Grand Committee Report of 17 December 2002

Official Report of the Grand Committee on the Waste and Emissions Trading Bill [H.L.]
(First Day)
Tuesday, 17th December 2002.
The Committee met at half-past three of the clock.
[The Deputy Chairman of Committees (Lord Tordoff) in the Chair.]
The Deputy Chairman of Committees (Lord Tordloff): Before I put the Question that the Title be postponed, it may be helpful to remind your Lordships of the procedure for today's Committee stage. Except in one important respect, our proceedings will be exactly as in a normal Committee of the Whole House. We shall go through the Bill clause by clause; noble Lords will speak standing; all noble Lords are free to attend and participate; and the proceedings will be recorded in Hansard. The one difference is that the House has agreed that there shall be no Divisions in the Grand Committee. Any issue on which agreement cannot be reached should be considered again at the Report stage when, if necessary, a Division may be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.
I should explain what will happen if there is a Division in the Chamber while we are sitting. The Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.
Title postponed.
Clause 1 [Target years]:
Lord Greaves Lord Greaves moved Amendment No. 1:
Page 1. line 14, at end insert—
"(1A) The Secretary of State must by regulations specify the maximum amount of weight of end of life electrical and electronic equipment and end of life vehicles to be sent to landfills from each of—

(a) the United Kingdom,

(b) England,

(c) Scotland,

(d) Wales, and

(e) Northern Ireland."

The noble Lord said: I apologise if my voice disappears at any stage during the proceedings but I have been fighting off the flu or a cold for the best part of a fortnight, and no doubt I shall succumb finally when Christmas arrives. Meanwhile we have the interest of the Committee stage of the Waste and Emissions Trading Bill.
Amendment No. 1 has been tabled to ask the Government certain fundamental questions. I shall listen with interest to the Minister's reply. The amendment would put on the face of the Bill other
GC 2
aspects of various regulations and directives involved with waste and waste disposal, in addition to the provisions relating to the Landfill Directive which make up Part 1 of the Bill as it stands. In particular, it would put on the face of the Bill the requirement on the Secretary of State to specify by regulations the maximum amount of end-of-life electrical and electronic equipment and end-of-life vehicles to be sent to landfills in each of the different parts of the United Kingdom and the United Kingdom as a whole.
These relate to the WEEE Directive and the End of Life Vehicles Directive, both of which are being introduced into United Kingdom legislation separately and the requirements are being legislated for here independently and separately from this.
The first question is why the Government are taking this approach to this legislation. Why are they taking a bits and pieces approach to new waste disposal and collection legislation? Why are we not getting overall legislation? Why are we not getting a Bill that connects together these different European directives and, no doubt, others which are in the pipeline?
The second major question which this raises is: why is the concept of the trading of allowances for waste disposal the right way to go so far as concerns biodegradable municipal waste? I apologise at this stage if Members of the Committee do not like my pronunciation of the word "municipal" but that is how they pronounce it in my part of the world and that is what I shall continue to say. Why is biodegradable municipal waste an appropriate area for the whole concept of trading of allowances, trading of surpluses and buying in of allowances by authorities which do not have sufficient funds to cope with their needs? Why is it simply biodegradable municipal waste where this is appropriate? Why is it not appropriate for other areas?
It is hoped and intended that a high proportion of the waste arising from waste electronic and electrical equipment and end-of-life vehicles will be recycled and that it will not have to be put to landfill or disposed of as waste in other ways. That is true. However, a large residual amount will still be left, although not as large an amount as is the case at present. Why is the concept right in one case and not in these two cases? At this stage, we should be interested to hear the Government's response to those two fundamental questions. That is why we tabled the amendment. I beg to move.
Lord Dixon-Smith: I open with two or three irrelevancies. First, it is a pleasure to face the noble Lord, Lord Whitty, once again, and I am sorry that he is not able to be with us tomorrow.
I rise formally to support the amendment of the noble Lord, Lord Greaves. The Bill is very narrowly drawn. If the Minister is minded to reply that the Bill is a pilot for what they intend to do with all waste, it might begin to make a little sense. Biodegradable domestic waste accounts for approximately only 30 per cent of total waste. It is a specific area and is susceptible to specific treatments, whereas many other wastes require different treatment. It would have been

GC 3
better to have arrived at a strategy for waste and then to break it down into smaller parts, of which this is but one.
I have some sympathy with the Government because they are committed to a deadline which has been arrived at elsewhere and that always creates pressure on the system. I acknowledge that one has to start somewhere, but I cannot help but feel that it is a little less than fortunate that we are beginning on such a narrow base.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): The noble Lord, Lord Dixon-Smith, who, likewise, I am happy to sit opposite again, has partly answered the question raised by the amendment of the noble Lord, Lord Greaves. As I said at Second Reading, this is a relatively modest and narrow Bill. This provision is intended to fulfil commitments under the Landfill Directive. As the noble Lord, Lord Greaves, implied, the Government will also fully implement the provisions of the Waste Electrical and Electronic Equipment Directive and the End of Life Vehicles Directive. If we were to legislate in the Bill for the totality of the waste strategy, we should cover a much wider area than even the amendment tempts us to do. We already have the Waste Strategy 2000, which deals with wider issues of waste and what might be needed as a result of the recent Performance and Innovation Unit report on waste strategy. But this part of the Bill is specifically and time-committed to deliver the Landfill Directive.
The other two directives, which have yet to be transposed—the WEEE Directive and the End of Life Vehicle Directive—specify targets for recovery, reuse and recycling of equipment sent for treatment and for the reuse, recovery and recycling of end-of-life vehicles. Those targets are in those directives and we fully intend to implement them. Those targets are pretty challenging as well and will be dealt with in the normal transposition.
Indeed, to incorporate the targets in advance of that transposition and then provide further targets in line with the ones for biodegradable municipal waste could be seen in a different context. I can see the noble Lord, Lord Dixon-Smith, saying that that was gold plating in advance of the coming directives. The focus of this Bill is on the Landfill Directive.
Moreover, the Government have a policy to minimise waste which arises, rather than specifying maximum quantities allowed in landfill. So we are aiming to increase the quantity of material, in this context as well, that is reused, recycled and recovered, in line with what is in the waste strategy—that is, in line with the waste hierarchy and the strategy that we will be adopting from the PIU report. Clearly, therefore, as the noble Lord, Lord Greaves, implies, there are much wider issues for the Government to tackle, but this is not the place to tackle them. They will be dealt with either by the transposition of directives or they in line with our broader waste strategy. It is important that we focus on what is provided in the Bill rather than
GC 4
broaden it. That obviously applies to how much is covered by the trading scheme proposed in the Bill as well as to the targets alluded to by the noble Lord, Lord Greaves.
I therefore hope that the Committee will not pursue the amendment because it would hugely widen the Bill and have substantial consequences for later stages of our consideration. We need to deliver the Landfill Directive and this is the means whereby we are doing so.
Lord Stoddart of Swindon: I listened to what the noble Lord said and one thing struck me very forcefully: namely that it is the Government's policy to minimise waste. If that is what we want to do, the Bill starts from the wrong end. I said that on Second Reading and repeat it now. It seems strange that we are to deal with landfill problems through the Bill, rather than starting at the other end by trying to minimise waste. The people of this country are deluged by waste which is then put into landfill sites. We should start at the other end by persuading manufacturers and others not to produce so much waste—packing their goods in so much waste and delivering newspapers and other things to people's doors that they are unable to reject. The problem at the landfill sites could then be much more easily dealt with.
I think that the noble Lords, Lord Greaves and Lord Dixon-Smith, have in mind that instead of dealing with the matter piecemeal, the Government should be dealing as a whole with the production of packaging and waste which goes to landfill, the recycling of waste and its final disposal. It seems to me—and no doubt to most other reasonable people—that it should be tackled as a complete problem rather than in this piecemeal way.
3.45 p.m.
Lord Glentoran: I support the amendment of the noble Lord, Lord Greaves. For some time, I have been only on the fringe of this Bill and the issues related to it. It is sometimes beneficial to focus on the small package that appears to be meaningful and then to deal with it. I sense that that is what the Government are attempting to do with the Bill and with the issue of municipal waste.
Since first reading the Bill and looking at the Explanatory Notes, I have been worried not by what is in the Bill but by what is missing from it. As we go through it, I am worried, as, I am sure, is the Minister, about the overlaps that will inevitably occur because of the things which are left out of the Bill and which are not necessarily municipal waste in black bags, such as financial planning and fly-tipping. More often, such items will be motor cars and fridges and so on.
Unless we are careful and take account of the WEEE and End of Life Vehicles Directives, what we debate and finally pass as an Act into the public domain will make interpretation extremely difficult for both local authorities and the judiciary. It will be difficult to decide where the lines are drawn when cases arrive in court, as they inevitably will do.

