1. This memorandum responds to the Committee's letter on Refuse Collection of 18 January 2008. The letter formally noted the points on which further evidence was requested or offered at the oral evidence session on 17 December 2007.


Assessing cost pressures from the landfill tax escalator


2. In response to the request from Mr Betts at Question 14, the following paragraphs provide a note about the assessment made in the 2007 Comprehensive Spending Review (CSR07) of the cost pressure on local authorities created by the increase in the landfill tax escalator, and the way pressures on authorities over the next three years have been assessed.


3. In preparation for CSR07, each government department with policy responsibility for services delivered by local authorities analysed cost pressures - and the scope for efficiency gains - in relation to those local authority services. In line with its responsibilities, the Department for the Environment, Food and Rural Affairs (Defra) led on assessing cost pressures and scope for efficiency gains on waste management.


4. In the case of each service, representatives of local government led by the Local Government Association (LGA), practitioners and other stakeholders were engaged in the process, contributing evidence and expertise to strengthen the evidence-base on which the assessment was made. Communities and Local Government (CLG), working with HM Treasury, played a co-ordinating role - ensuring that issues which cut across services, or were generic to local government as a whole, were considered in the round. This involved, for example, an extensive programme of work to assess the scope for efficiency gains and service transformation across local government services and beyond.


5. As John Healey said when giving evidence to the Committee, waste and social care were two of the main areas where pressures were considered to be greatest in the CSR07 period. Priority was placed on ensuring that the cost drivers in this area were fully understood as decisions were taken on spending plans. CLG and Defra worked intensively in 2006 and 2007 - with strong, sustained input from the LGA, drawing on a group of experienced practitioners - to examine cost pressures and the scope for mitigating them, in preparation for CSR07.


6. This work drew together available evidence to establish a full understanding of the cost drivers on waste, including: levels of biodegradable municipal waste going to landfill and the progress required to meet EU targets in 2010; levels of recycling and the progress required to meet national targets; predicted levels of waste arising; increases in landfill tax; and construction and fuel inflation. It also examined existing and past patterns of spend on waste by Defra and local authorities and identified areas of the policy framework that could be adjusted to enable England to meet its waste goals more cost effectively. The result of this programme of work fed into the Government's 2007 Waste Strategy, as well as informing decisions in the Comprehensive Spending Review.


7. The landfill tax, which increases the price of waste sent to landfill, encourages the diversion of waste from landfill to more sustainable alternatives. The standard rate of landfill tax has increased by 3 per tonne in each of the past three years and is currently 24 per tonne. The Chancellor announced in Budget 2007 that the standard rate would be increased by 8 a tonne, each year, from 1st April 2008 until at least 2010-2011. This would see it rising to 48 per tonne in 2010-11.


8. We consider that the landfill tax has been very successful. Overall quantities of waste recorded at landfill sites registered for the tax fell from around 96 million tonnes in 1997-98 to around 72 million tonnes in 2005-06, a reduction of around 25%. When considering local government funding levels, the Government takes account of the cost to local authorities as a whole of paying landfill tax. Increases in landfill tax are included in the analysis of cost pressures on local government which inform the Government's decisions on the overall level of funding to local government. The local government finance settlement voted for by Parliament therefore takes into account local government's landfill tax liability, including the increased costs resulting from the rise in the escalator announced in the last Budget.


Overseas experience of financial incentive schemes


9. At Question 67, Mr Betts requested a note on experience in Italy and Sweden, or other best European models for the implementation of financial incentive schemes.


10. The Government does not champion any one overseas scheme as the 'best' type of model. This is because different sorts of schemes will work well in different areas. For example, factors such as housing type or population can influence suitability. This is why the Climate Change Bill proposes to allow local authorities to come forward with their own proposals for piloting a waste incentive scheme, according to what is most suitable for their area. However, the Government wishes to make sure that local authorities can introduce, if they want, four common types of schemes operating overseas (and any combination of these) - they are sack-based, bin volume-based, frequency-based and weight-based schemes.


