Examination of Witnesses (Questions 55-59)
MR PETER
LAYBOURNE AND
MR PETER
JONES
23 JANUARY 2007
Q55 Chairman: Good morning and welcome
to the Committee. We are most grateful to you for coming in. Did
you want to introduce yourselves so we are clear who you are from?
Mr Laybourne: Good morning, and
thank you for the invitation. My name is Peter Laybourne and I
am Director of the National Industrial Symbiosis Programme.
Mr Jones: Thank you very much
for the invitation, Chairman. I am Peter Jones, a Director of
Biffa Waste Services.
Q56 Chairman: Perhaps I could kick
off. This is more for you, Mr Laybourne. You talk about how the
Landfill Tax has achieved valuable environmental objectives through
allowing the Treasury to use part of the revenue it generates
to fund certain projects, including your own work. Could you give
us an overview of the impact those projects have?
Mr Laybourne: What I would like
to do is perhaps just cover the main objective of the tax in terms
of the landfill diversion. In the 18 months since the project
started it has diverted 1.13 million tonnes of waste from a landfill.
This waste is on an annual basis, so that will be repeated year
after year, not ad infinitum but certainly for a significant period
of time. The exciting thing for me, not reaching that prime objective,
it is a foot in the door to engagement with industry to get other
environmental benefits. For example, in that same time we have
reduced hazardous waste by 123,000 tonnes; brought CO2 down by
1.33 million tonnes, brought industrial water use down by over
1.13 million tonnes, so it has got that much wider impact than
its initial design purpose.
Q57 Chairman: Thank you. Could both
of you say how the effective you think the Landfill Tax itself
has actually been in its direct impact of discouraging the use
of landfill? I think there has been some debate about exactly
how big that effect has been.
Mr Laybourne: We engage with about
6,000 companies in the programme and the clear intent of an escalator
from a Landfill Tax has been a major factor in those companies
engaging with the programme.
Q58 Chairman: Is that your view as
well?
Mr Jones: Slightly more robust
I guess, Chairman, in the sense that we have 82,000-ish customers—we
think that the Landfill Tax is an instrument that has been woefully
inadequate and that in fact has not taken us anywhere near the
economic boundary for the waste industry to make its transition
technologically from burial to the innovative new technologies
of various sorts that are opening up for us. The harsh reality
is that in 1996 landfill gate fees for mixed organic waste were
of the order of £6-£7 per tonne and now running at the
order of £35 per tonne, of which £21 per tonne of course
is tax. That sevenfold increase in the cost of landfill has resulted
in a reduction of putrescible inputs (as is confirmed in fact
by Government statements, we agree with) to the tune of a 16%.
Anybody claiming that a sevenfold increase in prices results in
around about a fifth of behaviour change and argues that is in
fact having an impact is, I think, slightly away from reality.
We have a long way to go. If you look at municipal impacts, there
has been a more significant reduction. Municipal organic inputs
to landfill has gone from 18 million tonnes to 13—that is
a reduction of 27% but you have to remember that, as well as being
hit by the Landfill Tax, they also have the additional threat
of the trading permit regime coming up, the so-called LATS regime;
and also they have received (we think) of the order of £200
million to £300 million worth in subsidies to implement separate
recycling systems in terms of plastic buckets and so on, of which
the waste industry has been the beneficiary.
Q59 Joan Walley: If you are going
to get the waste industry out of this limbo land and look at behavioural
changes and the general public's role, what role do you think
the Landfill Tax escalator as it currently stands at the moment
could take? We are going to have to collect a £3 a tonne
increase in April and then a possible further increase in 2008.
What do you make of that? Is that sufficient, or is it going to
leave us in limbo, or do we need to be making more of a step change?
What is your advice from the Treasury on that?
Mr Jones: The way that the public
responds to its consumption of any good or service is a function
of how that good or service is delivered by the supply chain.
What I mean by that is that the public landfills the majority
of its waste because the six major waste companies find it in
their economic interests to bury that waste rather than do anything
else with it. If it was in our economic interest to either recycle
it, or create energy from it, or to bio-digest it in various forms
we would do that and the public would receive that service. The
public do not get excited about the design of motor cars because
they disagree with it. They get that design because Ford or General
Motors' R&D departments decide that in response to legislative,
regulatory and fuel cost influences that is the way you design
a car to remain competitive in the market, and the waste industry
is no different. The reality for is us that the tax needs to be
at least £35 per tonne. It should have been escalated far
more quickly and there should have been an RPI adjuster put on
that which, by 2010, would put in a tax of the order of £50
per tonne. It is at that level it then becomes attractive for
us to switch from what would then be uneconomic landfill. You
can make a perfectly acceptable profit from landfill within the
current regulatory framework at a gate fee of £15 per tonne.
To operate anaerobic digesters, gassifiers, waste incineration
plants, composting plants and recycling you need to look at a
cost of the order of £40, £50 or £60 per tonne,
and the tax is the mechanism by which that gap needs to be closed
if we are to design our delivery service differently.
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