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General Committee Debates
Delegated Legislation Committee Debates
|©Parliamentary copyright||Prepared 23rd November 2010|
Publications on the internet
General Committee Debates
Delegated Legislation Committee Debates
Draft Producer Responsibility Obligations (Packaging Waste) (Amendment) Regulations 2010
The Committee consisted of the following Members:
Dr Sarah Thatcher, Committee Clerk
† attended the CommitteeThe following also attended, pursuant to Standing Order No. 118(2):
It is a pleasure to serve under your chairmanship today, Mr Gray. We are meeting to debate regulations that amend the Producer Responsibility Obligations (Packaging Waste) Regulations 2007 in three ways. First, they set new recovery and recycling targets for packaging waste for 2011 and 2012. Secondly, as I will explain later, they will improve the transparency of how the packaging recycling system is funded. Finally, they make a number of technical changes to improve the clarity of the regulations and reduce costs to business.
Packaging fulfils an important role in protecting food and other goods on their journey from farms or factories via warehouses and shops, until they arrive at homes and offices. In 2009, nearly 11 million tonnes of packaging was placed on the UK market together with the products it protects. The producer responsibility system for packaging ensures that a minimum proportion of such packaging is recycled once it has done its job. It is important to remember that tackling waste is an issue for us all. That is why the Government are undertaking a review to consider all aspects of waste policy and delivery in England. The main aim of the review will be to ensure that, together, we are taking the right steps towards creating a zero-waste economy, where resources are fully valued and nothing of value gets thrown away.
The EU directive on packaging and packaging waste, which has been in place for more than 10 years, requires member states to recover a minimum of 60% of all packaging waste, of which 55% must be recycled every year. The UK achieved those targets in 2008 and 2009, and it is on course to do so again in 2010 via the producer responsibility system set out in the producer responsibility regulations. Currently, we only have recycling targets for packaging producers in the UK until the end of 2010. Therefore, we need to put measures in place to ensure that the UK continues to meet the EU packaging and recycling targets in future years, so that we can ensure that packaging waste continues to be recycled. Without those targets, we can expect costly infraction proceedings.
We also need to ensure that those targets are achieved at the lowest possible cost to businesses in order to support them in this challenging economic climate. Next year, the Government will set out their long-term
The regulations include slight increases in the proportions of steel and plastic packaging wastes that producers will have to recycle over the current 2010 levels. That reflects recent changes in the market for those materials and ensures that the overall EU recycling targets for such materials continues to be met. The targets are expected to deliver overall net benefits estimated at between £1.6 million and £18 million over two years in terms of reduced costs to business, the carbon savings associated with recycling and the revenue from the sale of valuable material. Targets for 2013 and beyond will be considered in the light of the findings of the review on waste policy, which are due in spring next year, as I have said.
In addition to the recycling targets for 2011 and 2012, the regulations contain provisions on the transparency of the funding associated with packaging waste recovery notes, PRNs, and packaging waste export recovery notes, PERNs. Those are the evidence notes issued by accredited reprocessors and exporters to show that recovery and recycling has taken place. Reprocessors and exporters will now be required to report how they have spent the PRN revenue against new, more defined categories. The new categories have been developed in consultation with the industry and will provide a more accurate picture of how the funding is used to benefit the packing recycling system as a whole.
The regulations will also empower the environment agencies to set a common format for the business plans that reprocessors and exporters seeking accreditation have to submit. That will make the requirements clearer for business and save processing time for the agencies.
As I have mentioned, the regulations also contain a number of minor technical changes. The majority of those changes aim to clarify definitions, key dates for data returns and payment deadlines, and to update references to legislation that has been revised since 2007.
In line with the Government’s commitment to reduce the burden of regulation on business, these changes include two deregulatory proposals. The first is the removal of the requirement for reprocessors and exporters to have an independent audit, which can cost up to £10,000 for a large company. The second deregulatory change allows a certain category of smaller businesses to use a simpler method to calculate their legal obligation, which will save time and effort.
I believe that the proposed amendments to the packaging regulations will ensure that the UK continues to meet its EU obligations while keeping costs to UK businesses low. They will provide greater transparency for producers and local authorities regarding producer funding, and they will resolve a number of technical issues that will reduce the overall administrative burden on business.
