Response to the recommendations
1. The Government should introduce differential
VAT rates based on life-cycle analysis of the environmental impact
or recycled content of products, and tax allowances for businesses
that repair goods or promote re-use. It should set up a cross-Government
working group, led by the Cabinet Office to decide how best to
implement such reforms. (Paragraph 27)
VAT is governed by European law and therefore any
reliefs from VAT are strictly limited under this. Member States
are allowed to implement a reduced rate of VAT for certain goods
and services, as listed in Annex 3 of the VAT Directive. However,
there are no specific provisions that allow for actions to encourage
the use of recyclable materials and therefore any changes would
require amendments in EU law. Such changes would need a proposal
introduced by the European Commission and unanimous agreement
by all Member States. Recent discussion in this area makes it
clear that it would not be possible to reach such agreement.
On tax allowances, it is the Government's view that
in general a low corporate tax rate with fewer reliefs and allowances
will provide the best incentive for business investment with the
fewest distortions. The Government has already introduced Enhanced
Capital Allowance schemes for water- and energy-efficient plant
and machinery. The Landfill Tax has and continues to play a significant
role in meeting the targets set out in the Landfill Directive.
Since 1996, when Landfill Tax was introduced, the amount of waste
sent to landfill has more than halved. In addition, since 2000,
recycling rates have increased fourfold and have been accompanied
by large growth in the recycling industry as recycling has become
more economically viable. The Government therefore considers that
no further reforms to taxation are necessary at this stage.
2. The Government should reform the PRN scheme
to include an 'offset' or lower charge for products that have
higher recycled content and ensure that funds generated from the
operation of the scheme are distributed to bodies working to enhance
materials recovery and product circularity. It should also introduce
individual producer responsibility schemes in new sectors to make
more producers design products with their end-of-life in mind.
The Government should review how processes for environmental protections
against illegal disposal of waste might be simplified to encourage
businesses to re-use materials. More generally, it should explore
the scope for regulating the minimum recycled content of particular
products in order to stimulate sustainable markets in recovered
and recycled material. (Paragraph 33)
The Government welcomes the Committee's recommendation
and will consider it as part of current work looking at the PRN
system. The aim is to better understand where the barriers are
to meeting the targets proposed in the recent European Commission
package to review waste legislation.
The Commission's proposals are at a very early stage
and we can expect substantial changes as negotiations progress.
We are currently therefore considering all scenarios to support
our negotiation and ensure that we are in a good position to implement
the final agreed targets.
Whatever solution we end up with for implementing
new targets, the Government believes that the following criteria
for a producer responsibility system are desirable:
· have
a good fit with the system used to achieve related targets for
reducing household waste, reducing its disposal to landfill and
for increasing household recycling;
· provide
a mechanism for meeting stretching targets that is cost-effective
and securely delivers sufficient change to meet targets;
· provide
a fair distribution of costs and burdens that encourages innovation
and incentivises collaboration throughout the supply chain, where
this enhances value in recyclate. This may include incentives
for manufacturers to produce recyclable goods, and/or for end-users
and the waste management industry to preserve value.
We exist in a global market and the global trade
in recyclates mirrors the international trade in raw materials
and products. The export trade in UK recyclate reflects a mixture
of both demand from overseas reprocessors (which means that they
are willing to pay competitive prices for the recyclate) and,
in some cases, collections of UK waste material in excess of demand
from UK reprocessors/manufacturers. It is important that any amendments
do not conflict with trade laws.
Under an Individual Producer Responsibility (IPR)
system, producers are individually responsible (financially and/or
physically) for their own products at end of life. It is intended
to create an incentive for producers to design their products
for easier repair, upgrading, re-use or recycling. The Waste Electrical
and Electronic Equipment Directive (WEEE) allows for either collective
producer responsibility or individual producer responsibility.
The Government made a commitment in the Waste Prevention Programme[1]
to look further at IPR systems for WEEE, and the emerging electricals
Sustainability Action Plan (eSAP) provides an opportunity to explore
IPR with industry and other stakeholders.
