Select Committee on Environment, Food and Rural Affairs Eighth Report


5  INCENTIVES FOR WASTE PRODUCERS

43. Greater resource efficiency and waste minimisation may pay for themselves, but shifting from cheap disposal via landfill to higher recycling and less polluting disposal methods will be expensive, at least in the short term. An important question for the Government, then, is how it can persuade local authorities, businesses and individuals to adopt a more sustainable approach to waste management.

44. We note the Government's recognition that markets involving the environment are particularly likely to be subject to imperfections or failures and that economic instruments are often needed to correct these failures.[54] This is very much the case for waste management. At present in England, the price of waste management options is almost the reverse of the waste hierarchy; landfill is still by far the cheapest option, incineration is often the next cheapest and recycling is considered very expensive.

45. There are a range of incentives and disincentives that can be applied. What is important is that economic instruments are designed to achieve the ultimate goals of sustainable waste management - best use of resources, waste minimisation and high levels of re-use and recovery. Local authorities and industries are naturally concerned with cost effectiveness and we fear that increases in the landfill tax could simply drive waste to the next cheapest option, which is likely to be another form of disposal such as incineration. We would like to see a system where the relative net costs of waste management options reflect their position in the waste hierarchy.

Disposal taxes

46. Our witnesses welcomed the increase in the landfill tax announced in the Pre-Budget Report of November 2002, but many would have liked the tax to be raised faster because they believe that £35 per tonne is the minimum rate required to change waste management choices. The Minister said that the tax would not be high enough to meet the first deadlines of the Landfill Directive, but that other important drivers, such as the Waste and Emissions Trading Bill would be in place in time. We welcome the increase in the landfill tax and recognise the need for waste producers and local authorities to have adequate time to prepare for it, but we urge the Government to raise it more rapidly than the minimum £3 per year outlined in the Pre-Budget Report. We are persuaded that the tax will have little influence until it reaches a rate of £35 per tonne.

47. The Danish model, whereby waste management options are subject to a differentiated tax according to their environmental impact, has been very successful in diverting waste to their Government's preferred management techniques. Landfill attracts the highest rate of tax; in addition, many types of waste are banned from landfill. Incineration attracts a lower rate, and recycling and composting are zero-rated. In the past, incinerators that generated both heat and power attracted a lower rate than ones that generated heat alone, which in turn were subject to less tax than incinerators which recovered no value from the waste at all. All municipal waste incinerators in Denmark are now required to provide both heat and power.

48. Several of our witnesses were in favour of replicating such a graduated disposal tax here.[55] However the ESA and INCPEN took the view that, although not opposed to an incineration tax in principle, there was still a need to expand incineration capacity in England in order to meet landfill diversion targets and a tax would be counter-productive at this stage. The Government has commissioned a review of the environmental and health effects of all waste management options and said that it will consider the case for an incineration tax in the light of the findings of that review and in consultation with stakeholders.[56]

49. The current economic and fiscal regime has failed to promote sustainable waste management. We are therefore sympathetic to calls for graduated disposal tax. It is not, however, the only way in which the Government can influence the attractiveness of different ways of dealing with waste. For example, Eunomia Consulting criticised the fact that energy from waste plants receive support under the Renewables Obligation.[57] The Centre for Business Relationships, Accountability, Sustainability and Society recommended that the Government withdraw the current exemption from the Climate Change Levy for power produced by incineration of mixed wastes.[58] We recommend that the Government ensure that all economic instruments - both taxes and subsidies - are used in such a way that they reflect the position of each waste management option in the waste hierarchy.

50. The Government does not support "any significant expansion of incineration"[59] and has said that it is "not providing any incentives for incineration […] we are clear about the waste hierarchy and incineration is just above landfill."[60] Its policy on municipal waste incinerators or other energy from waste facilities is that "they should be considered only where it can be shown that they are appropriately sized so that they would not 'crowd out' recycling."[61]

51. It seems, then, that the Government's position on incineration is based upon incineration's low ranking in the waste hierarchy and the possibility that it can pose a threat to recycling. Public opposition, on the other hand, centres largely on the belief that incinerators pose a threat to human health. The Government does not "rule out the possibility that it [incineration] may be necessary in some cases".[62] The Government should publish a report on the use of incineration techniques setting out the case both for and against this type of waste disposal. It should also make its own position clear on incineration addressing particularly the health and environmental implications of this type of disposal.

52. We welcome the Government's decision to commission a survey of the environmental and health effects of all waste management options but are worried that a simple review of material already in the public domain will do little to influence what are often entrenched views. Where there is still significant scientific doubt about the impacts of different methods of waste management, the Government should commission new research into those impacts.

53. We accept that well managed, well regulated waste management facilities that operate to the best available techniques pose a minimal threat to public health. However, we are concerned that the Environment Agency does not have the capacity to regulate effectively, particularly in the face of the increasing demands on it. Unless the public and the waste management industry can be assured that all facilities are stringently regulated and operate to the best of international standards, public confidence in the safety of such facilities and industry's willingness to invest in the best available equipment will both be compromised.

Household charging

54. Householders pay for the collection and management of their waste through their council tax. The cost of waste management is not differentiated from the costs of the other services their council provides, and few people know how much of their council tax is spent on waste. In addition, the cost to the householder is the same no matter how much waste they throw away or recycle, so there is little incentive for individuals to try to reduce the amount of waste they produce.

55. Consumers need to be made aware of waste as an important environmental issue. At the moment it is easy for them to ignore the problem. Waste minimisation, producer responsibility, and the 'polluter pays' principle are all at the heart of a sustainable waste management policy and there is no reason why the householder should be exempt.

56. We agree with the Local Government Association that variable charging for household waste collection should not be regarded as an additional source of revenue for local authorities but primarily as a means of changing householders' behaviour. We understand their concern that, in some areas, introducing direct charges could result in fly-tipping. It should therefore be for the council concerned to decide what type of incentives or disincentives are most appropriate for each area.

57. There is also concern that variable charging for waste collection can be regressive. Variable charging is only fair if people have a means of controlling the amount of waste they dispose of and this means that good recycling services must be in place. It is clear that new waste initiatives need to be accompanied by good public awareness and education campaigns.

58. We regret that the Government has not yet decided whether to allow local authorities to introduce household incentive schemes.[63] There is already a body of evidence available to draw on[64] and local authorities themselves are best placed to judge what is suitable for their area. Therefore, we recommend that the Government complete its deliberations about local authority household incentive schemes as soon as practicable and certainly by the time of the next Pre-Budget Report. We are strongly in favour of local authorities being given the ability to introduce incentive schemes if they so wish.



54   HM Treasury, 2002, Tax and the Environment: using economic instruments, para 1.2. Back

55   See, for example, Q 208, Ev 246, para 3.2, Ev 3, para 18, Ev 263. Back

56   Defra, May 2003, Government response to Strategy Unit report 'Waste not, want not', p. 12. Back

57   Ev 237, para 45. Back

58   Ev 263. Back

59   HC Deb, 6 March 2003, col 945 [Commons Chamber]. Back

60   HC Deb, 20 Mar 2003, col 1130 [Commons Chamber]. Back

61   HC Deb, 8 Apr 2003, col 137W [Commons written answer]. Back

62   HC Deb, 6 March 2003, col 945 [Commons Chamber]. Back

63   Budget 2003, HC (2002-03) 500, para 7.54. Back

64   Eunomia Research and Consulting, Waste Collection: to charge or not to charge. Final Report to the Chartered Institute of Wastes Management Environmental Body, 2003 and Strategy Unit, 2002, Waste Not, Want NotBack


 
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