The Minister will be pleased to learn that I do not intend to delay proceedings any longer than is necessary. This is the first time that I have spoken from the Opposition Front Bench in such proceedings. However, I assure him—as I have done on previous occasions—that our intention is to support him in his work, wherever we agree. Environment policy must take account of other policy areas, but we hope that we can debate ideas and prosecute policies that have the full support of the House. These issues are too important and the consequences are too long-term to be considered only on a Parliament-by-Parliament basis and I believe that they should be above the banalities of party politics.
The Minister is absolutely right, of course—packaging plays an important role. In so far as the regulations seek to provide greater transparency and clarity to regulation, we in the Labour party are supportive of them. There is no point in opposition for the sake of it, as I have mentioned. In principle, we welcome sincere attempts to reduce costs to businesses affected by any regulation introduced to help further a social good, which we believe is the intention behind these regulations.
We support the greater transparency that these regulations aim to promote with regard to PRNs and PERNs—at this point, I think that the Minister can tell that we have shared the same briefing. These are sensible changes, and I understand that industry is content with them. Some of the technical changes that tidy up the existing system also appear to be both minor and acceptable. However, some of the other technical changes require the Minister to provide further detail.
With regard to the removal of the need for an independent audit, will the Minister tell us whether the industry welcomes this move and whether it has actively sought this change? Current regulation sets recycling targets for packaging producers in the UK only until the end of 2010. Therefore it is inevitable that some measures should be introduced now to ensure that the UK meets the EU packaging recycling targets for the future. It is also vital that targets are set at such a level so as to ensure not only that future minimum targets are met but that the necessary confidence and certainty is given to business, local authorities and others with regard to future targets, so that necessary investments can be made now to make sure that future targets are met.
Fabian Hamilton (Leeds North East) (Lab): Will my hon. Friend acknowledge that industry—especially those in the packaging industry—wants to have targets going 10 years into the future, because that will help it with the future, as he has just underlined? Also, will he emphasise that point further in his response to the Minister, because it seems to me that these targets are not sufficiently forward-looking?
With that point in mind, and with regard to the necessary investments that need to be made in recycling facilities and the like, will the Minister tell us why
The Minister knows that there is disagreement about the way in which the Government have decided to proceed with certain aspects of the regulations. Our recycling industry is competitive. It has many active dynamics that drive performance, price and recycling levels. One of its most important dynamics is the gradual, predictable annual increase in recycling targets. The removal of that increase is likely to change business models and investment practices. Will the Minister give an assurance that it will not do so? What have been the consequences of flat, zero-increase recycling targets in this country in the past? The Minister will be aware that Lord Deben expressed concern about this matter last week in the other place, where he said:
What assessment has the Minister made of the way in which flat targets will affect not only the recycling capability, but the revenue obtained from recycling by local authorities? That is central to our combined national effort to recycle. The Department for Environment, Food and Rural Affairs needs an effective interface with the Department for Communities and Local Government across many policy areas. However, I understand that that relationship would charitably be described as fractious. My fear is that it is actually dysfunctional. Why was the DCLG not consulted alongside other Departments on the regulations?
Our concern is that it will take years to recover the ground lost through the recycling target freeze. Business was overwhelmingly content with the gradual annual increase, so why is it not being continued? To drive change, we need to increase targets. Does the Minister believe that we can become one of the European Union’s best performers and reach 70% recycling rates by 2020 with a recycling target freeze over the next two years?
Mr David Lammy (Tottenham) (Lab): Is my hon. Friend aware that there is an increasing gap between the total packaging tonnage and that declared by registered producers? Does he think it important that the Department investigates why that has happened and why the gap is increasing, so that we know where we are in 2015?
I do not believe that the portents are good. It appears that the strategy review is considering slowing down or removing targets in the UK, except where minimum EU requirements must be met. That is not remotely progressive; it is a damaging disincentive to investment.
Finally, the consultation that underpins the amendments overwhelmingly revealed the desire for recycling targets to be raised gradually. Will the Minister explain why the weight of opinion and evidence from the consultation has been disregarded?
I will add a few words to the measured contribution of the hon. Member for Copeland and the intervention of the hon. Member for Leeds North East. I think it is worth echoing their concerns. I hope that in responding, the Minister will address the worries of Lord Deben, who acknowledged his declarable interest as chairman of Valpak when the issue was debated in another place. He comes to this issue with the experience of a former environment Minister and with an intimate knowledge of the workings of the package recycling industry. I hope that the Minister at least acknowledges the weight of his evidence.