11. Attached at Annex A is a factual briefing note which may be of assistance to members of the Committee. Lord Rooker circulated this to Peers in advance of the debate in Committee on the waste provisions in the Climate Change Bill. It contains examples of a few schemes operating overseas, and the impacts which they have had on recycling rates, levels of waste and local authority costs. However, many more examples of schemes operating overseas are contained in the research report produced for Defra by Eunomia. This can be found, with a peer report, at the following link:


12. As part of this discussion on overseas charging schemes at Question 65 and Question 66, Mr Betts also asked whether the charges were entirely variable or a combination of flat-rate and variable charges. In general they tend to be a combination of both. Please find some examples of these below:

Flanders - Households paid the municipality an average of 179 per year in 2003, of which approximately:

o A third was via taxes related to the amount of waste which was generated (the variable element)

o A third was paid via a fixed household waste or environmental tax which is the same for each household, with the exception of some social corrections for certain target groups.

o The final third was paid via general taxes which are related to household income.

Treviso, Italy - total fee varied from 76 to 141 in 2005, with the variable element ranging from 28 to 87. The average variable element was around 50 per household.

Gent, Belgium - on average in 2002, a household was billed for around 160 per annum, of which around 60 per annum was a variable charge.


13. It is the variable element in these schemes which provides a behavioural incentive, and which is analogous to charges under a waste incentive scheme of the sort the Government is proposing for England. Typically, the average variable fee in other countries has been of the order of 35-50 per annum. The difference is that in England the revenue collected in by the authority would be paid back to residents through rebates, rather than being put towards covering the costs of providing waste services. Instead, costs of providing waste services would continue to be met through a combination of central Government grant and Council Tax.


14. Again, more examples of overseas schemes and how they operate are included in the research report in the previous link.



15. At Question 86, Joan Ruddock offered to write to the Committee on statistics relating to fly-tipping. The most recent fly-tipping statistics for England for 2006-7 can be found on the Defra website at the following link:

16. The results, covering 354 English authorities, show an increase in incidents over the past year, however, nearly half of all cases reported came from a single council. Key results include:

Local Authorities in England reported that they had dealt with more than 2.6 million incidents of fly-tipping - up five per cent on 2005-06.  1,289,410 incidents were reported by Liverpool City Council. 

Enforcement action taken by local authorities, excluding Liverpool City Council, increased by 46 per cent to 357,829 cases.

Half of all fly-tips recorded involved single black bags and it is estimated that the majority of these occurred in back alleys and involved waste placed out for collection incorrectly, primarily in Liverpool. However, when Liverpool City Council is excluded, 48 per cent of all recorded fly-tips occurred on the highway and 53 per cent of fly-tips were of a car boot or small van load in size. 

77 per cent of fly-tips involved household waste - a 5.4 per cent increase on 2005-06.  Once Liverpool City Council is excluded, 56 per cent of all fly-tips involve household waste - a 10 per cent increase on 2005-06.


17. In Question 84, in which Dr Pugh referred to fly-tipping prevention strategies, he also referred to households of different sizes and asked if any continental schemes had been sufficiently sophisticated to make allowances for these factors. Joan Ruddock offered to write to the Committee on this point with further information in her response to Question 86.


18. Please find below some examples of how overseas schemes are catering for different household types and sizes:

San Jose, California (bin volume-based scheme) - Households are assessed on household size and level of income. 50% discount on 32-gallon service level for 1-3 person households with income less than 175% of federal poverty line. 50% discount on 64 gallon service level for four plus person households with incomes less than 175% of federal poverty line.

Leuven, Belgium (sack-based scheme) - households with new born babies receive 40 free sacks to use over time

San Fransisco (bin volume-based scheme) - discount on 20 gallon container for all elderly residents.