GC 5
The noble Lord wants seriously to resist this issue, and one side of me has considerable sympathy with that approach. However, I am also seriously worried that many issues are not covered by the Bill. Those will inevitably leak out in a big way when they reach people in the country—local authorities, district councils, the industry itself and those of us who want to find someone who will take 50 quid to dispose of a fridge for us. The impact of the problem and the managing, handling and disposing of all waste produce in the United Kingdom are matters which are not dealt with in the Bill.
Lord Hanningfield: I would add to those comments and endorse them but I must immediately declare an interest as leader of Essex County Council, which is one of the largest authorities in the country for disposable waste. It will be very much affected and will have to implement the Bill, which is putting the cart before the horse.
I agree that we would like some legislation to reduce waste. Holland, for example, has considerable legislation that helps to minimise waste. The Bill will affect and penalise local authorities without assisting them to minimise waste, which is what it should be about.
The Waste Not, Want Not strategy was published a month or two ago, and I gather that there was a waste summit a year ago last November, but there has not been much further action by the Government since then. One would have liked to have seen some real thought about minimising waste, and something included in the Bill about that. It will be very difficult to implement the Bill without some real help in minimising waste.
Lord Dixon-Smith: Before the Minister responds for a second time, even if we accept the exclusion of what I would call white goods, cars and electronic goods, we are still missing the greater part of the problem of what goes to landfill anyway, because most of those items do not. Instead they go to what in some places is called land reforming, where they are used to create mountains. Mountains of waste fridges do not look very nice.
There is an immense amount of inert waste or all sorts—everything from building footings to rubble from old buildings, timber and so on, which could possibly he reused, although much of it is smashed to pieces as the building is demolished. Much if not all of that goes back into landfill. It would be interesting to hear whether the Landfill Directive is exclusive to the issue of biodegradable domestic refuse or whether it is generally a landfill problem. If it is generally a landfill problem, then frankly what we are dealing with here is missing part of the point. If on the other hand, it is specifically drawn, we are dealing with a different issue. It would be interesting to hear whether there is a linkage, because there certainly ought to be.
Lord Greaves: The Minister referred to the Government's overall strategies, which do of course exist. There is the Waste Strategy 2000 for England and Wales, and the thick document, which has just been
GC 6
referred to, Waste Not, Want Not. That is a strategy for tackling the waste problem recently published by the Strategy Unit. Many of us are trying to get our minds round exactly what that strategy means and how it will be implemented.
The existence of those strategic policy documents increases the power of the argument that what we need is legislation which deals with the problem as a whole. The Minister said that there are many interesting things to be discussed, but that this is not the place to do it. I understand his point of view in relation to the Bill, but he will equally understand the frustration experienced by those of us in other parts of the House and some of the organisations who have been considering the Bill on behalf of local government, the waste industry, the environmental movement, or whoever, who see it as a wasted opportunity.
I have no doubt that the Minister's response to many amendments that we will be discussing in Committee will be exactly the same. No doubt he will get thoroughly weary of giving the same response that what we propose is all very interesting, necessary and important, but not part of what he wants to do through the Bill.
Equally, it is absolutely right that we should use the opportunity of the Bill to probe the Government's wider intentions, not least because the Bill cannot avoid being broadened in its implications. It will not exist and operate in a vacuum. It will have knock-on effects, as the noble Lord, Lord Glentoran, said, on, for example, fly-tipping. It may have knock-on effects on incineration if in order to meet the Bill's requirements there is greater pressure on waste disposal authorities to go for more incineration, which we would certainly deplore. There may be implications for other kinds of landfill, such as inert waste, about which the noble Lord, Lord Dixon-Smith has just spoken.
It seems that a measure is being introduced to place a huge amount of pressure on waste collection and disposal authorities to minimise waste in order to meet these targets, but the measure itself does not help them to do so. It is perfectly right and proper that we should probe what the Government are doing to assist them to do that, so that they can carry out the requirements of this Bill. Without that assistance, the Bill will be meaningless. If the amount of biodegradable municipal waste that turns up at landfills does not reduce year on year in line with the targets, the whole thing will fall apart. People may be penalised, but the whole thing will still fall apart.
I do not know whether the Minister wants to respond any further to the discussion before I withdraw the amendment.
Lord Whitty: This is of course a complicated issue. We need a wider waste strategy and it is therefore proper at this early stage in Committee to discuss that, but the way in which the strategy is delivered will vary. Many of the directives and policy ambitions can be delivered without primary legislation. For example, as I described, the End of Life Vehicles Directive and the WEEE Directive will effectively be delivered by simple

GC 7
transposition. We dealt with other aspects of the Landfill Directive by secondary legislation in May. The parts dealing with the targets relating to biodegradable municipal waste in Articles 5.1 and 5.2 of the Landfill Directive cannot be dealt with by secondary legislation or direct transposition. That is the reason why we have primary legislation and setting out the means to deliver that part of the directive and the strategy. That is why we have primary legislation setting out the means to deliver that part of the directive and that part of the strategy. Other parts of the strategy will be dealt with by legislative, fiscal and administrative measures. This is required in order to put the requirements of the directive into English law. It does not deal with the whole directive, let alone the whole of waste strategy, nor is it intended to. It is intended to deliver that part which deals with biodegradable municipal waste.
To that extent, noble Lords are being overambitious in trying to pull that all together in one piece of primary legislation. Primary legislation is not the same as a strategy, and we cannot load on to this legislation the other objectives of that strategy, most of which, insofar as they require legislative action, are adequately dealt with in other ways.
Lord Stoddart of Swindon: Before the noble Lord, Lord Greaves, withdraws the amendment, I would like to say that one advantage of primary legislation is that one can discuss the issues far and wide. The advantage of this particular legislation is that we can discuss not merely the narrow aspects of this Bill, but the associated aspects as well. It would be quite wrong if the Committee did not take this opportunity to do just that.
The local government settlement was imposed upon us last week. I have not studied it closely, but it seems to me that local authorities in the South will be penalised to some degree. Yet there is perhaps more biodegradable waste in the South than in other parts of the country.
That might not seem relevant, but recycling is one of the ways of dealing with biodegradable waste. Starving local authorities of the ability to put in schemes for recycling does not help them at all. As I said on Second Reading, if local authorities are going to do the job properly and not impose great penalties on their council tax payers, they need a great deal of help and not hindrance.
This is the value of having a debate of this sort. At least those of us of little importance normally can put our views to the Government in the hope that perhaps they will listen just a bit.
Lord Dixon-Smith: I may have been guilty of inattention or possibly even deafness, but in his response the Minister did not deal with my query about the status of inert waste going to landfill, and whether there was any linkage between that and domestic biodegradable waste.
Lord Whitty: There is no linkage with the provisions here dealing with construction waste, etcetera. Other parts of the Landfill Directive can deal with that.
It may be sensible if I outline the requirements of the directive. Different parts are dealt with in different ways. I also say to the noble Lord, Lord Stoddart, that clearly it is open to the Committee to raise all these issues and discuss them. All I am saying is that the requirement for primary legislation to deliver a European target is the main focus of the Bill. That needs to fit in with all sorts of domestic and European obligations. The wider strategy is relevant. That has to be seen to be compatible and part of the delivery of the wider strategy, but it does not attempt to put into primary legislation anything like the totality of that wider strategy. It is quite right that we should discuss the context but I suggest that the Committee does not put too much of the context on the face of the Bill.
4 p.m.
Lord Greaves: I am grateful to Members who have taken part in the debate on these amendments. The debate that has taken place will usefully inform the rest of our discussions, and it will resonate through many of the amendments that we shall discuss later. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 to 5 not moved.]
Clause 1 agreed to.
Clause 2 [Non-target years]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 6:
Page 2, line 17, at end insert—
"( ) If, for England, Scotland, Wales and Northern Ireland, no amount is specified under subsection (1) for a year to which that subsection applies, the maximum shall not be more than the maximum amount for the last specified year."
The noble Lord said: This is a suitable moment to make the point that, as with so much of the Bill, we are to a large degree flying blind. Clause 1 begins with the words,
"The Secretary of State must by regulations,
but we do not have the regulations, although the clause defines what the regulations may do. In Clause 2 we become even more querulous as it states,
"The Secretary of State may by regulation",
and we do not have the regulations. Clause 1 concerns what are defined as scheme years and Clause 2 deals with the others. Because the Secretary of State "may by regulations specify", he does not have to, which means that there has to be some kind of mechanism for dealing with a non-scheme year that defines what should happen. We had that purpose in mind when we tabled Amendment No. 6.
The purpose is quite simple: it is to prevent someone in a non-scheme year, where there have been no regulations, from tipping in more waste than he or she had done under the regulated year the year before. It seems to us that that kind of safety measure is sensible, because if we are to make progress towards diminishing the amount of biodegradable waste going into landfill, it would be nonsense to have a gap which

