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Lord Dixon-Smith: Two amendments, Amendments Nos. 16 and 18, in my name are grouped with that of the noble Lord, Lord Greaves, and were tabled with a similar purpose in mind. It seems to me that once one starts to permit borrowing forward, or, indeed, carrying unused allowance back, one begins to acknowledge what I would call the "unsafety" of the formula and the straight-line approach to the whole problem. We do not consider that to be right.

We do not like this clause. If all that is needed is to carry allowances forward, that would be done far more easily by accepting our Amendment No. 18. We are in complete agreement that there is a danger here that we begin to erode the original purpose of the Bill by including too much flexibility.

Baroness Farrington of Ribbleton: I am in some difficulty because I shall have to repeat the replies in this short debate when we come to Amendments Nos. 19 and 21.

With regard to the general point raised by both the noble Lords, Lord Greaves and Lord Dixon-Smith, the Government consider it useful that allocating authorities should be able to provide by balancing one year against another; for example, in the event that they were working towards a major investment in year three. This group of amendments, which seeks to limit the inclusion of borrowing in the trading scheme, concerns a matter referred to in the Landfill Directive consultation exercise. It will no doubt be referred to again when the draft scheme goes out for consultation. We acknowledge that some issues surrounding the inclusion of borrowing will need to be brought out in the consultation exercise and that risks are attached to banning borrowing completely at this stage. The balance needs to be kept.

The allowance mechanism is intended as a trading scheme and it is vital that the market for trading has the opportunity to work effectively. Were we to exclude borrowing, we could make that more difficult to achieve, particularly if banking is to be permitted. The points made by Members of the Committee about the different circumstances of different waste disposal authorities underpin the importance of a trading scheme. It is also important that an overall scheme, which does not exclude matters such as this, should be available for consultation so that the whole issue can be seen in context.

In response to the specific point raised, WDAs will need to meet the targets. Some will bank but it is important not to lose allowances because we need to be certain that WDAs are pulled into the system.

Lord Greaves: I am grateful to the Minister for that reply. However, I do not believe that she responded to the particular point that I raised—that is, the system

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may have built into it a disincentive for authorities. In a particular year, authorities may gain allowances that they are not using and they may be able to move those forward to succeeding years. As a result, they will stand still in terms of performance in relation to landfill. For example, this year they may send a certain amount of biodegradable municipal waste for landfill and they may still be sending the same amount in two years' time because they are able to carry allowances forward.

Under those circumstances, authorities might take a very short-term view. But at present many local authorities are forced into short-term views by the financial circumstances in which they find themselves. I raised the point about the potential disincentive within the system to people to continue to improve year by year. The noble Baroness did not tackle that.

5.45 p.m.

Baroness Farrington of Ribbleton: I am sorry that the noble Lord, Lord Greaves, feels that way. The incentive is the fact that in the end the disposal authorities have to meet their targets. We are talking about the period and the mechanism for achieving that. However, if the noble Lord is not satisfied with the answer, I would be delighted to write to him, sending copies to other noble Lords.

Lord Greaves: I have the promise of a letter, and perhaps I will get a Christmas card as well! I beg leave to withdraw the amendment.

Baroness Farrington of Ribbleton: So that there is no misunderstanding, I am afraid I do not send Christmas cards. However, I shall include the noble Lord, Lord Greaves, on my list of would-have-been Christmas cards, and my donation to charity as an alternative will be increased.

Amendment, by leave, withdrawn.

[Amendments Nos. 16 to 18 not moved.]

Lord Dixon-Smith moved Amendment No. 19:

    Page 4, line 38, leave out paragraphs (c) and (d).

The noble Lord said: This group of amendments deals with the question that if local authorities were allowed to carry the balances forward, there would be no need to set quantitative limits to those balances. Any serious over-allowance can be dealt with subsequently when there is a new annual target mode. If there were no inter-year utilisation of allowances, there would be no need for a system of charging for the facility of making inter-year allowances. We believed that it was worth tabling the amendments again to probe the Government's thinking behind the particular wording of these clauses. I beg to move.

Lord Livsey of Talgarth: On this probing situation, paragraph (c) makes provision for quantitative limits, as has been said, on the inter-year utilisation of allowances.

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The impact of Amendment No. 19 would negative that by leaving it out. Presumably the amendment could allow unlimited transference of allowances from one year to another as a result of the amendment. The result could be that it would assist those councils that have been particularly slow in taking action and in catching up and it could enable other councils to speed up in earlier years. Two effects of that could be beneficial. On the other hand, it would be difficult to plan for the amount of control available.