The primary and most contentious issue is perhaps Treasury driven, and it is beyond the scope or power of the Minister to take further, but it is of great concern to the industry. In the regulations, targets are set for 2011 and 2012 only, and that has a potentially disruptive impact on future market price and investment, and on the certainty from which the industry has benefited in recent years. It is worth emphasising that we all urge the Government to get this right, as the hon. Member for Copeland has rightly said. It is not an issue for party political point scoring; we can all seek to provide the industry with the certainty that it needs and, given how it has operated historically, deserves, if we are to continue to meet improved recycling targets in this country.
The big question is how we can achieve that, what is likely to happen beyond 2012, and whether the Minister can offer any clearer signals to the industry. On another issue, the previous Government instigated a consultation in March this year, and I am absolutely certain that the Minister, who is extremely diligent on these and many other issues, will have consulted widely and taken soundings from the industry on the likely impact of the regulations as currently drafted, and on how the industry is likely to respond. I am sure that he will have spoken to Lord Deben and others before the final drafting of the document. The industry deserves some reassurance.
I do not necessarily believe that as a result of the regulations the bottom will simply fall out of the recycling market as far as plastics, wood, paper, glass and other things are concerned, but I certainly hope that the Minister takes on board the impact and the potential disruption. Many of us who feel that this country should set the highest possible standards and the highest possible level of recycling—an objective which I know that the Minister shares—will be seeking some reassurance from him in his concluding remarks.
Nadine Dorries (Mid Bedfordshire) (Con): I congratulate the Minister on the removal of the independent audit, which will save businesses vast sums of money, along with the incentives for smaller businesses, which will be very much welcomed.
My constituency has a 50% recycling rate, and we hope to increase it to 60%. Incentivising recycling is, therefore, incredibly important, particularly in the face of the wave of incinerator companies and organisations that have arrived on our shores over the past 12 months. One of them, Covanta, has proposals to build six incinerators across the UK. For local authorities and activists to fight off such planning applications—
Nadine Dorries: I am doing that, Mr Gray. Recycling is a way of counteracting planning applications and the advancement of incineration. Incentivising companies and authorities to recycle is a huge concern. The flat-rate zero increase targets set for 2010, 2011 and 2012 are worrying from that perspective. Will the Minister, given that there is a provision within these regulations to go to 2013, return in a year or so—or even in six months—on the basis of further information and consider revising the time frame within which the flat-rate zero increase targets are set, and perhaps bring them forward to 2011? These incineration companies are here now, and we need to have the arguments on recycling to counteract them.
Mr Hamilton: Thank you, Mr Gray. I will not detain the Committee for long. We all agree that the environment—stopping further carbon emissions and climate change—is one of the most important policy areas for all political parties in Parliament, for our nation and for the whole of Europe. We do not want to see party political division on the regulations. We want to agree and we want to ensure that we have the best possible targets for packaging recycling. That is something that the industry wants, that the industry can plan for and that we can achieve as a nation as our contribution towards preventing climate change.
Does the Minister believe that the targets, which are being set under these regulations and which we have to set, because the current targets expired this year, will achieve the required amount of recycling, as obligated under the EU packaging directive, by 2015? Is he concerned that the Treasury’s input towards future targets, and the presumable need for those targets to be looked at in a future Budget, will delay further target setting by at least one year? Can he reassure the Committee that that will not happen?
Finally, as I am sure that he and other hon. Members acknowledge, the previous Government set ambitious targets and doubled the amount of recycling of packaging waste materials from 30% to 60% this year. That was done by setting ambitious targets, not by setting flat
Zac Goldsmith (Richmond Park) (Con): Thank you, Mr Gray. I enthusiastically welcome the Minister’s commitment that the main aim of the Government’s waste review is to ensure that we take the appropriate steps towards creating a zero-waste economy, where, to quote him,
I also welcome the Minister’s commitment to an increase in landfill tax to £80 a time by 2015. It is certainly one of the most effective, if not the only effective, examples of green taxation that I can think of in this country, because it has had an impact in changing behaviour.
