Select Committee on Science and Technology Sixth Report


CHAPTER 6: WASTE REDUCTION AS A BUSINESS OPPORTUNITY

Recognising the cost of waste

6.1.  In 2003, a report produced for the Environment Agency concluded that around £2-2.9 billion of the annual operating costs of UK businesses could be saved if best practice waste minimisation procedures were implemented.[41] Waste reduction practices are, in general, inherently good for business. Professor Stevels, an Environmental Adviser, pointed out that during his time at Philips, "75 per cent of the environmental projects have been very profitable." This is because there is a "direct connection" between using less energy, materials or packaging and a reduced cost (Q 292).

6.2.  The IoM said that "the business conception is that the adoption of sustainability involves a cost, because this is easily identified and measurable. However there is insufficient understanding of the benefits, because the methodology for estimating these is not well developed and there is not an obvious way of itemising these benefits in the company accounts" (p 318). Mr Michael Glass, Chief Executive Officer at the Process Industries Centre for Manufacturing Excellence (PICME), explained that waste reduction processes are "basically good common sense" which involve "a structured approach of problem solving, simplifying and defining processes, standardising certain things so that they are done repeatedly the best way." He felt that many organisations provided advice, such as the Manufacturing Advisory Service or sector specialist industry forums, in addition to a multitude of internet resources. "So getting that access to basic information is not difficult. Understanding how to apply it and actually doing it is the main issue and a lot of that is cultural." Although managers are likely to have heard of waste reduction strategies, "they will not necessarily truly understand how it applies to their specific environment" and "will struggle to see what that means for them in their particular circumstance" (QQ 155, 163).

6.3.  Getting this message across to business is therefore key. According to Mr Glass, the single biggest barrier to reducing waste is the lack of awareness amongst senior management of the real potential for improvement. "Many are carrying on doing things the way they have always done and have not been particularly receptive to learn." He described the work he had undertaken with one company, "where 14 per cent of the material going through the process ended up as waste." The company expected this wastage because their process aimed to produce an extremely pure product, which would inevitably produce some waste, but "they had no way of gauging whether a 14 per cent loss was good or bad." It was only when questioned that they, "after some persistence," agreed to assess their process. The end result was to reduce their waste from 14 per cent to four per cent. Mr Glass felt that "very often people are very busy and the simplest thing to do is to carry on doing what they have always done, and to make improvement one has to make time, to stand back and to re-examine how things are done; to go through a thorough structured approach of mapping and measuring and challenging why things are done a certain way" (QQ 155, 163).

6.4.  Envirowise agreed that "very few people in business seem to appreciate the need to reduce resource use or that their purchasing decisions have an effect on the use of resources." They added that "even people who do want to reduce resource use may not have information on how to do it" (p 86). PICME agreed, noting that "many companies are unable to see the potential scale of their improvement opportunity or their improvement efforts fall short through weaknesses in their approach. The majority of operating sites are also now very resource constrained … and struggle to find time to learn the best ways to improve without external support" (p 85). The BRE has been working with companies to set benchmarks for the overall amount of waste produced within a certain floor area. As Ms Hobbs, Director of Resource Efficiency at BRE explained, "waste reduction is not tangible because you are trying to quantify something that no longer is there," so it is important to have measurements to enable businesses to recognise the cost of their waste. She said that "the critical thing everybody is trying to work out is: what is the business case? If I invest this much in terms of waste reduction activities, am I going to get the money back myself in terms of reduced waste costs?" (Q 743).

SMEs: a special case?

6.5.  The most recent survey of commercial and industrial waste estimated that nearly 68 million tonnes of waste was generated in England in 2002-03. According to an unpublished analysis, Ms Ruddock, the Defra Minister, reported that of this total figure, where employee size of the businesses were known, around 15 per cent of the waste was produced by companies with fewer than 10 employees and around 37 per cent was produced by businesses with 10-100 employees.[42] Promoting the waste reduction message to SMEs is therefore a difficult but important task.

6.6.  During our visit to Belgium we visited OVAM, the public waste agency for the Flanders region, which has been particularly successful at engaging with the business community to promote waste prevention. The agency has developed an "ecolizer" tool, aimed at designers, to help them assess the sustainability of the products they design. Their series of ecolizer charts display eco-indicators, based upon life-cycle assessments, which provide simple, easy to understand information on the emissions and resource inputs of materials and production processes. OVAM has also conducted a series of prevention programmes which disseminates information to SMEs, shares the experiences of companies implementing prevention measures and supports research.[43]