I refer to Amendment No. 21. It refers to subsection (3) which includes a long list of provisions. I refer to one of them. Paragraph (i) makes provision for levying fees and charges, for example, on persons engaged in inter-year utilisation of allowances. I have some concerns about that. Are the fees to be levied likely to be prohibitive? No Minister would admit to that, but that could be the case. They could have a negative effect and perhaps would be likely to discourage inter-year utilisation of allowances. Picking up on that one point, this is perhaps an example of why this amendment has been tabled. I would be interested to see whether I can be reassured on that point, for example.

Baroness Farrington of Ribbleton: The Bill refers to "inter-year utilisation", which relates to years between target years. It is extremely important to place on record that, while variance can be accepted and is part of the market scheme, in inter-years there can be no transference over the target years. The target years are, thus, the fixed points that apply to the individual authorities. The Bill allows appropriate flexibility between those two fixed points. I hope that helps the noble Lord, Lord Greaves, with the issue he raised before.

The amendments would remove from the examples of provisions which the regulations make, those which limit inter-year utilisation of allowances, including quantitative limits on inter-year utilisation of allowances and suspension of inter-year utilisation of allowances and the charging of fees.

We believe it is useful that allocating authorities should be able to provide for inter-year utilisation of allowances, giving maximum flexibility. Thus, for example, if a waste disposal authority were planning a major investment in year 3, it could use the allowances in earlier years, knowing that borrowing would be compensated for in later years. Again, I flag up the difference between that and the target year. Equally, allocating authorities may need to set limits on such uses of allowances for other years. There may, for example, be concern that there should be a maximum, to ensure that in scheme years between target years the amount of biodegradable municipal waste landfill does not exceed the amount permitted to be landfilled in the previous target year.

The noble Lord, Lord Livsey, raised questions about the use of fees. The intention is that these could be useful to compensate for additional administrative costs and to discourage unnecessary inter-year

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utilisation. Therefore, I assure him that it would not be intended to be on a scale that would be punitive and savage in the way he feared.

We believe that these are issues for each allocating authority in setting up a scheme and it is proper to express the full range of flexibility they might need. I hope I have reassured all noble Lords on that point.

Lord Dixon-Smith: I am grateful to the noble Baroness for her response, which helpfully set out the background very fully. That is what we hoped for when we tabled these amendments. We will study the details and in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 20:

    Page 5, line 7, leave out from "for" to "requirement" in line 8 and insert "the allocating authority to make available to each waste collection authority full financial resources incurred by each waste collection authority in order for it to comply with any"

The noble Lord said: I shall speak also to Amendment No. 36. We spoke earlier today about the cost of implementation of a lot of this—building incinerators and so on and the work associated with the removal of landfill. However, we have not spoken about the cost to local authorities of implementing the Bill. These days, we constantly have new regulations, new inspections and everything to worry about. The cost of implementing this in a local authority is considerable. We have two types of authority that will incur expense.

Each collection authority—as I mentioned earlier, in Essex we have 12 district councils—may have to have an employee to monitor the Bill. In Maldon District Council, for example, 40,000 of expenditure puts 1 per cent on the council tax. That shows the effect that the Bill might have locally. Essex County Council will probably have an expenditure of over 100,000 a year just on the implementation of the Bill. The Local Government Association has been doing some work nationally about how much the Bill will cost and we will have the full figures later. This is just for the implementation of the Bill, not building incinerators or minimising waste. Unfortunately, we are also taking people away from minimising waste and from looking at the ways in which we might implement the Bill, just to do the paperwork associated with it. We must take this into account.

The Minister spoke earlier today about a generous amount of money being put in the settlement for waste disposal. I can speak for the seven or eight authorities—the large counties surrounding London, representing about 10 million people. We have had an increase of about 3.7 per cent and we will have that for three or four years, because a great deal of dampening has been built into the settlement. Considering we have to pass forward to education something like 6 per cent, the councils around London will have council tax rises of probably between 15 and 20 per cent for the next three or four years. That is without investing any money in waste disposal.

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In moving this amendment I am suggesting that some provision must be made for the day-to-day expenses that local authorities will incur in implementing this Bill. We spoke earlier about the potential costs of the Bill and we understand the reasons behind it, but someone really ought to give some serious consideration to the costs.

I hope that the Government will make full allowance in what is now called FSS—it has had all sorts of names over the years, but it is now the FSS grant to local authorities—for the cost of implementing this Bill in future settlements. I beg to move.

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