The Chairman: Does a member of the European Scrutiny Committee wish to make a statement?

Keith Hill (Streatham) (Lab): It is a delight to serve under your stewardship, Mr. Hancock. I thought that it might help the Committee if I took a couple of minutes to explain the background to the document and the European Scrutiny Committee’s reasons for recommending it for debate.

Waste electrical and electronic equipment—WEEE—is one of the target areas for prevention, recovery and safe disposal, because it includes various hazardous materials. A large proportion is land-filled, incinerated or recovered without any pre-treatment, and its decreasing lifespan has led to its rapid growth. That encouraged the Community to adopt two measures in 2002: one restricted the use of certain hazardous substances in such equipment, while the other established procedures to reduce the amount of resultant waste and increase the level of recycling and recovery. In particular, that required producers to take financial responsibility for waste management; to ensure the separate collection of electrical and electronic waste; to set up systems for its improved treatment and reuse or recycling; and to provide adequate information to consumers.

The Commission maintains, however, that the measure has given rise to several major problems, so it has proposed several changes: the collection rates for electrical and electronic waste would be expressed not as a fixed amount, but as a minimum percentage of sales on a member state’s market; the obligation on producers to find finance the collection of such waste would extend to collection from private households; and the recovery, reuse or recycled targets would be increased by 5 percentage points.

The Government expect the main benefit to be a reduction in carbon dioxide emissions, but they consider that the proposed separate collection target for electrical and electronic waste might be ambitious, given the UK’s current situation, and that there are issues relating to producer financing. The Government also suggest that the annualised cost of the proposals would be about £37 million, whereas the corresponding benefits would be only about £11 million.

The European Scrutiny Committee has concluded that the proposal gives rise to several issues that should be considered further, including the disparity between the costs and benefits, the practicality of achieving the separate collection targets, and the justification for placing an additional financial burden on producers. We have therefore recommended it for debate in the European Committee.

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Ian Lucas): It is a great pleasure to serve under your chairmanship again, Mr. Hancock; I think that you are the first Chairman before whom I have appeared twice.

The Chairman: It is a good omen.

Ian Lucas: Thank you, Mr. Hancock. I am also grateful to my right hon. Friend the Member for Streatham for presenting the background to the proposed directive, which enables me to truncate my comments. I will be interested in due course in dealing with any issues that arise in the debate.

It is recognised that electrical and electronic equipment is a growing waste stream. That should be addressed by member states not only because of the volumes involved, but because of the potentially hazardous nature of the resulting waste. It is important therefore that we ensure that WEEE is treated, reprocessed and recycled to the highest standards possible. With that in mind, the Commission has given commitments in the original directive to review the different systems introduced across member states, the minimum collection targets that member states must meet, and the treatment and reprocessing targets to be achieved. The recast is a result of that review.

The main elements of the proposed recast of the WEEE directive are as follows. First, it will clarify the definition of the word “producer” so that producers would only have to register in one member state to permit EU-wide coverage. Currently, they have to register in every member state in which they operate. Secondly, the recast directive will change the basis of the separate collection target from a calculation based on kilograms of WEEE per head of the population calculation—currently 4 kg—to a target based on the amount of electronic and electrical equipment placed on the member state’s market. The initial minimum target proposed for the recast directive, to be met by 2016, is for member states to achieve a minimum collection rate of WEEE equating to an average of 65 per cent. of the electrical and electronic equipment placed on the market in the previous two years.

Thirdly, the directive will increase waste treatment and reprocessing targets by 5 per cent. across each of the product categories and, for the first time, introduce a 75 per cent. recovery target for the medical device sector. Fourthly, it will place greater controls on the shipment of electrical and electronic products identified for reuse overseas to eliminate the growing problem of the illegal export of WEEE outside the OECD. Fifthly, it will encourage member states to extend the limits of producer responsibility to include the cost of collection from households, as opposed to the current obligation to meet the cost of collection from designated collection facilities.

Finally, the directive will develop the inter-operational national registers, which will allow producers to register in only one member state to achieve EU-wide coverage. Currently, producers must register in each member state in which they place products on the market. The directive is an important one to ensure that the UK and Europe tackle increasing levels of electrical and electronic waste effectively; limit the environmental impact of electronic and electrical equipment; and deliver effective producer responsibility. We are consulting industry and the wider public on the proposal, and I welcome this debate.

The Chairman: We now have an opportunity for questions until 5.30 pm. I am sure that that will be ample time, but I urge Members who ask questions to be brief. It would be my choice to allow one or two supplementaries on each question, but I would like if possible to spread the questioning backwards and forwards, so that no one Member asks all the questions and everyone has a chance.

