Eighth Standing Committee
on Delegated Legislation
Monday 16 December 2002
[Mr. Eric Illsley in the Chair]
Local Government Finance (England) Special Grant Report (No.109) (HC 15) on Special Grant for addressing the Costs of EC Regulation 2037/00 on Substances that Deplete the Ozone Layer (Disposal of Refrigeration Equipment) 2002
The Minister for the Environment (Mr. Michael Meacher): I beg to move,
That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 109) (HC 15) on Special Grant for addressing the costs of EC Regulation 2037/00 on Substances that Deplete the Ozone Layer (Disposal of Refrigeration Equipment) 2002.
I am sure that I speak for everyone when I say that it is with more than usual pleasure that we see you here, Mr. Illsley.
The Local Government Finance (England) Special Grant Report (No. 109) was laid before the House on 14 November. It addresses the costs of EC regulation 2037/00 on substances that deplete the ozone layer, and will provide additional funds to local authorities to offset costs for the disposal of old refrigerators.
The ozone depleting substances regulation, which is designed to help protect the ozone layer, came into force for domestic fridges throughout Europe on 1 January this year. It requires the recovery of chlorofluorocarbons and hydrochlorofluorocarbons from fridges and freezers before they are disposed of, and bans the export of such appliances outside the European community.
CFCs and HCFCs are found in the cooling system of most fridges manufactured before the mid–1990s. When the regulation went through the EU Environmental Council in December 1998, nobody questioned whether it applied also to the foam insulation contained inside the walls and door. When our industry first raised that with us in February 1999, we immediately asked the Commission for a definitive ruling on the matter. It was unable to provide one, and during the next two and a quarter years we formally asked for a ruling on nine separate occasions before a decision was finally given in June 2001. That left the United Kingdom, along with most other member states, just a few months in which to put specialist fridge treatment facilities in place.
About 2.5 million domestic fridges and freezers are disposed of in the UK each year. We estimate that between 10 and 15 recycling plants will be required to deal with them. At an investment of £2 million to £3 million each, the industry understandably needed robust advice from the Government on standards and enforcement before it could commit to that. Advice was agreed and produced as quickly as possible, in close association with the Environment Agency and
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the fridge recycling companies. That process took until the end of last year to complete.
At 1 January 2002, the UK had limited facilities for dealing with waste fridges, so local authorities set up storage sites across the country. Guidance was developed on safety and handling to prevent the sites from posing a risk to the public and to ensure that the gases would not be released into the environment. From the beginning, a limited number of fridges were taken by the already established high temperature incinerator operators. In addition, a number of companies began to export fridges to Germany for treatment, but specialist plants have since been built in the UK.
Two mobile plants have been operating at sites across the country for several months, with capacities of between 150,000 and 500,000 units per year. Eight static plants have come on line in the UK since the summer, each with a capacity of about 300,000 units per year. Plans are well advanced for the establishment of more static plants.
Although the cost of disposing of such fridges has increased as a result of the regulation, they are now being dealt with properly. The hazardous chemicals are removed for safe disposal and the remaining materials recycled. Sustainable waste management will always be more costly than landfill disposal, but we have already seen anticipated costs decrease as competition is established.
On the positive side, a new waste management industry has been created in the UK in less than 12 months, providing new jobs and opportunities. The UK fridge recycling industry will be well placed to help other member states that are in a similar position but have not established their own capacity. The move is also a step in the right direction for recycling and for the forthcoming waste electrical and electronic equipment directive.
Sir Teddy Taylor (Rochford and Southend, East): Will the Minister give way?
Mr. Meacher: There will be plenty of opportunities for the hon. Member to speak, but I am happy for him to intervene if he wishes.
Sir Teddy Taylor: It is not my intention to make a long speech. Do not the regulations say that these fridges cannot be exported outside the EU? If so, why is that? Is that not interfering with world trade?
Mr. Meacher: The fridges can be exported within the EU because proper facilities exist for disposal in a manner that does not damage the environment. That is not the case in many areas that were involved in the export trade before the regulation, notably African countries.
Mr. Edward Garnier (Harborough): Will the Minister give way?
Mr. Meacher: I will not get into discussion at this point. I shall certainly reply fully to questions at the end, but it would be better for the Committee if I made a brief statement first, and only three or four more minutes of that remain. I shall later reply in detail to every point raised.