GC 9
made it possible for there to he an increase in years where regulations had not been passed and which were not scheme years. I beg to move.
Lord Livsey of Talgarth: I am not a lawyer, although I have looked at many Bills in my time, but I wish to clarify the situation as I see it. I am sure that the Minister and others will correct me. As I understand it, the target years are laid down by the Landfill Directive for 2010, 2012 and 2020. The assumption that I read into the Bill is that the Secretary of State specifies the maximum amount unilaterally for England. I assume, after receiving proposals from the National Assembly for Wales, the Scottish Parliament and the Northern Ireland Assembly, that he will come to an agreement about what will be done in relation to those countries.
As I see it, Amendment No. 6 seeks not to increase the maximum amount by more than the amount for the last specified year. My feeling is that that may slow down progress towards achieving the target year amounts, and I wish to know whether that is the view of the Minister and the target years amounts as specified in the Landfill Directive. Were we to accept the amendment, that may eventually mean that the UK will not meet the targets laid down in the Landfill Directive, although I stand to be corrected if I have interpreted that wrongly. The default rule can seriously impact on councils, but the Secretary of State must pursue co-operative agreement, which would incorporate best practice. I make those observations and I should like clarification as to whether I have correctly interpreted the purpose of the Bill and the amendment tabled by the noble Lord, Lord Dixon-Smith.
Lord Whitty: No doubt the noble Lord, Lord Dixon-Smith, can explain the purpose of his amendment. The position in the Bill is that the Secretary of State sets the targets for the scheme years, which indeed reflect the years of the directive, and then agreement is reached, if necessary, on each of the intervening years and allocations made by the Secretary of State for England and by the devolved administrations for the other countries.
Lord Jenkin of Roding: I am becoming confused. People are using the phrase scheme year; I wonder whether they mean target year. The scheme runs over the whole period, but the directive provides for target years. I do not understand the use of the term scheme year. Perhaps someone can explain.
Lord Whitty: My meaning of scheme year is those years which are specified in the directive. They are indeed targets and if it is easier we will call them target years. They are the targets specified in the directive for the years to which reference was made. The Secretary of State and the devolved administrations may then set targets for the intervening years.
I contend that the amendment is unnecessary because there is already a default position in the Bill in the following clause. If there is not agreement between the allocating authorities on the intervening years, the formula set out in Clause 3, which is based on a
GC 10
reducing scale over the years and to which the noble Lord, Lord Greaves drew attention during Second Reading, would come into play. There is therefore already a default position in the Bill.
The noble Lord, Lord Dixon-Smith, proposes an alternative default position that requires there to be a limit on each year's allocation, which, as I read it, could lead to the result that the noble Lord, Lord Greaves describes. Although I do not think that that is the intention behind the amendment, it could make matters slightly more difficult. However, one would still have to reach the point in the target year, so it would not undermine the requirement to reach the already specified target. Nevertheless, what is already in the Bill is a better formulation because it provides for steady progress towards the target in the period between the target years.
Lord Dixon-Smith: The noble Lord, Lord Whiny, will be happy to hear that I am glad to be persuaded. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Non-target years: default rules]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 7:
Page 3, line 21, leave out "16th July" and insert "5th April"
The noble Lord said: I hope that this group of amendments will prove to be rather less controversial than our discussion so far. The Bill provides a date of 16th July 2004 as the end of the first target year. My question concerns 16th July, not 2004. We have a complete system of government and local government dedicated to accounting for everything on an annual base with 5th April as the end of the year. That has become inalienable, although I am bound to say that I can find no more logic in 5th April than I can in 16th July, except that except that 5th April happens to be there. It seems a little funny peculiar, to put it that way, that on this specific issue—and there may well be others—we will have to deal with a different year and a different accounting base. It may be that something is written in the European directive which means that it has to be 16th July, but surely if it were 5th Apr LI in that year, since that is before 16th July, that would not be a problem. I cannot help wondering if we are not in the business of arguing about square tomatoes—sorry, cubic tomatoes—and straight bananas.
It would be interesting to know what the irredeemable logic is of this rather odd date. I beg to move.
Lord Hanningfield: I support my noble friend Lord Dixon Smith on the amendment. As I said earlier, I am leader of a large local authority and we have at least a dozen waste contracts of one kind or another, all of which are April to April, as are all our financial proposals and reckonings. If we are to introduce new jobs, they should really be done April to April. When I talk to my local government colleagues and the Local Government Association, none of us can understand why it should be 16th July. I very much hope the Government will reconsider and have it April to April,

GC 11
otherwise the situation of existing contracts will be extremely difficult and will have to be rethought in the future.
I fully support this amendment and hope, as my noble friend Lord Dixon-Smith said, that the Government will think seriously about this.
Lord Greaves: I shall briefly support the noble Lord, Lord Dixon-Smith, in this amendment for all the reasons that he and the noble Lord, Lord Hanningfield, have put forward.
The noble Lord, Lord Dixon-Smith, referred to cubic tomatoes and straight bananas. Since I obviously read the wrong newspapers, I do not know what he is talking about. However, if either of them goes off, they become biodegradable municipal waste, so perhaps they are relevant to this discussion.
Those of us who have been in local government for over half our adult lives have been ruled by the normal annual local government cycle, which runs from April to April. We are probably all agog to hear what the Minister has to tell us about the excitement and significance of 16th July. I shall sit down and wait.
Lord Whitty: I hope the noble Lord is not too agog, because the explanation is fairly straightforward, as the noble Lord, Lord Dixon Smith, implied. There is provision within the timetable which does not relate to what I might call standardised horticultural waste or any other European inflexibility but it does relate to 16th July, which was the date from which the directive applies. Therefore, the target dates throughout the scheme relate to 16th July. This may not be particularly helpful from a UK local government financing point of view and I have some understanding and sympathy with the points made here.
To make the allowance scheme more workable for the waste disposal authorities, it may be necessary to run the trading year for allowances in a way that corresponds more closely to the financial year of local authorities. We need to give further consideration to this. For example, it may be possible to run a trading scheme from July in a given year through to April—the end of the financial year. All the reconciliation could take place so that the final result on the target would be known for July, but all contractual aspects would relate to a year ending in April, as is the case for the rest of local authority activity.
There is therefore some possibility of our reconciling what I understand clearly to be the treadmill of the local authority year with the requirement of the directive. The figure is in there at the moment because of the requirement of the directive. We can probably look at this a little further, either subsequent to the Bill or during its consideration. We clearly need to make it compatible with the way in which the local authorities are doing their planning and making their contractual arrangements. In that spirit, I hope that the noble Lord will not pursue the amendment now, but we will see what we can do on this front.
4.15 p.m.
Lord Glentoran: Perhaps I may make two points while the Minister is contemplating working towards 5th April. One of my criticisms of the Government over this is that they have left themselves no leeway within the directive. This scheme, this strategy and this Bill gear everything up to happening and happening and, crunch, on the day the directive comes into play either we have met it or we have not. There is no leeway as I understand it. Perhaps moving from July to April would at least give them a few months' leeway.
The second point, wearing a commercial hat as opposed to any other, is that in the commercial sector we have contracts for up to 25 years and more already in place or being put in place, with dates written in. Unravelling that and putting it back together would involve quite serious cost.
Lord Stoddart of Swindon: I was encouraged by the Minister's comment that he will consider the problems that have been raised. However, I am worried about how this directive was negotiated. Presumably there were British bureaucrats negotiating together with other bureaucrats. I find it disturbing that they did not pick this problem up. They did not seem to realise that our national and local government financial system runs from April to April. I do not know why they did not pick that up and at least ask for a derogation.
I return to the fact that it is fortunate that we are dealing with the Bill as primary legislation. Members of the Committee who are experienced, particularly in local government and in business, have seen straight away how difficult this 16th July date will be. We should all be grateful to the Minister that he at least is listening.
Lord Jenkin of Roding: I share the general welcome that the Committee has given to the Minister's readiness to look at this again. When I went to the Treasury as Financial Secretary 32 years ago, I remember asking my officials why the tax year ran from 6th April to 5th April, but the answer was that the reason was lost in the mists of history. It may have had something to do with quarter days for the payment of agricultural rent and so on.
However, company accounts follow the company's accounting year and do not run necessarily from 6th April to 5th April. The Act then deems that that is to be the year on which the profits will be assessed for the tax year, the following 6th April to 5th April. If that were announced, so that in fact you did not have a single broken year, but you actually went on with years to 5th April and it was then always deemed to run from 16th July, would that amount to a breach of the directive? Are we once again guilty of gold plating a directive?
If we chose to interpret the directive so that one could have 12-month periods ending on 5th April and simply say that they will be regarded as the basis year for the subsequent 12 months beginning on 16th July, I cannot believe that anyone would regard that as in any way sufficient to warrant an intervention on the part of the Commission. This is another example of the

