House of Commons - Communities and Local Government Committee

Select Committee on Communities and Local Government Committee Written Evidence

Memorandum by the National Audit Office (RC 31)

INTRODUCTION AND SUMMARY

1. The Comptroller and Auditor General reported on the Department for Environment, Food and Rural Affairs' progress in reducing the reliance on landfill for refuse disposal in England in July 2006. The report examined the Department's actions to help achieve the Landfill Directive targets, local authorities' progress in developing alternative methods of waste disposal and progress with recycling and minimisation initiatives.[1] On the basis of that report the Committee of Public Accounts took evidence from the Department for Environment, Food and Rural Affairs in January 2007, although the Committee has yet to issue a report.

2. This memorandum by the National Audit Office sets out the findings from the Comptroller and Auditor General's report that related to refuse collection at the time of publication in July 2006. The memorandum has been prepared with a view to assisting the Communities and Local Government Committee in its consideration of that subject.

SUMMARY

—  The Landfill Allowance Trading Scheme provides a financial incentive for local authorities to divert biodegradable municipal waste from landfill, but the absence of timely and accurate data could undermine the effectiveness of the Scheme (paragraphs 3 to 7).

—  At the rate of progress found at the time of the NAO report, there was a significant risk of local authorities failing to divert sufficient biodegradable municipal waste from landfill to meet European Union targets (paragraphs 8 to 12).

—  The amount of waste recycled each year has increased considerably, but it will become more difficult to maintain this rate of increase (paragraphs 13 to 19).

—  Initiatives to get businesses and households to minimise waste remain at a very early stage (paragraphs 20 to 23).

THE LANDFILL ALLOWANCE TRADING SCHEME PROVIDES A FINANCIAL INCENTIVE FOR LOCAL AUTHORITIES TO DIVERT BIODEGRADABLE MUNICIPAL WASTE FROM LANDFILL, BUT THE ABSENCE OF TIMELY AND ACCURATE DATA COULD UNDERMINE THE EFFECTIVENESS OF THE SCHEME.[2]

3. The Department's Landfill Allowance Trading Scheme, which began in April 2005, seeks to encourage further reductions in biodegradable municipal waste going to landfill and more effective local authority collaboration in developing alternatives. Under the Scheme, waste disposal authorities were allocated allowances for the tonnage of biodegradable waste they could send to landfill. The allowances from 2009-10 onwards are based on the proportions of local authorities' waste arising in 2001-02 (ie if a local authority had one per cent of the waste arising in England it has been allocated one per cent of England's available allowances). To allow a smooth transition into the scheme, allocations between 2005-06 and 2008-09 gradually decrease from the amount of biodegradable municipal waste landfilled in the base year (2001-02) to the authorities' 2009-10 allocation. Each allowance entitles an authority to landfill one tonne of biodegradable municipal waste.

4. The Department has confirmed that any English authority which landfills in excess of the allowances it holds after the reconciliation period will be liable to a financial penalty of £150 a tonne.[3] Authorities who already operate within their allowance could benefit from further reductions because they are entitled to sell their spare allowances to other authorities. Waste collection authorities, responsible for much of England's recycling effort, are not tied into the scheme by regulation but are encouraged to work with waste disposal authorities to support landfill diversion and provide waste statistics.

5. The effectiveness of the Scheme will depend on the Department's rigour in imposing penalties and other sanctions and on the completeness and timeliness of the data from local authorities and waste disposal contractors. There is a potential risk that authorities might believe the Government would not in practice impose penalties because of the impact on council taxes, but the Department confirmed to us that penalties will be imposed if allowances are exceeded.

6. We found relevant data on amounts of waste sent for treatment and disposal in the past, however, were neither complete nor timely. During the first Scheme year many authorities failed to meet the deadlines for quarterly reporting of waste data. By July 2006 however, only one of the 121 waste disposal authorities had not submitted the data for the first Scheme year (April 2005 to March 2006).

7. The Environment Agency's validation of these returns has been delayed because in many cases the data were not of sufficient quality to pass the first stage validation process which is required before the Agency's validation can begin (at 10 July 2006 only 21 authorities had completed this stage for the first Scheme year). In addition, waste disposal authorities rely on data from their constituent waste collection authorities before reconciliation can take place. There is, however, no mandatory requirement for waste collection authorities to submit such returns (only waste disposal authorities are required to supply data under the Waste and Emissions Trading Act 2003).[4] As a result there is a risk, that the scheme will lose credibility due to the late or inaccurate notification of validated results to authorities. In Wales, where the Landfill Allowance Trading Scheme began six months earlier, the Environment Agency found a 10% discrepancy in returns between local authorities' recorded figures and operators' figures in the first quarter. The discrepancy in England may be larger since in urban areas the link between collection and final disposal passes through a number of intermediaries.

