Examination of Witnesses (Questions 660-673)
Mr Christopher Murphy, Mr Peter Jones, Mr Martin
Wheatley and Dr Andrew Craig
18 MARCH 2008
Q660 Chairman: Do you not think that
part of the problem is that there are too many local authorities
with insufficient markets for this kind of activity and that really
it would be more sensible to give it to larger strategic authorities,
because the idea of local control seems to have gone out of the
window—when there are private companies doing it anyway
the degree of democratic accountability is very limited. Would
it not be better if you just threw your hands up and said "We
cannot do this any more because we are not big enough, we are
not efficient enough and there are too many of us trying to do
it"?
Mr Wheatley: My Lord Chairman, one can to some
extent have one's cake and eat it. One of the things that is in
the Climate Change Bill that we support very strongly is the introduction
of a power to create joint waste authorities and that means that
local authorities can work together.
Q661 Chairman: Is that they were
unable to do it before or is it that now that you have the legislation
you are encouraged?
Mr Wheatley: There is a strengthened statutory
framework for collaboration between authorities, and that is very
welcome. There is still a strong case for local control over waste,
particularly as it becomes not just a service but a means of achieving
very important environmental imperatives through individual behaviour
change, that local authorities as bodies that are close to local
people are very well-placed to encourage people to think about
their behaviour and its environmental impacts. I would have said
that maintaining local control at a fundamental level over how
waste gets collected and disposed of is absolutely right, but
there is a lot of scope for local authorities to work together
on some of the more downstream aspects to secure economies of
scale and make sure that their practices follow the best available
evidence.
Q662 Chairman: Can I just get it
right: you have always had that power to come together and to
co-operate and so far it has not been used. Now that there is
going to be in the Climate Change Bill the legislative means whereby
this is going to happen, the myopia of local authorities so far
in seeing what to most people is blindingly obvious is now going
to be transformed because there is going to be an additional legislative
power which they do not really need because they had it already.
Mr Wheatley: First of all the power was in the
local government Public Involvement in Health Bill. It was possible
for local authorities to come together before but that legislation
has removed some of the obstacles and difficulties that stood
in their way in the past and I know that a number of authorities
are already developing this sort of arrangement or have developed
it. We could certainly let you have a note on that point if you
would find it helpful.
Lord Lewis of Newnham: I would appreciate knowing
what these obstacles were.
Q663 Chairman: The heads of most
councils I would suspect, and officials who were looking after
their bailiwicks.
Mr Wheatley: As I said, My Lord Chairman, I
am very happy to let you have a more detailed note on that point
if you would find it helpful.
Lord Crickhowell: Can I come back to this whole
question of cost? I heard your answer on bottles and yet we heard
from the industry that again in Europe they do not seem to be
having the problem or they are meeting it in some way, and that
our industry is therefore being gravely damaged by what is happening.
The chartered institute does rightly say that the primary driver
for most manufacturing is the cost of those products and we are
hearing that cost comes into the whole equation about whether
you get virgin projects out and how you collect and so on. We
have been told repeatedly in evidence that the contracts that
local authorities provide to waste management companies are usually
based on tonnage of waste, and that means that lighter materials—aluminium
is a particularly good example of a high quality, recyclable material—never
get collected at all. We had a reference earlier and we heard
again in the evidence that somehow because of these cost factors
a lot of the material is disappearing into informal channels and
going perhaps to exports and illegal exports. Is there something
fundamentally wrong with the whole arrangement at the moment,
that it is based on weight rather than on some other factor, that
we have not got a proper balance of costs to get the maximum benefit
out of it? Our continental competitors do seem to be doing much
better in this field; is this to do with costs and weight? Can
you elaborate on what is going wrong—and it is clearly going
wrong at present?
Q664 Chairman: We are conscious of
time so if you can keep your answers fairly short that would be
helpful, but Dr Craig and then Mr Jones.
Dr Craig: The fact is that local authorities
have been set weight-based targets and there is a related issue
which is around the costs specifically in relation to packaging
but also other related things. Local authorities at the moment
pay the collection costs of the lighter materials which we would
like to get more of out of the waste stream and because they have
got very low bulk density they are very expensive to collect in
terms of pounds per tonne. There is a question that your Lordships
might consider about whether this cost should be borne by local
authorities at all. Certainly local authorities do not need any
more targets when it comes to waste management; we have plenty
of those and we have more than succeeded in achieving the targets
that the Government has set us. For very lightweight materials
when the cost of collection per tonne is very high there is a
considerable gap between the value of the material when you have
it to sell and the actual cost of collecting it. The answer to
this is to shift it over to producer responsibility and say that
producers should be working with local authorities. We agree that
there should be more consistency between the systems that are
operated to collect waste, both from individual people and from
firms, but the cost is a crucial issue as far as local authorities
go.