3. Local authorities need to tailor their [household
recycling services] to local needs, but the Government should
give clear guidance that directs local authorities in England
towards a more standard approach. This should include separation
systems that enable reliable delivery of compatible sorted waste
products to all recyclers, separate food waste collections, and
a ban on food waste to landfill. (Paragraph 39)
The Government agrees that Local Authorities need
to tailor waste services to local needs. Collection arrangements
should be easy for consumers and we want to support services that
are effective and easy for householders to follow and that help
to improve the recycling rate. Through the Weekly Collection Support
Scheme[2] and the Recycling
Reward Scheme[3], the Government
is working with councils to deliver more frequent collections
and make recycling easier for householders. We continue to support
the sharing of best practice and joint procurement across Local
Authorities to help councils reduce costs and drive up quality
and value. We would encourage councils to work together to standardise
services and maintain frequent collections where this can help
to improve quality and delivery and save money.
The Government is committed to meeting the EU 50%
target for recycling of household waste by 2020 and we are looking
hard at the role of household waste collections in recycling performance,
including how to help those Local Authorities with lower recycling
rates to improve.
Work to improve the quality of recyclate has already
been taken forward through the implementation of ground breaking
regulations to promote transparency in quality of recyclates separated
at materials recovery facilities. Separate collection will also
be the default system from January 2015, though councils may continue
co-mingling when separate collection is not necessary to provide
a sufficiently high quality of recyclates, or where separate collection
is not technically, environmentally or economically practicable.
In addition, the Government has funded WRAP to undertake
projects and provide guidance for Local Authorities on best practice
models for the efficient and effective collection of food waste.
This includes helping to reduce cost of collections and increase
the amount of food waste going to Anaerobic Digestion. The Government
has no plans to compel councils to adopt household food waste
collections, the provision of food waste collections has increased,
and WRAP guidance can assist local authorities who are considering
introducing such a scheme.
4. The Government should set out plans to ensure
eDoc's long term future so that it can fulfil its role in improving
data quality on waste materials. It should set a deadline by which
time reporting in this way will be mandatory. (Paragraph 42)
The Government welcomes the Committee's support for
the eDoc system, the ownership of which will transfer to Government
at the end of this year. Together with Scotland, Wales and Northern
Ireland, the Government is committed to sustaining the eDoc system
for the foreseeable future, with a view to encouraging a digital
by default approach across all businesses. We are continuing to
engage and seek support from the resource and waste management
sector through the eDoc Technical Advisory Group, CIWM and WRAP.
We will work with the industry to consider whether a mandatory
system would be appropriate and beneficial and economically viable
for both the sector and to Government.
5. The Green Investment Bank should finance innovative
technologies to support a circular economy. The Bank could for
example showcase the potential of anaerobic digestion plants which
are able to process a range of waste feedstock sources by investing
in such projects. The Government needs to ensure that its policies
for recovering resources and generating energy are aligned and
are consistent with the waste hierarchy. (Paragraph 45)
Businesses need to drive the change to a more sustainable
and growing economy. Many are leading the way on becoming more
resource efficient, but we want more to act and take advantage
of the financial and environmental benefits, especially SMEs,
and along supply chains.
To support businesses, the Government set up the
Green Investment Bank (GIB) to mobilise additional private sector
investment into green infrastructure projects, helping to address
specific market failures relating to the limited availability
of finance in these sectors. This is aligned with and supports
other Government policy measures designed to promote the circular
economy.
The GIB is actively investing in the waste sector
and has supported a number of projects that deploy a range of
technologies, including anaerobic digestion and new technologies
not previously used in the UK. In 2013, GIB published a market
report describing and assessing the anaerobic digestion market
and examining the opportunities for investment in it.[4]
In addition, GIB published a market report in July 2014 on the
residual waste market examining the opportunity for investment
in that sector.[5]
The Government remains clear that any action on resource
and waste management will continue to be guided by the waste hierarchy.
This includes the prevention of waste where possible, recovering
resources for re-use and recycling and, where appropriate, energy
recovery as a preferred option to landfill/disposal.
6. The Government, working closely with the EU,
should establish eco-design standards across a range of products.
