Oral evidence: Growing a circular economy, HC 214Wednesday 11 June 2014 (morning)
Oral evidence, 11 June 2014.
Witnesses
Dominic Hogg, Eunomia research and consulting, Steve Lee, Chief Executive, Chartered Institution of Wastes Management, and Councillor Clyde Loakes, Environment and Housing Board Vice Chairman, Local Government Association, gave evidence.
Chair
May I thank each of you not just for coming along to our session this morning but for sitting in during our previous session. It enables us to continue from where we left off. I should explain that we have changed our normal Committee time to this morning because of the Queen’s Speech arrangements so we are perhaps thinner on the ground than usual. But I can assure you that your evidence will be taken fully into account in our inquiry. We have heard just now about the economies of scale or the benefits that would come from having a more joined-up approach to recycling right across the country and across all the different county and unitary authority areas. How do we get that more co-ordinated approach to recycling? The LGA in its evidence talked about an extra £1 billion of value that we could get, but is there some disconnect there with the Department for Communities and Local Government in terms of its approach to recycling? So how do we overcome what appear to be some of the inconsistencies? Do you want to start, Councillor Loakes?
Clyde Loakes
To set some sort of background, recycling and waste services are some of the most popular services; local residents constantly tell local councils that they are happy with them. Percentage rates for satisfaction are in the early to mid-80s. People, generally, on the ground in their local communities tend to be happy with their waste and recycling services. On top of that, local councils have almost led the massive increase in recycling over the past decade going from 13% to 43%. They have really transformed local services. They have done that through a period when budgets have been constrained and there has been a drive on efficiencies to deliver that success. They have done that in partnership with their residents. They have designed local services for waste and recycling collections with their local residents, which is a principle that sometimes gets lost in some of the current narrative from central Government, particularly from the Department for Communities and Local Government. You either have a localist approach to services or you don’t.
Chair
Is there an inconsistency?
Clyde Loakes
If councils cannot make decisions on issues related to bin and waste collections—that is pretty much as local a service as you can get, and I would point to principles of localism. They are doing well and are working with residents to deliver year-on-year increases in recycling. That is an important narrative and principle to put in place. There is clearly a lot more that can be done, and councils are up for the challenge of helping not only to increase their own recycling services but to develop and deliver a circular economy. But councils need extra resources and tools to be able to do that. In our “Wealth from waste” report we started to allude to some of those in particular. We have just picked up a point on the packaging recovery note system. As Coca-Cola clearly said, the system definitely needs to be reviewed. Councils currently subsidise this country’s commercial multinationals to the tune of £550 million a year to dispose of their packaging. Last year, the PRN system brought in less than £100 million. We are not clear that any of that actually ended up in local councils.
Chair
If you were going to prevent that subsidy and deal with it, what measures would you suggest?
Clyde Loakes
We would like to see some of that PRN money go to local councils to help them provide improved and better recycling infrastructure. There was a conversation just now on the need for infrastructure. We have inherited a patchwork of infrastructure across the country. Some of it is historical, some of it is in the public sector and some of it is in the private sector. It is a real patchwork solution, and there needs to be a bit more tightening up and better, more modern provision. We would like to see some of the commercial landfill tax come into local government, too. Again, we believe that can help to stimulate some of the much-needed recycling infrastructure and help us to deliver more.
Chair
Has the LGA had talks with the Treasury about the possible mechanisms for doing that?
Clyde Loakes
These items were included in our “Wealth from waste” report, which was sent to senior Government Ministers.
Chair
I am talking about feedback from the Treasury.
Clyde Loakes
I think the Treasury haven’t come back to us on that particular point because it would mean giving local government money, but we think there are a number of mechanisms through which they can do that. The green investment bank, for example, is a mechanism that could be better utilised to provide us with the resources to deliver much-needed infrastructure. Those kinds of things haven’t yet really been played out to their full potential.
Chair
Talking about how you could get everybody working across different local government areas in a more joined-up way, Hampshire county council told us that they would like to do that with neighbouring councils but one of the issues is the long-term contracts to which they are committed. You can never actually catch up because you can never start from where you want to start. You always have contracts to which you are committed that are going to be costly to exit. How would you deal with that?
Clyde Loakes
Historically, you have a number of joint waste disposal authorities already. I am chair of the North London waste authority, which is seven boroughs. There is great potential in making that work. You have organisations such as the London waste and recycling board, which is working with the 32 London boroughs, so I disagree a little with the fact that such networks for helping greater efficiencies aren’t in existence. We need to encourage examples of voluntary waste disposal authority partnerships such as the South London waste partnership, where a group of unitary authorities have come together and are now starting to provide kit. It is expensive to come out of stuff, but we need to set some sort of landscape that encourages greater working. At the moment, it is a bit rigid and static. We could share some of the good practices and work that has been delivered by such things as the Kent partnership, for example, which, again, is another voluntary set-up, and demonstrate how it can work. Before you are immediately at bin collections, perhaps you can go into some of the softer side of stuff—maybe reusing things, sharing your household waste and recycling centres, and creating that kind of network—that convinces the politicians, councils and officers in those particular areas that there is some value in sharing resources and putting together a more efficient programme, and then actually, you can start moving into some of the harder stuff, which is around joint procuring of contract for collection of recyclates and the sale of recyclates, perhaps.
Chair
Do you see a role for joint procurement?
Clyde Loakes
It is a clear tool that has been deployed and will continue to be deployed going forward.
Chair
Mr Hogg, you look like you want to comment on how we get that standardisation and do away with the problem of the variations at local level that make this incomprehensible.
