§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)I am grateful for the opportunity to have a short debate about an important subject. As an Opposition Member, I spend most of my time denouncing Government policy as rubbish, so it is a pleasant change to discuss proposals on rubbish. We can make jokes about it—we shall no doubt hear many puns and bons mots, because I know that the Minister has a reputation for a scintillating sense of humour—but it is a matter of some importance and concern.
The concern is not about the Government's stated strategy and objectives—since the introduction of the Environmental Protection Act 1990, everyone recognises that they have been on the right track in trying to give a lead in promoting recycling—but events, admittedly largely unforeseen ones, have combined to render less effective, to put it mildly, some of the efforts made in good faith by Scottish local authorities.
Unless we get a clearer idea of the Government's long-term strategy, some local authorities in Scotland might withdraw from recycling altogether, and that would be a shame. I want to persuade the Government to consider their long-term strategy, and I hope that that will reassure people that their efforts will not be in vain, but will be supported as much as possible by central Government.
The history of recycling in my local authority, which is now Scottish Borders council, is instructive, and other authorities in Scotland will have similar stories. In the old local authority set-up, which came into effect in 1975, the four district councils in the Borders—Tweeddale, Ettrick and Lauderdale, Roxburgh and Berwickshire—undertook a series of independent and separate recycling projects according to their respective priorities and needs.
After the introduction of the Environmental Protection Act 1990 and the Scottish Office's 1991 guidance on recycling, the councils were issued, as waste collection authorities, with a requirement to produce a recycling plan, which had the aim of recycling 25 per cent. of household waste by 2000, and everyone supported that as an objective; at the time, we were recycling only about 2 per cent. of household waste, and everyone recognised that we had to improve on that.
The former district councils, as waste collection authorities, did their best through 1991, 1993 and 1995 to co-ordinate among themselves within the resources available and to agree a strategy for the Borders. They secured useful assistance from the local enterprise company, which produced consultants' reports to inform the process, but they were constrained until 1995 by the fact that, for lack of resources, they could not integrate their services.
In the financial year 1995, the four authorities met again to consider the commissioning of a feasibility study into converting as a recycling centre a building that one of them had recently purchased. Each of the constituent authorities, and the local enterprise company, contributed towards another consultants' report. On 1 April 1996, under the reorganisation into unitary authorities, the four district councils were amalgamated with the former Borders regional council to form the Scottish Borders council.
938 In May 1996, the council took up the previous authorities' commitment to recycling, committing £200,000 from its capital budget and £100,000 from current revenue. Almost simultaneously with that ambitious and proper act, with which everyone was pleased—the sums added up, and the proposal made a lot of sense as an attempt to reach the target set by central Government—the paper merchants with whom the council dealt intimated that the price for mixed paper would drop from £35 to £3 a tonne.
In October 1995, the council had been receiving £82 a tonne for mixed paper; the wild fluctuations in market prices were certainly beyond the control of the local authorities. The council's financial estimates for the recycling centre project had been based on what was then considered the conservative figure of £30 a tonne. As if it was not bad enough having the bottom fall out of the market, the merchants then introduced a quota, and would purchase only 85 per cent. of the council's raw material. That immediately produced a glut of recovered material, and a huge backlog began to build up at depots in Galashiels and Hawick, which was another problem for the council.
In September 1996, the council reviewed its strategy, and committed additional resources in the form of extra manpower to separate cardboard from the mixed paper so that it could get a better price. That had a significant impact on the estimated total loss that the council faced, and still faces, of between £75,000 and £100,000 a year-a significant part of the council's cleansing services budget.
To make matters worse, in November 1996, the council was advised by the waste paper merchants that the price for card had reduced from £23 to £20 a tonne; worse still, the price for mixed paper had gone from £3 a tonne to nil: there was no value at all in the mixed paper that the council had collected for recycling.
It became clear at that stage that neighbouring authorities were experiencing similar problems. The local authorities all found that they had to pay the merchants to take the paper off their hands, because otherwise they would have had to use landfill sites to dispose of the paper, and pay £7 a tonne under the landfill tax. I know that Scottish Borders council and other local authorities will have written to the Scottish Office to highlight the problem and outline the difficulties that they may face in the future.
