Memorandum by Biffa Waste Services Ltd
(LGR 02)
1. Biffa Waste Services is the largest waste
management company operating in the UK—it is the largest
wholly British owned waste management company and can justifiably
claim to be the most diverse in terms of its spread of interest
in industrial/commercial and domestic collection, landfill, liquid
waste stream and specialist hazardous waste management systems.
Turnover with local authority waste collection services is circa
£50 million per annum including recycling but excluding disposal
charges.
2. SYNOPSIS
2.1 Waste management as a local government
service has a very high "recall" rate within the electorate
as a key service provided by local government yet it has—at
around £1.7 billion per annum—a relatively small share
of total local authority expenditure. That total is set to increase—and
could potentially double in real terms over the next 10 years.
There is already a body of experience worldwide with regard to
charging for this activity and we are attaching a recent publication
produced under the auspices of the Landfill Tax Credit Scheme
funded by Biffaward to inform this debate.
2.2 The onset of Producer Responsibility
Obligations will also place substantial pressure on municipally
operated civic amenity sites with risks of saturation and overload.
The risks attendant on failure to invest substantively in these
facilities could form a significant forward investment burden
on the public sector if not handled correctly.
3. OPTIONS FOR
LOCAL WASTE
TAXES
3.1 Independent research throughout the
UK confirms that the disposal of rubbish has the highest recall
rate for citizens as a service provided by their local council.
In general such services operate efficiently and effectively but
they are currently in the midst of a substantial transition as
disposal exit routes are moved from landfill to alternative end
life technologies. The latter incur higher processing costs due
to greater labour and capital intensity coupled to higher operating
costs.
Historically, service provision based on landfill
resulted in charges of £50 to £60 per household per
year—equivalent to around 4% of community charge for band
D and 1% of overall local government expenditure. This cost level
is 30% to 40% of charging levels in mainland Europe and it is
the latter which have established the benchmark for future levels
of recycling and landfill diversion performance in the UK. There
is thus the expectation that the charge to the public purse from
moving to those standards—which are embedded in the National
Waste Strategy and a variety of other environmental directives—will
result in a total additional charge to local authorities of around
£1.2 billion to £1.5 billion per annum across the UK
(this depends on the mix of collection and disposal technologies
finally selected).
4. PRODUCER RESPONSIBILITY
4.1 Producer Responsibility is a policy
framework whereby—in accordance with schedules established
by European Directives to which the UK government is a signatory—a
variety of consumer goods such as packaging, electrical goods,
household hazardous wastes, batteries, tyres, etc, which are currently
the responsibility of the final disposer (for end life management)
will become the responsibility of the originator or manufacturer.
Our calculations suggest that around 15 million tonnes of products
will be affected by these regulations and that of that total around
eight to 10 million tonnes are currently the financial liability
of local authorities. Over the next five years, those financial
liabilities will transfer to the originators of the product. This
could result in a £300 million saving to local authority
disposal costs but—to comply with storage and safe handling
demands at civic amenity sites—the public sector may be
obliged to invest up to £1 billion throughout the UK on conservative
estimates of £1 million per site to bring them up to appropriate
standards.
4.2 There is a danger of muddled thinking
emerging with regard to how this funding cost is to be covered.
Indications from DTI consultations suggest that this will be handled
piecemeal on a product by product basis and covered by a levy
on manufacturers or retailers. It is our view that this method
of approach is short-termist, non strategic and is—potentially—an
illegal form of backdoor taxation.
5. It is our contention that a more holistic
approach should be taken to the development of national standards
for the provision of such facilities and that your Committee should
give consideration to the merits of treating local authority waste
management funding in the light of these future challenges. This
should be dealt with by a specialist group within government given
the fact that expenditure patterns could double. There are substantive
diseconomies of scale if the issue is handled piecemeal and this
expenditure area is not traditionally subject to ring fencing.
Peter T Jones
Director—Development and External Relations
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