Dominic Hogg
The first thing to say is that it is often difficult to get agreement around what are often local authorities with their own agendas and politics. We worked on the first big example with the Somerset waste partnership, and it was a lengthy process in the gestation, but it did actually lead to significant savings for the council as they reorganised the whole of the collection systems across the county. They set up a single client organisation. We know that can be done, but it is difficult. For district authorities, it is the only remaining big service that they provide and are responsible for, so it is something that they are slightly reluctant to cede control of in our experience. So one of the answers is that it is politically difficult. Mitigating against that, the incentive to look for those savings at the moment could never be stronger, because the authorities are looking to make savings, so they are being pushed to look at all sorts of efficiencies that they can make in those contracts. To varying degrees, they are doing so. In terms of the consistency, I think there is something that Government could do more. Vis-à-vis local government—and I say this with Clyde sitting beside me—I think Government have been a little too reluctant to say, if not exactly what to do, then what not to do, almost like the Trinny and Susannah of the waste management world, because things have certainly happened over the last 15 years that we could have avoided if we had set some sensible parameters around which local government could make their own decisions locally. We did not have to take the decision away; we simply had to narrow the scope within which those decisions are made.
Chair
Is that the same as guidance or regulation?
Dominic Hogg
It is guidance, but I quite liked the example they had in Flanders, where they would give all the local authorities what I would call guidance as to what the customer experience should be; so, “You should have a recycling service of paper at least once every two weeks. You should have a recycling service at the doorstep for—” and so on. It was basically saying that everyone should get a minimum level of experience. I do not like the idea of being too prescriptive and making it uniform across the whole country. I think we have had some interesting innovations around our collection services over the past decade and more, and if we make the thing too prescriptive, we run the risk of pushing the innovation out of the process of the service delivery, and I think we need to maintain that.
Chair
From the Chartered Institution of Wastes Management’s perspective, these issues must be on your radar quite a lot of the time. Mr Lee, perhaps you could give us an insight into how we deal with standardisation, incentivisation, infrastructure investment or the possible greater role of the green investment bank to overcome some of the shortages of investment funding.
Steve Lee
Your question could go into so many different corners. May I start off be remaking the point that we recognise that the circular economy is much bigger than recycling, and certainly much bigger than the recycling of household waste? We think there is at least £10 billion economic benefit in the UK to be achieved relatively easily through a more circular economy, and at least 100,000 jobs. That is just based on some thumbnail figures in a recent product from the European Commission. It came out last week, and I will be leaving a copy of it with your secretary. We also missed the fact that recycling in this country is a relative success story—sorry, you were going to ask a question, Chairman.
Chair
I was only going to say that we will be having a video conference with the European Commission later today on that subject.
Steve Lee
Okay, good. There are some fascinating figures in this four-page summary. If you calculate on a population basis what is possible in the UK, it underlines the importance of our striving to achieve a more circular materials economy. Do the math, as the Americans would say. Going back to recycling being a success story, we too often look past that. We have come from single-figure recycling at the turn of the century to 43% last year. We are actually identified as the fastest riser in Europe, and we are held up as an exemplar for slower-moving European member states. A fantastic performance, but that still leaves us short of the 50% that we are striving for on the 2020 target, and CIWM would want you to know today that we have serious concerns as to whether we are going to be able to hit that target, given the current circumstances. The good news for the Government is that it is not all about money. A very important part of this is about communications, getting the message across, getting the message simple, and getting it to people through routes with which they are comfortable and that they trust, from people they actually want to hear the message from. They also want consistent messages from the Government, but at the moment we see a disconnect between different Government Departments. It does not help to have one Government Department concentrating on quantity and quality, and another Department concentrating on frequency and customer quality of service.
Chair
Can you be more specific, please?
Steve Lee
Yes. It does not help to open the daily press and find stories about separated food waste collections being described as “slop buckets”—that does not help. The bad news for the Government is that it is about not only communications, but money. I have brought some statistics for you on performance in Welsh local authorities. Their national average recycling performance is now at 53% as opposed to 43% in England. Why is that? Partly because they have got the story, the messaging and the coherence from national strategy through to individual local authority plans. That is in place and it is doing very well. They also make more money available to their local authorities. Last year, that was approximately £71 million in addition to their normal funding of local authorities. By my maths, I think that there are probably about a million households in Wales, so that is an additional £70 a household in Wales, and that makes all sorts of things possible, including separated food waste collections, high-quality collection and high-quality reprocessing, hence a better performance reported from Welsh local authorities. It is not just Government who have a responsibility to make this work—the recycling story within the bigger circular economy story. You ask what can move us forward. You have already heard a lot from your other two experts, particularly about joint working between authorities. We are seeing some great examples of that happening at the procurement stage, at the service delivery stage, and even at the point of access for recovered materials back into markets. There are excellent examples of cross-working.
Chair
On those examples of joint working, is the initiative coming from the local authorities themselves?
Steve Lee
Yes.
Chair
It is not because of anything prescribed centrally.
Steve Lee
No, it is not forced on local authorities at all.
Chair
So it’s about local champions.
Steve Lee
You could say it is being forced on local authorities because of their pinched resources. They are obliged now to look for increasingly radical and effective methods of working in service delivery, and it is operating at all three levels.
Chair
What about the local authorities that do not have local champions?
Steve Lee
The pressures on local authorities are generic. More and more authorities will be driven to looking for new ways of working. You have already heard from Councillor Clyde Loakes about people taking relatively easy-to-deliver decisions such as sharing household waste recycling centres and sharing access to markets for secondary materials. You yourself pointed out the difficulty of marrying the different time scales on contracts. The average lifetime for a waste collection and recycling contract is seven years; the average lifetime for a waste management and disposal contract could be 20 or 25 years. It is important that local authorities are given the opportunity to look at not only the costs of breaking into contract periods and harmonising with neighbours, and therefore being able to work with neighbours, but the benefits as well. You have just heard Councillor Loakes talking about how we might achieve that by starting off at the relatively easy-to-achieve forms of joint working and moving towards joint contracts and really effective joint working between authorities.
