Examination of Witnesses (Questions 280-299)
15 DECEMBER 2004
MR DIRK
HAZELL, MR
MAREK GORDON
AND MR
PETER JONES
Q280 Alan Simpson: The Minister's claim
is that that means that the waste minimisation strategies are
working. It is not waste that is clandestinely being shipped about
and dumped in the dead of night; it is no longer being generated.
Mr Hazell: We know that there
is some criminal activity. We cannot say, just like one or two
of your other witnesses have said, how much. We cannot quantify
it. It might be helpful to mention that in July, for example,
the Greater London Assembly Environment Committee, which is obviously
a much more modest affair than this, did its own inquiry into
hazardous waste and it was actually heart-rending listening to
some of the local authority officers describing, and this was
obviously coming up to the ban on co-disposal, how organised some
of this dumping of hazardous waste is in the streets of London
and what some of those local authorities actually have to deal
with in terms of their engagement with these criminals. We know
that there is criminal activity.
Q281 Alan Simpson: Can I just pin you
down on that? In a way, this is almost like the complaints that
MPs get in their constituencies about acts of vandalism, people
intentionally loitering in a threatening manner. MPs will always
begin their questioning by saying, "Can you give us some
idea on this? Give us something to work with, otherwise we are
just chasing rumour and speculation". Give us a bit of hard
data yourselves.
Mr Hazell: There are specific
examples. What we cannot do is aggregate them and say it comes
to X thousand tonnes a year across the country.
Alan Simpson: I am not even asking that.
I am just asking: have we got any specific examples? Have those
examples been communicated to Defra? Is there a line of investigation
that can legitimately be asked of the Department: are you pursuing
this?
Chairman: Before you answer that, Diana
Organ wants to add a postscript.
Diana Organ: It really ties in with this.
This stuff cannot vanish into thin air. If you are making this
argument to us and to others from information through your members
that the hazardous waste is being dealt with criminally as opposed
to the Government's argument, which is that this is minimising
because the strategy is working, I wondered if you had a list
that you could give us with examples of where you know that criminal
activity is going on and you have reported it to the relevant
agency. If your argument is true, this stuff does not disappear
into vapour. It is somehow going to contaminate our land or our
water courses and it will be fed back because the Environment
Agency somewhere along the line will have a report of contamination
and they will ask, "How did this material get into this water
course" and they will trace it back. Do you have those instances?
Chairman: Mr Drew is aching to add his
two pennyworth to this.
Q282 Mr Drew: I want to ask the very
simple question: have you directly tackled Ministers on this?
Would you write to us with evidence of when you told Ministers?
We have a Minister saying there is not a problem.
Mr Jones: First of all, the crunch
point on this will not be now because the developers are not starting
up major new, brownfield redevelopment sites. Traditionally that
does not happen at this time of the year. The crunch will come
and the proof will be in "the pudding" next March/April/May
when you start seeing large-scale developments of brownfield sites,
(depending on what the state of the office and housing property
markets is). That is when you would expect to see this issue burst
out. The second point I would make is that it is not our task.
Certainly I know of one case in Bristol where the Agency has re-classified
what a waste operator legitimately feels is hazardous waste; they
have told him now to send it and consign it as ordinary waste.
I can give you the information on that. I will have two or three
examples as each of us in the Association may have. That is the
regulator's task. It is not the task of the waste industry to
catch criminals. The Environment Agency should be there understanding
this process.
Q283 Chairman: Mr Jones, you have just
said that the Environment Agency gave an instruction to reclassify
a waste. That is not illegal, is it?
Mr Jones: No, because they write
the rules.
Q284 Chairman: You have just put before
the Committee, in the light of Mr Simpson's trenchant questioning,
examples of illegal, illicit disposal. What we need is some concrete
evidence of what is going on. If the Environment Agency and others
are not capable of dealing with it, then we need to have the evidence
to put in a report and say, "Here are two or three real world
examples. Go out there and sort the job out". Can you provide
us with that information?
Mr Jones: We can provide you with
odd examples from all of our members, but it will not add up to
a comprehensive, bullet-proof case that goes to the heart of this
problem. If we had had the database collection system, we would
not need to define that.
Q285 Chairman: We get before this Committee
farmers, for example, who tell us that X, Y and Z countries are
not implementing this that or the other of the European regulations,
that they are all breaking the rules. We ask, "Give us some
proof". They say, "Ah, well, I heard it". We cannot
work on that. We have to have some concrete stuff. Mr Hazell,
it is now your turn.
Mr Hazell: One piece of concrete
stuff that would probably be helpful to you is a report of the
Greater London Assembly Environment Committee, which I think came
out fairly recently. Their evidence did contain some specific
examples. Perhaps the most helpful way to respond to Mr Drew's
question would be to send the Committee a chronology of our engagement.
