Select Committee on Environmental Audit Minutes of Evidence


Further Memorandum from the Environmental Services Association

Response of the Environmental Services Association to the Strategy Unit Report and the Pre-Budget Statement

BACKGROUND

  The Environmental Services Association (ESA) welcomes the opportunity to provide further evidence to the Environmental Audit Committee's inquiry into Winning the War on Waste. ESA is the sectoral trade association for the UK's waste and secondary resource management industry, which contributes more than £5 billion annually to the UK economy. To return more of the materials and energy in waste to the productive economy, as required by Waste Strategy 2000 and EU law, our Members are in principle willing to invest an additional £1 billion per year in infrastructure.

ESA'S RESPONSE TO THE STRATEGY UNIT REPORT

  ESA has welcomed the Secretary of State's leadership in convening the first National Waste Summit and commended without qualification her chairmanship of the Waste Study Advisory Board, which brought together a wide range of partners in a constructive spirit. The Secretary of State, in her first year in office at DEFRA, has done all that could reasonably have been expected.

  The Strategy Unit has re-stated many of the challenges which ESA and others have for some years identified as being faced by the UK. The report recognises, as ESA has already itself indicated, that on current trends the United Kingdom will fail to deliver compliance with EU legislation, such as the Landfill Directive, and suggests practical measures to reduce the barriers to investing in waste management in the United Kingdom.

  However, ESA believes the report has fallen short of identifying the precise delivery mechanisms the UK will need to use. The report can only be considered a success if it promptly galvinises the Government into taking the necessary significant and imminent decisions to achieve the UK's compliance with EU laws. The success or otherwise of the Strategy Unit's report will be judged not by what it says, but the action that it precipitates in the coming months.

  ESA believes that there are several key recommendations contained in the report on which the Government should make rapid progress in order to meet national and international obligations.

KEY RECOMMENDATIONS FOR ACTION

1.   Focused responsibility for waste management policy within government

  The fact that a Strategy Unit project was required illustrates the current lack of focus for waste management issues within Government. Responsibility is spread between two main departments-DEFRA and DTI-but other Departments which impact on waste policy include ODPM, DoH, and HMT. Furthermore, in a context where it is the UK as a whole which is responsible for compliance with EU law and where it is essential to avoid regulatory arbitrage within the UK, devolution represents a further aspect of the policy matrix.

  A champion for sustainable waste management fully appraised of the facts and with the necessary powers to effect change is a priority if the UK is to move forward. Subject to appropriate parameters, we therefore welcome the Strategy Unit's view that the Secretary of State for Environment Food and Rural Affairs should be the Ministerial Champion for waste management strategy.

  ESA also welcomes the report's recommendation that the respective roles of DEFRA and the Environment Agency should be clarified. The Government must, more effectively than hitherto, provide strategic leadership on policy development and negotiations. ESA welcomes strengthening of the waste management function within DEFRA and also the establishment of a delivery unit (Recommendation 26). One department focused on delivering the UK's environmental objectives, including those for waste management (Recommendation 27), should concentrate necessary expertise and speed up decision making. A more effective focus within the Government should also help the Environment Agency to concentrate on its core role of regulation.

2.   Paying for waste management

  The report rightly recognises that the UK is not paying enough for waste management. It also recognises that the polluter pays principle can be applied to householders. However, the report still reflects the confusion of debate over the distinction between direct and variable charging, something which was made clear in the Ernst and Young discussion document commissioned by ESTET and published in July 2002[9].

  In a context where the Government has some way to go in allocating adequate resources for management of the municipal waste stream, we are not persuaded that it is helpful for the Strategy Unit to raise the prospect of discounts in Council Tax (Recommendation 1).

  ESA has for some time advocated piloting of direct charging in the current Parliament. The Government must grasp the opportunity to bring in the legislative changes required to allow flexibility in the way local authorities fund the collection and management of municipal waste.

3.   Reform of the planning system

  ESA has for some years argued that the current planning system is not delivering for waste management preventing the delivery of national objectives at a local level. It is a continuing source of frustration when, having competed for and won a contract with a local authority, the same local authority will not grant planning permission for the facilities required to deliver the contract.

  We look forward to an early review of PPG10 (Recommendation 32) as obtaining planning permission for facilities remains a major barrier to delivering sustainable waste management.

4.   Health

  Delays and uncertainty affect the development of all types of waste management facility. Often delays are due to public debate, frequently based on inadequate information sometimes mischievously propagated, about potential health issues. Waste management is, of course, in very large part a mechanism to protect public health. Without a highly regulated waste management industry there would undoubtedly be serious and widespread public health problems.

  ESA's Members operate to high standards, regulated by the Environment Agency. However, in a context where there has been imprecise media coverage of inconclusive data, ESA does recognise that an independent review of sufficient calibre might help to provide authoritative communication of current knowledge of the potential health impacts of waste management and help define those areas where gaps exist in scientific knowledge (Recommendation 15). Such a review should not be used as to contrive further prevarication and delay, and it should start very soon.