It should set out the steps towards a ban on products that are
made from materials that cannot be recycled, or reduce taxes on
those that can be. Such standards would phase out inefficient
products or hard to recycle materials by ensuring that companies
design products that are consistent with the circular economy,
have a clear end-of-life recovery route and are fabricated using
easily separable and recyclable components. The Government should
underpin voluntary agreements by setting timescales by which regulation
would establish the recyclability of all products coming on the
market. The Government should also work with industry sectors
to set longer minimum warranty periods for consumer products to
encourage businesses to adopt more resource-efficient business
models. (Paragraph 51)
The Government agrees that the Ecodesign standards
for energy-using and energy-related products can play a valuable
role in moving towards a more circular economy. We welcome the
draft standardisation request on material efficiency issued by
the European Commission on 3 July 2014 to CEN and CENELEC, the
European bodies which draw up standards to support the Ecodesign
process. We will continue to influence the European Commission
to incorporate waste prevention requirements in Ecodesign and
Ecolabel criteria where appropriate. However, we do not have any
plans to require the recyclability of all products coming onto
the market and any proposed regulation should be proportionate
and provide businesses with the flexibility to develop in a global
market.
As part of WRAP's development of an electrical and
electronic equipment sustainability action plan (eSAP), we are
working with industry to investigate options for extended warranty
periods on electrical and electronic products and the contribution
that more resource-efficient business models can make. WRAP has
also developed product design guidelines for key electrical appliances
in consultation with the Electrical Products Pathfinder Group
of retailers, manufacturers and their representative bodies. This
enables industry to specify design requirements to tackle common
problems to reduce the cost and resource impacts of the early
failure of products. Work is underway to integrate the guidelines
into retailers' technical specifications and buying activity.[6]
While we agree in principle with the Committee's
views of the potential benefits for the extension of warranties
on a voluntary basis, we recognise that it will be at direct cost
to businesses. These sit alongside consumer's statutory rights,
which cannot be undermined.
7. [The Government] should take steps to remove
trade barriers for remanufactured goods through trade negotiations,
including pushing for them to be treated in the same way as new
products. (Paragraph 55)
Trade barriers are a key component of the Government's
trade negotiations. The Government consults with businesses on
their priorities for trade agreements and continues to be involved
in the ongoing work at EU-level to remove trade barriers and improve
market access for businesses. We would welcome any further information
that businesses can provide on any problems they have encountered.
To this end, the Government would be happy to meet with the companies
involved and any trade body that is active in the area of remanufacturing.
8. The Government should extend buying standards
to include a greater emphasis on the recyclability of materials
and recycled or re-used content. (Paragraph 58)
The Government Buying Standards (GBS) are one of
the mechanisms that can help embed circular economy principles
into procurement, but not the only one. To support this work,
we are working with WRAP to develop approaches that involve new
business models such as leasing of products. In addition to this,
the Government is working with WRAP and the Aldersgate Group to
explore the potential to embed such an approach into the centralised
frameworks developed by the Crown Commercial Service, looking
specifically at mobile phones.
We recognise that the GBS can contribute in terms
of creating a demand for recycled products/material and recyclable
products. The current GBS for paper and paper products, ICT equipment
and for construction projects encourage procurement of recycled
or re-used material as well as recyclable products.
In addition to this, the Furniture GBS, updated in
June 2014, requires Departments to look to buy used furniture
from within Government before any new furniture purchases are
made. All new purchases of standard furniture should be refurbished
furniture, if available, or otherwise from a core list of standard
items designed to facilitate reuse and refurbishment. A Crown
Commercial Service framework is also in place for refurbishment
of furniture.
The GBS for food and catering was updated in July
2014 and requires certain standards of waste management and, through
a 'balanced scorecard' for evaluation of tenders published alongside
this, gives contractors who use more recycled materials, such
as packaging, recognition for this in the bid evaluation process.
The Government is currently working to update the standard on
textiles and will draw heavily on WRAP's research on the means
of supporting durable and repairable products.
9. The Government should learn from the strategic
vision and ambitious targets that other countries have adopted.
It should embrace the EU's ambitious targets for improving resource
productivity, and support business in achieving the economic and
environmental benefits. It should also support the European's
Commission's proposals for recycling and the accompanying proposed
targets, and use these to drive change. (Paragraph 70)
The Government supports the overall ambition and
vision behind the EU Communication on Circular Economy, calling
for a move to a more circular economy and to minimise waste. We
agree on the need to support future actions to reduce production
and consumption impacts, to improve the use of natural resources,
and reduce negative impacts on eco-systems.