The councils are co-ordinating some activity through the Convention of Scottish Local Authorities. A catalogue of unexpected financial blows caused by the collapse of the market has hit Scottish Borders council. It is also worried that not only local authorities but all commerce and industry has been taking account of the introduction of the landfill tax.
I entirely support the principle of the landfill tax, and understand what the Government are seeking to do. It makes much sense in principle. However, the draft EC directive on packaging waste, which requires producers, packagers and retailers to examine their operations and recycle packaging material, is compounding the glut of material on the market and leading to even lower prices. That explains the low prices that are being received for recovered goods. The draft directive came on stream only on 1 October, and aims for about 50 per cent. recycled packaging. That will have a major impact and make matters worse.
939 In recent months, Scottish Borders council and its sister authorities have been examining all sorts of alternative markets for recovered materials and for ways out of the mess. Few options are available. Like my next-door neighbour, my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), I have always encouraged the council to go down the route that it has taken. It has always, rightly, had a high profile on environmental issues. Bluntly, unless central Government can do something, it may have to reconsider its environmental policy, which would be a shame.
I conclude with a few suggestions, some of which will be harder than others for central Government to consider. First, we must consider diverting some of the £280,000 that will be payable by Scottish Borders council in a full financial year in landfill tax to help with recycling and the sale of products to the market. Secondly, the Scottish Office should consider introducing a grant system whereby local authorities that meet their Scottish Office targets will receive funding to improve continually on those targets.
Thirdly, the Scottish Office could step in to set an intervention price for recovered materials. I know that that would be difficult, but it is essential that someone should co-ordinate the financial planning and get some order into the process of estimating what this policy and associated actions will cost local authorities. Fourthly, the Scottish Office should consider top-slicing and ring-fencing part of the council's capital allocation for environmental projects. That would allow each local authority to set its own priorities and targets within an allocated budget.
Fifthly, the Scottish Environment Protection Agency must quickly produce a waste strategy. I realise that it has existed only since the beginning of April, but it has been charged with producing a waste strategy. That should include recycling and waste minimisation, with realistic targets for recovering materials for recycling.
Sixthly, any target set by the Scottish Office, or any of its agencies such as SEPA, should be accompanied by the appropriate finance to enable local authorities to meet them. Finally, the Government, in the longer term and in the broadest sense—it cannot be done by the Scottish Office alone—should think about setting minimum targets for the recycled content of goods for sale, which could create a sensible long-term market for recovered products for recycling.
My local authority's experience, which is not unique, shows that, unless a more stable market is established in the supply of recovered materials to recyclers in Scotland, the Government's environmental strategy, with which I agree, will fail to achieve its desired results. The whole policy may founder on the need to implement emergency solutions. That is what Scottish Borders council faces. It is having to take drastic action and do things that it does not think are in the long-term interests of Borders council tax payers, or of the environment. It pleads with central Government to recognise its position, set up a long-term strategy, and come to its aid.
§ The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch)I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) 940 on securing this important debate. I know that he does not regard the matter as a waste of time. That will be the full extent of my humour in this debate. I will not compete with the usual rubbish that comes from the hon. Gentleman. However, I appreciate the opportunity of dealing with the important subject of recycling targets for Scottish local authorities.
Recycling is part of the much wider issue of waste management generally. It might be helpful if I begin by setting out in broad terms the Government's policy on recycling and on waste management as a whole.
The Government recognise the importance of the waste management industry. Commercial, industrial and household waste account for around a quarter of the annual total of waste. We are especially aware of the scope to add value to much of the waste handled. The principal vehicles through which value can be added are re-use and recycling. We are therefore especially keen to encourage an approach to waste management that seeks opportunities to treat waste as a potentially valuable resource.
The Government subscribe to the idea of a broad waste management hierarchy. The options in such a hierarchy are reduction, re-use, recycling and recovery, and disposal. I wish to deal with the recycling and recovery option, which includes composting elements of the waste stream to make a usable product, and energy recovery from waste. In general, however, recycling is considered to be the recycling of specific materials. To be effective, it requires the active involvement of a wide range of parties, such as individual citizens, voluntary organisations, local authorities and industry.