6.7.  OVAM's Eco-efficiency Scanprogramme encourages SMEs to invest in eco-efficient policies which combine environmental profit with economic advantage. This voluntary programme offers a free initial audit conducted by external consultants, followed up again after six months and one year, which identify areas which businesses can improve upon. One of the most commonly identified aspects involves waste prevention and separation and Mrs Katrijn Siebens, Head of Waste Prevention at OVAM, told us that SMEs do not always have a clear idea of where their waste is due to poor recording systems. SMEs often reported that the scan questions their preconceptions and "opens the eyes." OVAM has also developed a tool for Flemish SMEs to calculate the costs of their waste, which has demonstrated that true waste costs can be up to 10 times higher than the visible costs of disposal. Perhaps most useful of all, the agency has developed benchmarking techniques which enable businesses to compare their resource efficiency. OVAM's Inspiration database holds information from over 250 companies which have implemented successful waste reduction practices and design for sustainability. Furthermore, an internet-based tool has been developed which allows local authorities to assess their consumption patterns and procurement policies.[44]

6.8.  Mr Davies from the EIC hoped that once businesses started to look at waste management costs, "they will realise then that the real cost is in the materials that they have bought and then thrown away, which is probably 10 times the cost of the disposal of it." He commented that large companies may have dedicated staff to examine resource efficiency, might be registered with environmental auditing schemes or produce corporate social responsibility reports, all of which "draw attention to what they are doing and are a driver to improve them" (Q 226). In comparison, smaller companies usually do not. Mr Stace, EEF, noted that "something like 42 per cent of SMEs do not have recycling ever on their board agendas so if it is not on the agenda they are not talking about it and they are not doing anything … If you are a small organisation, a small company, where do you go to get the right information for what you are trying to do or your production process? That is the barrier. You might know what you need to do, but sometimes you do not know how to action it and achieve it" (Q 218).

6.9.  Generalisations of "large" and "small" companies can often oversimplify the situation. Dr O'Connor, Director of the Ecodesign Centre Wales, pointed out that "they are not all the same—there are a lot of innovative SMEs out there. If you take a particular sector, for example, like food and drink … there are loads of small businesses in Wales innovating in terms of packaging and in terms of new products in the food and drink sector. Likewise in fashion and textiles … The key thing is it depends on the culture of the company, location and the sector in which they operate." Dr Bhamra, Loughborough University, countered that "SMEs are a good place to innovate, but they do not have the skills and expertise in sustainability. There are a few examples where SMEs have done this but that will be down to an individual who is committed and wants to do this. On a general day-to-day basis, they are often short of staff and do not have the designers with specialist knowledge … giving them the skills in order to make these changes in sustainable design is the challenge … they can do it but it is down to resources" (Q 379).

6.10.  According to EEF, government organisations promote the potential cost savings from waste minimisation initiatives, "but these figures do not always take into account the 'hidden' costs, for example the administrative costs or man-hours, of implementing such measures. This can lead to scepticism and provide a barrier to greater uptake by business" (p 117). Mr Sexton from Laing O'Rourke felt that businesses needed clarity and consistency in the advice that was provided by various support bodies. He said that Laing O'Rourke, as a large firm, could cope with information coming from different sources as they had a team of people who were experts in it, but he wondered "whether much smaller firms are capable of doing it in the way that we can because we are able to devote the resources to it." As resources may be lacking, Ms Lesley Seymour, representing the ICE, thought that the important point was to "instil the correct process into a business such that it becomes part of their culture to be resource efficient" and to provide SMEs with simple guidance and clear procedures (Q 811).

6.11.  Mr Holbrow, representing the FSB, admitted that "the problem is the perception amongst small businesses." He commented that "there is lots of information there, there are lots of things that people should do but the perception is amongst the owners of small businesses that there are so many other things they have to do that they do not necessarily see waste reduction as a way of increasing profits" (Q 156). Nevertheless, Mr Holbrow was also keen to point out that SMEs did not deserve a lot of the criticism they received about waste. A recent report by the FSB surveyed 1,700 SMEs and showed that 83 per cent of them "actively engaged in waste minimisation and recycling." It stated that "the key problem for many small businesses has not been apathy but lack of awareness of what they can and should be doing to seek effective environmental solutions to waste disposal and other areas." The report acknowledged that "the picture is not entirely rosy, and small businesses are still very much hampered by time, the size of their business and the complexity and raft of legislation emanating from the EU on the environment." The report's conclusion was that "small businesses tend to be innovative and adapt quicker to change than large companies. They could readily make use of new technology and develop new markets however, the onus remains on the Government to improve and increase investment into research and development and provide clear, simple and timely guidance on the opportunities available and the steps small businesses need to take to mitigate negative effects on their businesses."[45]