Mr Jones: My suggestion, My Lord Chairman, for
the differences between the EU and the UK is that the EU is ten
years ahead of us.
Q665 Chairman: We are part of the
EU as well.
Mr Jones: In mainland Europe the waste industry
has been stable for ten years because they have had high landfill
taxes, they have had certainty on technologies and so on. Here
in the UK we have this dynamic of four major factors that are
in a state of changing and evolving tension: the first is what
is happening to local authorities in terms of scale economies,
the second is the fact that if you establish this much more decisive
approach in terms of producer responsibility, then on our estimates—and
I can provide you with a note—10-12 million tonnes of the
30 million tonnes for which local authorities are responsible
would change from being a cost liability on the local community
and they would in fact receive an income from those industry supply
chains. We have batteries on the go, we have nappies—there
are 1.5 million tonnes of incontinence pads and nappies in the
stream that are a cost on local authorities but in fact they are
generated in part by the NHS and also of course by stances for
products that may or may not be used efficiently. The third dimension
is this issue around the closure of landfill sites and the fact
that the tax, which is now at £24 after ten years, is going
to go to £48 in the next three years, so you have this sharp
acceleration which is creating uncertainty. The fourth big block
is the box labelled technology: are we going to go down the thermal
route, the biological route, anaerobic digestion or recycling
and different companies and different regions are approaching
that differently so you have a complete situation of instability
created by these four major issue areas.
Q666 Baroness Platt of Whittle: How
successful have national and local government been in implementing
sustainable procurement policies that consider the entire life-cycle
of the products?
Mr Wheatley: The Local Government Association
thinks it is a very important area as part of the work we are
doing on climate change and we see waste as very much a component
of what local authorities can do to tackle climate change. Work
has been going on into sustainable procurement and some local
authorities—Wakefield, Newcastle, Easington, Norfolk spring
to mind—are already pursuing very progressive and effective
approaches to sustainability and procurement, but a local government
working group published a report in November last year which sets
out a road map for the local authority sector to improve the sustainability
of its procurement approaches, notably carbon, and the other things
that go with carbon like whether our products generate a lot of
waste, particularly non-recyclable waste. We are now in the process
of organising an action plan that will take the recommendations
of that task force report forward. The only caveat I will put
on all of that is again the extreme financial pressures that local
authorities are under and a strong pressure to achieve short-term
efficiency savings which may not be the same as a long-term sustainable
definition of the costs and benefits of particular types of procurement.
Q667 Baroness Platt of Whittle: What
conversations do local authorities hold with waste processing
companies when developing procurement policies and how do they
educate their staff to consider the full life-cycle implications
of the materials and products they purchase, because it is a life-cycle
thing, is it not?
Mr Wheatley: I very much agree, My Lord Chairman.
It is certainly part of the work I have just referred to both
to encourage local authorities, particularly in combination, to
have an intelligent dialogue with people with whom they are in
a commercial relationship—the people they source goods from
and the people whom they dispose of them to—so that the
private sector has the scale and certainty it needs to come forward
with procurement solutions that work for local authorities. Again,
it is also an element of the work that I have just referred to
for councils to think about how they educate all of their staff,
not just a handful of procurement staff, to think about the decisions
they make and to make them more sustainable.
Q668 Baroness Platt of Whittle: The
Federation of Small Businesses told us that small businesses are
sometimes unable to compete for procurement contracts—this
follows up what you have just said—because the standards
are aimed towards big business. Do you think that there is a need
to alter the ways in which the procurement policies are developed?
Mr Wheatley: Of course local authorities, under
the financial pressures to which I have alluded, are often going
to have to go for best value solutions, and those will often inevitably
be delivered by the largest companies, but local authorities also
adopt a variety of approaches to try and even out the playing
field between larger and smaller businesses. For example, many
authorities run what are called meet the buyer days when small
businesses can come into the council and talk to the people who
are making procurement decisions and get a clear idea of what
the council needs.
Q669 Lord Haskel: Is this matter
about small businesses really a problem? What happens to their
waste, do we know?