Chair
Just before we move on, both you, Mr Lee, and Mr Hogg mentioned infrastructure investment. I was very interested in the scope that you saw for the possible role of the green investment bank in that. I have seen just recently how there has been a huge increase in investment in street lighting. It is not the same area, but I think there is obviously a similar kind of emphasis and focus for local authorities. Are you aware of any possible joint working with the GIB on getting the necessary infrastructure finances that could help with this?
Dominic Hogg
We have some concerns about the GIB and the decisions it is making in waste management. If you look at the projects it is funding directly itself, it tends to support the large residual waste treatment contracts, some of which were ones from which the Government pulled back from funding under PFI. I would suggest that the record of funding is not particularly green and nor is it particularly successful. Funding Gloucestershire just before the decision went to the planning committee and got thrown out, and funding Norfolk just before that—then the contract was literally weeks before—seemed to be a strange decision. One or two others that have been funded look not to be especially green at all, in our view.
Chair
So you are suggesting that the track record of the GIB so far, in terms of looking at the potential opportunities that there might be for green investment on waste resource and recycling, is not perhaps where it needs to be?
Dominic Hogg
If you looked at the portfolio of its own investments, you would certainly ask yourself, “What the hell does that have to do with the circular economy?”, because it is very strange indeed. A couple of anaerobic digestion investments have been made more recently. There are a couple of investments made to separate bodies investing independently, as it were, of the GIB, which is making some interesting investments itself. It is a little more interesting. The difficulty with waste is that some of the large capital investments are not necessarily the ones that you would be looking to support if you were seeking to stimulate the circular economy.
Chair
When you referred just now to large residual treatment, were you referring to incineration waste?
Dominic Hogg
Yes. Mainly incineration waste.
Chair
So basically what you are suggesting is that the emphasis of the green investment bank is on incineration and those with previous PFI contracts, and that they should be looking to change the direction of travel.
Dominic Hogg
Yes.
Chair
Do you wish to comment on that, Mr Lee?
Steve Lee
Can I be absolutely clear? This industry does not have the infrastructure that it needs to deliver the future. We are short of many types of infrastructure and technology, from recycling, reprocessing and energy recovery, right across the spectrum of things that we must do to our waste to keep it working or to put it back to work. We believe that decisions over PFI that were pulled from seven local authorities, I think, in the last 18 months were short-sighted.
Chair
Are you talking about pulled for incineration?
Steve Lee
Yes, they were.
Chair
So there is a disagreement between the two of you in terms of the role of incineration.
Steve Lee
Dominic and I know where we can tease ourselves apart. We agree on an enormous amount of things, but I’d like to say that the decision to pull away from, I think, seven PFI major funded pieces of infrastructure appears to be based on the existing landfill directive and revised waste framework directive targets—that is for landfill diversion and recycling. We have known for several years that these targets are under active review at European level. First indications that came out last week suggest that the Commission will push for a radical increase in both targets, including a potential 70% recycling target for Europe by 2030, a landfill ban for recyclable materials by 2025, and a landfill ban for anything that is recoverable by 2030. That means we have a lot of changes to infrastructure, and to services, partnerships, and the way we interact with our customers, whether at home or at work. We are short of the infrastructure that we need to deliver the future. Having said that, the green investment bank is a good, and I am sure you will be taking evidence from it about where it thinks its priorities are. The green investment bank has supported recent projects in anaerobic digestion, and the signals it sends to other potential investors that this is a technology, a process and a part of the market in which it has confidence, and is willing to invest, are incredibly powerful, so the green investment bank is a good. My only criticism is that it has been slow to start the flow of projects, but that is a harsh criticism, because this is a difficult business. I encourage it to do more.
Chair
I am sure it will hear your words of wisdom. Do you want to come back, Mr Hogg?
Dominic Hogg
I do not disagree that we need infrastructure, but I question whether the green investment bank, with its own remit about reducing carbon emissions, should be focusing its investments in the area where it has. The way in which the green investment bank appears to be assessing the impact of its investments is quite different from the research coming out of DEFRA on the relative impacts for landfill and incineration. If you apply the nature of the analysis that DEFRA has suggested should be done, you find that because the carbon intensity of the electricity generated by an incineration plant is expected to decline over time as the electricity system decarbonises, landfill becomes better than incineration, in carbon terms, if it is only generating electricity in about 10 years’ time. That is a technical argument, but it happens to be based on DEFRA’s analysis. You would have to question why the green investment bank is supporting it. I don’t deny the need for infrastructure, but I question whether it should be the focus of the “green” investment bank.
Chair
That is quite a technical, complex piece of evidence.
Dominic Hogg
I would happily supply additional supporting evidence.
Chair
That would be really helpful. We must move on.
Q179Peter Aldous
A number of the items of written evidence we have received suggest that we lack information and data that would enable us to understand the flow of materials. To what extent do you think that is a barrier to a circular economy? I ask you to go first, Mr Hogg, because you have described the current arrangement as “abysmal”.
