WEDNESDAY 22 JANUARY 2003

__________

Members present:

Mr John Horam, in the Chair
Mr Peter Ainsworth
Gregory Barker
Mr Colin Challen
Mr David Chaytor
Mr Mark Francois
Mr Simon Thomas
David Wright

__________

Memorandum submitted by Chartered Institution of Wastes Management

Examination of Witnesses

DR JANE BEASLEY, Communications Manager, MR CHRIS MURPHY, Deputy Chief Executive, Institution of Wastes Management, examined.

Chairman

Welcome to you both this afternoon. I hope you did not get lobbied by Friends of the Earth too much as you came in. There is a mass lobby going on on recycling and so forth. It is very topical at the moment. Parliament is all about waste today. Thank you very much for your memorandum which we are very glad to have and enjoyed reading. Is there anything you would like to add to that memorandum before we begin to ask a few questions?

(Mr Murphy) Just to put our organisation into context. We are a professional organisation representing about 5,500 members mainly in the UK but also overseas. We represent all sectors of the industry. Our response has been put together by representatives of those sectors and the response encapsulated two elements, one was its hierarchy, as requested and also the recently released report on waste. We are here to answer questions not just on the written memorandum but also anything else.

Chairman: Thank you very much indeed. Mr Ainsworth?

Mr Ainsworth

I am interested to hear you say there is a need for a strengthened role and a higher profile of waste in Government. No doubt Friends of the Earth, who are here lobbying, would agree with that. It would be very helpful to us if you could just tell us a little bit more about what you mean by that, what exactly you would like to see the Government doing?

(Mr Murphy) We are aware that DEFRA are presently under-resourced for the role they have to play. That has shown itself in a slowness of the regulations coming through and there are a couple of consultation papers which we are awaiting and have been promised for a little while.

Could you just name those?

(Mr Murphy) There are the hazardous waste regulations and licensing exemptions. Also, we have waste which is identified within more than one government department which adds a little bit of confusion amongst the industry; we have DEFRA which obviously has a major waste focus; there is the DTI which is the sponsoring Government department and the Office of the Deputy Prime Minister. We are looking for more clarity in the various responsibilities.

When you say you think DEFRA is under-resourced, do you mean DEFRA or do you mean the Environment Agency?

(Mr Murphy) No, I mean the waste section within DEFRA is under-resourced.

If they had more resources what would you like them to do with them? I understand your frustration that documents are slow in coming forward and so on. If you had Mrs Beckett here this afternoon, what three things would you ask her to do?

(Dr Beasley) The first thing we would be looking for is a strengthening in terms of the staff and the expertise there. The diversity of legislation that is coming through from Europe does call on an awful lot of different skills for those personnel to get the regulations through quickly. We would be asking for additional staff to try and speed up the regulations coming through and the guidance that goes out to the industry. This is where one of the big delays is, the uncertainty that sits within the industry as to how to act on the interpretation of European legislation that is coming through and the subsequent guidance that is issued on how that can work effectively on the ground. We would look for a strengthening of the waste remit within DEFRA itself because obviously DEFRA covers so many different areas and waste is just one small part of it, but it is a fundamental part that we feel has been under-resourced in the past.

I am getting the impression that your concerns are more about the implementation of practice than about policy, is that right?

(Dr Beasley) Essentially, yes. The biggest problem with the legislation coming through has been how we can enact that legislation on the ground.

Do you think the problems that everyone knows about that happened with fridges occurred as a result of under-resourcing?

(Dr Beasley) The fridge issue was a very unfortunate issue in terms of the fact that there was a lack of understanding of what the regulations actually meant and it was a very last minute response by DEFRA in that suddenly it went much wider than what they first interpreted the legislation to be. Perhaps if they had found more time to spend on it and more expertise we might have avoided that issue.

They had four years.

(Dr Beasley) We do have notice of these things coming through from a European level, but their interpretation right up to the last minute did not go as far as the (inaudible).

Chairman

Is this lack of resources in DEFRA something which has occurred since the creation of a new department or has it been something of fairly long standing?

(Mr Murphy) I think it has been highlighted since the creation of the new department. Waste is a small part. MAFF is now DEFRA and waste disposal is a very small part of that, but it was an issue previously as well.

We get the impression that when it was the old Department for the Environment obviously environmental issues had a higher status, perhaps had better resources, a higher profile in terms of personnel and so forth and received better treatment.

(Mr Murphy) Yes, that is probably very true and it has been highlighted more now it is a smaller part of a larger department.

Mr Chaytor

You have argued that the solutions to commercial and industrial waste minimisation will be driven by market forces. If so, why do we have such a waste crisis? We have had a market economy for as long as any of us can remember, but we have also had increasing mountains of commercial industrial waste. Why has the market not delivered a solution?

(Dr Beasley) One of the problems has been - and it covers all waste streams but it is particularly pertinent for commercial and industrial waste streams - that it is very very cheap to dispose at the moment and it has been so for many years. Whilst you can put your waste into a landfill site and pay very low gate fees or pay a very low Landfill Tax comparatively, that is what commercial industrial operators will do, they are generating the waste and going for the cheapest possibly option, understandably. Whilst the Landfill Tax came in to try and produce a more level playing field and bring about that diversion, it was not set high enough compared to recycling and other treatment options. So they have always been driven by market forces.

That is to do with waste disposal. What about waste minimisation or reducing the volume potential of waste, can the market work to reduce the volume?

(Dr Beasley) I think essentially if you start at the end point and if you are increasing the cost of final disposal then more and more companies will look in-house and at how they can reduce their component of the waste streams. The larger companies are doing this, they are driven very much by the bottom line, they are looking at how much money they are spending on waste management full stop and then looking at what other initiatives they can do in-house. The problem arises within the smaller companies, your SMEs, where perhaps they have not got the expertise, the time or the resources to have a look at their waste streams and look at what they are doing and they will adopt their normal practices which will have been to do with disposal in the main.

Other than taxation, are there other forms of regulation that are necessary to reduce the volumes of waste?

(Dr Beasley) One possible option and something that we have been discussing within the Institution is the idea of environmental reporting and enforcing environmental reporting, to make companies move down a more Green route and be more aware of the waste that they are producing and make recommendations in-house. It is something that other European countries are doing and they have moved towards monetary and environmental reporting and it is something that our own Government has kind of hinted at when they made the request for the FTSE-350 companies, to report on their environmental performance. Moving into the regulatory area targets that sort of thing, but it is not necessarily something that we feel would be the most appropriate route to go down at the moment and there are many reasons for this, one of them being the data issue and trying to get a clear picture of what the baseline data is and what the most appropriate targets would be set against that.

Do you think the waste strategy with its targets has had any effect whatsoever?

(Dr Beasley) On commercial and industrial?

Yes.

(Dr Beasley) No.

On household?