AT THE RATE OF PROGRESS FOUND AT THE TIME OF THE NAO REPORT, THERE WAS A SIGNIFICANT RISK OF LOCAL AUTHORITIES FAILING TO DIVERT SUFFICIENT BIODEGRADABLE MUNICIPAL WASTE FROM LANDFILL TO MEET EUROPEAN UNION TARGETS[5]

8. We reviewed the outputs of a Departmental steering group set up to oversee the development of a model to forecast the likely impact of different initiatives to reduce reliance on landfill.[6] The model takes account of, among other things: disposal method costs; existing and planned capacity; build times; taxes, penalties, targets and the Landfill Allowance Trading Scheme; and "pressure factors" to reflect non-financial issues (eg the political unpopularity of certain technologies reflecting public opposition).

9. To divert sufficient waste from landfill, the Department's model indicated the need for:

— significantly increased rates of recycling and composting to around 40% by 2010;

— an increased requirement for residual waste treatment, including energy from waste (using refuse-derived fuels) for post-recycling residues;

— mechanical and biological treatment plants becoming operational between 2005-06 and 2012-13.

10. Our participation in the Department's development of a forecasting model enabled us to examine the rigour of the assumptions used. The Department's modelling indicated that, if all existing plans for waste treatment facilities were realised within one year of their planned delivery date, the 2010 target could be met, implying a national recycling rate of around 40%. The Department's model implied local authority yearly municipal waste management costs would rise from just under £2 billion in 2003-04 to £3.4 billion in 2009-10 and £4.2 billion in 2012-13 to fund new waste management practices.[7] Yet such an increase could face opposition. Our survey found 39% of the public think local authorities should be "most concerned about minimising the cost to council taxpayers when collecting and disposing of household rubbish." We also found, however, that half of the public did not know how much they paid for their waste collection and disposal. Of those that did, the most popular choice was over £200 a council taxpayer a year. The actual average was around £75 a council taxpayer a year.

11. The Office of Government Commerce's survey of waste disposal authorities in Autumn 2005 asked about progress in developing the new capacity needed to meet the Landfill Allowance Trading Scheme allowances. Eighty seven out of 121 authorities replied, of which less than one in five were entirely confident that they would divert the required level of biodegradable municipal waste and some one in three had not yet identified how they proposed to dispose of waste other than by landfill. Based on their plans at the time of our report, we estimated that authorities would miss their 2010 landfill allowances by approximately 190,000 tonnes and their 2013 allowances by approximately 960,000 tonnes.[8] Extrapolated to a national level, the figures would be 268,000 tonnes and 1.37 million tonnes, respectively.[9] On this basis, we estimated potential penalties could be as much as £40 million for missing the 2010 targets and £205 million for missing the 2013 targets.

12. There is still an opportunity for authorities to amend or develop their plans to address any shortfall in alternative disposal capacity, although there is considerably more scope to do this in relation to the 2013 target rather than that for 2010. As things stood in Summer 2006, it may be too late for authorities to bring forward plans for new residual waste treatment facilities and have them ready in time for 2010, although such action could contribute to meeting the 2013 target. However, completion of new recycling and composting plants, as well as mechanical biological treatment plants, should still be achievable if procurement processes are already in hand.

THE AMOUNT OF WASTE RECYCLED EACH YEAR HAS INCREASED CONSIDERABLY, BUT IT WILL BECOME MORE DIFFICULT TO MAINTAIN THIS RATE OF INCREASE[10]

13. According to local authority reports, the proportion of household waste being recycled or composted in England has increased by 12 percentage points since 2001. The rate reached 23% in 2004-05, suggesting the Department will meet its target of 25% by 2005-06.

14. The United Kingdom's recycling and composting rate lags behind that of leading European countries. Based on 2001 data, recycling rates in the Netherlands, Austria, Germany and Sweden were almost double the United Kingdom's. For the high waste generators such as Germany, France and Spain, composting represents a smaller proportion of the total amount of municipal waste managed, but still far more than the United Kingdom.

15. Further increases in the aggregate municipal recycling rate will not necessarily lead to increases in the biodegradable recycling rate. About a third of household materials are not biodegradable, such as cans, glass and plastic. The Household Waste Recycling Act 2003 requires all authorities to collect at least two types of recyclable waste from households by 2010.

16. Levels of recycling have increased, but local authority data indicate wide variations in performance in 2004-05 (see Figure 1).[11] Ten authorities (2.5%), such as St Edmundsbury Borough Council in Suffolk, recycle or compost over 40% of their waste. In contrast, 70 authorities (18%), such as the London Borough of Newham, recycle or compost less than 15%. Authorities with higher recycling rates tended to collect organic waste (mainly garden waste) directly from households and had specific facilities to remove recyclable materials from general household waste.

Figure 1: Differences in recycling rates between local authorities in 2004-05

Source: National Audit Office analysis of Audit Commission data.

17. The Department has provided £336 million in funding between 2002-03 and 2005-06 (through the Challenge Fund) to encourage local authorities to recycle more waste. The Department awarded grants on the basis of bids received from high-performing and low-performing authorities. Targets were set for each project, although funding was not dependent on their achievement. The Department distributed £131 million through the Challenge Fund in 2003-04, which contributed to an increase in recycled tonnage of 166,000 tonnes against a target of 222,000 tonnes (75%). These schemes should yield greater benefits in future years as they become better established.