GC 13
tendency, to which one has frequently drawn attention, of the Civil Service in this country to gold plate and do the thing in a way that could not conceivably be open to attack. I do not believe that it could be. I wonder whether the Minister will undertake to look at that as an alternative way of proceeding. Instead of having a broken year, which I understood was his suggestion for the first year, the period would always run from 6th April to 5th April. It could then be translated so as to apply for what one may call the commission year beginning on 16th July.
Lord Whitty: This requires further consideration. In regard to England, the Government will be setting the allowances throughout the whole scheme. There will be plenty of notice for one to see the point that one is supposed to reach by the designated year, even if part of the matter is determined separately from what is in the directive. That means that by that year one will have had to reach a certain level.
The date at which the Commission will judge ourselves and other European countries to have met or otherwise those targets will be 16th July. As the noble Lord will know, different EU countries have different financial years. Most operate on the calendar year, but not all. Therefore, in European legislation we need a specific date against which we are all judged. The way in which we attain that may well be compatible with the accounting year for the local authorities. In other words, by April there will need to be in place sufficient reductions of trading or whatever to meet the target when it is measured in July. That is why I said that the year could run from July through to April.
Then the reconciliation took place so we made the figures ready for the Commission in July. That did not cut across contractual arrangements and annual accounting for the local authorities. However, there will be time to plan that because the allowances will be made in advance. It is not as crucial a problem as perhaps the Committee suggests but, nevertheless, it is one that needs some thought and clarification. We cannot remove 16th July as it is a legal requirement under European legislation, but in relation to how we arrive at that, we must be practical about the way in which local authorities carry out their business.
Lord Dixon-Smith: I am grateful to those who supported me, particularly the noble Lord, Lord Jenkin of Roding, whose eloquence was perhaps rather more clear than my own on the matter of dates. I take the Minister's reply as expressing agreement that we need to look at how we arrive at the date and its conclusion. While he does not feel able, for reasons that I understand, to accept the amendment, he says that there must be ways of accounting for this matter that mean that we can comply both with the date and with the accounting practice of Government. If the noble Lord assures the Committee that the Government will look at how best that can be done, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 3 shall stand part of the Bill?
Lord Dixon-Smith: Clause 3 is interesting to me as I am a non-mathematician. Anything that contains a formula such as this terrifies me. Having looked at it a number of times, I am still not certain that I understand it. However, if I understand the formula, which I admit is a considerable question, I believe that it produces a straight line graph. If it does, I am unsure whether we are dealing with this matter in the most sensible way. That is the reason why we decided to question this clause.
The problem with changing the practice for dealing with waste is that the process will be uneven and it will not follow a straight line graph. Authorities will be given targets to aim at. That is perfectly straightforward, but if you are changing the system of dealing with waste, you will almost certainly have to get involved with capital expenditure, which will have to be accounted for and provided. That may well also require the provision of plant and buildings, which need planning permission.
Anyone who thinks that getting planning permission for new facilities to handle waste is easy and uncontroversial had better think again quickly. This is likely to prove immensely difficult. I do not know a local community anywhere in the country that will not want these jobs done somewhere else. That is very simple, very basic and very normal.
As local authorities try to overcome these difficulties initially there will appear to be a period of inertia, both because of the physical needs to provide plant, sites and finance, and because of the procedural need to overcome the dreadful business of planning permission.
I would love the Minister to reply that we can overcome that very simply, but he knows as well as I do that unfortunately that is not the case. It is likely that initially things will change very slowly in response to the scheme. Subsequently, we will see an accelerating pace of change as new systems and new plant come on stream and begin to work.
I readily acknowledge that there are some things that can be done quite easily. One can persuade people to segregate waste into metals, glass and biodegradable waste, as many authorities do. However, in some areas where that happens all three are tipped into the same collection lorry. We know what happens to it after that.
That easy avenue is not always available. There is a very real problem in that regard. I would also argue that there is a separate problem. Some authorities in this country have been considerably successful in this area and have managed to reduce the amount of biodegradable waste that is going to landfill already, some by large proportions. The Bill and the formula make no distinction between those who have already gone a long way down that road and those who have scarcely begun. If one was to allow for that—and we have had only a general discussion so far around this issue—one would want to pick the base date for

GC 15
starting to apply the formula back at 1990, before the recycling business started, so that we would be treating those who are good performers and those who are bad performers equally. I would be the first to acknowledge that is not very practical.
How does one overcome that sort of difficulty? We have two serious problems with Clause 3, which will require serious thought before we finish the Bill, although I do not expect the Minister to be too encouraging today on these issues. These problems are inherent in the way the Bill is drafted. Before this legislation is passed, solutions should be found.
The first problem is real even if we disregard the inequity of a flat start date that would put the good boys and the bad boys all back in the same class. The much deeper point arises that there will be an initial period of very slow change before the pace accelerates as new plant and new ideas and so forth come on stream. That situation will be very difficult to overcome and the formula in Clause 3 does not deal with it.
4.30 p.m.
Lord Stoddart of Swindon: The noble Lord, Lord Dixon-Smith, makes a good point. It is true that local people are suspicious, particularly if they are faced with the building of an incinerator. We have probably all been involved in one way or another in applications for incineration plants. Such applications can take a very long time to process, and with very good reason. People are scared of them because they believe that the output from them will be harmful. They also believe that their roads will be made less safe for their children because of the number of heavy lorries which might pass their doorsteps in getting to the incineration plant. The noble Lord has raised very real problems. The same applies to sorting plants. They can be very large and very noisy and, indeed, in some ways can in themselves be polluting. Again, the planning problems must be dealt with and they take time.
Another problem comes to my mind following an experience that I had when serving on a local authority. It is always necessary to be able to dispose of recycled material from a recycling plant. That matter came to mind because in Reading, where, for some time, I was a councillor and leader of the council, after the war we continued with a system to save paper introduced during the war. We collected paper separately and did so for many years.
The problem was that recycled paper was not in demand and therefore all our storage facilities became completely full of paper. We spent thousands of pounds each year collecting the paper separately but we were not able to dispose of it and had to acquire new warehouses in which to store it. Eventually, because it was costing the council the earth, I had to agree that the system should stop. I am sure that there is a warehouse in Reading containing wastepaper that has still not been disposed of.
At this stage, I must return to the issue of the money problem. Recycling plants and incinerators are expensive to build and, in the light of what I said about
GC 16
disposal, could be expensive to operate. As this is a national policy concerning waste disposal, I believe there must be a national solution, or part of a solution, to the financing problem.
I realise that this is a narrow Bill, but some of us are taking the opportunity to widen it slightly. It would be useful to hear from the Minister that he has all these problems in mind. It would also be helpful if he could give an assurance that local authorities will not be presented with a demand to do something for which there could be heavy penalties which they simply cannot meet because of lack of resources. As the noble Lord, Lord Dixon-Smith, has said, they may not be able to grant or achieve the necessary planning permissions.
Lord Whitty: This clause is a devolved clause. If the Secretary of State wished to set an alternative structure for England, reflecting some of the points raised by the noble Lord, Lord Dixon-Smith, and others, an alternative pattern for a straight line could be proposed. If the Welsh Assembly or the Scottish Executive proposed an alternative configuration of the line, provided the Secretary of State agreed, that would likewise take us between the target years and would be acceptable. That is a default position that arises only when other considerations have been taken into account but not pursued. It is felt that it is best to rely on that default position.
The default rules are based on the rate of progress which would be needed to meet the target year targets, in equal steps, as the noble Lord has said—in other words, in a straight line. I cannot believe that there could be an alternative default position that did not raise more problems, but it is open to authorities to take a different view of what the progress between target years should be.
It is equally important to recognise that all the targets will have been set well in advance. One of the main propositions in the Bill on the trading scheme provides the ability for a local authority, faced with problems of investment, timing, length of planning procedures, inability to find a market for recyclable goods and so on, to borrow or to bank, if it has exceeded the target, thereby, allowing it to smooth out the allowances that it has been allocated by trading in the market. In other words, the whole point of the trading part of the Bill is to allow authorities to smooth out those step challenges by a process of banking and borrowing.
Amendments have been tabled by various noble Lords, opposing the banking and certainly the borrowing requirements. Nevertheless the Bill is consistent in that it gives authorities flexibility to be able to smooth out their progress by operating in the market. However, the clause deals with the default rules and it would be difficult to see what other default rule one could have for measuring progress between what are fixed target years. There is flexibility for the

