertina-ed between 2005 and 2008, and against that
we have still got no clear message going to industry about the
fact that they have got to change their ways. We have still got
about 10 to 15% of local authorities not producing waste strategies
and we have got a planning system where you do not necessarily
integrate the Environment Agency approval system with the planning
process itself—in terms of political consent to operate.
That is certainly taking at least two to three years, so effectively,
yes, we are pessimistic.
Mr Challen
215. Can I just ask you about the delays in
the landfill site classifications that you mention. How do you
see that being resolved? Is it simply a matter for DEFRA to sort
it out or are there other issues there on which you would want
to elaborate?
(Mr Savory) When you say landfill site classifications—
216. Site classifications.
(Mr Savory) Hazardous and non-hazardous sites.
217. Yes.
(Mr Savory) There were certainly delays in getting
the regulatory process in place. Our reading of the Directive
is that industry should be allowed 12 months to identify and set
out to the Environment Agency how it proposes to take existing
landfill sites forward into the new regime and that was concertina-ed
down to three or four months. We are now clearly going into the
transition period where sites will move to the IPPC regime. There
are still serious gaps in terms of the guidance that is required.
The application forms for that process have only very recently
been published, it is a 120-page document, and it is a massive
task that both the industry has got to deliver on and the Environment
Agency has got to respond to. It could have been done better,
there is no doubt about that. Certainly, we understand there was
a delay in certain things coming through Europe, for example the
waste acceptance criteria, which is a major concern leading to
a serious problem with how industry is going to respond on hazardous
waste. We have a situation at the moment where in July 2004 co-disposal
will cease and effectively there will be nowhere for hazardous
waste to go. The waste management industry is very, very nervous
about the prospect of putting untreated or semi-treated hazardous
waste into landfill sites which then have effectively an environmental
liability attached to them which will continue for hundreds of
years, possibly in perpetuity.
218. Is it political aspirations ahead of industry's
ability to deliver or is it the case that there was not enough
consultation in the first place?
(Mr Savory) There is a problem with the way in which
UK has interpreted the Landfill Directive. Going back to the comments
that Peter made, first off, my reading and our reading of the
Landfill Directive is that it was a holistic regulatory requirement
and yet in the UK we have effectively pushed to one side most
commercial and industrial waste and we are not really sure what
we should do with the hazardous waste, the point already made.
The issue is the Article 5 definition of "municipal"
waste, and there is reference to it in the Strategy Report, albeit
tucked away in the appendices at the back, and we could get caught
out at some future date in how we are managing industrial waste.
It does seem perverse that we are focused on household with the
primary requirement to reduce greenhouse emissions from landfill
sites but we have ignored 60 or 70 million tonnes of industrial
and commercial waste, which causes exactly the same problem. On
the hazardous waste side, the approach that industry put forward
to DEFRA was that we do not like the idea of having hazardous
landfill sites because we do not think the public is going to
like them. I have heard questions asked earlier today about the
proximity of hazardous waste sites to the public and it would
clearly be extremely contentious for somebody seeking to run a
planning application for such a site. The approach that we took
and the trade association took is that we think hazardous waste
should be fully treated to final storage quality so it is effectively
put into the landfill site but presents no future liabilities.
We think that is the only truly sustainable way forward, and it
may be that we have to put back the date for achieving that because
it clearly requires a major shift in manufacturing industry in
terms of the waste it is producing and also the provision of treatment
capacity. This arrangement that is currently being proposed is
certainly unsustainable and is potentially quite harmful.
(Mr Jones) Could I quickly add to that in terms of
numbers, if I may. We have currently 356-odd wide licence landfill
sites of which 250 probably tackle most of the significantly hazardous
materials. The current Environment Agency estimate that I heard
last was that about 50 sites would be applied for for hazardous
waste treatment. We have about 8 to10% of the landfill market
and we are extremely dubious as to whether we will commit our
shareholders in perpetuity to a site that acts as a consolidated
store of material that cannot even be affected, as it is managed
now, by bio-degradation within a mixed site, so there is a huge
range of estimates here and I think the trade association estimates
are nearer the single digits of sites that would be licensed rather
than the 50 that the Agency seemed to think. It also goes back
to what I was saying about producer responsibility. The whole
difficulty with the economics of waste is that the people at the
back end of the process are funding the end life management. You
can manufacture gaily anything you want, the classic example of
course is Nicad screens and flat screen televisions. A flat screen
television is impossible to recover, it is packed full of noxious,
dangerous heavy metals, and if those things are released at some
point when they are scrapped none of those costs are attached
to the manufacturer, yet we have got a huge industry building
up and marketing those products without a cent being put in there
for future deferred environmental costs. It is crazy.
Chairman: Mr Ainsworth?
Mr Ainsworth
219. Nice to see you again, Mr Jones. You will
recall that we first met during a very similar inquiry 10 years
ago when I was on the Environment Select Committee. I am tempted
to ask you what is the most significant change that has occurred
in the relationship between government and your industry in the
last 10 years, and has it been better or worse. If there is a
succinct answer I would be glad to hear it.
(Mr Jones) The succinct answer is I think the good
news—and to an extent it is allied to what happened in the
Cabinet Office report—is that there is a growing awareness
of economics in this process. There is a greater emphasis on getting
sound data and I believe that now we are not just seen as dustbin
operators. I am not talking about Biffa, I am talking about the
sector. I think now there is a greater awareness in government
that our industry potentially, along with a number of others such
as water and elements of the chemical industry, hold the key to
a lot of future prosperity and jobs and indeed academic prowess
if we can seize this opportunity. By government, of course, that
is a very euphemistic term. I did not mean to be over-critical
of the Cabinet Office report but when I was at the Associate Parliamentary
Sustainable Waste Group recently I likened the original Cabinet
report to the bright, shiny, new bus that was put out but there
are elements in government that stripped the top deck and the
wheels and fuel out of that bus. I personally and we in Biffa
believe that it went to DEFRA, and they probably took great exception
to any discussion about extending this debate into industrial
and commercial waste because it is clear from 10 years ago that
they have been besotted with what comes out of people's dustbins
in their households, so no change there. If you look at the idea
of a single Ministry in waste (which we need) that was shoved
down to recommendation 27 out of a list of 34. It then went to
DTLR (and the reason I am going through this list is that for
us "government" is a series of chimneys or weirs that
waste is trying to go over, and those weirs or chimneys are all
operating at different pressures, out of sync, not communicating
on the same thing and using different definitions.) When their
study went to the DTLR, quick as a flash, any suggestion that
waste collection authorities be integrated with waste disposal
authorities (which our industry has been calling for, that just
got squirted down to recommendation 32 out of 34. Planning is
a complete black hole, nobody seems to want to grip the planning
nettle. Ten years ago we were on that debate, 10 years later here
we are still.
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