Mr Wheatley: Certainly many local authorities
have been taking very progressive initiatives, going beyond what
they are statutorily required to do, to provide the sort of recycling
service that small businesses often find it hard to secure from
the private sector, but local authorities do face something of
a disincentive to collect waste from businesses because any residual
waste that they end up with is subject to the Landfill Allowance
Trading Scheme (LATS), unlike private contractors. It is something
that authorities will try and help with if they can, but we do
think we need a more consistent and secure central government
policy framework to encourage more action in that area. I suppose
my other observation, thinking of Mr Jones' earlier points, is
that as the rate of landfill tax increases there will be more
and more incentive on the private sector to provide recycling
and re-use solutions for smaller businesses to a greater extent
than they do at the moment. Only last week actually I saw a facility
in Liverpool that is now taking quite small quantities of construction
waste from smaller builders and I understand that is passing the
point of breakeven now, precisely because of the effect of the
rapid increases of landfill tax.
Dr Craig: My Lord Chairman, in its Waste Strategy
2007 the Government announced that it wanted local authorities
to become more engaged with businesses and commercial waste generally,
presumably through direct provision of services and partly through
the provision of better advice on the former. The operation of
the LATS actually militates very strongly against that and for
local authorities to collect more commercial waste looks as if
it is increasing both the risk and the cost of having enough landfill
allowances to cover their obligations there. The Government has
just done a light touch review of LATS although, unfortunately,
it did not extend to questions such as should the commercial waste
that local authorities collect be included in LATS or should private
sector companies that collect the same commercial waste also be
subject to targets and possible financial penalties.
Mr Murphy: As a £3 million industry employing
40 odd people we (CIWM) are an SME and three or four years ago
we found it extremely difficult to get rid of our recycled paper—you
can imagine that we are a very efficient recycling organisation
as well as all the other work we do—but now when the market
is enhanced there are others competing with the local authority
to actually collect our recycled paper who want to get into the
market, but none of them will collect the other materials because
with economies of scale we cannot generate enough for it to make
it worthwhile. This is a big issue as well for SMEs.
Q670 Lord Haskel: Do you pay to have
your waste collected or is it something that the local authority
does for you?
Mr Murphy: The waste is collected by the local
authority for a charge, the paper is taken away because there
is a market and a value.
Q671 Lord May of Oxford: Defra's
Waste Strategy reports that targets will be set for local authorities
focusing on the "amount of municipal and household waste
produced, recycled and landfilled", with the indicator actually
being the "average amount of household waste per person that
is not re-used, recycled or composted". Do you think that
is a sensible way to frame the indicator?
Mr Wheatley: If I might start, My Lord Chairman,
what we have ended up with in the national indicator set for local
authorities is three indicators, all of which one way or another
are about the amount of waste that either does or does not end
up in landfill. Of course, in the new performance regime for local
authorities no local authority would have to choose any of those
three targets; my view is that actually local authority behaviour
is much more likely to be driven by landfill tax and the LATS
regime than it is by these targets. Of course, both of those would
drive local authorities to minimise waste disposed to landfill,
but of course that is then open to criticism that authorities
may find ways of avoiding their landfill liability by recycling
rather than mechanisms that are preferable in terms of the waste
hierarchy of re-use or avoidance. In practice between collection
and disposal costs recycling is still often a costly activity
for local authorities and if local authorities can find a way
of avoiding collecting waste in the first place it would certainly
prefer to do that rather than collect it for recycling, but that
takes us back to some of the points that a number of us have made
in this session about the need for a central government policy
framework that promotes avoidance and re-use, which we do not
quite have at the moment.
Lord May of Oxford: I particularly liked the
answer that Mr Wheatley gave to an earlier question which relates
to that very problem.
Q672 Chairman: That is fine. Mr Jones.
Mr Jones: One brief point if I may, My Lord
Chairman. It is worth making the point to your Committee that
we have this enormous divide between waste from households and
waste from industry and commerce, because in the mid-nineties,
when the Landfill Directive was translated, a translator presumably
assumed that in English parlance municipal waste means waste from
households. In mainland Europe "municipal waste" is
waste that is similar to that from households and in Europe all
businesses, SMEs included, are subject to LATS-type frameworks
and all of the requirements that are imposed on British local
authorities. The only driver in the UK has been the landfill tax,
and that is a major confabulation—if that is the right word—that
has been introduced into this debate, probably by the act of one
translator.
Q673 Chairman: We are going to Brussels
and we will explore that point; we will see if we can find the
suspect but what we will do with them I am not sure, whether they
are recycled remains to be seen. Can I thank you very much for
your evidence this morning. I am conscious, Mr Wheatley, that
in the light of our discussion you might want to submit something
further and I know that there were certain areas that you wanted
to explore and speak about. If you have not covered them all then
please do not have any qualms about getting in touch with us,
we are quite happy to accept additional notes. Mr Jones, you said
there was a point you could provide us with some information on
as well. That would be helpful.
Chairman: Thank you very much for your evidence
and thank you for your patience.
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