(Dr Beasley) I think it has had some effect. The recycling rate has grown, no matter how slowly and you have to admit, the statutory targets could be one of the contributing factors for driving that forward and some local authorities have demonstrated that that target can be met, they have had a push towards it. In order to make the targets more effective the framework needs to be there, the infrastructure needs to be there on a local level and the capacity to be able to achieve it needs to be there, which has been missing in some local authorities.

Where there are good examples either of commercial and industrial waste or local authorities managing household waste, whose responsibility is it to promote the best practice? Is it yours or is it Government's or somebody else's?

(Dr Beasley) It is a combination for the promotion of best practice.

Is it part of your brief?

(Dr Beasley) Certainly we do it, yes. One of our main duties is the promotion of good practice and disseminating it widely.

Can Government do more?

(Mr Murphy) I think there is a duty for all the stakeholders to do more to highlight those areas of good practice and to identify more and that goes all the way down from the Government, local authorities, producers and organisations like ourselves. There are plenty of opportunities out there. We should be making more of them.

On the question of direct charging, your organisation is in favour of a direct charging system. How would that operate and what are the difficulties there between different kinds of council taxpayer because some people pay directly and some people do not? What sort of scheme would you envisage?

(Dr Beasley) There are two strands to it. The direct charging element is actually removing the cost of waste disposal out of council tax and applying it as a separate cost. It does not necessarily have to relate to the quantity of waste that is being disposed of, but that is certainly the first step that has to be taken because at present most people are unaware of how little money is actually spent on waste management at a local level. The first step is to take it out and make that clear to the householder; the second step is moving towards the variable charging scheme where the best schemes are hybrid schemes and where there is a baseline fee charged, like a standing order charge that you will have your waste collected and then you have a variable element on top of that that equates directly to how much waste is being disposed of. The reason why we support it as an instrument is because it is probably one of the effective ways of minimising waste and diverting waste, but it would be down to the local authorities to administer it.

How do you deal with the argument that leaving it to the authorities simply encourages people to dump their waste in someone else's back garden?

(Dr Beasley) Research has shown that any fly tipping is usually very very short term. There is also the opinion that because you are monitoring for fly tipping you are actually identifying fly tipping that may well have been going on previously but you have got a better monitoring system in place to identify it now. Generally speaking, even the very very high end of the spectrum on costs has shown that is short lived because it is easier for the consumer to separate the materials out for recycling, which is generally a free element of it, than it is to drive down a country lane and dispose of their waste there.

David Wright

Where did the research you are quoting come from?

(Dr Beasley) There is a significant amount of research from America that the Environmental Protection Agency has done and there is also a wealth of research available in Europe producing that information as well, ranging from academic papers to their own regulatory bodies.

Mr Thomas

Can you just return briefly to the point raised by Mr Chaytor on waste minimisation and your evidence to us around market forces. Could you comment on the implementation and the effect of things like the Packaging Directive on waste minimisation and the re-use of materials as an example of where regulation rather than market forces is bearing down on the commercial sector, how you see those type of regulatory measures working as well?

(Mr Murphy) I would not say we are particular experts on the packaging regulations and other similar regulations, but from looking at our evidence from members and others, it seems that the packaging regulations were not entirely successful, they had a difficult development and there was not a flow of material from the PRNs back to the local authorities who could be involved in the recycling of the packaging material. What we would like to see is a greater emphasis on producer responsibility across the board so that those who are at the manufacturing end have a greater remit to look at life-cycle analysis and involve the whole sector in a supply chain delivery.

But all on a voluntary basis?

(Mr Murphy) I think there probably is a role for producer responsibility. It will be interesting to see what comes out of the End of Life Vehicles Directive with some sort of levy on the purchase of the product at the start of its life which is carried on through the life of that item, that is particularly relevant for vehicles and then at the end of life that levy is cashed in, which is the appropriate disposal or treatment of the vehicle. That is appropriate for vehicles at the present time because we have an awful lot of abandoned cars. So that sort of levy down the chain would work out well.

Mr Francois

Imagine for a moment that you were to bring in mandatory environmental reporting for companies, which is something that some people have argued for, what level of improvement in terms of waste prevention, minimalisation and recycling would occur if that step was to be taken?

(Dr Beasley) I think what you would see initially as a result is improved housekeeping. Then you would have better practices in terms of resource usage and resource flow because there would be an increased awareness of the waste that was being generated by the organisation which perhaps has been lacking. If you are enforcing environmental reporting then you are actually getting a company to look at its performance, but it is in the subsequent years when you would expect them to improve upon that performance, when you would see greater activity in terms of looking at resource flows which hopefully would lead to improved waste minimisation and in-house practices in terms of in-house recycling and then possibly looking for better markets for the recycling of their products. It has been demonstrated in some sectors that this has been achieved. The larger corporations with a bigger starting point in terms of the amount of waste they are producing are seeing the largest benefits initially, but it is an area where with increased awareness the company can move things forward and bench mark.

Even if you were to take that step, how would you see the SMEs applying this principle, ie those who are not publicly quoted and who are not producing glossy annual reports in a sense?

(Dr Beasley) I would certainly avoid this approach with SMEs at the outset purely because they do not have the expertise to put forward an effective environmental report. There would be a different way of tackling SMEs. There are existing routes out there with regard to organisations such as Envirowise and promoting better practice in-house for SMEs and really giving them the opportunity to look at guidelines, looking at the best practice out there and implementing their own strategies. Generally speaking it has not been enforced on SMEs in other areas and it would not be the most appropriate route for ourselves either.

Part of this whole debate is that businesses across all sorts of ranges of size are having to face more and more regulation of one type or another. No matter how environmentally worthy this might be in principle, it would represent an additional regulatory burden particularly for smaller companies who have less staff to deal with, whatever it is they have to deal with. What would be your response to that?

(Dr Beasley) The one potential benefit if you were enforcing environmental reporting on the larger companies or even medium-size companies would be their liability, their own insurance in terms of environmental insurance. Something that the Environment Agency is looking into would be the strong arm of regulation upon them which would perhaps not be the same if they can demonstrate through an environmental report that they have an environmental system in place and they are following it and showing improvement. So there could be benefits in the longer term from the regulatory perspective because they are demonstrating that good practice and if the agency could follow through on how the two can tally up it could be of benefit.

There is a lot of evidence to show that companies like having directors who have financial and accounting backgrounds. Is there any evidence that companies are beginning to look towards directors who have an environmental background or any expertise in that area when they are trying to pick directors of firms?

(Dr Beasley) There seems to be a trend towards it on some of the more high profile companies that potentially have more of an environmental impact and they are looking more at broadening their expertise in terms of having a stronger environmental background for the whole company with regard to whether it is the chemical industry, your own sector, that sort of thing, where they are much more high profile and they are ahead of the game in one sense in terms of incorporating staff that have that expertise and going down the environmental reporting route.

The waste strategy asserted that the Government expect the amount of industrial and commercial waste being sent to landfill to be reduced from about 42 million tonnes in 1998 to 36 million tonnes by 2005. Are you confident they will reach that target?