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Mr. Garnier rose—
Mr. Meacher: If the hon. and learned Gentleman is absolutely adamant, I will give way, but this is the last time.
Mr. Garnier: I should explain that I am hoping to be present for the opening speeches of the Department for Environment, Food and Rural Affairs business on the Floor of the Chamber, so I am very grateful to the Minister for allowing me to intervene now.
The Minister mentioned location of new plants and cost. Is it intended that there will be a recycling plant in Leicestershire? Can he explain why the grant that central Government have given to Leicestershire county council for the disposal of fridges under the new regime will leave the council £250,000 out of pocket? How does he intend that that gap should be bridged?
Mr. Meacher: Location is not a matter for the Government. These are not publicly-owned plant, but investments by the private sector, and the companies concerned must decide where to place their static plant so as to meet the requirements of the market.
Costs will be the subject of considerable discussion. I want to make it clear that £40 million is the total that is available, and that no further money will be provided this year. However, that figure has been carefully calculated to take account of the real costs, bearing in mind the fact that those costs are rapidly declining, for the reasons that I have given—new plant coming into place, increasing competition and fridges that do not need recycling entering the waste stream. If local authorities have engaged in contracts under which the unit cost is expensive, they would be well advised to revisit those contracts. In our view, £40 million is adequate for the purpose. Many local authorities are finding that that is so. If others do not, they should reconsider the matter.
Mr. David Curry (Skipton and Ripon): Will the right hon. Gentleman give way precisely on that point?
Mr. Meacher: No. As I said, we will have very considerable discussion about this matter. The normal procedure is that the Minister makes a brief opening statement, he is followed by the hon. Member who speaks for the Opposition, then there is discussion. That is the right way to proceed, and I intend to adhere to that.
Local authorities have played a key role in ensuring that the UK has been able to comply with the regulation. At no time have householders been unable to dispose of their old fridge or freezer. Local authorities have a statutory duty to dispose of domestic waste free of charge and to collect that waste, although they may recover their costs for collection only. By providing that service—I pay tribute to them for doing so—local authorities have prevented a significant increase in the fly tipping of domestic fridges.
Since the introduction of the regulation, electrical retailers have ceased their take-back schemes, whereby they take away an old refrigerator when delivering a new one. That has added to the burden on local authorities, which now deal with almost all waste
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domestic refrigerators. As that is an additional burden, the Government have already allocated £6 million in the 2002–03 local government finance settlement to cover the period 1 January to 31 March 2002. The special grant makes provision for additional costs that local authorities face as a result of the new burdens for the period 2002–03.
I propose to allocate £40 million to local authorities through the special grant. The amount payable to each authority shall be calculated according to the formula used for county services within the environmental, protective and cultural service standard spending assessment block.
Mr. Curry: Will the Minister give way on that particular point?
Mr. Meacher: I shall give way, because I respect the right hon. Gentleman, but I shall not do so again until I have finished.
Mr. Curry: A few moments ago, the Minister said that the costs had been carefully calculated according to the needs of local authorities, but he now says that it is being distributed formulaically. It must be one or the other, but it cannot be both.
Mr. Meacher: If the right hon. Gentleman will listen, I said that it has been calculated according to the formula. That is the same basis on which we have already allocated the £6 million—perfectly satisfactorily, as far as I know.
Funds will be allocated to authorities with responsibility for waste disposal, because that is where the additional burden lies. No conditions are imposed on the grant, but we will ask authorities to record the numbers of fridges they deal with on the annual waste survey questionnaire.
As to future funding, the Government will continue to contribute to local authority costs until producer responsibility is introduced through implementation of the WEEE directive, probably around mid–2004. The 2002 spending review includes provision within the environmental, protective and cultural services block for costs for 2003–04.
In conclusion, the Government are certainly aware of the considerable financial burden placed on local authorities as a result of the introduction of the ODS regulations. We have funded that burden to ensure that it need not fall on council tax payers. We have provided the guidance and advice needed to put mechanisms in place for appropriate disposal, and the majority of authorities have acted swiftly to ensure that householders have always had a safe route for disposing of their old fridges and freezers. That special grant, as proposed, is the most effective mechanism for distributing the additional funds directly to those authorities that incur a cost. I know that finance officers will welcome payment as promptly as possible.