I would like to emphasise, and I do not think these things should
generally be personalised, that the present Minister of State
has been much easier to engage with and has been much more responsive
generally to our sector's concerns than his predecessor.
Mr Jones: The other firm and clear
piece of evidence was all over the national papers, and it was
the fridges again, in Trafford Park. That was a problem we had
all been told had been solved and £80 million of public taxpayers'
money has gone over three years into managing the fridge problem
and that has not been achieved. The Minister said about eight
months ago (in response to a parliamentary question) that only
about one-quarter of the CFC chemicals were being recovered, and
nobody ever knew where the other three-quarters were going because
there was no proof of destruction. In a recent parliamentary question
from a member of your Committee, I note that he said a report
is just about to be produced. There were people and charlatans
working in that particular sector, and that is symptomatic of
what happens when you do not have a comprehensive data network
despite a framework of high regulation.
Q286 David Taylor: On landfill diversion
targets, in paragraphs 30 and 31 of your evidence to us you note
that in progress on municipal waste local authorities are recycling
more. Then, very helpfully, you sent us supplementary evidence
and to the Council which loves diagrams and figures. It is a real
joy to see information expressed in this form, although what it
revealed was quite startling. It does show, does it not, that
if there was a 3% annual growth in biodegradable municipal waste,
then by 2010 we have got to divert 13.3 million tonnes a year.
Even if it flat-lined, we are still at 8.73 million tonnes a year.
You have given this evidence and it will form part of the document.
Are these targets achievable, even if it were possible to reduce
the level of biodegradable municipal waste? The first two figures,
the 3% growth to 2010 and the flat-line to 2010, seem way beyond
the capacity of the system at the moment. What is your observation,
Mr Gordon?
Mr Gordon: It is way beyond the
capacity of the system at the moment, there is no doubt about
it. That is why we are saying that the targets are unlikely to
be met. What we need is a considerable increase in the amount
of infrastructure in this country. We start from a very low base
in comparison perhaps to our European neighbours. We have to build
a lot. There are many reasons for delay to that building, one
undoubtedly being the planning system, which is a very slow process
indeed. We have some good stories in our industry of good infrastructure
being built, but the length of time taken between award of contract,
getting planning permission and building infrastructure is extraordinary.
We are already five years away from these targets. We have to
build a lot of infrastructure to meet these targets. I will give
a broad-brush number here. If an average facility copes with 100,000
tonnes of waste, you can work out how many facilities this country
has to build to divert that amount of waste by 2010.
Q287 David Taylor: There is a very large
facility that was granted planning permission on the borders of
Leicestershire and Derbyshire called the New Albion project. There
was delay in granting permission, and that permission was granted
probably six or seven years ago. That has not yet taken a lorry-load
of waste. What is happening?
Mr Jones: There is an issue here
about the transfer of risk. If you look at what happens, there
are 150 waste disposal authorities on this list that are going
to be subject to LATS' targets. Each of them is going to need
about two of these biggish facilities. We are looking at 300 sites.
In the case of the failure on that particular one, the ideal,
from the waste industry point of view, is that many of those 150
authorities needs to get three beans in a row. The first set of
beans is the need to acquire land under its own ownership to manage
its own waste. The second thing it needs to do is then to indulge
in dialogue with the local community as to the sort of technology
solution they want and give themselves outline planning consent
in conjunction with the communications and dialogue process. Finally,
they come out to the bid process (whether it is PFI or open tendering),
to the industry and say, "We have the sites; we have outline
consent. We want you to tender for this sort of solution".
If you get those things out of kilter, you will end up with problems.
Some waste disposal authorities, as a result, have tried to transfer
the risk of planning consent or site acquisition or both on to
the private sector. In the end, the public sector ends up paying
for that deficiency. If we are three separate contractors bidding
for the same contract, we have three sets of lawyers; we are spending
about £1 million each, which times 150 is half a billion
pounds over the cycle between now and, say, 2012, when these places
get built.
Q288 David Taylor: The point I am putting,
and I am sorry to interrupt, is that you are allocating responsibility
to the public sector, in a sense, in terms of slowness of permitting,
or indicating suitable sites, but the one large example I have
given, permission and site acquisition and so on, were in place
years and years ago and yet not a lorry-load of waste has yet
gone into them.
Mr Jones: I am coming to that
one because this is all about transfer of risk. When companies
in our sector are not prepared to take on that risk, what happens
is that you start to see the emergence of partnership arrangements
between these 150 authorities and the technology providers, who
are sometimes companies without substance. They are basically
one-product companies. There are issues around balance sheets
and so on, but they are keen to sell a particular piece of kit.
