Examination of Witness (Questions 180-199)
1 DECEMBER 2004
MR ELLIOT
MORLEY, MP
Q180 Chairman: That is
the point I am making. I was interested to know what the split
was because, effectively, you have got people who are making a
business out of disposing of materials, and there is an inducement
for them to pursue minimisation criteria of their own and then
there is the public side. What happens is that the local authorities
(who are already hard-pushed for cash) who may not be able to
be as good as other local authorities at reducing the amount of
material that is going to landfill end up by paying more and more
money in the landfill pot. So what you have got is the Government
through the Landfill Tax reclaiming some of the money it has already
given to local authorities, then handing it back to them to try
and make them better at reducing the amount of material that is
going to landfill. So I was interested to see how this cycle was
moving and what the proportions were between the public funding
of the Landfill Tax and the private funding of the Landfill Tax.
Mr Morley: I am
sure I can give you a detailed breakdown on that, which I think
will be of benefit to the Committee, but what I can also say to
you is that the £43 million that goes to the Business Resource
Efficiency and Waste Fund is all from industry. In relation to
what local authorities pay in Landfill Tax, that is recycled back
to them through the environment, protective and cultural services
block.
Q181 Chairman: How much
of that block is actually money for environment and waste services?
Can we have a breakdown of that block because when you have something
that is as broad as environment through to cultural services,
that seems to encompass everything. What is the breakdown of that?
Mr Morley:
I think it is for local authorities. They get their share through
that block and it is to finance things like waste disposal.
Q182 Chairman: I appreciate
that.
Mr Morley: But
it is for them to decide, Chairman, you see.
Q183 Chairman: When the
local authority gets its money from the Government it knows that
there is a line somewhere that comes out with a number at the
end of it against this environment through to cultural services.
There is a number for each local authority at the end of the line.
How is that broken down? There must be a formula which determines
how much they get. What is the formula?
Mr Morley: You
mean how they split that themselves?
Paddy Tipping: How the
block is made up.
Q184 Chairman: Yes, how
is the block is made up. Somebody in the Office of the Deputy
Prime Minister must know that. When all this money is moved around,
there must be a way of saying there is so much for the environment,
so much for culture, so much for this, add it all together and,
"Here you are, local authority, this is your number against
that line?" How is it made up.
Mr Morley: That
is correct. The formula for the actual payment is based on population
but I do not think that is what you are asking. No, it is not
what you are asking.
Q185 Chairman: I want
to know how you work out how much money each authority is getting
because it comes back to the point I was making.
Mr Morley: The
money is related to the population. The total amount of money
is based on population.
Q186 Chairman: What we
do not know in that is whether it is 20% for environment and X%
for cultural services or what. I am unclear as to what logic informs
this.
Mr Morley: There
is a calculation, Chairman, which is done by both the Treasury
and ODPM in relation to what they calculate is needed in terms
of waste collection, for example, or environment.
Q187 Chairman: So how
do they calculate this "need" business? The reason I
am asking these questions is that you have got local authorities
who are paying the Landfill Tax. It comes out of hard-pressed
resources. The ones that are not doing terribly well in terms
of diverting waste from landfill are going to end up paying more
Landfill Tax. You have said that it gets recycled to them. I am
unclear as to what the starting point is because many local authorities
have put it to us that they have not got sufficient resources
to deal with these tasks. So do they simply get worse at it so
that they get more landfill money back or do they look for another
form of funding to try and improve their performance to reduce
the expenditure and, if so, when we come to the middle bit, which
is how much they are getting for this, how is this constructed
because we will never be able to work out whether local authorities
are telling us that they have got too much or too little if we
do not know how it is formulated.
Mr Morley: I have
never known local authorities to say that they have got too much
money for any particular service, Chairman.
Chairman: Will you undertake
to provide us with a detailed breakdown as to how this piece of
magic works, and what are the proportions within that line of
budget which are accounted for by these different elements, and
how it is determined by a local authority that they get whatever
they get? Joan Ruddock?