GC 17
Secretary of State and the other allocation authorities, and there is flexibility for the individual authority through the trading scheme.
Lord Glentoran: I have one practical point. I apologise for referring to another debate if noble Lords have not read it, but in a recent debate, when only four noble Lords were in the House—the noble Lord, myself and the noble Lords, Lord Lucas and Lord Greaves—the point was made by the noble Lord, Lord Lucas, that some local authorities were recycling 40 per cent of municipal waste and some only 2 per cent.
I am worried about the trading part of the Bill. I have been coming from the same place all the time: the financial input of the capital requirements and the money that needs to go in—the £1.5 billion a year for ten years, that the industry tells us it needs. It appears that there will be an encouragement on local authorities that are equipped to recycle only 2 per cent of their municipal waste to spend all their money buying from those that now recycle 40 per cent, that have presumably spent a great deal of capital and that have sophisticated equipment to allow them to recycle that percentage.
In some ways, as the clause is currently drafted, I wonder whether it is demotivating to what one might call the "poorer" authorities—if, indeed, they are the poorer authorities; the noble Lord, Lord Lucas, made the point that they might be. Those authorities may not be motivated to invest in their own capital plant but will simply spend money and buy the facilities from others. I am not sure whether in the medium—let alone the long—term that is where we want to go.
Lord Hanningfield: In supporting my noble friend, I do not like to give the example of Essex again. However, Essex has 12 district councils which are collection authorities, and we have two unitary authorities—one being Southend, which has no disposal facilities at all as it is totally built up. We tried to create a consortium between the two unitary authorities, the 12 district councils and the one county council.
In supporting my noble friend, I should say that district councils have totally different rates of recycling. Some are recycling 40 per cent and others are recycling hardly anything. That is why I said at the beginning that it will be almost impossible to operate the Bill. I am sure that we shall discuss this matter a great deal in Committee. It will be difficult to penalise disposal authorities when the fault lies with the collection authorities which cannot meet the targets. We shall return to that issue.
We have spent two years trying to get the authorities to agree on the matter within a consortium. The word "incineration" is already engraved on my heart. We have had riots and disturbances as no one in Essex wants incineration. In fact, I have given an undertaking that there will be no incineration without a referendum in our county. Therefore, we are considering different and very expensive methods of disposal, and we hope that modern technology will
GC 18
catch up a little. In many parts of the country, incineration is not acceptable. We need to find different ways to deal with waste and we are trying to speed up technology in order to find methods of doing so.
I repeat what I said at the beginning: this is a case of putting the cart before the horse. We need to encourage people to minimise waste and we need to encourage district councils, which are the collection authorities, in the eastern region. Eighty-eight per cent of councils in that region are two-tier councils and that is why the Bill is almost impossible to operate in England. It will be easy to do so in Wales, Scotland and Northern Ireland because the councils there are all unitary. But, in England where 70 per cent or so are two-tier councils and in the eastern region 88 per cent are two-tier, unless there is total co-operation between district and county councils, the Bill will not work at all. Therefore, I add to and endorse what my noble friend Lord Dixon-Smith seeks to achieve in the amendment. We need to examine fundamentally the whole reason behind the Bill and how it will operate.
4.45 p.m.
Lord Dixon-Smith: This has been an interesting discussion because it has gone to the heart of the problems presented by the Bill. I am grateful to those who have supported, in various ways, the initial remarks that I made.
I am not particularly encouraged by what the Minister said. I understand his point that the Bill sets out a default position and I understand his difficulty in setting it out in any other way than this. But, in view of the realities of the problems that we face, it would almost be better if it were not there.
In returning to the subject of financing and the point raised by the noble Lord, Lord Stoddart, it would be interesting to know whether there are "identified ad lib funds" to make all this work. At the very least, there will need to be some expensive installations. I began to describe them at Second Reading and I completely understand the problem that everyone has with incineration. I, myself, do not like incineration and I do not believe that anyone should build incinerators any more. They simply convert one form of pollution into another form of pollution, and that is not what the business should be about.
My favourite solution—an expensive one—is anaerobic digestion. I was not serious when I mentioned turning soiled nappies into wallpaper but it is happening in Belgium and the United States with the huge subsidy that I mentioned. There are all kinds of ways of dealing with the problem, but I prefer anaerobic fermentation because biodegradable waste can be turned into ethanol. In that process there is an irreducible minimum of waste that has to be disposed of, but the volume can be greatly reduced, producing something very useful which is a greenfill. We do not have to worry too much about incinerators but I cannot accept that an anaerobic digestion plant will be any less controversial, wherever one decides to put it. That is one problem.