18. Although the grants are likely to have contributed to increased recycling, there is no clear link between the amount of the grant and the consequent increase in performance. Our analysis of the household recycling performance of unitary authorities between 2002 and 2005 shows that the level of Challenge Funding received by an authority does not correlate with its recycling performance during the period.

19. In addition, the Department's Local Authority Support Unit and WRAP Ltd's Recycling and Organics Technical Advisory Team (ROTATE) provide advice to local authorities on recycling practices and to encourage public participation. A review of the Local Authority Support Unit by BeEnvironmental Ltd in December 2005 found that some 80% of 77 local authorities who offered a view thought that the direct consultancy support, the largest part of the Unit's programme, provided "good value for money". A review of the Recycling and Organics Technical Advisory Team by Exodus Market Research in September 2005 found most of the 54 local authorities contacted considered the service helpful and that improvements had resulted, although 12 authorities (22%) queried the quality of consultancy support. Performance appeared to have marginally improved when Exodus surveyed local authorities again in February and March 2006. Exodus found that, of 89 authorities surveyed, 13 (15%) queried the quality of the consultancy support. Sixty-six of the authorities surveyed by Exodus (74%) claimed to have acted on advice given. WRAP commissioned NOP to evaluate its public awareness campaign and found that by April 2006 the proportion of people classed as "committed recyclers" increased from 45%-57%. Almost all local authorities have benefited from support provided by the Local Authority Support Unit or WRAP and it is very difficult to separate the impact of these services from other factors which might divert waste from landfill.

INITIATIVES TO GET BUSINESSES AND HOUSEHOLDS TO MINIMISE WASTE REMAIN AT A VERY EARLY STAGE[12]

20. Minimising the amount of biodegradable municipal waste produced is potentially the most cost-effective way of reducing the amount sent to landfill. There are two main approaches: encouraging producers to reduce packaging and other materials likely to end up as waste; and encouraging households to reduce waste (for example, by having their own compost bin). Both programmes reduce the burden on local authorities collecting, treating and disposing of waste.

21. WRAP has instigated a number of projects to minimise volumes of waste generated. The projects could lead to reductions in waste, but progress is likely to take time:

— Home Composting Scheme—this is a long-term scheme to increase diversion from landfill by preventing garden and kitchen waste from entering the waste stream. In the three years to March 2006 approximately £30 million was spent on 1.5 million bins, marketing, delivery and support. WRAP estimates that, over a ten year period, with a reasonable level of take-up, the scheme could divert 300,000 tonnes of waste a year at a cost of about £12 a tonne a year. In some areas, though, the Scheme is in competition with separate local authority initiatives to collect green waste for composting.

— Waste Minimisation Innovation Fund and the Retailers Initiative—the Fund has a budget of £8 million and aims to reduce household waste by almost 320,000 tonnes by March 2007 (£25 a tonne) by reducing packaging, preventing food waste and improving the efficiency of distribution systems. To March 2006, WRAP has spent some £5.5 million and let contracts for 25 projects. Based on likely estimates of take-up, WRAP estimates these projects offer potential savings of 330,000 tonnes, of which 60,000 tonnes would be biodegradable if fully rolled out across the retail sector.

— The Courtauld Commitment—signed in July 2005 with 13 leading retailers who committed, through individual projects yet to be announced, to: reduce growth in packaging waste by 2008; deliver absolute reductions in packaging waste by March 2010; and identify ways to tackle the problem of food waste. It is too early to assess the impact of the Commitment but it has the potential to make significant reductions in biodegradable municipal waste generation.

— The Real Nappies Programme—aims to encourage greater use of re-usable nappies. The programme, estimated to cost £2.3 million, aimed to divert 35,000 tonnes from landfill by March 2006 (£65 a tonne). Current estimates suggest that a cumulative total of 16,000 tonnes of biodegradable household waste will have been directly diverted by funded projects in England by the target date at a cost of £912,000 (£57 a tonne). This estimate does not take account of continued benefits in future years and wider changes to consumer choices promoted by the programme. The balance of the programme funding has been directed at these benefits.

22. Other countries have imposed a charging scheme on households to reduce volumes of waste and maximise household recycling. Our consultants found that the most common, and successful, approach is known as "pay-as-you-throw", whereby households are charged variable rates according to the weight or volume of residual waste collected. The general trend was towards "two-tier" charging in which householders pay a standing charge for waste collection, plus a variable charge according to the amount of waste generated. Our consultants found "pay-as-you-throw" schemes running in Austria, Denmark, France, Ireland, Italy, Germany, the Netherlands and Sweden. In their view, such schemes could lead to reductions of up to 40%, but can lead to adverse impacts, such as increased fly-tipping.

23. The Environmental Protection Act 1990 prohibits local authorities in England from charging households directly for waste collection.[13] Some collection authorities, have, however, used Section 46 of the Act to charge for additional containers, such as for garden waste, or to restrict and specify what householders can do with their waste.[14] In its current Waste Strategy Review, the Department states that, in the light of pilot projects currently underway, "Government intends to consider the scope and desirability for additional pricing mechanisms, including householder charging, to support the levels of recycling anticipated to be required."[15]