Examination of Witnesses (Questions 320-325)
WEDNESDAY 19 MARCH 2003
MR DIRK
HAZELL, MR
PETER JONES
AND MR
GRAHAM WATSON
Mr Lepper
320. We have talked a lot about the landfill
directive and on its way at some point is the EU's biowaste directive
as well and I believe there are drafts of that which are circulating.
What does your industry feel is going to be the impact on the
UK of that directive on the basis of the drafts that are available
at the moment?
(Mr Hazell) In general terms—and I do not know
if Peter wants to say more—there are radical drivers coming
from Europe anyway: there is a recycling strategy, there is a
soil strategy and a there is a whole load of generic stuff in
terms of producer responsibility that we know is coming. So, in
general terms, everything that is coming from Europe is the primary
driver for our industry and, as of today, what is already in the
landfill directive is the key driver.
(Mr Jones) For me, it is more about the economics
in the sense that, if there were a level playing field between
the cost of disposal to landfill and these newer, more environmentally
sound technologies in terms of resource efficiency, not implying
that landfill is not safe, then you need an economic differential
of the order of £25 a tonne at the moment to be closed. The
effect on us of these directives coming in is that we do not have
the economic framework but we do have the statutory framework.
There is a percentile target here that you must achieve and, if
you do not, then penalties follow. The problem for us is that
we are then, as companies or as a sector, faced with the challenge
of investing in these new technologies and then we find that there
is not the level playing field in terms of enforcement and I know
that this is the sort of thing that occupies other industry sectors.
If you look at the ferrous scrap sector where the vehicle dismantlers
have a clear deadline for end-life vehicle dismantling by 2007
but they are saying, "Why should we invest in these state
of the art funded vacuum plants that take out all the noxious
substances when we do not have an absolute guarantee that Fred
will in the field down the road" . . . We have evidence only
this last week or so of fridges stacked up in Surrey again, the
dear old fridges . . . It is either getting the economics right
and then we will get on with the job because we can make a living
from the investment or, if you want to do it via the statutory
route with targets, then make sure that the Environment Agency
has the resources and the focus to make sure that the legitimate
among us can in fact make that living. If you provide neither,
then we cannot put any money in anyway and we will all have a
problem.
321. You anticipated the image that came into
my mind when you referred to our old friends the fridges because
I think it was yourself, Mr Jones, or one of your colleagues who,
when we were inquiring into that issue, made several very forceful
points to us about the extent to which the industry had made approaches
to the Government about schemes for disposals etc and felt that
proposals you had for investment were being undermined by lack
of direction and it is the same syndrome which you see happening
on these issues of waste management generally.
(Mr Jones) Yes. There are three simple things that
any company that is a long-term player in this industry wants.
We want to know who is going to pay. The price is set through
a competitive framework, but who is going to pay? Is it going
to be paid through Government subsidies that can be withdrawn
at a minute's notice when we move into deficit for a variety of
reasons and suddenly the subsidies stop and we are left with a
machine that we need ten years to get our money back on, or is
it going to be paid through a certain market that is guaranteed?
The second thing we need is from the Environment Agency, which
I think they are desperately trying to get to, which is the framework
where we want type approval. So, if it is a fridge machine or
a machine that degases a car, we do not want to have to go to
the Agency in Stockport and go through the same rigmarole that
we went through with the Agency in South Wales or Dover for the
same machine with the same operating systems to the same level
of technical knowledge. The Agency could give type approval for
these technologies and say they are compliant and that is a big
tick in terms of the planning applications grade. The third thing
is then, once you know who is going to pay you and you are using
the right technology, that the Agency are going to thwack somebody
who turns up with the wrong technology. Without those three elements
of the tripod being in place, our bankers, our plc, will not give
us the money. It is like having a television set where it takes
the electricity and it looks nice, but you cannot get a picture.
(Mr Hazell) If there are specific questions that we
can answer on subsequent evidence on that directive, we will be
happy to do that.
322. I would like to ask a particular question
about organic waste. There are two ways of looking at the diversion
of organic waste from landfill etc: one is home composting and
the other is kerbside collection and disposal. Do you have any
thoughts on which of those two paths the Government ought to be
directing people along, or both?
(Mr Hazell) Obviously for garden waste where people
have reasonable gardens, it is a sensible thing for them to do
their own home composting for green waste, but we at the outset
expressed some scepticism about the weight attached in the Strategy
Unit's report to home composting and I have to say that it does
look suspiciously like trying to save money today and possibly
storing up problems for tomorrow. Our industry broadly has come
to a consensus on composting which is that you have the right
quality material for the right applications and that the really
good quality stuff that can safely go to agricultural land should
go to agricultural land, for example, but it has to be of a certain
quality. There has been a certain amount of debate about whether
our industry should do its composting in the open air or whether
it should do it in closed vessels and I think there is a growing
consensus that more and more commercial composting in the future
will be done in closed vessels because there are bio-aerosols
that are given off. If, for a managed system, the view is taken
that the industry should do it in-vessel, why are you then saying,
particularly when it is public policy to make people's housing
closer and closer together, that composting should be very close
to where people actually live because it seems that there may
possibly be health problems that are being built into the future
with that? Also, if people are being encouraged to compost things
when perhaps actually they make mistakes and they are composting
things in their garden that they should not really be composting,
you are actually putting into the soil in their garden things
that may not be terribly helpful to have over the long run in
their garden soil. So, we do not think that this reliance on home
composting in the Strategy Unit's report is one on which the Government
should safely rely. It looks like a cop-out. We will be fairly
scathing in our response if we find that money that has been taken
away from our industry is given to WRAP to promote on personal
counsellors for home composting because, frankly, that is not
delivering this country to the next stage of resource efficiency.