John Penrose (Weston-super-Mare) (Con): It is a pleasure to see you in the Chair, Mr. Hancock. I hope that everybody here would accept the importance of the directive and proper recycling and reuse, but there are grave concerns. As a kick-off question, I am deeply concerned about the costs-benefit ratio. We have heard that there is a mismatch: £37 million in costs and just £11 million in benefits. Although I hope that everyone would accept that there are external costs that are not mentioned that need to be quantified—the costs of carbon dioxide, for example, and the external impact of the pollution that would be caused by a failure to recycle and reuse waste electrical and electronic equipment—even after we have taken all those into account, we are still imposing a net cost on the economy.

Surely, if we were doing it the right way, the benefits that would accrue from reducing pollution, landfill and so forth would far outweigh the costs of achieving the changes that the Minister described and on which he is consulting. As that does not appear to be the case, I must conclude either that the impact assessment’s figures are wrongly calculated—in which case, perhaps he can tell us which bits he thinks are wrong and how his Department plans to update them—or that we are fundamentally choosing the wrong approach for the British economy to achieve an otherwise thoroughly desirable aim. I hope that he will elucidate which of those two options he thinks is right.

Ian Lucas: I am not in any sense resiling from the figures in the impact assessment; I want to make that clear from the outset. Of course I am conscious of the additional costs necessarily imposed from that statement on my part. Producers in particular are concerned about the additional costs imposed by the recast directive. As I said, we have been consulting and listening to producers and other interested parties, so we are considering the observations made by producers. However, one driver of the policy to improve recycling and provide for the proper disposal of these items, if not their reuse, is to try to reduce cost in the overall process and to incentivise business to take steps to lessen the environmental impact of the products that they originally manufacture. We must take that factor into account in the general equation.

John Penrose: My follow-up question is this: if the benefits that are achieved are so much less than the costs, why do the Government want to do this at all? Surely it is worth while doing it if we can come up with a big enough bang for the buck. We should be getting far more benefits. The value of the pollution being avoided should be far greater than the costs being imposed. How wide a gap between costs and benefits would the Minister be willing to see? How much of a net cost to the economy would he be willing to see before he would consider withdrawing the measure entirely because it involved too much cost for too little benefit?

Ian Lucas: I am reluctant to avoid answering questions, but in this case I think that I shall make an exception. What is important is that we want to improve the process that has already started with the existing WEEE directive. The targets to be introduced will be more challenging, because we need to go further to improve the system and the recycling taking place. That is the motor of the recast directive. We are doing very well in this country as regards the impact of the original targets, because we are ahead of the 4 kg target at present. From memory, I think that we are up to 6.9 kg. However, we need to do better and the type of target imposed by the recast directive is more challenging again. We need to improve the situation, but I am conscious of the burdens that will be imposed, and we shall consider that when we have the result of the consultation.

Mr. Mark Todd (South Derbyshire) (Lab): It is a pleasure to serve under your chairmanship, Mr. Hancock. First, how is “placed on the market” defined? Bearing it in mind that retailers in this country distribute goods through a variety of channels—they may do so online and they may export their business through third parties—I am not clear how watertight is a market that will have a direct percentage related to it payable back to the producer community in the UK. Bearing it in mind that the items vary hugely in shape, form and value, I am not clear how one can standardise a mechanism for establishing a percentage of the products, then attributing those back to the producer community. Bearing in mind the different mechanisms for collection that inevitably arise when a wide range of products is covered by the directive, I would welcome an explanation of the model for how that will function. Municipal channels will almost certainly be used, as well as retail collection points and so on. I am talking about how there ends up being a recharge back to the producers for the particular items recycled—for example, through a municipal depot.

Ian Lucas: There would certainly be a wide description of what a distributor is. I am grateful to my hon. Friend for raising those issues. He is right to say that there is a long list of different methods by which people acquire the goods: by mail order, by buying them in the local high street and so on. I think that the description of distributor would be as wide as it could be defined, because we need to include as many distributors as we can. The particular way in which that is done will be considered within the overall framework of the recast directive.

It is important to realise that the individual item is not traced through this process. The producers enter into an agreement to pay the organisations that dispose of the electrical goods in the broad sense, and do not trace an individual item through the process. Instead, a broad-based financial calculation is made to achieve the safe disposal of the electrical good. It is in that way that the cost would be addressed, by extending it to the producer. That is the issue that is addressed in the way in which we deal with the process in the UK.

Mr. Todd: I was going to follow that by saying that that answer raises further questions in my mind. Considering the hugely different life spans of many of these products, it is really quite hard to see how producers can agree a straight, flat percentage. For example, if one is dealing in light bulbs, the life span of that product is rather different from, say, that of a kitchen appliance of some kind. Both goods are covered by this directive, but it is hard to tell from the directive how to apply a percentage that is meaningful for the very different life spans of different products. I am also not clear how the second-hand marketplace is encompassed by the directive. If a company is a retailer of second-hand goods, many of which are recycled, is that company also subject to the directive?

Ian Lucas: On the last point, about the second-hand sale of electrical goods, I am afraid that I will have to write to my hon. Friend. He raises an interesting point, which I must confess had not crossed my mind.