Business advice and support

6.12.  The Government fund a range of delivery bodies which help businesses avoid or minimise waste. Some of the most commonly cited bodies are Envirowise, the National Industrial Symbiosis Programme (NISP), the Waste and Resources Action Programme (WRAP) and the Market Transformation Programme (MTP). The Government described the roles of these bodies. Envirowise "provides free, confidential advice to UK businesses on reducing environmental impact, including on-site audits by expert technical advisers, a dedicated telephone help-line, best practice guides and tailored business support packages." NISP performs a slightly different function and "identifies business waste with value as a raw material for other operators" thus improving the sustainability of processes and helping to increase the profits of operators. WRAP "encourages businesses and consumers to be more efficient in their use of materials" by, for example, promoting the use of recycled materials above virgin, whilst the MTP "works with government, business and other stakeholders to improve the design of products and services, such that they use fewer resources in manufacture and use, and result in less waste at end-of-life" (p 4). In addition, BERR's Manufacturing Advisory Service helps manufacturers to share knowledge and improve productivity, the Business Link network provides general information and links to all of these bodies, and trade associations also disseminate information to their members.

6.13.  Mr Stace said that these support bodies had experienced problems in the past. He felt that the people carrying out the audits did "not really understand the process" so did not add any value to what the companies already knew. However, he acknowledged that this was beginning to change and bodies were acquiring a better understanding of sectors, "sending in more specialists, helping them achieve what they are setting out to do." EEF was working very closely with Envirowise, the Carbon Trust, NISP and the Manufacturing Advisory Service "to effect that change" (Q 221). NISP reported that it was "the first and only industrial symbiosis initiative in the world to be operated on a national scale" and that its approach had attracted international attention, diverting over 1.8 million tonnes of waste from landfill, saving 5.4 million tonnes of virgin materials and generating more than £99 million in additional industry sales in the 2005-07 period (p 89). Envirowise claimed to have helped businesses save £297 million in 2006 by a variety of measures, including reducing solid waste by almost 550,000 tonnes and using 84,000 tonnes less raw material (p 86). These bodies are therefore helping businesses to increase their profits as well as reduce their waste.

6.14.  In addition, the Design Council's Designing Demand service for SMEs is "working to embed sustainable practice at its heart." As part of this service, a mentoring scheme is provided by "design associates" which advise businesses according to their needs, raise awareness and "signpost businesses to other resources around complex sustainability issues" (p 178). Ecodesign Centre Wales thought that transferring the knowledge and experiences of larger businesses and other stakeholders, such as research centres, non-governmental organisations, academia and support services, was crucial in moving towards "a culture where all stakeholders view waste as a resource" (p 182). Dr O'Connor told us that the Ecodesign Centre had therefore been supporting commercial support partnerships in which larger companies transferred knowledge to smaller enterprises. For example, Panasonic in Cardiff had been working with the Centre to transfer their knowledge and expertise to a small electronics business in Wales (Q 364).

6.15.  Knowledge also needs to be shared between SMEs themselves and Mr Holbrow said that in regional FSB meetings, "if there is a piece of information that will make life easier for one business they will quite readily share it with the next business." He made it clear that the initiative to share knowledge had to come from the businesses themselves; "for it to work it has to be generated in the small business world, from the small businesses themselves; they have to see the benefit of it and the need for it" (QQ 170-171).

6.16.  Mr Black thought that the REKTN also had a role to play in engaging with SME communities, saying "that is essentially what we are there for. We provide the advice and support and we act as an honest broker, if you like. We have also been quite successful in getting a number of SMEs to collaborate together to address a problem." He acknowledged that SMEs "tend to be very interested in what is hurting them now rather than the innovation of their business for tomorrow," but by establishing a working relationship and helping them to solve their immediate problems through bodies such as NISP, they could then start to consider more innovative alternatives for the future. Mr Black added that the REKTN programme was entirely free, funded from the TSB, and signposted businesses towards funding activities such as grants for research and development (QQ 463-464).

6.17.  Dr Hedges said that for SMEs interested in technological innovations, the EPSRC has "a number of support schemes to engage them through research projects or through collaborations in our various research activities." He added that the vast majority of SMEs were not interested in this though, so the key was to promote engagement with university research bases to make them aware of the opportunities that existed. Dr Hedges felt that the Knowledge Transfer Partnerships (KTPs), which place newly qualified graduates in companies, were useful "because that provides them with an additional member of staff to get state-of-the-art knowledge from a university company" and it also provides very good training for the graduate. Dr Whittall from the TSB noted that 86 per cent of the KTP schemes involved the participation of SMEs and added that they were "looking to double the number of KTPs over three years" (QQ 461, 463).

6.18.  Local authorities also play an important role in providing business support at a local level. According to a survey conducted for the business support website NetRegs, 49 per cent of businesses contact local authorities about environmental issues and around 25 per cent of businesses see local authorities as the most valuable source of environmental information.[46] In 2006, a consortium formed between the LGA, NISP and Oxfordshire County Council established the BREW Centre for Local Authorities, a central support service for local authorities. This Centre commented that "if a business is willing to consider behavioural change it is important for local authorities to be in a position to harness that willingness and be able to support and enable the means by which change can happen." The Centre has supported a number of projects led by local authorities and claims that their results demonstrate "how local authorities, whether taking a strategic or direct role in supporting businesses to improve the use of their resources, can have a significant impact in reducing waste to landfill, reducing carbon emissions and importantly decoupling economic growth from environmental protection through enabling financial savings" (pp 452-453, 456).