5.   Recycling

  ESA agrees with the report's conclusions that there is a need to increase rates of recycling. ESA's Members want to extract more of the value from waste. We would, for example, go further than Recommendation 6—which advocates that space be allowed for recycling facilities in new developments with more than 50 houses—and encourage high levels of use of recycled/reused building materials in appropriate new developments themselves as a condition of planning consent. We would also welcome, when ODPM launches its major initiative in January 2003, proper consideration of the integration of CHP in the construction of new residential and industrial districts.

  ESA has already commended the Government's current responsible approach to defining recycling. The Government's Best Value performance indicators define recycling not on an input but on an output basis. This reflects the approach taken by the draft European CEN standard (prEN 13965-2). Pointing to productive re-use of recycled materials, the draft standard seeks to measure real recycling which broadly reflects environmental benefit. This also builds on the recently published European Regulation on waste statistics[10], which requires the definition of recycling to be "the reprocessing in a production process of the waste materials for the original purpose or for other purposes including organic recycling but excluding energy recovery".

6.   Simpler contracts

  We welcome the Strategy Unit's recognition that the Private Finance Initiative (PFI) needs to be in tune with the sector's needs (Recommendation 23). ESA tried to address this with the Government three years ago and believes that the Waste PFI delivery panel should be extended to include representation from our industry and the PFI itself needs to be made more simple and flexible.

  Contracting with local authorities is a continuing source of frustration for both parties. Considering that some of the biggest waste management companies have turnover of less than £100m and that margins in waste management are historically low, spending £1m on bidding for a single contract is a significant barrier to entry.

ESA'S RESERVATIONS ABOUT THE REPORT

1.   Home composting

  We believe the report places too much emphasis on home composting, and we are not convinced that such a rapid growth in home composting is feasible, or that it will make a significant impact on the UK's achievement of the Landfill Directive diversion targets.

  Even where there are private gardens, modern developments tend to have smaller gardens which means composting is closer to people. In this case, it might be safer and ultimately much more reliable for this waste stream to be separately collected and composted in enclosed and strictly regulated facilities. This would also be in tune with future European legislation which will require the separate collection of biodegradable waste from households for centralised composting.

2.   Incentives for householders

  As outlined earlier, of particular concern is the recommendation that rebates could be provided to Council Tax payers at a time when it is recognised money should be directed towards waste management rather than being removed from the system. The UK currently spends around £1.5 billion per year on managing the municipal waste stream, a figure which must be at least doubled if we are to meet our national and international obligations on waste and recycling. At most 3% of what is needed is therefore provided by the Government's proposed abolition of Object C of the Landfill Tax Credit Scheme.

ESA'S RESPONSE TO THE PRE-BUDGET REPORT

Landfill tax

  ESA has welcomed the announcement of the medium to long term target for the landfill tax of £35 per tonne. The landfill tax needs to reach at least £35 per tonne to make other forms of management, such as recycling and composting, viable on a scale necessary for the UK to achieve compliance with EU law. Furthermore, ESA has welcomed the intention that, in line with our advice, that this will be fiscally neutral for British business. The tax should be a behavioural driver rather than a mechanism to raise revenue.

  However, the Government has failed to give a clear signal on when the landfill tax might reach £35 per tonne. This is despite the Government's Advisory Committee on Business and the Environment concluding: "even at £45 per tonne, landfill tax costs would rise to at most only a few tenths of a percent in any sector, and for many commercial sectors it would remain at less than one tenth of a per cent . . . the increases might be enough to make alternative waste management options more viable." [11]

  ESA's Members are ready to work with partners and to invest billions of pounds to deliver the aspirations of the Strategy Unit's report and put in place a world-class waste management system. A clear indication of when the landfill tax will reach £35 per tonne, and the increments the Chancellor proposes to make in order to get there, will provide ESA's Members greater certainty for investment and the sooner our Members' planned investment can be forthcoming, therefore, we encourage the Government, following its consultation, to announce its intentions as soon as possible.

THE LANDFILL TAX CREDIT SCHEME

  The proposed changes to the Landfill Tax Credit Scheme signalled in the Chancellor's Pre-Budget Report represent a U-turn by the Government. A year ago, the Government asked ESA's Member to direct two thirds of funding from Scheme into Object C projects (training, research, recycling). Even though the Government itself described this target as challenging, our leading Members promptly complied.

  We are concerned by the instability-over such a short period and for a relatively small sum-in the Government's policy and hypothecation is not an entirely encouraging signal.

  The Strategy Unit report refers to partnership. Partnership might have been expected to safeguard the ESA Research Trust, the Environmental Services and Training and Education Trust and, indeed, the support we advocated for the National Waste Awareness Initiative: beacons which deliver cost-effective added value.

  In recent years ESART has provided a focus for high quality research on sustainable waste management. Therefore, it is essential that the industry is included in discussion between DEFRA and the Environment Agency regarding future research programmes. The ESART and ESA's Members have excellent state of the art knowledge and inclusion of the industry in discussion is more likely to achieve focus.

January 2003


9   Ernst & Young: Analysis of the Application of the Producer Pays Principle to Producers of Household Waste as a Driver Towards Sustainability. July 2002. Available at http://www.esauk.org/documents/ernstandyoung.pdf Back

10   Regulation (EC) No 2150/2002 of the European Parliament and the Council of 25 November 2002 on waste statistics. Back

11   Resource Productivity, Waste Minimisation and the Landfill Tax-Advisory Committee on Business and the Environment Back


 
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