GC 19
I turn to the market being intended to even matters out so that the good performers have something to sell. I refer to good and poor performers because, when one considers rate of progress, some will be more successful than others. Perhaps one should consider how that can be carried out if an authority's base point is based on what it collects or what it disposes of at the moment. My noble friend Lord Hanningfield, when discussing Essex, did not mention London; he was discussing the Essex issue only. For a long time Essex has been a major disposal facility for London.
That is a slight red herring to what we are talking about but it is a potent issue. The noble Lord mentioned waste disposal authorities not just in London but in other metropolitan areas. They are not waste disposal authorities at all; they are waste collection authorities because they have no facilities to dispose of waste within their boundaries. If we are realistic about this point, in the Bill there is an appalling problem with definitions.
I return to the awful difficulty about the administrative and planning problems that will impose a delay. The market will not be able to even that out unless—the Minister can do this although it will cause a furious row in local authorities—he allocates waste to each authority on a notional volume or quantum of waste—perhaps by weight—per capita so that every authority starts with the same per capita allowance. One will not be able to make any provision either to help authorities that are "good performers" vis-à-vis those that are "poorer performers", nor will there be anything to trade initially.
The other way is to give every authority an allowance that is too big to start with but that would defeat the whole point of the exercise. One has to assume that the sum of the allocations that are made in the first distribution will equal the volume of waste presently being disposed of to landfill in that way.
I hope that the Minister will tell me that that assumption is correct. If it is not correct perhaps the problems that I foresee will be easier to deal with. If every authority in a trading scheme starts where it is now on day one, no authority will have anything to trade until three, four or five years down the scheme, by which time we shall be running up to the second date. It will be a difficult exercise. I can see a number of authorities getting into difficulties, having to pay large sums of money to the Treasury, or having large sums of money extracted from them by the Treasury. The interesting point about that is that with something like 84 per cent of all funding coming from central government to local government, is the Treasury going to pay its tranche? I assume not. The council tax payers are probably going to have to pay it.
If it is simply the council tax payers paying it, it will be very difficult and certainly in the initial year, it could impose completely unreasonable burdens. While I can see that the market system might have some validity by about 2015, for the first five or eight years it is not going to be any help at all. I come back to the fact that the default position is a straight line graph. If we are
GC 20
not going to use that and we simply have the three dates, what is going to happen? If the straight line is in effect impractical, which I suggest very strongly it is, do not know why we have Clause 3 in the Bill.
Lord Whitty: I am unsure whether the noble Lord, Lord Dixon-Smith, is suggesting that we should have no default position in the Bill. The whole tenor of the rest of his remarks and those of some of his colleagues has been that we need to be able to plan this and to have a clear strategy for developing it. The allocations will naturally be based on the actual waste. The aim is to minimise or reduce the amount that is landfilled. The landfill dimension can then be traded.
Although it is true that the amount of trading will grow and be cumulative—so there will be less trading flexibility at the beginning of the scheme than at the end of it—it is also true that the steps at the beginning will be easier than those at the end. Therefore, the flexibility required further down the line will increasingly be provided by the trading market that we are creating. Given that we have to meet the targets, all that this clause is doing—and we have spent quite some time on it partly because of the attention it attracts through its use of algebra—is to show that we need to ensure that we have a pattern to which people can work.
Clearly, we need some flexibility of work on the part of the allocation authorities as well as the individual authorities in order to meet those targets. However, we have to ensure that there is a pattern against which they are judging themselves and the Government are judging them. As the landfill trading scheme increasingly provides flexibility into the system, it will become easier for us to say that the default line is the appropriate line. It may be that at the earlier stages, different judgments will have to be made but we are not yet at that stage.
Lord Dixon-Smith: I would like to be absolutely clear about that. Does it mean that the allocations would be on the basis of total waste collected in a given area or on the basis of that which is already sent to landfill? This is a critical point.
Lord Whitty: The targets will be in terms of landfill but based on the total waste that arises—biodegradable municipal waste.
Lord Dixon-Smith: Perhaps I did not make myself clear. Will the initial allocations to waste disposal authorities be based on the total waste they collect at the present date or on the total waste that they presently send to landfill? If it is the total waste they collect, there will of course be some room for flexibility and I would like an assurance that that is what I should read into it. Then I have a final point to make.
Lord Whitty: The allocations will be based on the biodegradable municipal waste that is collected, not on the amount currently or historically landfilled.
Lord Hanningfield: In 1991.
Lord Whitty: Yes, in whatever was the previous base year.
Lord Dixon-Smith: I am grateful for that assurance. That gives me a little bit more cause for optimism.
I wish to raise a final point. Again, I am sorry to have to do this in this way and if the Minister tells me it is an unfair fast ball I shall not be in the least surprised, but it seems to me there is a perfectly valid question to ask. What happens if the Treasury does its assessment and decides that the cost of meeting the liabilities under the directive by introducing treatment plants and so on—even allowing for the fact that we may be able to attract considerable sums from private operators who want to be partners in the business enterprises—is greater than the cost of paying the fines? What happens then? That is one reason why there is so much smuggling into this country of products such as tobacco and alcohol.
Lord Stoddart of Swindon: Perhaps I may raise a short point that has been worrying me about the training system as this debate has proceeded. As I understand it, one problem of landfill is that landfill itself produces greenhouse gases. That is one reason why we do not want landfill—as well as the fact that we are running out of landfill sites. However, if we are to have tradeable arrangements, does that not mean that waste will be conveyed from one area to another to be dealt with? Am I right? Perhaps I am wrong, but I shall continue. If so, it will have to be transported—presumably by lorry—which will add to the emissions that cause greenhouse gases. Has that been taken into account?
Lord Whitty: The noble Lord, Lord Stoddart of Swindon, is confusing two things. The trading scheme is not a literal trading scheme; people are not trading lumps of rubbish with each other. Clearly, that goes on already. As the noble Lord, Lord Dixon-Smith, pointed out earlier, most London boroughs dispose of much of their waste outside the area in which the waste arises—the noble Lord was principally concerned about Essex.
That will continue and there is nothing in the trading scheme that makes it more or less likely. Of course, that has the consequences to which the noble Lord refers, but what is traded under the trading scheme is not the literal waste, it is the allowance for one's ability to put that waste into landfill. It is almost a conceptual figure. Nothing physical moves under the trading scheme, and there is therefore no additional impact on greenhouse gases.
I shall answer the point made by the noble Lord, Lord Dixon-Smith, about the Treasury view in two ways. First, under the coming spending review, the Treasury has already made allowance in the allocations to my department and in the rate support grant settlement for notionally significant amounts of money to tackle those waste problems. Other
GC 22
streams—the private finance initiative and others—are available to deal with those capital dimensions, in particular, of waste disposal.
We shall return later to the question of assessing whether it is better to comply or to face the penalty for not complying, but the sanctions must he more expensive than the cost of complying. Otherwise we shall indeed have smuggling and various other analogous activities. One reason that the penalties are not specified in the Bill is that to some extent we shall have to set them in line with the market, which itself reflects the compliance cost. Otherwise the sanctions will not work.
5 p.m.
Lord Dixon-Smith: I have one final question before I withdraw the amendment, as I must. Has a serious attempt been made to assess the total compliance cost of the directive? I would be most interested to know if that is so.
Lord Whitty: I do not think that such an estimate can be made. There are different ways of complying with the target and those decisions will come clown to the individual local authorities' waste minimisation strategies, to start with, as has been said, and the choice of alternatives to landfill will be different. Clearly there are significant capital costs involved in recycling, incineration and anaerobic digestion, but the choice of ways to meet the targets will he up to individual local authorities.
In the current spending round, sufficient allocation is already raised to ensure that the early years are covered. I am informed that the impact assessment is available in the Library should the noble Lord care to refer to it, perhaps we can return to the matter later.
Lord Dixon-Smith: I am grateful to everyone who has taken part in the debate. In particular, I am grateful to the Minister, because lie has done everything that he can to be helpful. I sympathise with him in his dilemma, but the only certainty to come out of the discussion is that we are flying uncertainly into an uncertain future. I cannot put it any other way. Perhaps that must happen. I have no doubt that we will return to this debate in many forms before we have dealt with the Bill, even if we do not return to this specific target—if I may use that pun.
Clause 3 agreed to.
Clause 4 [Allocation of landfill allowances]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 8:
Page 3, line 44, after "made" insert "at least thirty weeks"
The noble Lord said: These amendments address the problem that the Bill as drafted simply states that,
"An allocation must be made before the beginning of the year to which it relates".
That is fine, but if one is expecting those allocations to be on an ever-diminishing scale, a number of factors are involved. I will not go over the ground covered in debate on previous amendments, which complicate the issue, but if such allocations can be made on, let us say,

GC 23
1st February for a year beginning on 1st April, if the allocation is tight, that does not give anyone a great deal of time to do anything about it.
Unless we have a standard about the timing of Government edicts in relation to future allocations so that they arrive well in advance, local authorities will hear only a short time in advance. If we are to have steady progress towards the directive targets, we need an announcement of allocations by 1st September the previous year if dramatic changes are to be made. Then everyone would know well in advance where they were going. We cannot have these announcements made at the last minute. I would almost go as far as to say that you ought to be able to sit down now—whether or not you use the formula, which I disagree with—and say what the targets for the first, second and third target years will be and what each authority's share will be. I am sure that it is a fairly simple calculation which could be done, but whether any government would choose to make targets that far ahead remains to be seen.
The other point is that the targets are, in any event, amendable. Once again, however, amendments must come well in advance so that people have time to plan for change. If you have been aiming at one particular target, because we know where the theoretical line is, and reality suggests that a tighter target will be necessary, considerable planning will be needed. At a small scale, this comes back to the question of investment decisions and how things should be handled. One might be talking about training staff and so on. It is a continuation of the same argument but, in this case, on a much more micro scale. I am pleading that, when these announcements are made, they should be made well in advance of the year in which they are to apply. This is a very familiar argument, which the Minister will recognise from a number of other occasions about other issues. I beg to move.
Lord Livsey of Talgarth: I strongly support the noble Lord, Lord Dixon-Smith, on this amendment. It is clearly prudent to have a period of about 30 weeks' notice. Planning and budgeting are extremely difficult for local authorities. A great deal of detailed work and consultation with committees who are dealing with these matters are required. As we know, directions are very often made. Without this sort of notice so that we can see the precise parameters for decisions and actions, we would be operating in a dark fog.
Lord Whitty: If the Bill were solely confined to England, there would be no difficulty in meeting everything that the noble Lord, Lord Dixon-Smith, has indicated. This requires some flexibility on how the other devolved administrations set their allocations, which is why it is not laid down here.
I assure the Committee that we intend to set the targets for each waste disposal authority in England and the full allocation of its allowances at the beginning of the scheme. In other words, we would set the targets all the way through to 2020, taking account
GC 24
of the full derogation. The noble Lord, Lord Dixon-Smith, doubted that. That would give a real time per item for making some quite difficult planning and investment decisions, as the noble Lord rightly said.
That is our intention for England, well in advance of the timetable that noble Lords have argued for. However, I need to leave some flexibility for our Scottish, Welsh and Northern Irish colleagues, as they have a different approach to their method of allocation.
Lord Dixon-Smith: I am encouraged by what the Minister has said.
Lord Jenkin of Roding: I apologise for not rising to my feet sooner. What the Minister has said about the Government's intentions about announcing the allocations for England is reassuring. However, it is highly unsatisfactory that we should be faced with legislation drawn up in this rather brutal, uncompromising way because of the necessity of taking account of what will happen with the devolved administrations. Surely, it would be possible for the draftsmen to deal in this clause with what will happen in England. What will DEFRA do about this? If it is not possible to write it into the Bill, is the noble Lord prepared to give an undertaking that what he has told the Committee this afternoon about the notice that the department will give will be available for all to see in regulations? Whether it is up to the end of the whole scheme or whether, as my noble friend suggested, it is two or three years ahead is a detail on which I am not competent to express a view. However, I find it extremely unsatisfactory that we are apparently faced with a statutory provision that simply says it has to be done before, with no indication as to how that will be carried out. The Minister may be advised to go further than he has done and say that this must now be spelt out, if not on the face of the Bill, then at least in the regulations that will be made under the Bill.
Lord Whitty: The provisions for delivering this will be in regulations. I cannot undertake to provide the regulations during the course of the proceedings on the Bill. Apart from anything else, we would need to consult widely over a reasonable period on the regulations. However, the issue will be included in regulations. My point is that we need some equivalence between the English authorities, under the Secretary of State, and the other authorities. We must allow those other authorities, under the devolution settlement, their ability to adopt different ways of meeting the UK targets than those adopted in England. There is a UK obligation and it is incumbent on the UK Parliament to legislate for means whereby it is met, but there is some devolving of the responsibilities for the means of reaching those targets. That means I need to keep some flexibility in the legislation for the devolved administrations to operate differently from England.
Lord Dixon-Smith: I expect the Select Committee on Delegated Powers and Regulatory Reforms had some interesting comments in this area, and I entirely agree