The role of local authorities in the recycling process is the main focus of this debate. The hon. Gentleman mentioned that, in the 1990 White Paper on the environment, the Government set a target of recycling half of all household waste that can be recycled by 2000. It is estimated that that broadly equates to a target of 25 per cent. of all household waste.
In parallel, the Environmental Protection Act 1990 introduced a range of measures designed to create a more favourable climate for recycling. It introduced a scheme of recycling credits, and placed a requirement on all waste collection authorities to produce waste recycling plans. It also required waste disposal authorities to have regard to the desirability of including terms and conditions to maximise recycling in their waste disposal contracts.
The Government have also introduced the landfill tax—I am pleased that the hon. Gentleman welcomed that. It is the first stand-alone environmental tax to be introduced in the United Kingdom. It applies the "polluter pays" principle, and will promote a more sustainable approach to waste management. It will give waste producers a powerful incentive to cut the amount of waste that they send to landfill.
That has already led to the setting up of materials recovery facilities in Scotland where waste items that may be used in recycling are extracted from the waste recovered before it is sent to landfill. Another advantage is that we will be using income from the tax to reduce employers' national insurance contributions, thereby shifting taxation from jobs to pollution. I hope that that addresses one of the hon. Gentleman's points on using the funds received from the landfill tax. 941 The Government's policy on recycling is influenced by activity in the European Commission. The Commission proposes legislation on other measures designed to achieve recycling and recovery; the directive on packaging is an example. The Commission also influences recycling through its network of priority waste stream groups. The UK Government participate in those groups and seek to ensure that their outputs are consistent with Government policy.
The hon. Gentleman referred to the recycling targets, particularly in the context of local authorities and household waste. The Government's approach is to set challenging, but realistic, targets. For household waste, we have set a target of recycling half the recyclable element of all waste by the year 2000. That target equates broadly to a target of 25 per cent. of all household waste. As a general target, it is not binding on individual authorities.
We recognise that recycling is achieved more readily in some areas than in others—for example, because of geographical factors and population density. While authorities should set themselves a target of recycling 25 per cent. of all household waste, in practice those unable to achieve that target will be bolstered by those that are highly successful and surpass it.
Concerns have been expressed on behalf of Borders regional council, not only by the hon. Gentleman today, but by the council, in correspondence with the Scottish Office. As the hon. Gentleman said, other councils share those concerns. The particular problem appears to have arisen from the slump in demand for waste paper and the effect that that has had on prices. Borders council has estimated that, as a result, its income level could drop by up to £100,000 in the current year. That is also likely to be combined with a need to dispose of the surplus material collected to landfill.
It has therefore been suggested that the Government should set an intervention price for recycled materials, to encourage and support local authorities in achieving recycling targets and to defray costs. While I can understand the nature of the problems faced, I do not think that the Government should intervene to stabilise prices.
Recycling on a national, European and global scale should be allowed to stabilise through self-regulation. Intervention in the past—through the German packaging ordinance—caused significant problems in the market, and resulted in a flood of material being collected well beyond the capacity of the existing recycling plant. That pushed down the prices paid for such material throughout Europe, and I do not believe that we should seek to establish an intervention price mechanism.
It has also been suggested that the Customs and Excise should consider a short-term exemption from landfill tax for paper wastes that are required to be landfilled as a result of the market's inability to accept the material from suppliers. There are already some exemptions from that tax, but they generally reflect the fact that the material involved is not suitable for recycling. Those exemptions include waste dredged from ports, and the burial of domestic pets at pet cemeteries. Paper products, however, are eminently recyclable, and it is not sensible or appropriate to offer the exemptions sought. Were waste paper material not specifically separated from the waste stream, it would naturally be disposed of through landfill.
942 It has also been suggested that an investigation should be undertaken into the existing market for recyclable paper waste to establish whether and when material will continue to be required from suppliers such as local authorities. The demand for waste paper is a derived demand, as it is largely dependent on the demand for the final product. It is not uncommon for supply to exceed demand, and for prices to decline.
It is not for the Government to undertake the sort of investigation suggested. The implementation of the European Community's packaging directive will lead to a recovery of the recycled paper and cardboard market. In Britain, its implementation, through the producer responsibility for packaging waste scheme, is likely to have the longer-term effect of forcing a growth in recovery. The continuing high price of virgin pulp should also facilitate the recovery of the recycled product.