The Government is keen to make sure that the Commission's
proposals are developed with Member States, allow flexibility,
ensure that costs are justified by expected impacts, avoid unnecessary
burdens on business and create an environment that welcomes innovation.
To ensure this happens, the Government will continue to work closely
with the industry throughout the negotiation period.
The Government recognises the value of sharing information
and learning from what other Members States, and more globally,
are doing. We continue to work closely with the European Commission
and other Member States, both at a formal and informal level,
as well as key stakeholders here and across Europe to exchange
ideas, case studies and best practice in both directions.
10. The Government needs to ensure that there
is sufficient funding available for agencies such as WRAP and
the Technology Strategy Board to support this transition. Some
of the revenues from the Landfill Tax and taxes on non-circular
products should be used to directly support the circular economy
and reverse the cuts in WRAP's funding. (Paragraph 71)
The Government, as with all sectors of the economy,
is facing challenging times and priorities must be made to ensure
that work undertaken makes the best use of public funding. With
that in mind, the Government continues to support both the Technology
Strategy Board, now Innovate UK, and the Waste & Resources
Action Programme (WRAP). This is essential to support businesses
in realising the benefits of resource efficiency and to incentivise
business-led technology innovation and research and development.
Like all Government tax receipts, Landfill Tax revenues
go to the Consolidated Fund to support general expenditure on
public services, allowing the Government to allocate resources
most efficiently across the economy. Hypothecating Landfill Tax
revenues could lead to inefficiencies and impact upon value for
money for the taxpayer. A percentage of Landfill Tax revenues
already go directly to improving the environment surrounding landfill
sites through the Landfill Communities Fund (LCF). The LCF allows
landfill site operators to claim a credit against their Landfill
Tax liability for voluntary contributions made directly to environmental
bodies. Since its introduction alongside the landfill tax in 1996,
the LCF has provided £1.2 billion in total funds for community
projects.
11. The circular economy must be embedded into
industrial strategy, based on resource risks and covering key
sectors. Local Enterprise [Partnerships] should identify steps
to mitigate these risks and opportunities to innovate. It should
also be mainstreamed into departmental business plans, with clear
responsibilities for driving this forward in both BIS and Defra
and across Government. (Paragraph 72)
Working with business to deliver a sustainable economy
is embedded across Government. We agree with the Committee's recommendation
that moving towards the circular economy should be an integral
part of Departmental Business Plans.
In the Environmental Audit Committee, Seventh Report
"Sustainability in BIS" the committee made the following
recommendation: BIS should review its Industrial Strategies
(IS) to ensure that they represent a sustainable development approach
across the 11 sectors as a whole. If necessary, it should redraft
and reissue them to demonstrate where and how the Government has
made any trade-offs between economic growth and climate change
mitigation.
Acknowledging the recommendation, the Secretary of
States for the Departments of Business, Innovation and Skills,
Energy and Climate Change and Environment Food and Rural Affairs
have invited the Green Economy Council to independently review
the sustainable elements of the industrial strategies and make
recommendations. This work is now underway and will be fed back
to the Committee as part of the Government response. At this stage,
the Government will be in a position to review if additional work
concerning sustainability issues within the industrial strategies
is necessary.
In developing their Strategic Economic Plans, Local
Enterprise Partnerships have sought to address the challenges
of sustainable growth, however these plans are the responsibility
of local partners themselves, they determine their own local priorities
for action taking account of the opportunities for local growth
and jobs.
1 Waste Prevention Programme for England published
December 2013, available at https://www.gov.uk/government/publications/waste-prevention-programme-for-england. Back
2
More information is available at https://www.gov.uk/government/policies/making-sure-council-tax-payers-get-good-value-for-money/supporting-pages/bins-and-waste-collection Back
3
More information is available at https://www.gov.uk/government/publications/recycling-reward-scheme-2015-to-2016-bidding-form-and-prospectus Back
4
Green Investment Bank: Anaerobic Digestion Market Report, http://www.greeninvestmentbank.com/media/5188/ad-market-report-june-2013.pdf.
Back
5
Green Investment Bank: The UK Residual Market. http://www.greeninvestmentbank.com/media/25376/gib-residual-waste-report-july-2014-final.pdf
Back
6
Further information is available at www.wrap.org.uk/betterappliances. Back
| 
