HL Deb 16 November 2004 vol 666 cc1422-8

9.15 p.m.

Lord Whitty rose to move, That the draft regulations laid before the House on 13 October be approved [31st Report front the Joint Committee] [21st Report from Merits Committee].

The noble Lord said: My Lords, I shall also speak to the Landfill (Maximum Landfill Amount) (Northern Ireland) Regulations 2004. Both sets of regulations follow on from the Landfill (Scheme Year and Maximum Landfill Amount) Regulations we debated in July.

These instruments are made under the Waste and Emissions Trading Act 2003. The Act aims specifically to reduce or prevent, as far as possible, the negative effects of landfilling biodegradable municipal waste on the environment and on human health.

The principle of a trading scheme as a means of meeting the reduction targets in the landfill directive has already been accepted by your Lordships. The Landfill Allowances and Trading Scheme (England) Regulations 2004 fill in the scheme details.

Your Lordships may find this a complex and daunting area, particularly as this is a novel approach. But this scheme provides authorities with much more flexibility in choosing how to meet their targets than obligatory annual reductions.

In recognising some of the concerns expressed by local authorities and taking a cautious approach, the Government have made tremendous efforts to help authorities understand what is involved. This effort will continue up to the start of the scheme and beyond.

Some aspects that have a bearing on how the scheme will operate include the flexibilities of the scheme—the banking, borrowing and transfer of allowances; the responsibilities placed on waste disposal authorities and landfill operators for the retention and submission of certain information; a system of penalties, designed to encourage authorities to reach their targets; and provisions relating to the monitoring of the scheme.

The trading scheme is not intended to inflict major costs on local authorities either by imposing unnecessary penalties or forcing them to engage in trading against their will. In fact, it will allow local authorities to share the burden of meeting their reduction targets.

If a local authority exceeds its allowances, it will be given the opportunity in the reconciliation period to trade or borrow allowances to balance the figures, therefore avoiding the imposition of a penalty. The Secretary of State also has the power to waive the penalty if the reason an authority has breached its allowances is largely beyond its control.

A full operational review of the scheme is planned for 2007 that will consider how the scheme has gone in the first two years and whether any changes are necessary.

With the indulgence of the House, I shall refer briefly to the next set of regulations relating to Northern Ireland. This instrument specifies the amount of biodegradable municipal waste that may be sent to landfills from Northern Ireland in the scheme years which will begin on 1 April 2010 and 1 April 2011.

These instruments are a positive step in enabling the U K to meet its landfill directive targets, and I commend them to the House. I beg to move.

Moved, That the draft regulations laid before the House on 13 October be approved [31st Report from the Joint Committee] [21st Report from Merits Committee].—(Lord Whitty.)

Lord Dixon-Smith

My Lords, at this hour of the night, after a latish night last night, the Minister will not thank me for going on for too long. I have run my slide rule over these orders and the arithmetic appears to be impeccable. Since the scheme was outlined in the legislation—albeit efforts have been made to help in the way in which it is applied—it is not news to anybody, least of all to those of us discussing it tonight.

That said, the proof of the regulations will be in the eating, as always. That is not so simple and straightforward as we would all like to presume. I noted particularly the efforts the Government say that they have made to help authorities, which are very welcome. But I wondered quite what was going on when the Minister also said that it was not intended to inflict major costs on authorities. However, the fact is that every form of waste disposal that seems to exist is more expensive than landfill. If you raise the costs of waste disposal, someone inevitably has to pay those costs. It will either be the local taxpayer or the national taxpayer, or possibly a combination of the two. The question is how the scheme will actually work.

Of course, there is the possibility of penalties. In addition to that, some authorities will not meet their targets and there will be trading in waste disposal licences—that is the phrase that I will use—which is supposed to help, because authorities that meet their targets can trade off their surplus and sell it to authorities that are lagging. There is an assumption there—some will beat their targets and some will lag. Of course, if that is not the situation, we may well have a hiatus.

Then we return to the miserable business of how local government is financed and how any costs of the scheme will be fitted into the overall pattern of local government expenditure, of which these regulations form only a small part. When one reaches the margins of local government expenditure, small variations can have very large effects. There is a question about whether the overall expenditure limits of local government will be sufficiently flexible and large to cater for any failure in that particular area. If they are not, will we see local authorities being capped, as we have seen in the past, as a result of those schemes? do not know the answer to that; perhaps the Minister can enlighten us.

I note—and this is very welcome—that: The environment and cultural services block grant has been increased by somewhere in the region of £1.2 billion, in recognition of the fact that the additional cost will fall on local authorities".—[Official Report, Commons Fifth Standing Committee on Delegated Legislation, 11/11/04; col. 5.] So much for this measure not been intended to inflict major costs. The additional funds will be made available through private finance initiative credits. Something like £200 million is available from the waste minimisation fund. Those are large sums, but the last time that I checked, my own local authority will have capital expenditure in this one area of waste disposal in excess of £200 million. I recognise that Essex is a large county, but if that is grossed up throughout the rest of the country, the sums provided so far do not match the potential liabilities. I would welcome a little more information about that when the Minister replies.

All of that said, in essence those are worries for the future. As the Government are suggesting, the regulations are in line with the legislation that lies behind them and one cannot complain about them on that count. However, the concern will be all the way down the line on the implementation. The Government have the opportunity to make that successful or to break local authorities in the process if they so choose. I am sure that they do not intend the latter, but I look forward to hearing from the Minister exactly how the Government do intend to handle future liabilities.

Baroness Miller of Chilthorne Domer

My Lords, from these Benches, I certainly share the concern of the noble Lord, Lord Dixon-Smith, about the costs that fall on local authorities as a result of these regulations and, in doing so, I must declare an interest as a Somerset county councillor. However, my remarks are general and not confined to Somerset at all.