Q188 Joan Ruddock: I think
it would be very useful to know what advice Defra actually gives
to ODPM as to how Defra is placing upon local authorities higher
targets, more pressure, et cetera, et cetera. Many of us would
say that we want more spent on the environment and many electors
would say that they want more spent on the environment.
Mr Morley: Sure.
Q189 Joan Ruddock: So
what advice is given in making up the block which the Chairman
has referred to?
Mr Morley: We do
give advice and we also have an indicative figure about the kind
of spend that there should be.
Q190 Joan Ruddock: You
do?
Mr Morley: Yes.
In relation to, for example, in our case, environmental issues
and waste services, you will appreciate that this is wider than
this and these are ODPM and Treasury issues, but I am very happy
to get the calculations for you so that you can have a look at
those.
Q191 Paddy Tipping: Can
we go back to the Landfill Allowance Trading Scheme and, if I
understand this right, if a local authority gets to its target
earlier on, gets a credit, they can then sell on to other people?
Mr Morley: Yes.
Q192 Paddy Tipping: When
will it happen? When will local authorities be in a position to
start trading?
Mr Morley: The
actual scheme starts from the 1 April next year, although there
are some local authorities who already are offering credits and
have put their own price on them, which of course is a speculative
price.
Q193 Paddy Tipping: What
is the price?
Mr Morley: It is
£43 per tonne, though whether or not that reflects what the
market is, but that is a very, very advanced local authority which,
I think, is testing the water.
Q194 Paddy Tipping: Would
you like to put a name to that local authority?
Mr Morley: I think
it is in the public domain. Yes, it is, and I think it is Cambridgeshire.
I am advised it is actually £32 per tonne.
Q195 Chairman: So Cambridge
is £32?
Mr Morley: It is
Cambridgeshire.
Q196 Paddy Tipping: So
with the waste disposal authority it is £32 a tonne?
Mr Morley: Yes.
Q197 Paddy Tipping: Now,
I know Cambridgeshire a bit and it is a pretty affluent county,
is it not?
Mr Morley: Yes.
Q198 Paddy Tipping: What
about the point that Mr Taylor was making to you earlier on that
this LATS favours relatively affluent counties whereas the disposal
authorities are more disadvantaged, if we can put it like that,
or are at a disadvantage?
Mr Morley: I think
that would be a significant generalisation really. It is certainly
true that if you wanted to use the expression, the more affluent
local authorities have generally done better in relation to recycling
and minimisation than the less affluent authorities, but amongst
that, there are categories you would put there, some of whom have
done very well and some of whom have done very badly. There are
some local authorities that you might regard as in less affluent
areas which have an extremely good record on recycling and minimisation
and I do not doubt that some of those local authorities will have
credits to sell and to utilise.
Q199 Paddy Tipping: The
LGA are not very happy about this scheme, are they?
Mr Morley: Well,
I think it depends who you talk to in the LGA, whether they are
happy or not. There are members of the LGA who represent very
efficient local authorities who have done well in their waste
management and are likely to have credits and who like the scheme.
I think it is a general principle, talking to local authorities
generally, that they can see the logic in this scheme and they
can see how it can work to their benefit. It should not necessarily
be a cost on local authorities who are achieving their targets
that we have set and it is back to the point that you made, Chairman,
of how do we get the waste down from landfill into the scale which
you quite rightly pointed out, but there is going to be the statutory
target and the caps on landfill which local authorities will have
to comply with, so there are these very powerful drivers. It will
focus attention, it is focusing attention because I know from
my own experience and contact with local authorities that those
local authorities who frankly have been dragging their feet, when
faced with the implementation of LATS, have suddenly realised
that if they really do not address the issue of waste minimisation,
then it is going to cost them and their council taxpayers considerable
sums of money. That is one of the reasons why we are seeing this
acceleration in terms of recycling and minimisation which I mentioned
and which is part of what I believe will be how we will get to
these targets and how we will deliver them. I think that in the
end it is not so much whether an area is affluent or not affluent,
but it is a question of political will from the leadership of
the councils concerned about whether they think that waste minimisation
is a political priority. If they think it is a political priority,
then it will be done.
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