Dominic Hogg
It is abysmal. We have a bizarre situation in which we periodically carry out a range of surveys for commercial and industrial waste, and construction and demolition waste. If you were to ask anyone in the industry exactly what they think the recycling rate for commercial and industrial waste is at the moment, they would probably have to say, “We don’t really know,” so we need a better data tracking system. In my experience, whether we talk about going up the waste management hierarchy or within the tighter circles in the circular economy, the requirements for information become even more challenging. The resolving power, if you like, of your data collection mechanism becomes much more challenging. On investment, an example was given in the evidence that was submitted on the switch to LED light bulbs. LED light bulbs contain rare earth metals, yttrium and terbium, so you have to think about where and when those materials are going to come out of the waste stream, because they will be in stocks—they will be in the lighting system for some time. That is as real challenge for somebody who wants to extract those metals from those light fittings. They must understand the optimal timing of their investment. I am sure Mr Lee will agree that the eDoc system that the Environment Agency has introduced is welcome. I was disappointed that it is voluntary and was not made mandatory, and I am slightly concerned that we have gone backwards a little, because DEFRA has now decided to allow alternatives to waste transfer notes to be used as evidence of proper handling of data, so they can record waste that has been moved on an invoice, rather than a waste transfer note, which dilutes and diffuses the nature of the information. We need a proper, electronic register where we track the movements of waste and what it is through the whole system. I cannot believe this is a question of if; it has to be a question of when. If we want to accelerate the transition to a circular economy, we need to know where our materials are. If we don’t, it will be far more difficult for anyone to invest in anything.
Peter Aldous
You have answered my next question, but I have a final one about the improvements we need. Who should be funding them and leading on them?
Dominic Hogg
I know that there is an ongoing project across the Environment Agency in the UK to look at the potential for introducing a more mandatory system of tracking and linking into the system of trans-frontier shipments of waste so that we have integrated management of data. It seems to me that it should be the responsibility of the relevant ministries in the different countries. We have looked at what happens at European level, and if they all do it together the chances are that you will have one cost for setting up all the software and data infrastructure rather than replicating it several times and potentially doing something marginally different each time. That is one of the major up-front costs. It is not massive; it is of the order of £3 million or £4 million. It is not massive in the scheme of things. It is a one-off cost to get the system organised.
Clyde Loakes
There are shed-loads of data on what local councils collect. I get that from my own boroughs weekly, which shows how much of a champion I am for what goes on in my patch. If we are seriously talking about growing the circular economy, there is something perverse in the system that allows almost an incentive to export low-grade recyclates out of the country because it is cheaper. We need to get to grips with such perverse incentives, because incentives should be to create the infrastructure in this country to pull out those resources that can be recycled or reused, not exporting them because that is a cheaper option. We should grow some of our own research and development in this country. That is seriously lacking because we do not encourage research and development into creating new solutions and new interventions.
Chair
Is there sufficient understanding about grants from the European Union to help with that research and development?
Clyde Loakes
I think there is some understanding, but it should be understood more widely and I do not think it is. We have a system of encouraging through incentives the export of valuable recyclates. Something is not quite right. The system is not working and if we are serious about a circular economy, those questions must be asked and those challenges made and addressed.
Steve Lee
Yes. Thank you for asking this question. It has been a real bugbear for our institution for at least a decade. In every inquiry and every submission of evidence to any consultation by a relevant Government Department, our first comment is that the data on 90% of the materials that are not municipal waste are awful. The data on municipal waste are pretty good using the WasteDataFlow system that the Chartered Institution of Wastes Management built. Local authorities are using it very successfully, and may they continue to do so. Councillor Loakes is absolutely right. We have pretty good data on municipal waste, but on industrial and commercial waste, and construction and demolition waste in particular they are awful, It is very difficult to join up periodic survey to periodic survey. Things have changed and assumptions are different. The calculation methods, how you describe different types of waste, how you gather the data and how you aggregate that between member states are incredibly variable, making comparison from one member state to another at least dangerous and perhaps impossible. Even when looking at how data are expressed in the Republic of Ireland compared with how we do it in the UK, it is difficult to compare the two sets. However, looking forward, there are bright spots, and I am delighted that we have already heard about the electronic duty of care—eDoc—which is a very important project. It is three quarters of the way through its life. It has produced a web-based data, trafficking and monitoring system that is free to the user. It was launched at the end of January. It is supported by all four UK Governments. The big question now is who will be its foster parent and who will look after it in the next critical four or five years of its life.
Chair
Who should be the foster parent?
Steve Lee
The four Governments will pay for that foster parenting and continued development and care for the eDoc. We work very closely with them. We are a project partner and I was there yesterday. I believe that the Scottish Government believes most in this data system and its future use. They see particular potential to develop it to move beyond the non-hazardous waste duty of care concentration that it currently has. This is a system that could well be developed to cover the manifest approach to monitoring hazardous waste movements and treatment and disposal and trans-frontier shipments of waste. Those are potential future developments. CIWM is putting its heart and soul into promoting the use of the electronic duty of care. These are very early days, but we have some great local examples of waste producers, waste brokers and waste managers picking it up and suggesting that their supply chain partners work with them and that they pick up on the electronic duty of care as well. It will be a slow burn, but unless we support it to max, I cannot see any other route to generating data on waste and resource flows. If you do not have data, you do not have information. If you do not have information, you cannot forecast. If you cannot forecast, you are providing services and infrastructure by not much more than guesswork.
Chair
Do you want to come in on that, Mr Hogg?
Dominic Hogg
I agree with everything that Mr Lee has said.
Mrs Spelman
I want to discuss the impact of the landfill tax escalator, which we probably agree has had a huge impact on improving recycling rates. Do you think that there is scope for a similar fiscal measure to be used to encourage companies to use more recycled product in their manufactured goods? Can you think of an instrument that could work in that way?