6.19.  In addition, the Centre reported that Regional Development Agencies (RDAs) "look to work with local authorities to translate national and regional demands into local action … supporting resource efficiency advice for SMEs through the Business Link organisation, and through their role in regional co-ordination of business resource efficiency activity" (p 456). Along with KTPs, Dr Hedges said that RDAs act as useful agents distributing information about research opportunities as they have "much better links direct to SMEs than we do" (Q 461).

CO-ORDINATION OF BUSINESS SUPPORT BODIES

6.20.  The range of various bodies and schemes appear to be carrying out good work to support businesses implementing waste reduction practices, but questions were raised over whether there was any duplication of work. Dr Liz Goodwin, Chief Executive of WRAP, said that "I think we have all got very clear remits, but we do work very closely together … For example, with Envirowise we are both working with the construction sector and with the retail sector and we are currently developing a joint business plan for 2008." This meant that these programmes would be delivered as a single joint programme and businesses should get a seamless approach (Q 190).

6.21.  Dr Martin Gibson, Director of Envirowise, said that Envirowise did ensure "that when our advisers are on the ground they do signpost to other organisations where necessary. It is very much our feeling that it should not matter who the company comes to or which body the company comes to, they should get the right advice and we pass them on as necessary and as appropriate." Similarly, Mr Peter Laybourn, Director of NISP, acknowledged that "we do in fact have very similar objectives but our approaches are very complementary and very different. I do believe it is a bit of an urban myth that there is an overlap here; we certainly have not found it. We are working very closely with Envirowise particularly at the regional level and we support WRAP in their excellent work on waste protocols with the Environment Agency" (Q 190).

6.22.  Industry was less clear about their different roles. EEF thought that the service offered by various bodies was invaluable, but that "to the business community it appears somewhat confusing, particularly where remits appear to overlap" (p 117). The EIC agreed, adding that it had come to the point where there were "too many cooks," some of which were "attempting to attract the attention of the same businesses" which caused "confusion in terms of where to access the best support" (p 114). The CIWM concurred and suggested that "there is considerable scope for better co-ordination and communication between business support bodies … CIWM would like to see one BREW funded body take the lead in this area" (p 340). Within the construction sector, Mr Rainer Zimmann, Associate Director at Arup, thought that "there are too many government bodies that have started providing the industry with advice … particularly smaller companies probably feel that it is difficult to catch up with all of this" (Q 811). This was supported by Mr Cal Bailey, representing the Specialist Engineering Contractors' Group, who felt that all the sources of advice were confusing for smaller businesses and that "the idea of having a single source for that could be very attractive" (Q 812).

6.23.  BERR Minister, Mr Wicks, said that "we recognise in Government that the number of different schemes to support businesses, not just on this issue but on a whole range of issues, has grown like topsy. To be blunt, it is confusing, there are far too many, indeed there are an estimated 3,000 such schemes." The Government's Business Support Simplification Programme is therefore trying to streamline these to around 100 schemes by 2010. Mr Wicks added that "Government as a whole spends about £2.5 billion a year supporting business, 40 per cent of which is local funding. I think by rationalising them and by focusing on Business Link as the primary access point, we can help businesses in general, and I think there will be knock-on effects [for waste reduction]" (Q 835).

FUNDING OF BUSINESS SUPPORT BODIES

TABLE 1

Funding for Delivery Bodies
2005-06
2006-07
2007-08
2008-09
Envirowise

£15.542m

Comprising:

£12m - BREW programme

£2.292m - other Defra programmes

£1.25m - DTI programmes

£20.002m

Comprising:

£17m - BREW programme

£2.292m - other Defra programmes

£0.710m - DTI programmes

£22.19m

Comprising:

All BREW programme

£9.390m
Market Transformation Programme
£4.27m

Comprising:

£2.7m - BREW programme

£1.57m - other Defra programmes

£4.68m

Comprising:

£3.17m - BREW programme

£1.51m - other Defra programmes

£4.8m

Comprising:

£3.895m - BREW programme

£0.905m - other Defra programmes

£2.75m
National Industrial Symbiosis Programme
£2.675m

Comprising:

All BREW programme

£5.7m

Comprising:

All BREW programme

£8.25m

Comprising:

All BREW programme

£5.025m
Waste and Resources Action Programme
£68.147m

Comprising:

£2.701m - BREW programme

£5.620m - Aggregates Levy Sustainability Fund

£59.826m - other Defra programmes

£57.888m

Comprising:

£5.736m - BREW programme

£2.607m - Aggregates Levy Sustainability Fund

£49.545m - other Defra programmes

£59.012m

Comprising:

£12.174m - BREW programme

£2.7m -

Aggregates Levy Sustainability Fund

£44.1383m - other Defra programmes

£43.223m

Comprising:

£39.973m - Core Defra Funding

£3.25m - Aggregates Levy

Sustainability Fund

Figures are given for England only. Envirowise, NISP and WRAP also receive funding from the Devolved Administrations. From 2008-09 there will be no separate BREW programme of funding, although a number of BREW-type activities will receive funding as part of "core Defra" programmes (pp 430-431).