(Dr Beasley) There are so many drivers, the Landfill Tax being one of them and yes, we have already stated it is too low to have an immediate impact. Companies are looking towards minimising their costs in all areas and waste does cost them money. I do not really have the confidence to turn round and say I think they could achieve that diversion without having all of the other factors in place, like an increased Landfill Tax, that type of thing, but we are seeing a decline in the amount of material going into landfill. At what rate, I do not know, I would not be so confident as to say what it would be.

Do you think there is any point in putting incremental targets in between now and 2005?

(Dr Beasley) For industrial and commercial waste streams?

Yes.

(Dr Beasley) I think a difficulty with commercial and industrial waste streams is data discrepancies as to what the true picture is and if you are putting incremental targets in and you are not totally sure about the baseline data and the clarity of the data certainly is not there you could get into difficulties in trying to prove or disprove those targets. I think at the moment we need to look at improving our data collection, at improving the methodology for data collection to try and ensure that there is consistency there so that we know what baseline we are working against. Then we can decide whether we need to move towards statutory targets.

Would that argument also apply to targets post-2005?

(Dr Beasley) Yes.

(Mr Murphy) As far as the larger companies are concerned, there is evidence that there is a commercial advantage to expressing your Green credentials through an environmental management scheme and also the lighter regulation which the Environment Agency are looking at coordinating with existing regulatory and enforcement powers. There are advantages to doing this outside of fulfilling monetary EMS requirements. As far as the smaller companies are concerned, you are right, it is regulation on top of already burdensome regulation and probably mandatory reporting would not be appropriate.

For small and medium companies?

(Mr Murphy) Yes.

Chairman

How big a part of the problem are the SMEs?

(Mr Murphy) A larger proportion in terms of the companies and probably business in the UK.

In terms of producing waste, are they the biggest proportion?

(Mr Murphy) I would say so, yes. They are the largest proportion of waste producing companies.

More than 50 per cent of the waste is produced by SMEs?

(Mr Murphy) It is more than 50 per cent, yes. Their primary concern is the bottom-line existence and complying with regulations which have more teeth, health and safety regulations, for example, rather than environmental.

Mr Challen

Are any of the SMEs working co-operatively together so they create a critical mass to deal with these problems rather than just assuming that there is a regulatory burden, they cannot handle it, so they just criticise the Government?

(Mr Murphy) Yes. They are working together through local commercial development but also through organisations like Envirowise, which is DTI funded, and organisations like ourselves are looking to educate and train small and medium businesses as well.

(Dr Beasley) There are things like waste minimisation clubs which are SME founded.

Could you say something about the penetration of these clubs. Are they picking up now or are they just bumping along with a few enthusiasts trying to pull things together?

(Dr Beasley) There are about 100 waste minimisation clubs in operation. The general feeling as far as Envirowise is concerned, who are really driving this initiative forward, is that they cannot really identify specific trends in terms of the type of companies that might necessarily go towards these clubs, but it does rely on very committed individuals setting clubs up, running the clubs, lobbying for the clubs, that type of thing rather than a very co-ordinated effort centrally, which is quite lacking. Some areas are demonstrating very very good practice in terms of their waste minimisation clubs that have been around for some time, they have a vast membership, they disseminate information effectively amongst themselves whereas in others it is quite lacking.

Do you think they should have more support from the Government or is it just another market-led initiative?

(Dr Beasley) I think Envirowise certainly could do with some more support centrally in terms of disseminating this and setting it up as a framework for the clubs to follow. At the moment it is ad hoc and it does rely on the individuals. There needs to be some central support for it both in terms of promotion of what is going on because companies are not necessarily aware of these activities, not just the clubs but the work of Envirowise, the access to free information they can have, the access to free expertise they can have, they can have site visits and they are not necessarily aware of this, so there does need to be some kind of campaign and Envirowise does not have the funds for that so it would be looking for extra support.

Mr Ainsworth

I was going to ask about the level of awareness of Envirowise amongst your members. It does seem to me that if you are turning your back on mandatory regulation for smaller companies, for obvious reasons, we are left with a huge responsibility for organisations like Envirowise because if it is true that 50 per cent or more of all waste comes from smaller companies - I would be interested to know where you got your figures from, I appreciate you do not have them here but if you could name a source or whether they are your own figures - there is a huge burden of responsibility without the backing of new regulation on the industry to sort out its own problems. I am just not sure how well this is going to work. If mandatory obligations only apply to the larger companies which are perhaps producing less than 50 per cent of the waste and are by and large compliant anyway with good practice because they have learned that is the best way for them for the bottom line, is Envirowise enough?

(Dr Beasley) That is a very good question. The evidence of the success of Envirowise to date is such that when it does become involved it does have a dramatic effect in terms of the access to information that the companies can have. We are relying on the companies wanting to be interested and wanting to take it forward and jump on board with an organisation like Envirowise. As they are set up at the moment they certainly would not be enough. If you are looking for better dissemination of information then perhaps you are looking more for regional strengths to try and give a localised feel of where companies should be going. Collaboration is certainly the key in something like this. There will be a greater need for organisations, whether they are Envirowise or whether they are a new beast formed from the greater need, there will be the strive for it when we see increases in disposal charges, when we see the real burden on the companies coming to terms with their waste disposal. If any different producer responsibility, legislation, comes in they are not necessarily so keyed in and so aware of all the legislation out there and it is certainly something that needs to be addressed. There does need to be more. Organisations, such as ourselves, are taking this very seriously in terms of trying to go much further in our membership and looking at how we can get in and educate and train, particularly the SME sector.

The source of your figures?

(Mr Murphy) I will be able to provide that afterwards.

That would be helpful.

(Mr Murphy) As far as the SMEs are concerned, it is a concern for us because there is evidence that a significant number of them are unaware of not just impending legislation but existing legislation. A number of them are unaware of duty of care legislation which has been in for some time now and if that is the case then they will be oblivious to the implications of not just environmental legislation but waste legislation as well. That is something that we are trying to address through education. Anything that Envirowise and other national bodies can do to help to disseminate that information would be valuable.

David Wright

How effective do you think small and medium sized enterprises are in using their commitment to sustainable waste management in actually talking to their purchasers? Is that not a key driver, they have got to say to their purchasers "We are actually credible in this arena and you ought to be buying product from us because we are progressive in this field?" How effective do you think they are in doing that?

(Dr Beasley) Probably not very effective so far. I do not think the whole issue of green purchasing, green purchasing policies, necessarily has any teeth at all yet. It would be an area that would incentivise better action within SMEs to try and improve their own practices so they can demonstrate and stick their heads up and say "We are the ones you should be dealing with because we do have good practices". I do not think across the board there has been very much progress in terms of green procurement.

(Mr Murphy) We are involved with local Business Link and commercial groups. It is fair to say that these are driven by the informed, those who have something to say and those who have evidence of good practice. They speak at various workshops and conferences and pass on their information on how easy it is to get into waste minimisation and green procurement but it is preaching to the converted in many respects. Those we need to get to, and it is a huge proportion, are more involved in the day-to-day practice because they are probably one or two man bands.