A further reason for optimism is the likely future demand for recycled paper from the far east. There is also potential for growth in the United Kingdom paper manufacturing capacity if the products are competitive. All those factors lead me to the conclusion that markets for recycled waste paper will become viable.
The hon. Gentleman raised two points involving the treatment of expenditure on recycling in the context of the overall local government finance framework. First, he suggested that spending on environmental projects might be ring-fenced. Secondly, he asked whether extra grant could be made available to authorities for the collection of waste for recycling. Both those points boil down either to an increase in public expenditure or to a reduction in local authority discretion.
It would in principle be possible to separate recycling expenditure from all other local authority expenditure, and it would be possible to introduce a specific grant scheme for such expenditure. However, if one or both of those courses were adopted without affecting existing local authority expenditure provision, that would be a straightforward addition to public expenditure. The hon. Gentleman knows only too well the overriding importance of keeping that expenditure under control.
Alternatively, the proposals could be implemented within existing expenditure provision. That would, however, reduce the expenditure provision and grant available for general distribution to authorities. The Convention of Scottish Local Authorities is opposed to the introduction of new specific grants, because the process fetters local authorities' discretion in using the provision available to them. The Government are concerned that specific grant schemes introduce administrative costs, not only for the Government, but for local authorities. Those schemes use up resources that are better spent on service provision.
Having listed general points of principle, I must also ask the hon. Gentleman what other candidates he has in mind. Local authorities provide many valuable services to the community and there are many other cases where an argument could be made for some special treatment. At the end of that road lies a highly controlled and expensive centrally directed grant and expenditure system, in which much of the discretion would lie with central Government rather than local authorities.
943 Perhaps the hon. Gentleman believes that that should happen, which is why he makes his devolution proposals for a central tax-raising parliament in Edinburgh that would dominate local authorities and take away many of their decision-making powers.
§ Mr. KirkwoodRubbish.
§ Mr. KynochThe hon. Gentleman shouts, "Rubbish," continuing in the same spirit as he began the debate. But he advocates such a proposal, which would waste valuable resources. It would set up an unnecessary extra layer of bureaucracy, which would not help to solve the problem.
The hon. Gentleman also mentioned the Scottish Environment Protection Agency, which is drawing up a waste management strategy for Scotland. He asked when that would be available, and was honest enough to recognise that it is a new organisation, with many tasks. Clearly, an important element of its strategy will be recycling. That strategy is currently being prepared, and I accept the hon. Gentleman's call for it to be drawn up as quickly as possible—it will clearly be important.
Recycling needs to be seen in its wider context. The choice of the most appropriate waste management option must depend, to some degree, on the local circumstances that determine both the environmental and economic advantages and disadvantages of each option. To be credible in that context, recycling must be seen to be sustainable in both environmental and economic terms. However, the Government firmly believe that recycling must play an increasingly prominent part in the United Kingdom's waste management strategy.
The hon. Gentleman highlighted the difficulties faced by Borders council. I know that the same problems are being faced by many other councils. He talked about the variation of price over the past years. Current prices for waste paper are very low.
§ Mr. KirkwoodThey cannot go much lower.
§ Mr. KynochThe hon. Gentleman is right. He talked about the prices a year or so ago—about one year ago, the price was about £100 per tonne, and in the past four to five years there have been major fluctuations in price. I believe that the market will return and prices will increase. I urge the council not to make hasty decisions that might undo some of the significant good that it is clearly trying to do in its waste strategy. I trust that it will look at the medium to longer-term prospects in the marketplace and continue to develop its proposals, with a view to ensuring that it is in a good position to take advantage of higher market prices when they return.
I thank the hon. Gentleman again for raising this subject today. I know that it is an important issue, which is recognised by councils throughout Scotland. I see that the hon. Member for Moray (Mrs. Ewing) is present, and I am sure that she, too, appreciates these problems. I believe that the Government's policy in respect of recycling and environmental control is absolutely right, and I welcome the fact that the hon. Member for Roxburgh and Berwickshire recognised that in his speech today.