Fingal County, Ireland (bin volume-based scheme) - Those who are wholly dependent on Government social welfare payments are entitled to free tags (to attach to bins) per year. The number of tags you receive depends in part on the number of people living in your household.


Status of charges under financial incentive schemes


19. During the CLG Select Committee's hearing on Waste on 17 December 2007 Mr Olner expressed a concern that residents would see charges under a waste reduction scheme as an additional tax. The Government would like to take this opportunity to clarify the status of charges under this kind of scheme.


20. As explained at the time, the Office for National Statistics (ONS) has final responsibility for determining the classification of income (e.g. as taxation) for the purposes of national accounts. However, in this case, the Government will classify income collected under waste incentive schemes as taxation, in accordance with National Accounts guidelines. Broadly speaking, this is because the level of charge is not directly related to the cost of delivering a service, but to incentivising certain behaviours.


21. In practical terms, charges under a waste reduction scheme would feel very different to residents from most other taxes. This is because where an authority levies a charge on certain households who fail to recycle, it will have to return the money raised by way of rebates to all other households. This means that many residents will actually gain from the scheme. Meanwhile, unlike most taxes, neither the Government nor local authorities would keep any money to cover costs or to fund general expenditure. For these practical reasons, the Government does not accept that residents will necessarily view charges under a waste reduction scheme as an additional tax - especially not those who through positive action on recycling and minimising their waste, benefit from a rebate.




Annex A


Waste Reduction Schemes


Schemes which encourage householders, through rebates and charges, to produce less residual (non-recycled) waste, could help achieve important reductions in greenhouse gas emissions.




Methane emissions from biodegradable waste in landfill account for 3% of all UK greenhouse gas emissions. There are also significant carbon emission savings possible from recycling non-biodegradable materials, such as plastic, glass, steel and aluminium. We all need to take steps to reduce, reuse and recycle our waste for the good of the environment. Householders have a key role to play in this, since they produce around a quarter of all waste sent to landfill in England.


We have made progress in recent years - household recycling has nearly quadrupled in the last 10 years, achieving 30.7% in 2006/7, and waste is growing much less quickly than the economy. However, we still lag behind much of Europe.


Schemes which make a charge for collecting household waste (except in a few limited circumstances, for example garden waste and bulky waste) are banned in the UK under section 45(3) of the Environmental Protection Act 1990. The UK is the only country of the EU15 to have this kind of restriction.


The Local Government Association and individual local authorities have called for a power for local authorities to introduce "save as you throw" schemes. Under these schemes, residents who took steps to minimise, reuse, home compost and recycle would receive a Council Tax rebate. Sir Michael Lyons has similarly recommended that local authorities be given the power to introduce charging schemes for household waste, in close consultation with residents and other stakeholders. Green groups have also been supportive of waste charging.


Defra funded a research project, published in May, which included a comprehensive review of literature on overseas variable charging schemes; and modelled the potential impact of similar schemes in England. The report suggests that incentive schemes would be a powerful tool to reduce waste levels, increase recycling and reduce the amount of waste going to landfill.


Examples of schemes operating overseas are as follows:


Maastricht, Netherlands

Householders buy special sacks from local shops for 1 and must set out their waste in these sacks. Waste separated for recycling has risen from 45-50% to 65% since the scheme's introduction.




Flanders, Belgium

Householders pay according to the weight of the waste they throw away, or according to the volume of their bin. Areas with charging schemes have seen a net waste reduction of between 24 and 28 kg per inhabitant per year.


Treviso, Italy

Households pay for extra waste collection on top of a fixed minimum number of collections (between 1 and 6 depending on household size). The average charge is 50. The schemes have helped achieve a 12% reduction in waste since their inception.


Bjuv, Sweden

Bins are weighed before and after emptying and householders pay per kilogram. Residual (non-recycled) waste fell by 45% in the first year of the scheme, and waste separated for recycling and composting rose by 49%.