Can I change tack slightly and talk a little bit about technical advice. Could you tell us how successful you think the Regional Technical Advisory Bodies have been at providing technical advice on the best environmental options for sustainable waste management to those responsible for developing local development waste strategies?

(Mr Murphy) Probably not extensively. We value the contribution of the RTABs and their work regionally. I am aware that some of them have put together regional waste plans. How far they are co-ordinated with county waste structure plans, I am afraid I could not comment any further.

What do we need to do to make the change? What do we need to do as government for local bodies to make those changes, to make those connections?

(Mr Murphy) The information provision?

In terms of providing technical advice. How do you recommend that we move that forward? How can we make the Regional Technical Advisory Bodies more effective?

(Mr Murphy) They need to be tied into the delivery, I would say. The delivery for waste collection is through the collection authorities of district borough councils and disposal through the county authority by and large. Planning function rests parallel to that but outside of that remit. Perhaps tying all three together there needs to be delivery on a regional level of planning structure and waste structure. Whether the RTABs are the appropriate bodies to do that I have perhaps no comment to make. I do think there is a need to tie that into planning. The SU Report mentions this and it is a major review of the planning process that is absolutely necessary. We have got real problems with waste planning, applying for waste facilities in this country, and perhaps that is a major role for RTABs.

Given that recycling is not always the best practical environmental option, what difference do you think you could make generally if the government was to give better advice on the environmental health impacts of different types and forms of waste management options? Do you think that we should be having a much stronger statement from government on those options rather than the position of almost having the market dictate?

(Dr Beasley) Certainly with regard to the health issues without a doubt. It is something that is revisited time and time again at every single planning inquiry with regard to incineration, with regard to landfill, the same questions come up. What industry desperately needs, and I would imagine what local government is crying out for, is some kind of statement, some kind of guidance, that presents the facts, that presents the data sources, and we can move away from perceived fears, we can move away from emotive argument. The information is out there and information is coming through all the time on health issues. We would ask for a much more level playing field in terms of the health debate that always focuses on the traditional routes, they are not necessarily labelled against your mass or your composting facilities and all of them need to be addressed in the same way. It would save so much time in the planning process if there was a firm commitment, a firm statement, of what the positions are on a factual basis.

(Mr Murphy) That is quite correct. We need a statement on the comparative health effects of the various treatment and disposal options. That needs to be done by an objective organisation. Whether that would be viewed as objective by the various stakeholders is perhaps another matter, those with vested interests or axes to grind, but nevertheless that needs to be approached. I think that is also in the SU Report an objective review of the health impacts. The other side to it is we need a definitive statement from government on their policy on incineration so this issue is not drawn into every single planning application for a waste to energy plant.

Chairman

Could government give you such a definitive statement?

(Mr Murphy) I would hope so. There must be a policy, whether positive or negative, and let us hear it.

Would it vary according to the circumstances?

(Mr Murphy) If it is a statement on the merits of waste to energy as part of an integrated waste management system that would be a starting point and then that could be applied to local circumstances.

Mr Thomas

I just want to enlarge a little bit on this scenario you have just been talking about of how all authorities are vested to make their plans on the basis of the advice given and really bring in another complexity, which is devolution, because the waste strategy is an England only strategy and the Strategy Unit Report, which you have mentioned several times now, is an England only strategy and of course we have different recycling waste targets for Wales, Scotland and Northern Ireland as well I assume. In the work that this Committee does in looking at the headline indicators for sustainable development we have already identified how difficult it is to marry all of these together in the one that refers to waste in particular. What sort of challenge is devolution placing for you and your managers at the moment and how are you best able to get that advice out in a way that is able to help somebody in Wales who has got a very different recycling target and a different Envirowise set-up from the English set-up? What bits are falling through the cracks as well?

(Dr Beasley) As an organisation ourselves we do have a Welsh centre, we do have a Scottish centre, so obviously our own internal liaison in terms of getting out best practice we keep on top of. As an institution there are concerns that whilst devolution has demonstrated some clear differences in direction, we are all bound by the same Directives and so on, and there are some, I would not go so far as to say they are concerns but it is always there at the back of your mind that there should not be any great discrepancies between where we are heading in England and Wales and Northern Ireland and Scotland because ultimately there could be conflicts in terms of meeting those targets, specifically Landfill Directive targets and so on. I think information relating to best practice is easily translated and we can learn from what is going on in Wales, what is going on in Northern Ireland, because there are advancements in different areas, in the composting environment in Wales and Scotland was further than us in terms of developing its own waste strategy. There is a cross-over in terms of moving things forward and how we can learn from it. There is a commonality in that we are moving to sustainable waste management at the end of the day, or we are hoping to move to sustainable waste management.

And everyone subscribes to that, do they?

(Mr Murphy) We are aware obviously that there are different strategies throughout the UK and our Scottish members constantly tell us that they were the first to have their strategy out and delivered. We did do an appraisal of the different strategies. The framework is the same in all of them, the same fundamental framework, but delivery is slightly different because there are different operations and the hook-up is different in Scotland than it is in England, so the delivery is slightly different. What we are looking at is a UK delivery target for the Landfill Directive. How that will be co-ordinated between the various devolved governments, the assemblies or whatever, and how they will be delivered is the important message.

I just wonder if I can say this might be useful for this Committee. Is that something that you could do?

(Mr Murphy) It is a bit aged now.

It might be useful to look at that to see how the different elements are coming together. The other aspect that I wanted to ask you about goes back to the comments on government policy, for example, towards incineration. We have now got different governments who may take different policy decisions on this. For example, in Wales we came very close to a decision not to support incineration and that might be another decision after elections in Wales and Scotland which will have a huge effect I would have thought in perception terms back in England as well. Are there any emerging differences like that that you could flag up now as areas of concern to you?

(Mr Murphy) Perhaps the tradeable permits. I understand that Wales might have their own system on that and if Scotland went the same way then we are talking about differences across borders, so that would be an element where there might be a facility on one side of the border and waste movement. Also, if they become not tradeable in Wales and tradeable in the rest of the UK that would be another issue. That is just one area.

Mr Challen

Turning to hazardous waste. There do not appear to be any targets for reducing or recycling hazardous waste. Do you think there ought to be? Would it be a positive thing?

(Dr Beasley) We are certainly concerned about hazardous waste, particularly now with the Landfill Directive targets and the new Hazardous Waste Regulations. We feel that hazardous waste has been an area that has not received very much attention at all, it has been totally market driven in terms of the treatment, capacity and so on. The time has come now when we cannot afford to just let hazardous waste be and hope that industry will respond effectively. We are very pleased to be part of the Hazardous Waste Forum that has just been set up. With regard to whether there should be targets in place and so on, we are not convinced that necessarily is the case or the most appropriate form of action but it is something that as an institution we are looking to pursue. The data on hazardous waste, unlike in other areas of waste management, is not necessarily clear data, it is not necessarily reliable data, there are difficulties in interpreting capacity availability and so on. There are some real problems in its management. I do not feel that we are at the stage now that we can impose targets, we need to get our house in order with hazardous waste and we need to do it very quickly.