I am, however, concerned about these regulations. Last year, nearly 11 million tonnes of packaging were placed on the UK market. By law, we are required to recover a minimum of 60% of that, with 55% being recycled. We achieved that in 2008, 2009 and again this year. However, the regulations are now out for renewal and given the success so far, which no one doubts, it seems bizarre that we would want to freeze the targets. One of the reasons why local authorities have been incentivised to collect and recycle waste is that they know that they will see a return on their investment. If we freeze the recycling targets for packaging until a further review in two years, it is inconceivable that there will not be some repercussions. Lord Deben has already been quoted twice today, but I will do it a third time, from when he was debating the issue in the other place:
“Those who provide recycling facilities know that if they invest in them on the basis of this year's demand, by the next year there will be sufficient increase for that investment to have been worth while.”—[Official Report, House of Lords, 17 November 2010; Vol. 722, c. GC76.]
He went on to say that because of expectations that the Government might freeze the targets, the price of glass has already fallen—I think that he used the term “crashed”. I welcome the Government’s keenness to avoid overburdening small and medium-sized enterprises with red tape. In this case, however, the regulations not only work, but they have been positively welcomed by virtually all the main operators in this field, from Tesco to Sainsbury’s, all of which want the current system to be maintained. Smaller firms, as has already been said, are exempt. In addition, whereas last year it cost British businesses roughly £180 million to meet the obligations, I have been told that it cost German businesses about £1.8 billion, so clearly our approach works.
I would find it difficult to support the measure without a clear undertaking by the Minister, that if the Government’s assumptions are wrong, they will revisit the policy not in two years, but one. If that commitment is made, I think the measure will be broadly acceptable to most people.
The hon. Gentleman offered some supportive words about the regulations, which were measured across the Committee. A lot of references were made to my noble Friend Lord Deben, and rightly so. It could be argued that he was the person who thought up the scheme in the first place, and he feels a paternal sense of propriety towards it, which I entirely understand. I had a conversation with him this morning, as he was in DEFRA—he sits on an advisory panel on our natural environment White Paper—and I had a useful discussion with him. I hope to be able to respond to some of the points that people have put, and indeed those that my noble Friend put when the matter was discussed in another place.
As the hon. Member for Copeland has hinted, the measure is an example of a great success story. I pay tribute to previous Governments of all hues for their commitment to it, and for the way in which it has been developed. As my hon. Friend the Member for Richmond Park has said, the implementation has been a great success, in terms of both the amount of recyclates that have been encouraged and accessed and the minimum impact on business. He has rightly pointed out—the figures vary, whether it is €1 billion or €1.8 billion—the cost to Germany, as against £80 million here. Either way, there has been an enormous difference in how the scheme was implemented.
The hon. Member for Copeland asked whether there would be an audit for businesses. The answer is yes. Regarding the question whether businesses and local government have been consulted, the answer is also yes and very much so. Local government was consulted at an early stage, and DEFRA has not approached the matter with a silo mentality.
The big question that many hon. Members raised is whether we are right to proceed with a flat approach to the target. For a start, it is not a flat approach. We are not asking for massive increases, but there will none the less be increases in plastics. Also in steel, we are seeing a marginal increase. The most important point is that the matter has to be seen in the context of our waste review. That is not a cop-out; it is a fundamental part of the matter. No one can look at recyclates, businesses’ contribution to recycling, the whole question of packaging or any other part of the waste debate on its own; things have to be seen in the context of the whole. As my hon. Friend the Member for Richmond Park, who has great knowledge on such matters, has pointed out, the Government are extremely ambitious to move towards a zero-waste society, not just because we have to—to comply with European Union directives on landfills and other matters—but because we want to. We are extremely ambitious to achieve that.
My hon. Friend also asked about local authorities’ income and how that will be affected. Glass was mentioned, so let us use that as an example. The price for glass recyclates has dropped dramatically in recent years. I question whether that has anything to do with the process; it is just the way in which the system operates. In this country, the value is in clear glass. Local authorities
The point about income is that the vast majority of local authorities are on fixed-price contracts, so the impact of the measure will be considerably less on them. No doubt, there will be some impact—that is always the case. Undoubtedly, the success of the scheme mirrors the high volatility in the value of recyclates. We cannot escape from that—we cannot flatten that graph—and it is something that we must live with.
I assure my hon. Friend that the waste review is not a short-term prospect. That assurance relates to some of the queries that the hon. Member for Leeds North East raised. The waste review aims to have a view for a good decade—possibly more—and allow business, local authorities and manufacturers a clear view of the Government’s intentions, and it will provide a road map for that period.