Local authorities are not necessarily informed (although the Defra
WIP programme is doing something about that). As a result, you
end up with plants being agreed that are never ever built. Only
large major companies are prepared to take that risk, and each
of us approaches that risk differently. By and large, when that
risk is between a local authority and a technology provider, it
does not work. Where we are invited to tender for contracts, where
we see that sort of relationship operating, we as Biffa have walked
away from them. We have just walked away from two major County
contracts because they were trying to tell us how to do the job,
rather than focusing on outcomes.
Q289 David Taylor: The real problem is
that there are not too many waste disposal authorities. You are
not seeking to have them regionalised or nationalised?
Mr Jones: No. It is not an issue
in terms of the number of them. It is the process that is important.
Q290 David Taylor: Finally, can I ask
about cost because this is important. In paragraph 38 of your
evidence you assert, and I have not yet seen the proof and that
is what I want to examine you on, that we spend as a nation only
half what comparable European countries spend on municipal waste
management. You then go on to say that we need to get the costs
up to about £1 per person to achieve average European standards
of performance. There are two elements to this. Is it purely a
question of throwing yet more money at it to achieve our national
landfill diversion targets? Is that what you are saying?
Mr Hazell: It is not just the
money but the money is an essential component. In response to
a parliamentary question, and it is not quite current, it has
not actually gone up all that much. Mr Liddell-Grainger is no
longer with us but he did not quite get his sums right. In 2001-02,
the United Kingdom spent £1.63 billion on collecting and
managing municipal waste. I will not go through the workings,
but that is 47p per person per week.
Q291 David Taylor: I accept that your
figure would lead to £3 billion per year or thereabouts.
Mr Hazell: It is about that. If
you look at somewhere like North Rhine Westphalia in Germany,
the average the cost for a basic waste management package in the
urban areas is £191 per annum for a household, and in the
country it is £153. We have gone to our comparable trade
associations in those countries to get the figures. In the Netherlands,
the average cost per household is between £157 and £178
a year. In the Irish Republic, and again we got this from the
Irish Waste Management Association, they are looking at an estimated
cost, by the end of 2005, of £138 per household.
Q292 David Taylor: So the Government
is trying to do it on the cheap, is it?
Mr Hazell: It is definitely being
done on the cheap. But it cannot be done. It is actually quite
easy to work out why it cannot be done because, to get to the
diversion target, most people are saying you have to look at about
£8 billion of investment in infrastructure.
Q293 Chairman: Over what time period?
Mr Hazell: Over about a decade,
but to get to the funding level, if you assume a 10% funding cost,
that is actually 26p per person per week in the country, just
to fund it, not to run it.
Q294 David Taylor: It would be a lot
more if it was done by PFI, would it not? In paragraph 39 you
say, and our business is intended to be disingenuous is it not:
"The Gershon review missed an opportunity to reduce public
spending: it could have recommended that funding for municipal
waste management be taken out of public spending altogether."
You go on to talk about variable charging. It is not really taking
it out of public spending, is it? It is equivalent to PFI being
said to take loan debt off the Government's balance sheet. It
does not really. We, the community, still have that obligation
and we, the community, would still have the responsibility of
the revenue cost to dispose of our waste. It is not really taking
it out of public spending, is it?
Mr Hazell: Can I say, first of
all, that ESA would never dare to be disingenuous in giving evidence
to a select committee. We might sometimes have the odd spat with
counterparties but we are not disingenuous. There is an underlying
concern about the Gershon review, which is that not all but a
number of the political parties do seem to have interpreted the
Gershon review as giving a signal that waste management expenditure
can fall: it cannot. It may well be that there are operational
efficiencies, and we all want to see them, and Peter Jones has
been talking about them. We all want to see operational efficiencies
but the hard truth is that spending on household waste has got
to go up. This is not a PFI question. The question is: how is
it going to be paid for? Of course it has to be paid for, but
you can go to variable or direct charging, for example: if that
is as matter of public policy what the government of the day wants
to do, it does get it out of the public finances. That is what
is happening in a number of other European Member states.
Q295 David Taylor: My final small question
to Mr Gordon is this. A number of us, including Mr Tipping, have
had the privilege of going to the Netherlands and elsewhere and
we have had long conversations with you in looking at the sorts
of services available there. Is there a lesson to be learnt from
what the Netherlands and other north European countries do? Have
they only recently turned to the level of expenditure necessary
to deal with all this that is adequate?
Mr Gordon: I think the northern
European countries are in advance of us on investment in waste
management of all types. What we look at there in the equivalent
to the WEEE Directive goods is in advance of this country.
Q296 David Taylor: And they have been
for a generation?
Mr Gordon: Yes, I would think
it is very fair to put the period of a generation on it.