6.24.  The continuity of business services was a matter for concern following recent cuts in funding (see Table 1). Defra Minister, Ms Ruddock, explained that the reason for these funding cuts was two-fold. First, the investment had originally been made "to develop these fields, to develop business resource efficiency, and to pioneer work of this kind" and good progress had been made in doing that. She thought that some of the programmes had "probably reached the end of their natural life and would not require the same level of funding or perhaps funding at all." Second, she said that the Government had taken the decision "that we should rather reorientate our approach so that we would not give support to business which is on a one-to-one basis or direct business support to a particular company. What we are doing now through all these delivery agencies is providing the evidence about how something should be done, and therefore we can offer that expertise involved with business so that business can make its own progress." Ms Ruddock thought this a reasonable strategy because businesses are now much more aware of their environmental impacts and the importance of resource efficiency, and she confirmed that "we will not have the direct agency to business funding in the same way." The Government were also asking delivery bodies to consider whether they should charge for some of their services. Ms Ruddock cited the example of the Carbon Trust which had been "raising more and more money from the private sector and complementing the public money that they spend" (QQ 827, 834).

6.25.  By contrast, witnesses suggested that direct contact was exactly what businesses needed. EEF said that "many companies, in particular SMEs, have little time and lack the resources to address these issues on their own, which suggests that programmes need to be proactive and take the message directly to business" (p 117). Mr Nicholas Morley, Director of Sustainable Innovation at Oakdene Hollins added that "the companies that make the most use of business support services to reduce waste are those companies that are already performing well ... I think there is the interesting question of how you reach the laggards and the less well-performing businesses" (Q 196).

6.26.  There was concern that by removing direct business support, best practices would slip. Mr Davies said that when assistance was offered to companies in the past at no cost then they were glad to accept it, "but as soon as the support fell away—we tried every different means of recompense, a share of reduced wastage and all of these things—but effectively people were not willing to make those changes for their own sake." He cited a number of reasons for this. First, SMEs may lack the internal resources to "drive those changes through" and manage an external programme. Second, he referred to a common belief amongst SMEs that they do not require assistance because they can do it themselves, but then realise that they cannot due to a lack of time, "so it does not happen." Finally, he noted that really significant changes often required new infrastructures which "take longer to get a payback than two years, which is typically the requirement. All of this is a great pity because many of the changes require no significant investment. They just require a different approach" (Q 221).

6.27.  Mr Stace acknowledged that "there are potentially too many government funded organisations offering sometimes very similar services," but he argued that "we like them. There are certain ones that we think are doing very good work and we continue to work with them. What businesses need is long-term continuity." He added that "we have very little understanding of what is going to happen in the future." Thus the dilemma for businesses is whether to invest time and effort in this area, or "invest their efforts somewhere else because the organisations they are working for might not carry on" (Q 233). Ms Dibb from the SDC said that "there is a feeling within government that if there is an economic win for a business that the cost should be borne by the business." She acknowledged the argument that public money should not be used to subsidise savings in businesses but said that this argument was only legitimate up to a certain point. "For smaller businesses which do not have the in-house resources and expertise and time, there are particular barriers that need to be addressed in helping them." She felt that it was important for businesses to be provided with help to overcome the initial hurdles, "to the point where businesses can see that they are making money out of it. Then the ball starts rolling with them and they can take that further" (Q 557).

SENDING THE APPROPRIATE SIGNALS?

6.28.  Witnesses also expressed concern about the sources of funding for business support bodies. When the Government announced in 2003 that the standard rate of landfill tax would increase each year towards a rate of £35 per tonne, they committed to "introduce the increases in a way that was revenue-neutral to business as a whole." Therefore, in their Spending Review 2004, the Government announced that the additional revenues raised from businesses through the landfill tax "would be ring-fenced and spent on programmes to improve businesses' resource efficiency." In England, the BREW programme distributed £284 million of landfill tax receipts between April 2005 and March 2008. £50 million was returned to the Devolved Administrations for programmes similar to BREW and approximately £50 million was retained for Enhanced Capital Allowances for advanced waste disposal technology. Of the funding allocated to the BREW programme, approximately two thirds "provided for waste management and waste reduction initiatives." No ring-fencing arrangements were made regarding landfill tax revenues from local authorities, but the Spending Review 2004 announced that revenues from the landfill tax escalator would be returned to local authorities through Formula Grant, so that the landfill tax escalator was "revenue-neutral to local authorities overall" (p 432).