Steve Lee
Again, this is a really important question and one that CIWM has been thinking about for a while and that has been built into other evidence that we have supplied. The short answer is that we think there is scope. The current message coming out of the European Commission is that they believe that economic and tax tools are underused throughout the circular economy throughout Europe. CIWM would like to see a transfer of the weight of taxation away from effort, from skills, from employment and towards virgin resource use. That could take many forms, including a variable VAT rate across Europe, such that it would encourage designers and manufacturers to look for sources of secondary materials for their products, services and processes. We believe that there is great scope here and it is something that only Government in the UK can carry forwards as an argument into Europe, because it would be a very difficult thing for an individual member state to do on its own, but it could have tremendous impact if it were picked up at a European level.
Clyde Loakes
I agree with what Steve is saying, but it is also about the design of products and materials. There are some good opportunities for the UK Government to get in there with the European Union to help with the regulation around better design of products and materials, so that they can be repaired, reused or recycled for longer life. That is an area around design in which we still have a long way to go.
Dominic Hogg
From a socio-economic perspective, the other interesting case that we have heard about is the aggregates tax. It has been controversial, but it works rather well in conjunction with the lower rate tax on landfilling of inert materials, which is sometimes a controversial view. That shows what a primary resource tax could, in principle, achieve. The reality, of course, is that there are very few primary resource taxes in existence for anything other than aggregates and minerals that are not moved very far in the whole EU or, indeed, outside. Once materials and products start to move across borders, although we would, ideally, tax something to do with their nature—maybe their primary materials content—things become more difficult to track, although I personally think it is a project we should almost be starting to consider today, with a view to it perhaps coming to fruition in 10 years’ time. As to the other alternative, I think Mr Lee’s suggestion on the VAT is a good one. Other countries have looked at having packaging taxes—differentiated, for example, according to the primary and secondary content. The Danish tax—which, interestingly, has recently been abolished—had some elements of that in its design. I would like to see greater use of those fiscal instruments as well, and this is one of those issues where the principle is spot on, but the realities in terms of trade laws, single market legislation and so on sometimes make things rather more difficult than we would like them to be.
Mrs Spelman
As another way of coming at this to encourage more reuse and recycling, what do you think about banning raw materials from landfills? DEFRA consulted on textiles and wood, and I know the LGA has a view about those resources. The Scottish Government intend to ban organic waste from landfill by 2016. What do you think about that approach to increased reuse and recycling?
Clyde Loakes
From the LGA’s perspective, we are very keen to see that happen. We think it would almost contribute to, and stimulate, a response from the market to developing the technologies needed to deal with that. As you know, one of my big bugbears has always been mattresses, and we are looking, for example, at a project with the London Waste and Recycling Board where we will be able to take a huge amount of mattresses from local councils, housing associations and hotels in London and look at a better way of using the materials, rather than just shoving them in an incinerator—they have a high calorific value.
Chair
They are recycling mattresses in my constituency.
Clyde Loakes
Again, it is not broad-brush, but there should be a market. Carpets is another clear example. These are materials that there should be a response to, and maybe there are responses, but some of the technologies and the ways we reclaim have not always been particularly pleasant or helpful. I think banning things—particularly organic waste—from landfills is just a matter of time. It is an obvious one; it is obscene that we are sending organic matter to landfill when there are tried and tested responses. It also helps get people more engaged if there is no longer that solution; if you shut that solution off to them, they need to be doing more on their doorstep, and industry needs to be coming up with the infrastructure to deliver, if it is going to win the contracts for a particular council, for example.
Mrs Spelman
Would the others like to comment on extended bans?
Steve Lee
Yes, I would. We responded to the 2010 consultation; we said that we are not intrinsically opposed to landfill bans. In fact, we already have some that are particularly successful, like the landfill bans on liquids and tyres—a little more difficult to control. We think this will be the direction of travel in the European Commission, probably with the Parliament—let’s wait and see how the proposals are accepted. As I say, our members are not intrinsically opposed to landfill bans. We would need to be clear how they would be operated, measured and enforced. We would need a lead time to make sure that the right controls and measures were in place. We would probably need an even bigger lead time to make sure that the appropriate services and infrastructure were in place, because banning things from landfill is not enough; you have to have a clear idea of where you are pushing these materials. The lead time on infrastructure for a relatively simple technology could be two to five years; for a rather more contentious technology, it could be 10 or even more years. Those lead times have to be built in, but we are not opposed to landfill bans at all.
Dominic Hogg
We think it is much more difficult than people think, and we keep hearing, particularly around the circular economy, “Oh, look; we are throwing away x million, x billion, of this metal, and it is in there. So, solution: landfill ban.” My experience of talking to a lot of people who are recommending landfill bans is what they are saying is “We want to see more of it recycled or reused”, or what have you; but the landfill ban, for me, is not the right instrument, particularly if the material is something that is routinely found as part of a larger aggregation of mixed refuse. So to do it for something like aluminium cans or for plastic bottles would be almost impossible, or, at least, only to the extent that you were effectively banning all of mixed waste; because there would be some plastic, there would be some aluminium cans in there. It would be incredibly difficult to spot. The statistic at the moment in England is that 39% of all of the unrecycled waste from the local authority side is already not going to landfills; so what is going to be the effect on recycling and reuse in those authorities? I always like to use the example, when I am speaking in Europe on this, of Denmark. When people say, “Oh, let’s have a landfill ban,” I say, “Well, what’s that going to do in Denmark, where the recycling rate is about 27% and literally everything else is incinerated?” So a landfill ban would have no impact whatsoever on recycling and reuse in that country, because it is not going there in the first place. So what are the instruments that get the recycling and the reuse up? In my view, if you want to recycle you do what the Scots do, and you say “We are going to require businesses to sort x, y, z and we are going to require them to do that by a certain date.” If we want to encourage more reuse, I suspect that another mechanism is to extend the scope of producer responsibility mechanisms that we have in place. In principle, in my naive view of the world, for everything other than food—and even that, you probably could design something—and garden waste, you can probably have a producer responsibility measure. Those producer responsibility measures could be coupled to things such as—there has been a lot of discussion about supply chains, and I know in an earlier session there was a discussion about the role of voluntary agreements. Voluntary agreements are really interesting, I think, where so much of the supply chain is not in this country, for products, and where we are trying to reach overseas. We cannot set policy in other countries, so we are almost reliant upon those whose supply chains reach into those countries to try to take those messages overseas. So I think that is where those instruments, in my view, really come into their own; and they are doing so in textiles, and so forth, as we know.