Who is supposed to be managing this sort of thing? I suppose the Environment Agency. If I can just cite an example in my constituency which recycles batteries. Not only do they get the lead out of them but all sorts of other materials, some of them quite dangerous, they get the plastic out of them, the acid and all other things, and last year they were tearing their hair out because they could not find anywhere to get rid of the final bit of sludge that they cannot recycle. Is that a common experience? Has that problem been resolved with the Landfill Directive?

(Dr Beasley) I think we are seeing more problems as a result of the Landfill Directive. We certainly see more problems arising from 2004. Hazardous waste has been something that where possible they have allowed the materials to go into landfill sites, it has been a very cheap option. Any other treatment option is very, very expensive compared to disposal routes. You are talking ten times the gate fees, which is a considerable sum if you are a small company. We feel our role at the moment is to get in there and perhaps look at raising awareness of what the pending problems are going to be for the hazardous waste producers, particularly the smaller producers. They are not necessarily going to be able to follow the same routes of disposal that they have in the past. There may be some problems in terms of availability of treatment for elements of waste that they are producing which will affect their operations and it will affect the economic viability of their operations. It is something that we expect to see more of.

Has there been a reduction in sites where these things can go as a result of the Landfill Directive?

(Mr Murphy) Yes. The number of landfills which can take hazardous waste has reduced, yes. There has been a corresponding increase in the charging for the disposal of hazardous waste at treatment plants. The benefit of that is we hope hazardous waste production will reduce because if there are opportunities to neutralise the materials and not to send them out into the hazardous waste disposal chain then it is an advantage to the producer, it is at no cost to them.

In the immediate and short-term is there evidence of stockpiling of such wastes or sending the stuff abroad to countries where it might be cheaper or unregulated to get rid of it?

(Mr Murphy) Certainly there is no evidence to our knowledge of anything going overseas. Stockpiling, I do not know, perhaps the Environment Agency might be better placed to answer that.

Stockpiling is the approach taken by the nuclear industry and I just wonder if it will start happening in all the hazardous waste areas as well?

(Mr Murphy) The Agency could easily answer that because they would license premises for storage rather than production of hazardous waste.

The Environment Agency and the CBI and other groups have advocated the creation of an Industrial Commercial Waste Strategy. Do you agree with that or do you think it will be another strategy overload situation?

(Mr Murphy) I do not think it can do any harm at all. It is something which is mentioned here and we have been broadly supportive of it. We do not know what the strategy is going to come up, whether they will define how many facilities we need, where the facilities should be and targets for the minimisation of hazardous waste. That is probably a starting point. I imagine it would come from the Hazardous Waste Forum which has yet to meet but we wait to hear on that one.

Mr Thomas

I am just following on really from the last question from Mr Challen. Do you share my frustration that to date all the strategies and reports we have had, the Waste not, Want Not report, the waste strategy, concentrate basically on just 25 per cent of the waste stream and the other 75 per cent, whether it is agricultural waste or construction waste, is not dealt with in these reports except in a very cursory manner. What sort of representations are you making or able to make on behalf of the industry to government to come up with more strategic thinking on delivering reductions in the whole waste stream?

(Dr Beasley) Certainly we can understand why the focus has been on MSW because that is where the focus of the legislation is, most of the legislation we come across is really driving that. You can see why there would need to be a concerted effort. In addition, it is one of the hardest waste streams to manage most effectively because you are involving 60 million people and you are expecting them to respond effectively towards it. I think that the time has come when we cannot just leave the other waste streams to their own devices and not integrate them. It could ultimately lead to a more effective approach if you were combining facilities with what they were dealing with and managing and it would address capacity issues as well. It is something we are very, very keen to push forward and it is something that our members have been wanting us to drive forward in terms of getting a much more strategic approach towards the whole of the control of waste streams.

Is there anything in the Strategy Unit Report that you can identify as helping you achieve that?

(Dr Beasley) For the wider?

Yes.

(Dr Beasley) In the Strategy Unit Report the focus is on MSW. There is a small section on wider wastes. The fact that an industry forum has been recommended to be set up we would hope their remit would be to look at commercial and industrial waste streams and look at moving them on and also the issue of consideration of whether targets would be a necessity in the longer term. We would support those moves. We are not convinced that we are in that position at the moment. Certainly on the issues of data and data collection we would definitely support those being wider and addressing controlled waste.

(Mr Murphy) As far as the agricultural waste is concerned, I sit on the national Agricultural Waste Forum and there is a considerable amount of work looking at not just defining agricultural waste as waste or as a product of the process that is being driven, you could say, by the danger of infraction proceedings, but nevertheless there is a real issue there about dealing with not just the organic waste but the other elements of agricultural waste, how to encompass them in regulation whilst meeting the Framework Directive and not putting an unnecessary burden on farmers. We were talking about SMEs earlier and the burdens on them by over-regulation, it is perhaps more acute in the farming industry. That is something which we are aware of in developing regulations to deal with all kinds of agricultural waste.

I was a little bit surprised earlier when you mentioned the main European Directive and so forth related to the municipal waste stream and, therefore, you could understand why that was not the case at the moment because things like the Drinking Water Directive and Landfill Directive all impact in the end on the other ones as well. The issue of pesticides in water, for example, is a clear one for agricultural waste. I have had lots of letters from my own constituents about agricultural plastic waste and how that can be recycled and reused. One of the main things that you advocated in your evidence, I think, was the concept of waste exchanges. Could you say a little bit more about those and how they could benefit and help us meet the reduction in that other waste stream?

(Dr Beasley) The issue of waste exchanges is they could have an extended role to play. We would not anticipate them having a vast role to play. Certainly we have dabbled in waste exchanges in this country. There are a handful that operate continually. We did see an increase in waste exchanges when there was much more activity on the Internet and they were basing their practices on that, but others closed subsequently. It is a route that can match up waste streams, particularly for your smaller waste producers it will match up. It will do things on a one-off basis or it will do things on a continual basis. It is an option that should be considered for the smaller waste producer to look into. It is something that perhaps could be increased in its profile, there could be some further support for it, and maybe some guidelines on operation so that they operate consistently. Potentially with the right sort of policing they could also be used for hazardous waste streams where particularly if you are producing a single component material that is hazardous waste but could be used as a raw material in another process, they could be effective there.

Do they need to be taken up by a body like Envirowise or anybody else to actually promote them in a more co-ordinated way because my understanding is that they are very ad hoc?

(Dr Beasley) They are ad hoc. They operate independently. There are a couple of waste exchanges that are run by one body that operate in different parts of the country. Organisations such as Wastewatch have their own form of waste exchange. I think they would not necessarily need a formal co-ordination, what they would need is promotion and raising of their profile which could be done centrally. It could be done through an organisation like Envirowise or it could be done centrally through government and promoted, advertised, that kind of thing. They do tend to run as stand-alone, there is not very much relationship between them. There is no overlap in terms of exchanging materials from one source to another because they operate as companies.