The LGA made a statement in April of this year that many councils are likely to face substantial additional and unavoidable costs as a result of the scheme. Have the Government received an update from the Local Government Association that authorities are feeling any more reassured about the Government's approach than they were in April? Part of the difficult equation that everyone faces when dealing with waste—local authorities, the Government and the private sector—is deciding where the profits and costs should fall.

The waste industry is very innovative, far-sighted and professional. The Government could help local authorities better manage their waste by providing them with more guidance on how to specify contracts with the waste industry. Contracts are necessarily very long. They involve enormous capital sums well outside the range that is likely to arise during the elected lifetime of a councillor who may serve for four, eight or even 12 years. These contracts often last 25 years. It would be helpful if the experience of local authorities in procuring waste management services were gathered together—perhaps the Minister will tell me that it is—so that they could gain access to a centre of expertise on procuring waste management contracts. As a councillor I am aware that that is one of the most difficult things to get your mind round given the large number of variables. These regulations add one more variable.

I was a little puzzled by the schedule on page 14 of the regulations. That may be due to the fact that we had a long sitting yesterday or it may be due to the time of night. The table on page 14 sets out type of waste and the amount of biodegradable municipal waste (expressed as a percentage by weight). The table indicates that paper waste accounts for 100 per cent of biodegradable municipal waste (expressed as a percentage by weight). I can understand that. The relevant figure for glass is 0 per cent. That is common sense; it is self-evident. However, furniture might consist entirely of wood, or it might comprise a mixture of wood and wool, for example, or it might be comprised entirely of plastic. Therefore, I did not understand the 50 per cent figure with regard to furniture and materials that might be entirely biodegradable or not biodegradable at all.

Garden waste is not included in the table. However, I presume that is included in the item labelled "putrescible waste". Soil is included in the table. I believe that the Government have an admirable target as regards 60 per cent of construction taking place on brownfield sites. However, it is enormously expensive to treat contaminated soil. That process is particularly uneconomic on smaller sites where one does not have the advantage of economies of scale. It makes absolutely no sense for contaminated soil to be sent to landfill. I have not given the Minister notice of my next question so I shall be happy for him to write to me. Is he happy with the progress that is being made regarding the soil clean-up centres—I know that is not the technical term—that is, the centres that treat contaminated soil so that it does not have to be sent to landfill?

Lord Whitty

My Lords. I am grateful for the remarks of noble Lords on the Opposition Benches. The noble Lord, Lord Dixon-Smith, and the noble Baroness. Lady Miller of Chilthorne Domer, raised the issue of costs to local authorities. When I said that there was not a major cost to local authorities I was referring to the costs of introducing the trading scheme. It is of course the case that local authority waste management costs are rising because of the amount of waste involved and because of the need to fund the infrastructure necessary to divert more waste from landfill in order to meet the very targets that we are discussing. Those additional costs were factored in to the spending review figures that we announced earlier this year, which will inject an additional £1.2 billion into core local authority funding for waste management by 2007–08, plus £275 million additional PFI credits.

The funding of what is recognised as an additional overall cost is there. In addition—this addresses the point raised by the noble Baroness—Defra is committed to assisting local authorities to look at new efficiencies in the area. We hope to deliver nearly £300 million of savings over the spending review period. That involves joint working, new approaches to contracting, generalisation of best practice, standardisation of procurement operations and much of what she talked about in terms of centres of excellence and the spreading of the way in which local authorities approach their procurement policy.

The regulations provide a mechanism whereby the local authorities can more easily meet the targets. The net cost of that would be neutral, broadly speaking, because those authorities that could not quite meet the target would, in effect, be able to borrow or trade allowances with those that could. That would smooth out the progress and allow for lump payments in terms of capital investment required. Therefore, it is a mechanism that shares out the cost, starting from a target that relates to the local authority's existing performance in the area.

The noble Baroness referred to the Local Government Association, which has been very much involved in discussion on the scheme. It accepts that the scheme will start from April next year, and is keen to ensure that it is effective. We have consulted on all the mechanisms and the level of allocation, and are dealing with the results of that consultation. We will deal totally and bilaterally with individual authorities in the area.

The only other cost about which there may be some apprehension is that of penalties. Under a trading scheme, it is evident that the penalty will be incurred only if the local authority declines to trade. The penalty will need to be at a higher level than the cost of meeting requirements by other measures. However, if the trading scheme works effectively, there is no reason why local authorities should incur a sanction. Indeed, the reconciliation period built into the regulations provides additional flexibility, which ensures that, even if they have strictly missed the targets, there is a period in which they can trade and buy in allowances to avoid the sanction and smooth out their progress towards the stipulated targets.

The only other matter to which I wish to refer—I am not sure that I can do so adequately—is the schedule on page 14, which relates to the calculation of the amount and proportion of biodegradable municipal waste that will go into the mix. A number of factors arise. The reference to furniture is, for example, on an average basis rather than to the particular amount. The assumptions are built into the way in which we assess the biodegradable content of the total amount of waste. Clearly, those assumptions need to be kept under review. However, broadly speaking, they show the biodegradable material involved in each item as we find it at present. I think that I am right to say that putrescible waste includes all garden waste.

If soil is hazardously contaminated, it would not go to normal landfill but to accepted designated hazardous waste sites. On the progress towards decontamination of such soil, I shall have to write to the noble Baroness. However, the overall policy aim would be to minimise the amount of contaminated soil put into general landfill sites, and to eliminate entirely hazardous soil from landfill sites.

On Question, Motion agreed to.