Simon Wright
I would like to highlight a reference in Councillor Loakes’s evidence, which mentions the development of a standard by WRAP for reuse, and reuse groups. I wonder what benefits you think this will have, in terms of supporting the market for reuse products; but also are there any risks around the development of a standard that you would want to highlight?
Clyde Loakes
I think one of the things that led us to do the reuse report was the fact that actually so many people are doing reuse now, but they largely do not know it: whether they are buying off eBay or Gumtree, that is reuse; or they still go to the second-hand charity shop—that is reuse; or they give it to their grown up children for their new home. That is all reuse; so we wanted to put something down that said lots of people are doing it, but there is lots more that we can do. We also wanted to break some of the stigmas, still, that exist around people taking second-hand goods, or refurbished goods, whatever particular language you want to use. We thought of all the tools that would be really useful, and we took evidence from some of the big second-hand charity shop players and some of the third sector organisations that are active in this particular sphere of the circular economy. One of the things that they said would be useful for them was some sort of standard mark. So whether you go into a restorer in Tottenham, for example, or you go into a furniture network shop down in the south-west, actually there is a standard that is common, and that says that product has been certified, has been looked at by professionals, is an appropriate item to purchase and will have a life to it. That is one reason why people still do not go and purchase a second-hand good: they do not believe that it is legitimate in many respects or that it will have any kind of quality life left to it. When so many goods are being churned out so cheaply by other players, their value is decreasing all the time. People will make a decision on whether they are going to spend 20 quid in a British Heart Foundation charity shop for a telly or pay 40 quid in Argos for a telly. That difference is increasingly marginal, so one thing that would help them to make a better decision would be that kind of quality mark on the product.
Simon Wright
Are there any risks or downsides?
Clyde Loakes
Not that have been brought to our attention, but again, what we wanted to do by putting that report out there was to stimulate a big debate around reuse and the fact that although so many people do it, you could do so much more with regard to reuse. Putting something in the bin as you are going out to work first thing in the morning should not be your first port of call. Find out where a WEEE bank is. Find out where your local charity shop is. Stick it on eBay and make some money out of it yourself, or give it to your son and daughter-in-law. Just make sure you think about those opportunities. One thing that local government has done in response to some of the Government’s welfare reforms, for example in relation to the social fund, is to encourage reuse items to be the items put on offer for furnishing new properties for people who would traditionally have gone to the social fund and got a new fridge-freezer. A lot of local government now, because things are localised, is sourcing from reuse chains and networks and is driving that economy quite significantly in many local authority areas. In some respects, that is a good outcome for a Government policy that many probably do not agree with wholeheartedly. From a circular economy perspective, there is a relatively good outcome from that.
Steve Lee
It is hard to add to what Councillor Loakes has said, which is not unusual, but we believe that a standard would be good. It is about confidence. People need to be able to believe that they are getting a good product, a safe product and one that is going to be value for money if they go for reuse, and the standard should underpin that. I do not see eBay users lurching towards a standard saying “I’ve checked this appliance before selling it,” but for social enterprises and other organisations actively engaged in putting products forward into a second or third life, we think the standard will do good. You asked about risk. It is very difficult to see a downside to the standard, with the exception that employment and skills and adherence to standards do cost money, and we would not want people who are adhering to a standard to be at a disadvantage compared with those who aren’t, but that is about the only downside I can think of. The only way I can add to what Councillor Loakes has said is to say that apart from a standard, I can think of two other things that are really important to incentivising reuse. The first is design. Too many products are not designed with any second or third life in mind, even to the extent that it is impossible to replace a broken fuse in an otherwise perfectly good and fairly valuable piece of equipment. The second thing is access to feedstock for reuse. Very often, these materials are coming in through private sector waste contractors, not even directly through the local authorities. Social enterprises and the third sector generally are the ones who want to get access to these potentially resaleable materials, and just in the last 12 months we have seen a rapid growth in the conversation between those social enterprises, public sector and private sector, to try to stimulate that access to materials. So the issues are design, access and confidence in what has been placed in the market.
Clyde Loakes
Would you mind if I add to that? For example, in Waltham Forest, my own borough, the private contractor who deals with our waste has subcontracted to a third sector player to clear out voids in our housing stock. They take out, in the less complex void scenarios, all the furniture and electrical goods that are left and then they put them into the reuse network. They are offered, on a first come, first served basis, to the people who will be going into those voids. Lots of people put that question—“How can a private sector contractor subcontract to a third sector organisation for a waste contract?”—but there are ways and means of doing it if you really want to do it. Again, it is about exposure to some different ways of working and some good examples of how we can underpin this circular economy, particularly in the reuse network, where the third sector is really active and probably one of the main players, as opposed to the private sector.
Simon Wright
Are there any other steps that have not already come up during the course of the discussions that Government could be taking to encourage reuse?