There is a lot of the biodegradable waste stream that should be
composted and it should, taking the long-term view, be done in-vessel
and under very strictly managed conditions. When Graham was talking
earlier about the pressures that our Members are rightly under
with ongoing monitoring of what is happening in their processes
and, when you are looking at stuff going back and being re-used:
that should be done.
(Mr Jones) Just as a quick rider to that and something
which Dirk has not mentioned. We are talking about maybe eight
million to ten million tonnes of organic material in the domestic
waste stream that potentially could fall into the compost route
rather than be recycled conventionally, but there will be a convergence
between the water and the sewage industry as well and that problem,
and I suspect that you will see more integrated systems, but we
are talking about industrial processes here, taking human sewage
sludges, combining them in controlled conditions with quality-controlled
systems, ISO standards almost, for the stuff at the end. Home
composting does have a very important part to play in terms of,
for instance, the horticultural market. There are a number of
people who do their own gardening and I think that probably it
is an area for more education and standards development there,
but it is certainly not going to solve the big issue with millions
of tonnes of the stuff. That has to be through industrial processes,
more like oil refineries than pits in the garden, I am afraid.
323. It is helping people to feel good without
necessarily doing the right thing.
(Mr Hazell) Yes again, as both of us have said, for
legitimate garden waste, people with reasonable gardens, it is
a sensible thing to do and, if people need a bit of help in doing
that, fine.
Mr Jack
324. I want to ask one or two questions about
the finance, if you like, of waste disposal. One of the things
that strikes me is that, even with the landfill tax, those who
generate the waste by and large get no economic signals about
the consequences of them generating waste. Is that an issue that
should be addressed?
(Mr Hazell) Yes. We commissioned the Ernst & Young
report last summer to find a way of starting to apply the `producer
pays' principle to the producers of household waste. It is quite
clear that if one goes to a system of variable charging—and
most people at the moment are thinking in terms of weight-based
systems—so the more waste people produce the more they pay,
that is the purest way of introducing the `producer pays' principle
into the waste stream and of getting some more money into its
management and it undoubtedly gives a signal. There is a relatively
small number of our members who could cope with variable charging
relatively soon; they tend to be the companies that are subsidiaries
of water companies which have IT systems in place. There are two
principal difficulties with going straight to variable charging.
The first is that it can be regressive, so that poorer people
pay relatively more for it, and the second is that, given where
we are at in terms of our national culture as of today, it does
create an incentive to fly-tip, to put rubbish in other people's
dustbins and that sort of conduct. So, the view that we have taken—and
it was reflected in the Ernst & Young report—is that
it would probably be better to start by allowing local authorities
to introduce direct charging, so there could be a separate line
in the Council Tax bill. If it were structured in the right sort
of way, that would be private money collected on our Members'
behalf rather than public money, so it would actually help to
improve the public finances while giving more money towards waste
management, but significantly it would not, in the early stages,
give anyone any incentive to fly-tip. So, you are starting to
create the culture where people see how much they are paying.
It is less than they currently think they are, by the way. They
actually think they pay more. So, they start to see how much they
are paying and then, when you get local authority elections, hopefully
you will get an improved quality of debate insofar as it relates
to waste management with people saying, "If you pay this,
this and this, we can provide this facility for you."
Mr Jack: Mr Jones, we have heard a lot about
income streams coming into companies that are involved in the
waste business. The adequacy of those income streams to subsequently
fund new investment and new technologies to deal with waste and
interacting in this quite complicated model where you have local
authorities, waste collection bodies and others, all of whom also
need some money, is the question of the level of the landfill
tax and the clear view from your evidence that, even at £35
a tonne, which we are a long way off, that is not going to fundamentally
change the production cycle of the waste itself. I wonder if by
any chance I might take up Mr Hazell's kind offer of a note on
this subject where you may first of all identify for us the cost
streams, who pays what, and to give us a commentary in the context
of the landfill charge as to why £35 is not enough.
Chairman
325. Gentlemen, I am going to give you your
dismissal now because it is not fair to keep you waiting for another
vote. Gentlemen, thank you very much for appearing before us.
(Mr Hazell) If there are further questions, we will
be happy to give written details.
The Committee suspended from 4.26 pm to 4.38
pm for a Division in the House
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