Seattle, USA

Householders can choose between a standard 32 gallon bin, a 19 gallon bin and a 12 gallon bin, and pay less for smaller bin sizes. Recycling tonnages have increased by 60% and participation in recycling has increased to 80%.


Over the summer, the Government consulted on proposals to allow local authorities to introduce incentive schemes to promote recycling and reducing household waste. 80.5% of respondents who addressed this question thought authorities should have the power to introduce financial incentives.


What is being proposed under the Climate Change Bill


Clauses 51-54 and Schedule 5 of the Climate Change Bill will allow up to 5 waste collection authorities to pilot waste reduction schemes for the purpose of encouraging households to reduce, reuse and recycle their waste.


Households producing low levels of residual (non-recycled) waste will receive a rebate from the local authority. In some schemes, households producing the most waste could pay more. However, any revenue raised by the authority must all be paid back to residents through rebates. Neither the Government nor local authorities would keep any money for their own purposes. Nor could local authorities use the revenue to cover any of their costs.


The provisions in the Bill will also allow the Secretary of State to modify Council Tax regulations in order to allow waste charges and rebates to be combined with Council Tax bills.


It would be up to authorities, working closely with their communities, to come forward with their own proposals for piloting a scheme. Up to five of the authorities will then be selected by the Secretary of State to go ahead with pilots.


Below are examples of 3 waste reduction schemes. There are, of course, many other possible ways to design a scheme and we would welcome authorities coming forward with their own versions suited to their local area.


Bin volume-based charge and rebate scheme, not linked with Council Tax

At regular intervals (per quarter or per half-year, for example) householders can select which size of bin they wish to use. Householders who opt to use a bin which is smaller than the standard size receive a rebate, which could be in the form of a cheque from the authority. Those who have a standard sized bin pay a small charge to the authority. Money collected through the charges is used to fund the rebates for those with smaller bins.


Sack-based charge and rebate scheme, linked with Council Tax

Householders may only present their waste in the sacks specified by the local authority. They must purchase the sacks for a small charge. Everyone receives a flat-rate rebate in the form of a lower Council Tax bill. The rebate is funded by charges for sacks. Some people will pay out less for sacks than the value of the rebate; and some will pay out more.


Weight-based rebate-only scheme linked to Council Tax

Waste is weighed as it is collected from householders in the scheme. Households which threw away less than the average amount of waste - measured by weight - receive a rebate in the form of a lower Council Tax bill. This could be on a sliding scale, with larger rebates (i.e. smaller Council Tax bills) for those throwing away the very least. The costs of rebates would need to be met from the local authority's budgets.


Any scheme must meet the following criteria:

The authority must provide householders in the scheme with a good kerbside recycling service. This will be defined further in guidance to be issued by the Secretary of State.

Schemes must take account of the needs of groups that could potentially be disadvantaged. For example, those who have difficulty separating their waste for recycling may be exempt from the scheme, or large families may be able to throw away a certain amount of waste before they become liable to pay anything.

The authority must have in place a fly-tipping prevention strategy which might include, for example, effective communication and awareness raising and clear enforcement policies.


Local authorities may decide to apply the scheme to the whole of their area, or just some wards or households, to reflect the most suitable approach for that community. For example, they may wish to run the pilot just in certain wards, or apply it only to certain types of household or property.


Authorities will also be free to decide the level of rebates and any charges according to what they think will incentivise behaviour change in their areas. Charges would therefore not be linked to the cost of the service, nor to the savings made through the scheme (as a result of the authority having less waste to collect and dispose of). The Government will, however, have a reserve power to create in the future a cap on the level of incentive, should this be necessary.


Where residents fail to comply with the rules of a scheme (for example by presenting their rubbish in the wrong sacks) the local authority will be able to issue warnings or fines, as at present. If households fail to pay money they owe under the scheme enforcement options would be broadly similar to council tax without, we envisage, the most severe penalties applying. Ensuring that these measures are available to local authorities will enable them to run fair and effective schemes.