GC 25
with my noble friend Lord Jenkin of Roding. This will probably be the subject of another report in another debate in the House at some point. I am slightly encouraged by what the Minister has said in response to this group of amendments, which I shall study. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 9 not moved.]
5.15 p.m.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 10:
Page 3, line 45, at end insert—
"( ) In performing the duty under subsection (1), an allocating authority must specify the location of landfills to be used by each waste disposal authority and the maximum quantity that may be deposited in each landfill."
The noble Lord said: Here we have a large group of probing amendments. These clauses appear to make it possible for disposal authorities to borrow against their future allocations in order to deal with a problem that they have in the immediate present, if they are not able to purchase their way out of trouble under the trading scheme, not to put too fine a point on it. That would be rather like selling your birthright for a mess of pottage, because the local authority would have no certainty that they could trade up by buying allocation if the surplus they required to dispose of were to persist into the future. We are a little in the position of the European Central Bank trying to propose limits on budget deficits for nation states. I am not sure that the Bill as drafted is wise. That is why we have proposed this group of amendments, which we think will provide a more controllable situation for the future. Exactly how is the use of forward allowances supposed to work? It seems to create a problem greater than the one it is trying to solve. I beg to move.
Lord Jenkin of Roding: I am relieved to hear my noble friend say that this is a probing amendment. As I read Amendment No. 10 and some of the others grouped with it, it seems that my noble friend is asking that the authority should not only make an allocation to each local authority for what it may do, but tell it how to do it. I would find that difficult to support. If this amendment is no more than a peg to hang questions on, I shall be interested to hear the answers. If my noble friend were to decide at a later stage in the Bill to take it to a Division, I would not be able to support it. I may have misunderstood the situation, but my noble friend seems be seeking to grant the Government powers to do all sorts of things that I most assuredly do not believe they should have.
Lord Greaves: I hesitate to intervene in some of the arguments, but I rise to support the comments made by the noble Lord, Lord Jenkin of Roding. I was mystified by this group of amendments, partly because there seem to be at least three different issues involved, so I could not understand why they were all grouped together Secondly, I was mystified by the introduction of them by the noble Lord, Lord Dixon-Smith, because he seemed to be speaking to Amendment No. 49 and not to the rest of the amendments in the group.
GC 26
I had to keep pinching myself and saying, we are discussing the group that starts with Amendment No. 10. The third reason I am mystified is that he seemed to be proposing a system for operating the scheme that owes more to the old command economies of Eastern Europe than to the market economy to which, under New Labour, we are now all wedded.
Lord Stoddart of Swindon: Not all of us.
Lord Greaves: I was speaking ironically. I speak first of all to Amendment No. 49, to which the noble Lord, Lord Dixon-Smith, was speaking. It seems to be a probing amendment to find out more from the Government about how the trading of allowances between different authorities might work, how the use of allowances by a particular authority from an earlier or later year might work and how they might be saved up for later years. That seems to me what Amendment No. 49 is about and it is what the noble Lord was talking about. It will be interesting to hear more about that from the Government, because it underlines the essence of the Bill and is behind many of the discussions we will be having on other amendments.
Amendment No. 74 is a curious amendment aimed at strategy. I wondered why it was in this group. It says:
"reducing the distance travelled by vehicles transporting biodegradable municipal waste to landfill in order that by 2010 no journey is longer than 40 miles and by 2020 no journey is longer than 25 miles".
On the face of it, that appears to be a laudable aim.
However, it is not clear why those particular distances have been laid down, given the geography of the country and the difficulties, as the noble Lord and his colleagues have set out, that many councils have in finding landfill sites in which to deposit their waste. Clearly, this is a desirable aim but it is not clear how the noble Lord intends that it should be brought about or by what mechanisms. It would be useful to have such a debate and it would be interesting to know what the Government have to say about that. It is clearly desirable to do that if it can be achieved.
The rest of the amendments concern imposing detailed control over landfill sites and the deposit of waste at such sites, apparently by the Secretary of State. The Secretary of State will tell waste disposal authorities exactly to which sites they have to take their waste and to limit the size of them. The amendments will impose duties on landfill operators not to take more biodegradable municipal waste than is laid down by the Secretary of State or by the appropriate authorities in the devolved administrations. They will set out penalties for landfill site operators as well as for waste disposal authorities if they contravene those duties and set up a system for monitoring the process.
Like the noble Lord, Lord Jenkin, I find this proposal extraordinary. If we believe in the traditional delivery of services through local authorities, I would not want to see that kind of detailed central control over the county councils and unitary authorities in disposing of landfill. That appears to be inappropriate if we are to move towards a more market-based solution.

