Examination of Witnesses (Questions 40-59)
JOHN HEALEY
MP, MR GRAHAM
DUNCAN, JOAN
RUDDOCK MP AND
MR DANIEL
INSTONE
17 DECEMBER 2007
Q40 Mr Betts: Could we look at the
costs of the scheme. We understand that you have put £1.5
million on one side to help with the pilots. Does that mean that
authorities which enter into the pilot schemes will have their
administrative, enforcement and set-up costs paid for by government
directly?
Joan Ruddock: The basis of this
will be the local authority coming forward to government, making
a proposal, and that will then be evaluated. One of the issues
will of course be the amount of the set-up costs, how realistic
they are, and then the contribution that is required by them from
government to make that a viable option for them. We ought not
to prejudge that. We have set aside the specific amount of money
and we will spend up to that amount of money each year for three
years in order to support the pilots.
Q41 Mr Betts: When we did the previous
inquiry one of the issues that came out was that there could be
quite substantial costs for setting up, pursuing people who do
not pay, all the administrative arrangements that an authority
would have to charge. The authority cannot recover those from
the financial arrangements of the scheme itself.
Joan Ruddock: No.
Q42 Mr Betts: But then relies on
government to help fund the pilot. There is no way you can evaluate
a pilot on the basis of drawing conclusions about what would happen
if the same arrangements were run country-wide, because government
would not fund the country-wide scheme on the same basis, would
it?
Joan Ruddock: No. The modelling
has been done by Defra using our own situation here as opposed
to overseas but the models are based on the knowledge that has
come from overseas. Based on what we know here, the expectation
is that you will get a saving of up to £18 per household
if the recycling rates were driven up, in the way they have been
driven up elsewhere, in the way we would expect in the pilots.
Pilots then offer you the confidence, if there were to be a roll-out,
that long-term and very substantial savings could be made by the
local authority. That clearly would compensate for set-up costs.
Q43 Mr Betts: Therefore £18
could be saved over and above any savings that would be made by
what the authority would do to improve recycling anyway. That
is over and above because of the scheme.
John Healey: Waste disposal costs.
Q44 Mr Betts: Waste disposal costs
of £18.
John Healey: Per household.
Q45 Mr Betts: Over and above anything
that would have been achieved without this pilot. Therefore, £18
is the maximum incentive you can give to be made in a revenue
neutral authority. Is that right?
Joan Ruddock: No. No. Incentives
that can be deemed so that the local authority would make a proposal
that said, "This is the size of the incentive that we want
to put into this pilot." They do not have to be based on
savings or costs; they are incentives which the local authority
would think in their area would be appropriate to get behaviour
change.
Q46 Mr Betts: Who is going to pay
for the incentive?
Joan Ruddock: The incentive is
based on the local authority collecting in, if you have a charging
scheme, whereby they would collect in monies from those who recycled
least and rebate those who recycle most. The figure is one that
is deemed by the authority to make the calculations of how the
whole scheme would work.
Q47 Chair: There is also the suggestion,
is there not, that no resident is going to have to pay any more
for waste disposal under this scheme? Therefore how are they going
to pay penalties? If they do not pay penalties, you do not have
any money to pay incentives.
Joan Ruddock: I am sorry, could
you repeat your question, please. I was speaking to Daniel.
Chair: Do you want to have a go at it,
Clive?
Q48 Mr Betts: The suggestion is that
there will not be any penalties, there will simply be incentives
in this scheme, as we understand it. If you only have incentives,
where is the money coming from?
Joan Ruddock: You mean rewards.
Q49 Mr Betts: Yes.
Joan Ruddock: You mean reward-only
schemes.
Q50 Mr Betts: Yes.
Joan Ruddock: It is possible to
do reward-only schemes but clearly the council that did reward-only
schemes would have to find the means to create the rewards from
within its general level of council tax.
Q51 Chair: But they can do that now.
My own council is doing that at the moment. It is giving a prize—to
a tiny number of households, admittedly. It has the power to do
that anyway. What is going to be different under this scheme?
Joan Ruddock: The other important
thing we are doing under this scheme is of course to link it with
council tax itself. That is very different from the kind of rewards
which, as you say, are going to a small number—a very, very
small number. This is a scheme which, because it will be linked
to council tax, will be affecting and can affect every household
in the area where the pilot takes place.
Q52 Mr Betts: In terms of administrative
costs, you say there will be anticipated savings.