Mr Chaytor

You mentioned earlier the importance of the Landfill Tax. The Chancellor announced last year an increase in the escalator with the objective of reaching £35 per tonne. Is that the sort of figure that you think would be effective? Do you think that the period of time over which the escalator will increase to reach that £35 is about right or do you have a different view?

(Dr Beasley) As an institution we were rather disappointed when the Chancellor made his announcement that it was going to increase by three pounds a year. However, the three pounds a year is the only kind of firm notice we have got during year one of it being applied and then it is a minimum of three pounds after that. We would like to see that increased. We would like to get to the £35 per tonne quicker. We see that more as a short to medium term target than a long-term target because gate fees are so cheap and if you are looking at diverting materials from it then the only way you can do it is by hiking that tax up and it has to happen sooner.

So how many years to reach that £35?

(Dr Beasley) We were hoping that the tax would be going up within a couple of years of the new escalator being produced, so quite a significant hike initially. I think the whole industry had heard of the £35 a tonne figure and started to get rather excited that that would come in within one or two years rather than it being an aspirational target within a few years.

Beyond £35, is that the limit forever or do you see a continuous escalator or an escalator introduced from time to time in certain circumstances?

(Dr Beasley) I think the £35 per tonne will have an impact, it will increase diversion of materials, but that is still quite low compared to some of our European neighbours in terms of the taxation level, so you would not necessarily see that as your end point. However, you would have to look at your progress in terms of material that was going for recycling, material that was being minimised, to establish whether you needed to have another significant hike or whether you could just put it on an escalator for constant review.

In terms of the use of that revenue stream there is the Landfill Tax Credit Scheme and the National Waste Minimisation Fund. You have argued that they should be combined. What is the value in pulling them together?

(Mr Murphy) We would like greater clarity on the future of the Landfill Tax Credit Scheme and obviously we are going to get that in the next couple of months or so. It has had a huge beneficial effect on the industry, not just on those communities local to facilities but also much wider, particularly in research, which we are interested in. I know there is an element of that which may be into research in the future but there is no guarantee of that, so we are looking forward to hearing more.

Have you made representations on the changes to the Tax Credit Scheme?

(Mr Murphy) We have, yes.

What is the essence of your representations?

(Mr Murphy) Just that we welcome the fact that money is being channelled into local authority operations, it is something which we have needed, but it is unfortunate that it looks like the existing scheme will be scrapped for all but the local environmental improvement. We would like to see a continuity, certainly over the research, some of which is long-term and hugely beneficial and has value for stakeholders throughout the industry, including government departments. It is too valuable to lose, we think.

If the Landfill Tax starts to bite and change behaviour, what other behaviour do you expect to see, let us say for household waste, for example? What is your ideal model of collection and waste management?

(Dr Beasley) We fully support the principle of rolling out kerb side collection schemes because it is really the most effective way of capturing the recyclables from the householders. It is so easy and convenient for them.

For all recyclables? Will that include plastic?

(Dr Beasley) The problems with kerb side collection are that whilst it demonstrates the best way for Joe Public, it is not necessarily the better way for the local authority because of the costs associated with that. From our point of view that is why, no matter what happened with the Landfill Tax, we would support a move towards direct and variable charging so that the householder was paying for what they were actually having to manage or having to deal with. The actual costs associated with collection at the moment, the most expensive part of any waste management infrastructure is the collection. Once you have a very efficient collection under way and if you can look at minimising the number of times the vehicles have to come to the household, so whilst you might be maximising on your recyclables you may well then look at reducing the collection of the residual waste streams to try and maximise on the cost savings and hopefully you have the markets in place so the materials you are collecting will be of worth which will offset against the costs as well. It is a balancing act, it is many different things. If you are looking at capturing recyclables to meet your recycling targets then the rolling out at the kerb side and getting the public involved and onboard is obviously a first step.

Mr Ainsworth

I am just wondering whether you think local authorities have been clever enough in developing low cost ways of collecting recyclables? It seems to me that a lot of the cost may be to do with an approach which is not up to speed with the latest best practice in other countries, for example, in terms of collection.

(Dr Beasley) I think there is certainly a case for local authorities perhaps reviewing in some areas where they are not achieving the collection rates that they are expecting or the collection costs are so high because maybe the approach that they are using is not the most appropriate one. There is a case for them reviewing it. Some local authorities did jump straight in and adopt whatever particular approach was of the mode at that time. I think now we can benefit from the fact that so many people have tried these things right across Europe that we can look at improving what we do.

(Mr Murphy) In the 140 million Challenge Fund bids there was quite a variety of bids by all accounts and the most appropriate of those which were tested and proven to be of worth were the ones that were funded. There is a filtering system.

Chairman: Thank you, Dr Beasley, thank you, Mr Murphy, that was very helpful indeed.

Memorandum submitted by Biffa

Examination of Witnesses

MR PETER JONES, Director, External Affairs, MR PHIL CONRAN, General Manager, Recycling, and MR DAVID SAVORY, General Manager, Environment and Technical, Biffa, examined.

Chairman

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

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, in fact, 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 and it is about technology and 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 is wrong. There is no point going in investing in state of the art equipment, as was the case in fridges and flourescent lamps, when in fact it is absolutely clear that there are either no standards in place or no preparedness to operate a level playing field and 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 indeed 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 that is pouring out the back end is focused 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.

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, when 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 per cent 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.

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.

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 ten to 15 per cent 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

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 ---

Site classifications.

(Mr Savory) Hazardous and non-hazardous sites.

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 CPPC 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 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. 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 in perpetuity.

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 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 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 by the storage pumps 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 eight to ten per cent 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 attach 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

Nice to see you again, Mr Jones. You will recall that we first met during a very similar inquiry ten 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 ten 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 ten 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 increasingly calling, 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, ten years later here we are still.

I want to ask you about planning.

(Mr Jones) Finally, the DTI did not want any reference to producer responsibility, I guess, because some people in the DTI cannot make the connection between funding waste at the end of its life and the way you design things at the front end.

You have lost none of your trenchancy over the intervening years.

(Mr Jones) We might as well be explicit, sir.

Can we tackle the whole subject of planning because I notice you say in your evidence with the curtain coming down on major landfill sites, there may be a need for each one of those to spawn five or more new specialist processing plants. How realistic is it under present planning arrangements that room will be found for those to be built?