6.29.  The BREW programme of funding has now ceased and, in June 2008, Defra told us that future allocations for business resource efficiency would be "decided through Defra's business planning process, which seeks to ensure that resources are best matched to Departmental priorities" (p 421). Mr Stace was disappointed that there would be no more ring-fencing of part of the landfill tax monies; "what we hear at the moment is that the landfill tax monies could go to fund flooding, fly-tipping and blue tongue. They are very good causes but the money is coming from somewhere else and we would like to see direct recycling back to the organisations who are paying the landfill tax into measures to help them increase their resource efficiency" (Q 235). EEF believed that "the carrot and stick approach of using taxation to send a price signal to business and using the funds raised to help companies to change their practices is the most effective approach to behaviour change. We are therefore disappointed by the Government's decision to remove the ring-fencing of the tax" (p 117). Ms Hill from Green Alliance agreed, noting that "the Government sold to business the concept of the escalator on the landfill tax on the basis that that money would be recycled to business … The Commission on Environmental Markets said that kind of support needed to be increased and hypothecating a tax like the landfill tax is potentially a very logical way of doing that. The Treasury have moved away from that kind of idea and we think that is a shame" (Q 557).

6.30.  Mr Wheatley, Programme Director at the LGA, commented that the efforts of local authorities to help businesses reduce waste would also be hampered by a lack of funding. He said that for the period 2008-2011, "£1.5 billion of landfill tax funding which would, under the Government's previous policy, have come back to local government is not going into local government. That will almost inevitably force local authorities to take a very hardnosed economic attitude to the sorts of services they undertake, they will not be able to afford to do things that are not the minimum cost solution to securing recycling and disposal" (Q 659). Dr Craig, Principal Policy Officer at LARAC, added that "the Government is keeping more of this money to itself for the Treasury generally" and, as a result, the focus "has had to shift from giving help to individual companies for waste reduction and better use of resources to providing some general information and advice to companies about how they should do it" (Q 656).

6.31.  In response, Ms Ruddock said that although there had been an agreement to use some of the landfill tax receipts for waste initiatives, "ring-fencing arrangements are ones that are always kept under review, and we have come to a decision with the Treasury that that will no longer be the case, so there is no ring-fencing of landfill tax receipts in this financial year or the subsequent one." With regard to local authorities, she said "we are satisfied that they can carry out all the duties that are required of them in respect of waste … For local authorities there are year-on-year efficiencies which they are obliged to make and that is the key because if they make those efficiencies they will have much more money to spend" (QQ 843-844). As part of the Comprehensive Spending Review 2007, the Government decided to provide local authorities with an overall annual average increase in Government grant of 1.5 per cent above inflation for the period covered by the Spending Review. The Government said that this figure took into account local government's landfill tax liability "and allows local authorities to deliver effective services including in the area of waste management" (p 432).

6.32.  Ms Ruddock was adamant that they were "not turning off the tap" on funding for support bodies and reaffirmed the importance of the Business Link network, saying that "they are establishing working models for advising industry on how to be more sustainable." She felt this was necessary because "however much funding, even at the level of last year's funding, these delivery bodies could not be in contact with every business in the country … that is why it needs to be channelled through the main channel, which is Business Link for the advice in general, but we will continue to see that very specific work is done that will then provide the template for others to follow" (QQ 836-837).

6.33.  When asked whether Business Link advisers had the specialist knowledge to promote resource efficiency, Ms Ruddock said that "I accept they have not had it; they are going to acquire it." Mr Wicks added that one of the roles of Business Link was to provide generic advice on how to run businesses cost-effectively. Although acknowledging that resource efficiency would sometimes require specialist knowledge, he added that at the other end of the continuum, it "just requires a bit of thinking through and a bit of commonsense, does it not." According to the DIUS Minister, Mr Pearson, "it is not a question about having Business Link advisers being expert across a wide range of areas, from financial planning to waste minimisation to manufacturing techniques. What it really is about is providing that gateway and access" to make business support simpler and less confusing. Through their Business Support Simplification Programme, he said that they were "undertaking a major rationalisation of our points of contact with industry so that we respond directly to what the Confederation of British Industry, the British Chambers of Commerce and the FSB and others, are saying to us" (QQ 837-839, 841).