Dominic Hogg
A number of countries do have re-use targets. We did look at this in the context of the EU27, but it is extremely difficult to do across the EU27, partly for the reasons that Mr Lee was explaining, that the data are either not there or completely non-comparable. However, there is some mileage for setting a target in this country. We have got some reasonably good data now and we have a feel for—shall I say—the nature of the material that is coming out into this area. We have to be careful, because one gets into all sorts of issues about what re-use is and what is technically preparation for re-use. Do we really want to be talking about everything that is traded on eBay and goes into vintage clothing shops or what have you? I suspect not. We are probably looking more at the preparation for re-use side, the formal definition for which would be, broadly speaking, when a material has been discarded we are trying to re-use. We could set ourselves some targets. It would start things just moving in the right direction, but, as ever with targets, some caution is to be exercised.
Clyde Loakes
I broadly agree with Dominic on vintage clothing and such like, but if it is keeping it out of the bin and out of landfill, it is a form of re-use, but it is also buying in acceptance of re-use from a wider part of the population. That is why being able to have conversations with residents on how they relate to things, rather than on how the industry or the geeks relate to things—I include myself as a geek, before I cause offence to anyone—is really important. Too often we talk about these environmental matters very much from the informed perspective, rather than how the residents would view these things. That is why talking to them through eBay, as a concept, is in all sorts of different ways really important. Coming back to your point, we can encourage more retailer take-back schemes—there are some real success stories there. How some of those have linked with third sector players to get items back into the economy and into households is really good, but we are not making enough of that. We do not encourage enough of those big players to talk about doing that. From councils’ perspective, it is how we collect bulky waste or even how we deal with fly-tips in some respects. We are still very much, “We’ll pick it up at some point this week from your front garden,” rather than, “We’ll come and pick it up and take it out of your lounge”—if it is a sofa and if you tell us you think it still has some years’ worth of life in it—instead of it being left out in the front garden where it gets rained on and is then no use to anyone. There are still some ways in which we can shape some of our services, from the local government perspective, that could really help re-use.
Steve Lee
You specifically asked about what Government could do. I am sorry to sound like a broken record, but it is data, measurement, reporting—we need to bang a peg in the ground to measure ourselves against. Are we moving in the right direction? If not, why not? If not, what could be done about it? The second thing is that we tend to concentrate on re-use as being post-consumer—“I have owned this. I have now finished my use of this. I am prepared to offer it for someone else to use”. Government, manufacturers and retailers need to look at business models where the consumer does not necessarily need to own the product, but to see it more as a service. Government need to work with manufacturers, retailers and offerers of services to see how they might incentivise those sorts of new business models. I am so old that I can remember the days when we had never owned a television. We rented one—Radio Rentals. We never dreamt of owning a television. I now own a television. I am not quite sure why I own a television, but I do. I might be much better off purchasing an internet and televisual service because I might want that to be upgraded in 12 months’ time. I might want something better in 24 months’ time. We need the Government to look at how it will incentivise people like me not necessarily having to own the product.
Chair
Talking about Government incentivising, let us move to our last question.
Peter Aldous
My question has already been answered very clearly throughout this session and was to what extent the UK Government is taking a lead on the circular economy. I think we could say, in summary, that it could do better. I shall move on and ask you what role you want the UK Government to perform as we move forward?
Steve Lee
I will be very quick. More please, because there is some good stuff being done. Clear communication from Government because it is not clear. And something that we have not talked about yet: stimulation of the market end for circular economy materials. CIWM believes that that needs to be planned and delivered on a much bigger than local level. We think that the regional scale planning in this country has been pulled backwards by the removal of regional spatial strategies, for example. We would like to see the Government re-engage with planning for resource presentation and resource use. That includes everything from heat and electricity and biogas, right through to steel, aluminium, paper, card, indium, yttrium and whatever. We would like to see a plan to use more of those resources here in the UK to our own advantage.
Chair
You referred to spatial planning. You have introduced a whole new concept into the planning system.
Steve Lee
When I talk about planning I am not really talking about development control, permissions for individual proposals that come forward—
Chair
Can I just check on that? You are not talking about, for example, a brownfield development where you might demolish, as with the Olympics. You are not talking about planning conditions and making use of the material that is on site and reusing it.
Steve Lee
I do not want to give you the impression that I do not believe in that because I do, but I am talking about the link between real economic development at a regional level with the clear idea of where secondary materials arise, to what quantity and quality, and how they could be viewed as a feedstock to other businesses to the general benefit of economic development.
Clyde Loakes
The role for Government specifically is to ensure that there is the official working of the markets in recycling. It needs to look at how it rebalances the costs between producers and taxpayers. The packaging recovery note system, which I alluded to earlier, where councils are subsidising their collection and disposal of packaging to the tune of £550 million when the PRN system brings in less than £100 million, none of which comes to the local government, is a little bit of an odd thing to have in this day and age if we are taking these issues seriously. Local government is trusted. It is the most trusted part of the public sector. It has proved that it can deliver on this agenda repeatedly, even with tough constraints put on its budgets. It wants to continue to contribute in this area because it sees it as an area of growth for the economy. It sees there are good jobs and that there are good environmental reasons why it wants to be a party to this. But it simply needs some of those resources coming back to it which it helps the Government collect, whether through landfill tax or the PRN, so that it can invest in the infrastructure and start creating some of those interventions and responses that will make us a European leader on this agenda instead of talking about bin collection frequencies. That is the lowest common denominator where we always seem to be when it comes to councils, recycling and waste. It always come back to bin collection frequencies and some of the anecdotes that Steve referred to earlier and the sloppy contents of sloppy bins and such like. We have demonstrated we can deliver and we want to continue to deliver, but our ambition is that England, the UK, becomes a leader in this area not just a follower. A reluctant follower is how some Government Departments quite often want to portray us.