(Mr Jones) I will hand over to David in a tick on the detail of that but broadly, yes, what we are seeing in Future Perfect is that if you shut a typical, large landfill site, one of these 350-odd ones out there, each of those commercially needs to be "consuming" about a third to a million tonnes of waste. Quite often now they are doing that in isolated rural locations, out of the sight, proverbially out of mind. If you look at the more complex system that needs to come in with recycling, with composting, energy, however, you do it, through direct combustion or gasification, by and large, those facilities - and the proximity principle is also driving this - have to be about 25,000 to 50,000 tonnes. By a simple process of division, we are looking at maybe losing 100 landfill sites in the foreseeable future, the next ten years, which will probably create the need for around 2,000 of these sites that logically would have to be located closer to the point of waste generation, which is large urban centres and people's homes maybe. The upside of that is that our perspective is that you will have this activity occurring in large sheds that will look to the outside observer very much like a Tesco or an Asda or a Sainsbury distribution depot. They will just be places where normal deconstruction is taking place and there will be tight standards and there will be clear controls in the public domain in terms of emissions, availability of data, and so on. Where, indeed, we have already bought four of these sites in strategic locations, our intention is to create maybe a dozen of them roughly 50 or 100 miles apart and to look at road, rail and canal integration in terms of what is moving around the country. At the detailed end of course, we are grappling with the up-front issues on planning and maybe you would like to comment on the specifics of the system as we see it now, David.

(Mr Savory) If we look at the infrastructure which will be required to deliver the diversion of municipal waste from landfill, then we believe that the solution is actually quite simple, provided certain things come together, and that is provided the waste disposal authority is in tune with its planning authority and is in tune with its waste local plan, and all that has gone through a consultation process and it lets a contract and a contractor is selected, then in the majority of cases the infrastructure that is required will get planning permission and will get built because there is a will within that local authority for all of that to happen. It will happen within a process which has been defined. Where it goes wrong in this sector is where the waste disposal authority is not in tune with its waste collection authority partners, or where the planning authority is not sending the same messages as those in the waste disposal department. An example there is Surrey. Clearly there was very much difference between what the district wanted, what the county wanted, and what the planning authority felt could be delivered. We have a situation where a contract was let four years ago or thereabouts on the basis of two incinerators to be built; one got turned down for planning by the authority and the other one has recently been a recovered decision because it was perceived the decision was taken in error and now may never be taken again. So if all of those things come together, and they clearly should come together- and there is no real reason why authorities within a larger boundary should be working against each other but they do - then all of that can happen. In terms of the provision of infrastructure to deliver things like special waste treatment plants and facilities for commercial and industrial waste, an obligation in the Directive is for all waste to be treated, so there will need to be a whole host of facilities for that waste. Then it is really down to how the existing system is applied at a local level and in some authorities it will happen and in others it simply will not because of anything, from unsatisfactory applications, to a planning committee not wishing to consent waste facilities. In terms of the process then going forward, trying to take out some of the encumbrances in there, the Green Paper does nothing for waste. There is no impact in waste in terms of getting facilities permitted in our view. We are very concerned about the prospect of the life of a planning consent being reduced from five years to three. What it effectively does is it reduces by 40 per cent the ability of the waste industry to form a plan. Part of our strategy is certainly to get planning permission for facilities which we will then sit on until it is right to develop those facilities. We should shorten that period of time and having invested an awful lot of money getting consent we should then have a very short time. There is a proposal to change the plan structure at a time when we have county structure plans and district plans in place for all authorities. The Green Paper now talks about having a new set of plans with a new hierarchical plan probably at a regional level which will probably create more uncertainty and confusion. PPG10 and PPG23 still do not provide clear, concise guidance on the separation between planning and licensing for waste facilities. It is still a muddle and there is enormous overlap, particularly now we are moving into a CPPC regime, between the areas that need to be covered in a CPPC and those covered in planning where now there must be a case for a single permit system because there is so much overlap between the two, otherwise we need to draw a line between them and separate them more definitively. There is an opportunity which has been missed in not including waste treatment in the general industrial use class B2. That was a separate consultation when the Green Paper came out and that would at least have provided the facility for waste treatment going to industrial parks without needing planning permission and that would have opened up an enormous opportunity for additional capacity to be created, but it has been missed. Probably last but not least, permitted development rights. There is a considerable burden on both the industry and planning authorities in relation to small-scale developments on existing sites, all of which need planning permission. Most other industries have some permitted development rights, certainly within the minerals industry, and that would be a great help to taking the process forward.

Thank you. I am aware I have elicited two rather long answers. People do not like waste and they do not like having it treated next door to them. We are on the whole quite keen on renewable energy. Do you think your industry does enough to promote the renewable energy aspects, the waste stream, and do you think that local authorities when determining planning applications take enough account of what you are trying to do in terms of promoting renewable energy?

(Mr Jones) As a company we have set ourselves against mass burn incineration without energy, that is dead and buried, but we are also against and we would not propose in any of our contracts direct combustion mass burn energy from waste plant that was integrated with a front-end segregation operation. We believe that if you are going to burn waste directly and get the renewable energy back then you do it through the FLOCK (?) route. If direct combustion is unacceptable, either politically or socially, then there is a strong case for recovering energy in the form of gasification systems. The flagship project for us will be Leicester City Council which involves about £28 million of investment in an in-line system which has got intensive segregation in the logistics phase and kerbside sorting and segregation and then mechanical biological treatment, to which is added sewerage sludges from those same producers through the drains, and that is then gasified back to be exported to the grid. What we are finding - and it really touches on the last question - is it is the unitary authorities that are most progressive in this area. The two cases we have either running or building are in the Isle of Wight or and Leicester City and there you do not have this conflict between collection and disposal systems. Then you can open the gateway and say to that authority, "Look, this is a great merry-go-round with carbon. You can have that carbon back as electricity and steam, or you can have that carbon back as a soil enhancer that will sequestrate the carbon in the surrounding countryside through the agricultural industry, or you can sequestrate that carbon in the form of recycling because when you do that you take that material back to the glassworks, you lose less primary energy, less primarily carbon, to then reproduce that product and take it back and close the loop." Even if you stick it in a hole in the ground you still get some renewable energy back, albeit less efficiently than through some of the other routes. Again, these are points we raised in Future Perfect because there is now among the unitaries a growing awareness that all these solutions are a question of political decision but you can go down each of these four avenues. Renewable energy is quite important commercially for us. If you take a ten or 15-year time span, then a bet on the price of diesel, non-renewable energy or electricity produced from non-renewables would be a fairly safe one. If you look at what is happening to tradeable permits, renewable obligation certificates (ROCs), all the signs point to a lucrative investment there, certainly on the contracts at Leicester and the Isle of Wight. That is why we develop the Dutch and, to an extent, the Belgian model for those contracts where you have an arm's length company on which the waste company and the local authority is jointly represented and they share the pain and the gain. If they agree with us that energy offers a stronger product than maybe the long-term market selling compost, that is their call, against the technical advice that we can give them.

Thank you. You heard our previous witnesses this afternoon say that they would very much like the government to come clean on its policy towards incineration. Do you support that view?

(Mr Jones) It is very much a local issue. Our preference is for unitary authorities and a combined local body and, as with any issue in industry, what you have got to do is link authority and responsibility. I do not think nationally any administration that says they are going to commit to incineration, however you define it, would necessarily be prepared to take the political kickback from that. They would be deeply unpopular.

