Budget 2011 and Environmental Taxes

Written evidence submitted by the Nappy Alliance

Executive Summary

· One of the goals of the Government’s environmental policy should be to encourage a reduction in the amount of waste sent to landfill, and an overall reduction in levels of waste produced. Landfill tax, including the increase included in Budget 2011, helps to achieve this goal but is not enough on its own.

· This could be improved in a number of ways including considering the communication of green taxes, the consideration on individual initiatives to improve waste management, and the consideration of further taxes on waste producing products.

· The aim of Government action, including on green taxes, should be to encourage the best environmental behaviour, not simply behaviour which is slightly better than the worst behaviour.

Introduction

1. The Nappy Alliance is the trade body for the re-usable nappies industry. It was set up in 2003 by independent providers and distributors of re-usable nappies to promote awareness of the key benefits of re-usable nappies, which include waste reduction, improved well being for babies and significant cost savings for parents and local government.

2. Re-usable, or real, nappies are nappies that are washed and re-used, reducing both waste and cost. A recent Mintel report found that 5% of parents chose re-usable nappies. [1] Given the waste reduction that can be achieved through the use of re-usable nappies this means there is a lot of scope to reduce the amount of household waste produced by increasing the use of re-usable nappies. This also has financial implications for local authorities: figures show that if a 10% conversion rate from disposable nappies to re-usable nappies were achieved across the UK, this would equate to Local Authority savings of up to £9.2 million per annum.

3. This submission to the Environmental Audit Committee focuses on the impact of environmental taxes included in Budget 2011, particularly landfill tax, in encouraging the minimisation of waste. It also examines whether there is potential to further encourage environmentally friendly behaviour, for example through taxes on disposable products.

The benefits of re-usable nappies

4. Re-usable nappies have many benefits over disposable nappies:

· 5. Costs to local authorities: waste collection and disposal is a significant cost burden on local authorities, who spend approximately £22 billion per year on this in England [2] , according to figures from the Chartered Institute of Public Finance and Accountancy. Waste reduction, therefore, offers an excellent opportunity for cost savings in local government. This, again, means prioritising waste minimisation and re-use, as the less waste is produced, the less it will cost to manage. If a 10% conversion rate was achieved across the UK, figures show that this would equate to local authority savings of around £10 million per annum.

· 6. Environmental protection: Using re-usable nappies, as opposed to disposable nappies, can have a significant positive impact on the environment by reducing the amount we throw away. Nearly 3 billion disposable nappies are thrown away every year – around 8 million per day – making up almost 4% of all household waste, which adds to the UK’s landfill site problems.

7. There are a number of problems with relying on landfill to dispose of waste: it represents an excessive use of land and is a potential source of water pollution; landfill produces environmentally harmful greenhouse gases and accounts for 38% of total methane emissions, and, according to the Environment Agency, the decomposition timescale for some of the materials and chemicals used in disposable nappies is more than 500 years.

8. Re-usable nappies can have a much wider positive environmental impact, as shown in the Environment Agency’s 2008 revision of their Life Cycle Analysis Report on Nappies. The report showed that re-usable nappies can be up to around 40% better for the environment than disposable nappies.

· 9. Climate Change: The fact that re-usable nappies can reduce the amount of material which is put into landfill also has positive effects in helping to reduce climate change due to the reduction in the amount of methane produced.

· 10. Compliance with EU legislation: Not only are re-usable nappies more environmentally friendly, they are also aligned with the priorities of the revised EU Waste Framework Directive – the document which sets the ground rules for waste management across Europe.

11. At the heart of the Directive is the waste hierarchy, which the provisions of the Directive state should act as a priority order in waste prevention, legislation and policy. The hierarchy includes 5 priority levels:

· Prevention

· Preparing for re-use

· Recycling

· Other recovery - including energy recovery

· Disposal.

12. The waste hierarchy calls for waste prevention to be the top priority of Government policy and legislation, with preparing for re-use the second priority. Re-usable nappies prevent waste and are re-used – they can even be kept and used for future children or bought second hand – the two top priorities for waste management. In contrast, disposable nappies are poor fuel for incineration and are therefore mainly disposed of, the last of the options in the hierarchy.

· 13. Costs to parents: Re-usable nappies can save parents up to £600 per child [3] compared to disposable nappies. The savings per child can be even greater if the nappies are re-used for a second child.

Does Budget 2011 further the Government’s green objectives?

14. Budget 2011 is partially supportive of the Government’s environmental objectives (and European obligations) in terms of providing an incentive to reduce the amount of waste which is sent to landfill. The budget confirmed that the Government will increase the standard rate of landfill tax by £8 per tonne to £64 per tonne on 1 April 2012, as originally announced in June 2010. This will continue until at least 2014/2015, by which point the cost will have reached £80 per tonne. This clearly provides an incentive to local authorities to reduce the level of waste which is sent to landfill, whether through waste prevention, increased recycling, or greater use of methods such as anaerobic digestion.

15. However, while landfill tax provides a disincentive to send waste to landfill, it does not make any distinction between activities at different levels of the waste hierarchy above landfill. In terms of avoiding landfill tax, the financial benefits to councils are the same whatever they do to decrease waste to landfill. Our concern is that there is too high a focus on activities such as recycling, rather than the prevention of waste in the first place. As mentioned above, waste prevention should be the highest priority in waste management, from a legal, financial and environmental point of view, yet it is often neglected in favour of recycling – whether this is through compulsory recycling schemes, such as in the London Borough of Barnet, or recycling incentive schemes, such as in Windsor and Maidenhead. The latter can actually actively discourage waste prevention, as incentives are provided on the basis of the volume of waste recycled.

16. Furthermore, waste prevention tends to be neglected in the general political and media debate around waste management, with recycling once again prioritised as the main issue.

17. So while the increase in landfill tax goes some way to encouraging environmentally friendly behaviours, it does not encourage the most environmentally friendly behaviours.

Factors which need to be considered when designing environmental taxes

18. The increase in landfill tax places the increased financial burden for disposing of waste on local authorities, rather than on the individuals who are responsible for generating household waste. Sending increased waste to landfill does obviously have implications for council budgets, and therefore on council tax bills and the ability of local authorities to provide other services. However, this is not always communicated to residents, who may not understand why they are being asked to prevent waste or recycle more, and may see this activity as unnecessary interference in their home life. Greater efforts need to be made by local authorities to communicate to local residents about the reasons why certain policies may be desirable, and how they are likely to be beneficial to the local area.

19. In addition to this, environmental taxes could be designed in a way which better reflects the impact of individual choices on the environment. As an example, there could be a one pence tax on product which produce a high level of waste, such as disposable nappies, especially where a re-usable alternative exists. As well as raising money which could be invested in waste prevention initiatives, this would also increase the financial attractiveness of re-usable alternatives. Similar approaches have proven very effective in other countries to encourage the use of re-usable shopping bags instead of plastic bags, for example. This would also make people more aware of their environmental choices, and place the financial burden of disposing of waste on those producing the waste, in line with the principle of "the polluter pays".

Conclusion and recommendations:

20. While the environmental taxes in the budget, particularly landfill tax, are helpful in nudging environmental policy in the right direction, there is more that could be done to encourage behaviors such as waste reduction. We would make the following recommendations for the Committee to consider:

· When designing green taxes, the Government should consider how they can encourage the best environmental behaviour, not simply reduce the worst behaviour.

· Government and local authorities should consider how they communicate with people about the reasons why green taxes have been introduced, so that they are better understood and more widely supported.

· Government should consider a one pence tax on waste producing products, particularly where a waste minimising alternative is available.

19 April 2011