Dominic Hogg
Going back to first principles with a circular economy, I think that business is getting it this time round because commodity prices are high. It may well be that commodity prices do not stay high. They are still low over a 150-year time view; they are not so low over a 50-year time view. If you look at the reports we have done—and we have mentioned this in evidence—many of the policy recommendations are about getting prices right, so they are about the fiscal instruments that we spoke about earlier. The rest is more about exhorting industry to look more closely at new business models. We have an industrial strategy in the country. We have looked at these eight great technologies. Certainly where I live, in our local enterprise partnership we have identified a range of key industries to our region. I live in Bristol so it is aerospace, advanced engineering and design—the creative industries. They are key industries and low carbon. We want to embed the circular economy in the thinking of our local enterprise partnership, because we want to raise the profile. We have the National Composites Centre: what is going to happen if composites really take off in future? How will we get them back? How will we recycle them? What will we do with the material? We are very interested in that. We would like to try to take the opportunity to lead in the reprocessing side and use it as a way to rejuvenate our economy and secure the future success of those sectors that we are saying are crucial to our region’s economy. Perhaps Government can also look at that in the context of those regional and local enterprise partnerships to try to stimulate some of that activity.
Peter Aldous
That was very helpful. You have picked up on my final question about the role of the waste industry. Is it doing enough to lead on the transition to zero waste? If I picked it up properly, a few minutes ago you said that you felt that the business sector did not compare favourably with the voluntary sector. But from what you have just said it appears it is doing its bit.
Dominic Hogg
I used to work in commodity markets and price forecasting, which is obviously fiendishly difficult. In a sense everybody is doing that around the circular economy at the moment. People are betting to some extent that commodity prices are going to stay high and potentially go higher. I would say that is almost the precondition for them likely to go lower. The interesting thing about that is that if you looked 20 years forward and said that commodity prices were going to increase in real terms continuously, for people to get back the material in the way that they wanted it, given that the material we are using is getting more complex with complex alloys of steels and composite materials and we will see more of those coming into the waste stream and resource stream in future, we will see naturally much more closing of those loops and more systems that look a little more like take-back systems. The future of the waste industry within that looks quite interesting, because it is going to have to adapt. Because if that happens, arguably those people with an interest in making use of those raw materials will start to integrate more backward into the waste industry. To put it another way, they will look for more circular business models within their own enterprise.
Peter Aldous
Are there any other comments from Councillor Loakes or Mr Lee about the role of the private sector?
Steve Lee
Yes, clearly I would like to speak to this one. I would like to thank the Committee for not asking me when the Chartered Institution of Wastes Management is going to change its name. That is one of the most frequent questions that I face these days. That is because our industry has moved further than any of us could have imagined in about 15 years. When I came into the industry my job was to find where we would landfill next. “Find me a railway cutting, Mr Lee, we need to landfill.” Not, “Why are we going to landfill?” or “How are we going to landfill?”, but “Where and how do we make it as acceptable as possible?”. Now we are the resources industry, our purpose is not to get rid of waste as quickly, cheaply and invisibly as possible. It is to keep resources working and to put wastes back to work. We are starting to open up discussions now that I never dreamt we would have. I never even met a designer until a couple of years ago and now we are talking to the industry that designs things because at the end of their life we are going to have to take them apart and put them back to work again. We are talking to retailers, to manufacturers, to the reprocessors, to the whole circular economy cycle about how we keep this stuff at work. That is so radically different from where we were 15 years ago. Are we doing a great job? We are doing a better job, but we would like to do more. We can do more with Government support and we can do more without Government support by talking to other partners around the cycle.
Peter Aldous
Councillor Loakes, final word?
Clyde Loakes
As more of a concluding comment, I think there are a lot of people with a lot of roles to play, whether it is local authorities, Government, organisations such as the Chartered Institution of Wastes Management or some third sector organisations. Our residents and consumers are also key in making this work. Everyone has a distinct role to play and some could play a greater role in that. The narrative has to be pitched right so that people understand what they can do and contribute in doing. We can talk like we have been talking, but most people out there would still not really know what they were doing. We have to continue to make it simpler for people to participate. The issue around design is increasingly crucial. We don’t repair things anymore. That is fundamental. My generation remembers when you would have a repair shop for so many household goods down your high street. You would pop in with something and then collect it three or four days later and it would have been repaired. Things aren’t even made to be repaired anymore. At best you can cannibalise them and take out some recyclates. But it is those kinds of deliberations around this that we really need to have and we really need to put to the fore. I believe that there is a willing—a growing willing—to do that, and a necessity, to be frank. I want to see our ambition rise and get to that place rather than just being a reluctant follower, which is so often how this country and the UK is portrayed on these particular agendas.
Chair
I want to flag up one small issue. In a way, the work that our Committee does is cross-cutting and we have other reports that connect into this one. We recently did a report on biodiversity and overseas territories. One of the issues that came up was waste. Is that something that is on your radar? That need to mentor, link or partner with colleagues in overseas territories where the UK still has a commitment to biodiversity.
Dominic Hogg
I think some of Mr Lee’s colleagues as well as us have been working with UKTI in changing and revamping a brochure that they have to sell, as it were, the UK waste and resources expertise to overseas countries. I would say that there has been a shift in the perspective that we have tried to put in place there. We are certainly selling the UK’s offering much more as one of selling the ability to deliver locally adapted solutions. The interesting thing about our industry is that there is not an enormous amount of indigenous technology here. What we have done very cleverly, as a waste sector, is to adapt that and the engineering expertise we have has helped us to do that very well. In terms of biodiversity, I cannot comment on the—
Chair
I was just looking at the hope that there might be links and synergies with some of the overseas territories in terms of their own waste management. But I need to leave it there, because we have come to the end of our session. I thank each of you for coming along. We will be continuing this discussion later today, with the European Commissioner. Thank you. Oral evidence: Growing a circular economy, HC 214 29