I did not ask you whether you thought it was realistic, I was asking whether you thought it would help, not only in incineration but to rank the various processes is terms of their impact on health and the environment.

(Mr Jones) I do not see that as a central government role in terms of doing that. I think the role of central government is to put down markers and define the standards and then enforce that technically through the regulator, the Environment Agency, but for local authorities to be supplied with the necessary support in terms of database management systems and software systems on a ready reckoner basis. Part of the difficulty at the moment is that there is no-one out there who is offering that ready reckoner and the last ten years have been characterised, frankly, by a lot of snake oil salesmen who have been going out there claiming to cure rheumatism and arthritis and all the other ills of society, and of course many of these have never got off the ground, and indeed huge amounts of public money have been wasted on what the professional waste industry would have told them on day one were just complete flights of fancy. Unfortunately, the ringmaster in that process has to be the ministry responsible for waste. As I say, it is open to some doubt as to who is picking up to tab and then it has got to be forced through the regulator.

You warned last autumn in relation to the specific regulations dealing with cars, tyres, that whole tranche that is coming there, that there was a looming crisis because of the capacity to deal with the outcome of those new Directives and requirements. Has anything happened since you warned of the looming crisis to avert it? What in your view would happen if no action were taken?

(Mr Jones) In terms of the first point, we see no signs that the looming crisis has abated because if you take the big issues, the regulations in terms of producer responsibility do not appear to be putting any full liability on the producers until 2005, 2006 or 2007, it is still not decided. Cars look like being 04 to 05. What has happened in the meantime, amazingly for the Treasury, but still what has happened is that we see government putting in a lot of fudge money and, basically, £40 to £50 million has been slid into local authorities to cover the fridges mess. We have been trying to find out what precepts are going from central grants to local authorities to cover fly tipping of cars; nobody seems to know that. Maybe that is worth a parliamentary question because it is difficult to put a handle on it. All of these issues of data flow from the fact that we do not have a national management database, whether it is for domestic or industrial waste. What has happened is that we are sliding into a subsidy culture where producer responsibility will not sort out these problems from the industry side for five or six years and in between times we see that the pressures on the Treasury will grow and grow and grow through market failures and subsidies to organisations like RAFT (?) which try and create markets for these products will also go up and up and up, vis recent talk about combining the Lottery funding with the New Opportunities Fund, and the plan to take £100 million out of the Landfill Tax and put that back into the pot as well. So we are seeing this awareness that more and more subsidies are going into inefficiently applied systems in fragmented local authorities. There is no infrastructure of unified data capture as to what is going on with regard to numbers and quantities. We see those subsidies having to go up and up and up until we final pull through the Directives on producer responsibility. On the second aspect ---

What happens if nothing happens?

(Mr Jones) What happens if nothing happens? In hazardous waste there could be stock piling. I do not think it will occur in fly tipping because I am aware the Environment Agency are now getting very interested in looking at data mapping flows, which we believe ought to nail it, in conjunction with effective magistrates' policies and enforcement in the Agency, and we are pretty sanguine that that will happen. The Agency are moving to OPRA scoring systems. They have put in the response to the Public Accounts Committee, for instance they are recognising 80/20 issues here, that 80 per cent of pollution problems are associated with relatively small numbers of players. We think they are getting much more sophisticated about understanding where waste should be produced and there is no apparent exit route for that waste going to proper facilities. Producer responsibility regulations in packaging are beginning to bite. A company was fined a month or so back £65,000, which was effectively based on the money they had avoided by not being compliant with the regulations. So it will be a combination of rising subsidies from the central public purse, then there will be significant increases in fines and, yes, there could be some fairly big issues on fly tipping, but I would say that they are probably in that sort of order.

Mr Chaytor

You have argued that the Landfill Tax should be replaced by a Waste Disposal Tax, thereby different solutions would be found. Why do you think that will work and why do you think your arguments have not been taken on board by government?

(Mr Jones) To answer the easy bit, those suggestions will not be taken up if there is confusion in government as to what rate the Landfill Tax should be up at. If we are going to have uncertainty we might as well have uncertainty on one tax rather than maybe four or five. I made that point and I think senior management in the agency support it because we all tend to have lost sight of the idea that we should be minimising waste. If you think of a Disposal Tax it takes society back to the concept that you should not think that one method of managing waste is bad and thus the only zero-weighted tax option should be do not make it in the first place. Even recycling should attract a tax, albeit maybe only notionally. What we are trying to do is broaden that debate and get people to realise conceptually that if we had this ready reckoner of environmental impact that Mr Ainsworth was referring to which weighed a windro-composting plant to an open composting plant, they have different impacts and they should be taxed differently to reflect the way that government felt the best practical and environmental options should be applied. At the moment we have got a very unsophisticated approach to environmental taxation. Even the recent Treasury document which was released before Christmas was fine on rhetoric and words but there was very little detail in there in terms of numbers and the technical economic issues around the elasticity impacts of different types of tax on different bases, so we have got a long way to go. We would like to see that developed between government, our industry and the NGOs on a triangular basis, on an open basis. We have had ten years of "rifle shot" policies zooming out from the different arms and government of then people say, "Oh yes, I did not realise that, I wish we had sat down and thought about it before we did it."

You have referred to the changes in the Landfill Tax Credit Scheme; how will that impact on things? Do you have a project that will be affected by that in terms of data capture?

(Mr Jones) Yes, we are rather different, I think, from most of the other landfill companies. We have committed around 50 per cent, about £36 million. It is a very long range, holistic framework of issues, and £12 million of that has gone on data capture, resource flow studies in different regions, for London and the Isle of Wight, different industries.

Should this be your responsibility?

(Mr Jones) No.

We have heard from both sets of witnesses about the lack of reliability of our statistics on waste, so who should be doing this job?

(Mr Jones) We started the ball rolling about five or six years ago with our Biffa book three in the series Great Britain plc. It is clear that the Office of National Statistics did not want it from our discussions with them. The Agency are hot to trot for that sort of responsibility. I find it absolutely staggering and in fact only yesterday I got an e-mail from the DTLR task force team, I suggested that they would have an interest in including waste as part of the e-government initiative. 85 per cent of respondents out there think that the primary job of their local government system is to collect their waste, it has got the highest recall factor, and yet this electronic database is not a part of e-government. It is absolutely incredible. This e-mail in DTLR said, "Yes, we are stretched, we do not think it is high enough up the priority." There are other issues there in terms of strategic programmes. We jointly funded with DEFRA/DTI the Acorn Project, which is a pre-receptor system (before ISO14001) for SMEs. These are the big strategic areas. It was great while it lasted and we used that money to back the strategic things we wanted government to do. The sad thing is that there is no firm statement from the Treasury as to what they are going to do but on current reading it looks as if all those things are just going to go down the plug.

Chairman: Thank you very much indeed, gentlemen, we must draw this session to an end now. There may be things we want to follow up in writing because there are one or two questions that we did not quite get round to. Thank you very much for a very helpful session, we are very grateful.