Mr Jones: Mr Taylor's question
does reflect a much broader malaise in the environmental debate
in this country, which may go beyond the current inquiry. If you
look at what we have signed up to in terms of European standards,
then at Cabinet level there seems to be a refusal to confront
this whole environmental issue and price it. One of the reasons
why we fall out in terms of PFI, or funding and everything else,
is that there is a great need, right at the heart of government,
to price up real cost. Take the removal of CO2 from cement kilns.
The cement industry reckons that would cost about half a billion
pounds. The water industry says that if you want the European
Drinking Water Directive, it is going to be about another £5
billion a year on water bills (but the regulator is not charged
to take account of that). If you want to clean up power stations,
it is about £5 billion to £10 billion. If you want to
put in abatement systems in the chemical industry, or in the food
industry (in the IPPC framework), it may be £5 billion. We
say it is about £5 billion to deliver the 2020 vision on
waste. What we really should be saying, and we are putting the
cart before the horse at the moment to the general public, is:
"We have about £25 billion a year—it is not £40
billion and it is not £10 billion—or about a 2 to 3%
price hike in the retail cost of living in this country to deliver
a substantial improvement in the health of our nation". In
part, we have signed up to it. In part, it is about graffiti and
vandalism and chewing gum. You could get it for that. We should
be having the debate about how we transfer that £25 billion
cost and who is going to pick up the tab? Will it go through subsidies
or will it go through increased prices? Will those increased prices
be transparent and will they be audited by the Audit Office? What
is the competition effect? Because we have not had that debate,
we have all ended up having little turf wars on our separate buckets
of cement/ the CBI/ the waste industry/ the water industry and
the energy industry. I believe your question, Sir, does really
go to the heart of that issue, that if we set the rules in that
framework, we would then see the solutions, because the technology
exists, but the technology is a hell of a lot more expensive than
just sticking it in a big hole in the ground—it has to be.
David Taylor: I think Mr Jones's last
contribution is the most valuable contribution we have heard in
this section of evidence. It should be enshrined in stone and
put through the Chancellor's letterbox with the appropriate Christmas
card.
Chairman: To avoid unnecessarily adding
to the material waste, we will enshrine it in pieces of paper
that can ultimately be recycled. I thought we might just have
heard the birth of a new political party manifesto there, Mr Jones,
in the way that you enunciated your aspirations. In the meantime,
we will have some brisk questioning from Mr Simpson on landfill
tax and other associated matters.
Q297 Alan Simpson: This ties in with
the whole notion of using economic instruments to deliver environment
outcomes and being clear and transparent about that. Would you
say that the landfill tax is a good example of that transparency
and is it working?
Mr Jones: I was a member of the
Institute of Civil Engineers' group that came up with their verdict
on the mid-term review of the Government's strategy, about four
or five months ago when they did their annual report. I believe,
and I have enumerated this before, that there are about 70 different
initiatives. I think there is about £600 million of subsidies.
One is never sure. There is little transparency in terms of the
times over which these awards are made. An initiative starts life
with one name, and then it gets changed mid-term and it magically
is altered into something else. In your question to Alice Roberts
about the balance in terms of whether or not local authorities
have got their money back, probably they have. They pay £15
a tonne on about 25 million tonnes a year and they get that back
in subsidies for plastic buckets and recycling. Whether it is
good strategic funding or not is another matter. We are seeing
some of that money being returned in the form of the WIP programme
and there are some very good elements in that. Indeed, the data
question is being addressed by WIP and it has received £2
million. This is very difficult. I have not read the detail in
Defra's five-year review, but it would be very interesting to
see how much detail they have put in about all these initiatives,
because there are literally 70 or 80 of them, and it confuses
all our members.
Q298 Alan Simpson: Do you have a view,
just in respect of the landfill tax, on how quickly we should
be moving to the £35 per tonne figure?
Mr Jones: I guess I was the lone
voice years ago when I suggested that we go to it as quickly as
possible because that would deliver these solutions. Our Association
now concurs with that being a good idea. The fact is that you
do not need to persuade 300,000 businesses to change their waste
behaviour, or 25 million households. There are six major companies
in this country that could divert 80% of all landfill waste next
week if we had the economic incentives. Because we do not have
those economic incentives, it is still cheap to landfill. There
is no point doing it differently. That is why we do not invest
in these new processes.
Q299 Alan Simpson: Would a rapid transition
to the £35 per tonne figure improve the functioning of the
landfill allowances trading scheme?
Mr Jones: I think it would cause
more emotional pain, unless you set it up with transparent accounting.
There are political issues, as you have suggested, over the impact
on low income families, the transfer effects between rich and
poor local authorities or, dare I say, Labour controlled authorities
and Lib-Dems or Tory authorities, to which nobody really quite
knows the answers.
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