6.34.  The Government added that RDAs, BERR and Her Majesty's Revenue and Customs would work with the business support product owners "to ensure that Business Link meets customer support needs." Defra would work with RDAs "to ensure Business Link is able to deliver the enhanced service, and that customer service teams and advisers are trained to the appropriate level." The Government reported that "all Business Link customer-facing staff must be accredited to the appropriate nationally agreed standard of competence" and in the case of advisers, that involved accreditation to the National Occupational Standard for Business Support and the additional Business Link Broker standard. RDAs had also asked the standard-setting body to ensure that the National Occupational Standard was developed "to reflect sustainability as a core element of the national standards" (p 421).

Recommendations

6.35.  Businesses which implement new and innovative solutions to reduce waste tend to experience significant cost savings and awareness of such strategies is beginning to increase. However, many businesses still fail to recognise the financial costs of their waste and even where waste reduction strategies are known, an understanding of how to implement them is lacking. It is vital that business support bodies should continue to provide direct, tailored guidance to businesses, especially to help small- and medium-sized enterprises overcome the challenges they face. We are therefore extremely disappointed by the decision to reduce funding for some of the major business support bodies, including Envirowise, the Market Transformation Programme, the National Industrial Symbiosis Programme and the Waste and Resources Action Programme, and we are at a loss to understand the Government's reasoning. Discontinuation of the Business Resource Efficiency and Waste programme and funding cuts will only serve to reduce the services that business support bodies and local authorities can offer. Hitherto, hypothecation of a proportion of the landfill tax has sent a strong signal to industry that waste must be reduced, and ending this arrangement will undermine the Government's pledge to tackle commercial, industrial and construction waste. We recommend that the Government should once again ring-fence a proportion of the landfill tax revenue to fund waste reduction initiatives, thus providing businesses with both the carrot, and justification for the stick, in order to encourage change.

6.36.  We recognise that the vast range of business support bodies is confusing for businesses and support the Government's Business Support Simplification Programme. Nevertheless, we are not satisfied that Business Link advisers are appropriately qualified to advise on resource efficiency. We recommend that the Government urgently provide further training for these advisers, especially in the field of waste reduction, and a system should be developed to monitor the quality of advice provided. As many businesses approach local authorities for assistance, local authorities must also ensure that their advisers recognise the need to refer businesses to Business Link for more detailed advice.

Sustainable business models

6.37.  Alterations to design and production processes are crucial in reducing the amount of waste created and even small changes to existing practices can reap significant rewards. If taken further, the concept of sustainability can provide the basis for business models in which the product or service is offered in an entirely new way. To be successful these often require a change of attitude amongst the general public, but if the market can be found and perceptions changed, these models can offer extremely promising ways to reduce waste.

REMANUFACTURING

6.38.  Remanufacturing is not the same as refurbishing, repairing, re-using or recycling, but involves the disassembly of old products and the use of their components to manufacture completely new ones. Mr Charter, University College for the Creative Arts, described it as a "holistic concept" (Q 82) which involves "recapturing the value added to the material when a product was first manufactured."[47] It allows components to retain their worth and offers an exciting opportunity for businesses to develop a sustainable business model.

6.39.  Xerox has been putting this strategy to use since it pioneered its waste-free programme in 1991, taking back old products at the end of their lives and using component parts to produce new ones. In order to maximise the environmental and cost benefits, remanufacturing has to be incorporated into the design process and by designing their products for easy disassembly, Xerox can re-use and remanufacture a large proportion of their photocopiers, printers and scanners at the end of their lives. The important part of this process is that remanufactured products should provide the same quality and service as "new" products. In order to do this, Xerox carries out a series of tests on the components of its returned products to ensure they meet the required standards. Components are then subjected to a variety of cleaning processes before being used in the production of new units. In 2007, Xerox Europe claims to have remanufactured around 25 per cent of all the products that were returned (equating to around 440 tonnes of material). Since 1991, remanufacturing and recycling together have given life to more than 2.8 million Xerox copiers, printers and multifunction systems, while nearly £2 billion of potential waste has been diverted from landfills due to the remanufacturing of products and recycling of consumables.[48]

6.40.  In order to implement the remanufacturing strategy effectively, Mr Charter explained that businesses must take high-level strategic decisions to employ this "forward" and "reverse" manufacturing. The factory and remanufacturing factory must be co-located, the company must operate a take-back system and the designers must build disassembly requirements into their specifications. The system could be complex so businesses really had to "design the system and then empower the designers themselves with the right sort of thinking to enable them to do it" (Q 82).

INDUSTRIAL SYMBIOSIS

6.41.  When a remanufacturing strategy is implemented effectively, it can clearly have significant benefits, but the complexity of establishing such a system appears to preclude smaller businesses from employing it themselves. However, SMEs could engage in a type of remanufacturing, by "scavenging" other companies' technologies and products (Q 83). Yet what some may describe as scavenging, others may refer to as industrial symbiosis. This concept embraces the principle that what may be one person's waste, could in fact be another person's resource.