Joan Ruddock: Yes.
Q53 Mr Betts: If in the pilot scheme
itself the councils receive particular help from government funding
which will only be available for the pilots and not for the generality
of councils ultimately, you have to be very careful about the
lessons you draw from the pilots.
Joan Ruddock: Of course.
Q54 Mr Betts: They simply cannot
be transferred onto a national basis because the Government is
not going to fund the administrative costs on a national basis.
Is that an understood and accepted situation?
Joan Ruddock: It is understood
to the extent that, as you are illustrating in your questions,
because it is complex and we have to be extremely careful that
the pilots are properly controlled, properly monitored and analysed,
so that we know the basis on which we can then suggest it is appropriate
to move forward, we will put the money in for the set-up costs.
But we do believe that will demonstrate the savings that could
then be used by councils to justify putting up the money for their
own set-up costs. That is the confidence that we expect to give
them.
Q55 Mr Betts: The reason we are pushing
this is that, when we did the inquiry before, we found incredible
enthusiasm, almost universally, from local authorities who wanted
the power to be able to have these charges or incentives in terms
of waste collection but we could not find an authority which wanted
to embark on it because of what they saw as the quite prohibitive
costs of setting up, of administering and of enforcing what are
fairly small sums of money.
Joan Ruddock: It is because of
that kind of reaction, which we have been able to appreciate from
the inquiry you undertook and the evidence that came, that we
decided to do the pilots, to do them in a way which is going to
be very thorough and to put the money behind it so that we can
get out of those pilots what we need as a government to make a
decision whether to roll this out. I would just say that we are
making a huge debate about these particular schemes when they
have been running in many other Member States for a considerable
length of time with proven results, so we should not be so afraid
of being able to deliver a proper scheme in Britain.
Q56 Dr Pugh: I must admit that I
share the bewilderment of my colleagues here. Let us be clear
about this: the Government want an incentive scheme. There are
going to be two sorts of incentives possibly incorporated in the
scheme: positive incentives (which I think you just defined as
rewards) and negative incentives (which you could call fines,
penalties or whatever). From my simple way of looking at it, the
cost of the scheme is in giving any sort of reward; in other words,
a rebate. I think the former Minister of Waste Ben Bradshaw said
£30 was the right ball-park figure. I think you have said
£18.
Joan Ruddock: No. No, you misunderstand
me. The £18 is per household that the local authority could
conceivably save in the amount of money they would otherwise be
sending to landfill.
Q57 Dr Pugh: My supposition was that
if I was a zealous recycler in a pilot area I might get £30
off my council tax or something like that. Am I wrong in thinking
that?
Joan Ruddock: The whole point
of having pilots is for us to be able to test what kind of sum
would create an incentive. All it has been possible to do is to
give indicative figures based on Continental experience. It could
be that here we would believe that it had to be a higher sum of
money in order to create an incentive. That is what we will be
able to judge. Obviously inflation has been occurring since this
period.
Q58 Dr Pugh: Are you supposing that
local authorities, when they start a scheme, are not really going
to be in a position to vary it bit by bit, month by month, week
by week? There will have to be some fixed rate to tell people
about.
Joan Ruddock: Yes.
Q59 Dr Pugh: That when they reach
a certain threshold they will get £30 off or they might have
a taper or whatever, but they are going to have to have fixed
prices to start the scheme off? Otherwise householders simply
will not know what they are doing, will they, or what the benefits
are of them adopting a path of virtuous recycling? If we take
it there is a fixed sum—that is the cost of the scheme—and
then you have to take off that the administrative costs, the collection
costs, the disposal costs and so on, and, working in the other
direction, you have a reduction in landfill levy and whatever
market value the recycling will have, and then you presumably
have some income also from what I have learned to recognise as
"negative incentives" or penalties or fines, at some
point that scheme might possibly break even in a pilot scheme.
After how many years do you think that will be? Assume you have
some clever model of a Treasury kind here that is going to assist
you—you certainly claim to have a model—would you
anticipate that some of these schemes, if the appropriate numbers
stacked up, would be, not out of cost, but breaking even?—and
not in profit, of course, because they are not allowed to do that.
Joan Ruddock: That is right, they
are not allowed. All we have said is that over a number of years
local authorities would even out these costs and it would be revenue
neutral. I do not know, I will ask officials if they are able
to answer you in any more detail.
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