The hon. Member for St Ives mentioned Lord Deben’s comments on the matter, which I take seriously. Lord Deben will be involved in the waste review as a consultant—he has great experience in the subject—as will a great many other people. I assure him, as I have assured Committee, that we take an ambitious view on the matter.
I understand the points that were raised by my hon. Friends the Members for Mid Bedfordshire and for Richmond Park. Are the Government certain about the measure’s effects and the predictions that they are making? Of course not, because the market is uncertain. Are we a repository for total wisdom on the matter? No, and we would not be so arrogant to say that we are coming before Committee with predictions and statistics that are set in stone. If, in a year’s time, I must come before Committee and say that the market has changed or that different factors must now be taken into account that we did not consider, I will do so—and I will crave the Committee’s indulgence at that time. I hope, however, that hon. Members understand our commitment. I hope that they understand that the measure—and their concerns about it—must be regarded in the context of, perhaps, the largest review of waste policy that any Government have undertaken.
I understand the constituency concerns of my hon. Friend the Member for Mid Bedfordshire, which relate to local popular opinion about the effect of incineration in that area. I also understand how she cleverly linked that with the statutory instrument. I assure her, however, that although we want to achieve what we have to, we also want the maximum effect while limiting the impact on business. That means that we can pitch our policies higher up the waste hierarchy—we are preventing the use of materials; we are reusing them; and we are recycling them before they have to go to the kind of operations that are causing her and her constituents such concern.
I have tried to address the majority of the points that have been made. If hon. Members want further clarification, I am happy to give them written assurances. I also thank them for raising their queries today.
The regulations will allow the UK to meet its EU obligations while minimising the cost to business. On the 2012 targets, the regulations provide the opportunity
We have not dealt sufficiently with the effect that the regulations will have on behavioural change. It has been difficult to get people interested in and actively recycling. The effects that the changes will have on local authorities, which will be more significant than has been mentioned today, will affect people’s relationship with recycling facilities in their communities and will disincentivise them to change their behaviour sufficiently. I am concerned about that. Is the Minister concerned?
Richard Benyon: I apologise if I did not answer all the hon. Gentleman’s questions. I understand where he is coming from, but the regulation refers to business—big business—because any business with a turnover of less than £2 million or any business that is producing less than 50 tonnes of recyclable material is excluded from the regulations.
I shall deal with the hon. Gentleman’s question head-on, because it is important. Throughout the waste review and in the Government’s negotiations with people of all interests relating to it, particularly local government, we have had to consider how we incentivise people to recycle. He will find in his constituency, as I will find in mine, that recycling is a much more important issue for people. We can massively increase what we recycle by making it as easy as possible for people to do so. We must consider not only the impact that recycling has on the environment as a whole, but on people’s everyday lives. I assure the hon. Gentleman that although that may not be relevant to this statutory instrument, I will work with him to ensure that we consider how people behave, how we can influence their behaviour and how we can use the good will that is out there to achieve what we all want to achieve in this regard.
Andrew George: The Minister acknowledged earlier that DEFRA does not necessarily have a monopoly on all wisdom and does not have a crystal ball that can predict how the world will respond to the regulations, as proposed, particularly given the nature of the relatively short-term targets set by this measure. The hon. Member for Richmond Park rightly asked, in the light of that, what the Minister and the Department will do if the next six months or year prove to be less successful than the Department anticipates. Does the Minister accept the suggestion, made by the hon. Member for Richmond Park, that this matter should be reviewed earlier if such circumstances arise?
Richard Benyon: I can do no more than refer the hon. Gentleman to the words of my noble Friend Lord Henley, who was asked the same question when this matter was debated in the other place. We would consider returning to the House if we found that the circumstances had changed to any great degree or if we were failing to achieve what we set out to achieve. I urge Committee
I am conscious that I did not answer precisely the question asked by the right hon. Member for Tottenham about the gap between the tonnage reported by businesses and estimates of packaging going on to the market. That matter is constantly under debate in the Advisory Committee on Packaging, which is investigating that gap or alleged disparity, and trying to create the sort of certainty that we will be considering closely in the review in the months ahead. The review will be published in the spring.
|©Parliamentary copyright||Prepared 23rd November 2010|