6.42.  NISP introduces companies to each other and encourages them to form "partnerships to make maximum use of resources which would otherwise go to waste" (p 89). As an example, NISP has helped one manufacturer find a sustainable route for their waste wooden pallets. Whereas the company previously sent them to landfill, after NISP facilitated an agreement with a recycling business, the pallets are now repaired or rebuilt into "new life" pallets. Any wood which cannot be used in pallets is shredded and used as part of landscaping mulches or other surfaces, and no wood is sent to landfill. As a result, each year around 200 tonnes of wood is diverted from landfill, 200 tonnes of virgin raw material is saved and £3,600 is saved due to the lower cost of recycling compared to landfill.[49]

PRODUCT SERVICE SYSTEMS

6.43.  Although approaches such as lean manufacturing and six sigma have contributed to waste reduction, the CIKTN and CIA commented that their benefits are limited because they are "largely concerned with optimising an existing product and/or process" (p 135). Beyond this, there is scope for further innovation to provide the user requirement in a completely novel way. The Scottish Environment Protection Agency believed "it is not only the design and materials used which will have an impact on waste generation … the marketing model is also important." The Agency added that "a switch to product service systems could provide the impetus for waste reduction" (p 484).

6.44.  Whereas products are normally sold outright and then sent to landfill at the end of their lives, product service systems offer the potential to significantly reduce waste by leasing a product on a temporary basis and then taking it back. In this way the system has two purposes: it satisfies consumer needs to change products before the end of their natural lives; and producers can also fulfil their responsibilities by taking back materials and components for recycling or re-use. Dr Chapman, University of Brighton, highlighted the fact that such service systems could foster brand loyalty and pointed out that although a company might sell fewer units, it could "generate further turnover over the extended lifespan of an object through service points, repair points and upgrade points" (Q 396).

6.45.  Ms Brass, Founder of the SEED Foundation, noted that designers were crucial in identifying what the "real problem" was and finding a convenient solution. She cited an example of a different type of product service system provided by Streetcar, "a flexible car-hire service that affords people the mobility of a private vehicle without the associated inefficiency and costs" (p 186). This service allows "people in cities to find a car close by which they can get into, drive to where they are going and leave it in the street" and is a "fast-growing, very successful business." Ms Brass added that the service had developed a very user-friendly interface, "designed by a group of service designers" which was crucial to making such a service a success. She conceded that there were still very few examples of product service systems, but insisted that "there are examples of this beginning to work" (Q 388). The RED Initiative added that although design could be useful in minimising the environmental impact of materials, it had "a pivotal and potentially more critical role to play in changing consumption patterns. In order to achieve a sustainable society it is critical that alternative lifestyle solutions are designed, developed and adopted" (p 204).

6.46.  Dr O'Connor pointed out that the recycling and recovery infrastructures needed to make this strategy successful were complex and there were still "quite a lot of issues that need to be addressed to make this a successful business model" (Q 389). Miss McCain from the RED Initiative also emphasised the need for a competitive advantage in order for these schemes to work. She noted that the low cost of many items meant "you could actually go out and buy one for more or less the same price as it would be to hire one" (Q 409). We recognise that there would also be technicalities to clarify such as when capital tax allowances could be claimed. So although this strategy offers the potential for substantial waste savings, more work is therefore needed before it can become a ubiquitous, marketable strategy.

Recommendation

6.47.  There is scope for waste prevention to be integrated into sustainable business models but the implementation of such strategies will take time. The success of sustainable business models depends upon the size and structure of the business, the take-back and recycling infrastructure, the current market value of products and consumer perceptions. Evidence supporting these strategies is scant but growing so we recommend that the Department for Business, Enterprise and Regulatory Reform, along with business support agencies and industry, should continue to monitor such business models, assessing the barriers which inhibit their adoption and reviewing the range of policies and incentives that might be required to encourage their implementation.


41   Cambridge Econometrics and AEA Technology, The Benefits of Greener Business: Final report submitted to the Environment Agency, 2003. Back

42   Written Answer to the House of Commons, HC Deb 4 March 2008 col 2285W. Back

43   See Appendix 6. Back

44   Ibid. Back

45   Federation of Small Businesses, Social and Environmental Responsibility and the Small Business Owner, 2007, pp 4-5, 8, 9. Back

46   Environment Agency, Scottish Environment Protection Agency and the Northern Ireland Environment and Heritage Service, SME-nvironment 2007: UK summary.

(See http://www.netregs.gov.uk/commondata/acrobat/smenvironment07uk_1856733.pdf).  Back

47   Gray and Charter, Remanufacturing and Product Design: Designing for the 7th Generation (see http://www.cfsd.org.uk). Back

48   See Appendix 5. Back

49   See http://crisp.international-synergies.com/_layouts/Downloads/match_1675_giffords_and_grainger_worrall.pdf.  Back


 
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