GC 27
I do not know whether these amendments were tabled by a person or persons in the Conservative Party and so the noble Lord, Lord Dixon-Smith, was lumbered with them which is why he did not speak to them in great detail. However, like the noble Lord, Lord Jenkin, I would say that if the Conservatives want to push this command-control philosophy, we shall not support them in the Lobbies.
Lord Glentoran: That is a sound way of acquiring a denial from the Government on the matter. On the commercial side I would sincerely hope, if I were the chief executive of Cleanaway, that no government or local authority would tell me where I was to put the waste that I had collected. I would like to have that confirmed.
Lord Whitty: Like other noble Lords, I am slightly bemused by this. The amendment as proposed suggests maximum bureaucracy on the private sector with maximum inflexibility on local authorities. I know well that the noble Lord, Lord Dixon-Smith, normally argues the exact opposite. Therefore, I cannot accept Amendment No. 10 or the other elements of the command economy to which the noble Lord, Lord Greaves, refers.
The noble Lord helpfully redefined the real intention of this group of amendments as being Amendment No. 49. In the guise of a definition, that prevents borrowing allowances from future years. That would again limit the flexibility available in the scheme so that it will, in effect—as dealt with in a later amendment—limit trading to the allocations in the current year. That would be a severe restriction on the flexibility of meeting the targets. Therefore, none of this group of amendments is soundly based, and I am sure that the noble Lord, Lord Dixon-Smith, never intended that they should have the effect that they appear to have.
Lord Dixon-Smith: I knew that this group of amendments would jump up and beat me about the head but I do not apologise for tabling them. Two or three serious points arise, and barring one's own allowances from the future seems to me to be extremely hazardous. That is the first point.
Perhaps strategically more important is the point raised by the noble Lord, Lord Greaves, about the question of mileage travelled. If we are to have targets to send less waste to landfill, then we must have new plant in order to handle that material and that plant should be constructed where the waste arises.
The amendment as proposed is a pot shot and it is designed to provoke a debate. I would be the first to acknowledge that, in sum, the amendments are even more Stalinist than the Bill. They simply apply at the local level what is being applied to the disposal authorities by, in this instance, the national authority. There is a national authority for Scotland, for Wales and for Northern Ireland because that is the way that the Bill has had to be drafted.
GC 28
My noble friend Lord Hanningfield talked about the difficulties of dealing with this matter on a shire-county basis. The reality is that, in effect, a waste disposal authority in a shire county will have to impose this type of restriction on the waste collection authorities within its area. A deep problem lies in that. I certainly know of one situation where waste is taken much further than is expected or is necessary. The collecting authorities have realised that if they go down country roads and through villages to a disposal facility 20 miles away, they do not become jammed in on a crowded motorway in taking the waste where they are supposed to take it only 12 miles away.
As my noble friend Lord Glentoran said, if you collect waste, the problem is that no one will tell you where to tip it. It is tipped in the most convenient place but that may not be where it is supposed to go. However, people who operate the disposal facility will be happy to take it because, so far as they are concerned, it is all grist to the mill.
Therefore, a problem lies behind the amendment, and I do not apologise for giving a slightly long explanation at the end before withdrawing it. Some points need serious consideration. Certainly, strategically the mileage issue will become very important. I entirely agree that the figures are purely arbitrary, and one needs to think about that. But the Bill needs to contain a strategic aim to reduce such things because they form yet another type of waste. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 11 and 12 not moved.]
5.30 p.m.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 12A:
Page 4, line 5, at end insert—
"( ) The allocating authorities shall indicate the allowances for each year to 2020."
The noble Lord said: Amendment No. 12A simply indicates what the noble Lord, Lord Whitty, has already said will happen. If I understand matters correctly, he has said that the Government will make notional calculations of where we should be in 2020. If that is so, I do not need to argue this point any further. I should be grateful if the noble Lord could confirm that that was what he said at an earlier stage. I beg to move.
Baroness Farrington of Ribbleton: Perhaps I may clarify that my noble friend Lord Whitty explained the Government's position with regard to England. Of course, not all constituent countries of the UK will necessarily take part in the trading scheme. It is therefore inappropriate, to remove the ability of the Parliament and Assemblies to act flexibly according to local circumstances. However, the assurance that the noble Lord, Lord Dixon-Smith, sought was with regard to England and that can be given.
Lord Dixon-Smith: I am grateful for that assurance. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 [Alteration of allocations under section 4]:
[Amendments Nos. 13 and 14 not moved.]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 14A:
Page 4. line 16, at end insert—
"( ) In the event that the allocated amounts are less than the amounts already contracted to be disposed of by landfill operators and, as a consequence, compensation is payable, the allocating authority will indemnify the waste disposal authority."
The noble Lord said: This, again, is a probing amendment, but it has a serious point behind it. Many waste disposal contracts are made for periods of 30 years; quite a lot are made for 25 years. It is rare to find one for less than 20 years. I happen to know of a number of local authorities that have been turning over their contracts in the last two or three years and contracting for such very long periods of time.
I cannot expect an answer to the technical nature of this question, but the problem that may arise is that more contracts have been made to dispose of waste than will be permitted by the scheme now being advanced in its later years. If so, unless some other accommodation is made, a contractor may have a contract to dispose of, let us say, 100,000 tonnes of waste per annum, but under the scheme, only 80,000 tonnes of waste are permitted to come to him. He may say, "You are reducing my income by 20 per cent", and there may be a question of compensation.
The purpose of the amendment is to probe what is likely to happen in that situation. It may be a theoretical situation; sufficient contracts may run out in the intervening period for that not to be a problem. However, it would be interesting to know whether any research has been done on the matter to discover what is the precise situation. If not, perhaps I can have an assurance that it will be done. Perhaps I will be told, as is so often the case, that I am under a complete misapprehension and that the world is not like that. However, I fear that it is. I know that such very long-term contracts are in place and that the Bill could cut across them to the embarrassment of all concerned unless some other accommodation is made. I beg to move.
Lord Whitty: It would depend on the nature of the contracts whether that problem arose. I would doubt that many contracts specify 20 years in advance how much—by waste or value—the contract for a particular landfill should be. People have known about the directive since 1999—in practice, for a year or two before that. In any case, I do not think that contracts are likely to run into that difficulty. It would be difficult for the Government to say that we had a comprehensive view of that, but it is certainly not a problem that has been widely raised with us by local authorities. Any contract signed since 1999 should not run into that problem. With any contract that was signed before, one would have to consider the particulars. I have received no indication of
GC 30
substantial problems, because those contracts tend to be in terms not of quantum but of service. If the noble Lord, Lord Dixon-Smith, or his contacts in disposal authorities care to furnish further information, no doubt we can consider it. However, I am not prepared to make a commitment to compensation in the way that the amendment would provide. I doubt whether the problem is as great as the noble Lord suggests.
Lord Dixon-Smith: I am grateful for the Minister's response. I am bound to say that I have been unable to quantify whether there is such a problem, which is why this is a probing amendment. The Minister is reassuring in that he thinks there is probably not a problem. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Borrowing and banking of landfill allowances]:
Lord Greaves Lord Greaves moved Amendment No. 15:
Page 4, line 22, leave out "by regulations" and insert "nor"
The noble Lord said: In moving Amendment No. 15, I shall speak also to Amendment No. 17, which is really part and parcel of the same amendment. They represent a fairly draconian way to probe certain aspects of the inter-year utilisation of allowances—the movement of allowances and use of them either one year later or one year earlier than the year in which they are granted, the movement of allowances between years that fall between target years.
The real reason for moving the amendment—perhaps we may have found a less draconian way of doing it, but this is what we have done—is to probe the Government on how the banking of permits may actually act as a disincentive for waste disposal authorities to improve continuously, year on year.
A good authority—we are discussing good and bad authorities here—which does not send a great deal of biodegradable and municipal waste to landfill, or at least sends less than its allowance for the current year, will have a surplus. Under the proposals, it can bank that surplus for future years. Its allowance—the amount of waste that it is allowed to send to landfill—will reduce in those future years. However, if it is allowed to use its present good position to build up credits, there seems to be a disincentive built into the system for that authority—although its practice is good at present—to continue to improve. There is a disincentive for the authority to invest in the required new infrastructure or to devote energy and attention to improving its systems and working with waste collection authorities—if it is not one itself—to reduce the amount of waste collected.
There seems to be a disincentive built into the system. It will be interesting to hear the Government's view. They may say that, if it is a good authority now, it will want to continue to improve. However, given the financial pressures on local authorities, which will not go away, if they are already ahead of the game and can keep going for a further two years on the basis of the allowances that they are banking, they may decide to spend their money on something else, where the

GC 31
pressure is greater from the electors, the Government or all the other bodies that now police local authorities. There seems to be a disincentive, and it will be interesting to hear what the Minister has to say. I beg to move.
Lord Dixon-Smith: Two amendments, Amendments Nos. 16 and 18, in my name are grouped with that of the noble Lord, Lord Greaves, and were tabled with a similar purpose in mind. It seems to me that once one starts to permit borrowing forward, or, indeed, carrying unused allowance back, one begins to acknowledge what I would call the "unsafety" of the formula and the straight-line approach to the whole problem. We do not consider that to be right.
We do not like this clause. If all that is needed is to carry allowances forward, that would be done far more easily by accepting our Amendment No. 18. We are in complete agreement that there is a danger here that we begin to erode the original purpose of the Bill by including too much flexibility.
Baroness Farrington of Ribbleton: I am in some difficulty because I shall have to repeat the replies in this short debate when we come to Amendments Nos. 19 and 21.
With regard to the general point raised by both the noble Lords, Lord Greaves and Lord Dixon-Smith, the Government consider it useful that allocating authorities should be able to provide by balancing one year against another; for example, in the event that they were working towards a major investment in year three. This group of amendments, which seeks to limit the inclusion of borrowing in the trading scheme, concerns a matter referred to in the Landfill Directive consultation exercise. It will no doubt be referred to again when the draft scheme goes out for consultation. We acknowledge that some issues surrounding the inclusion of borrowing will need to be brought out in the consultation exercise and that risks are attached to banning borrowing completely at this stage. The balance needs to be kept.
The allowance mechanism is intended as a trading scheme and it is vital that the market for trading has the opportunity to work effectively. Were we to exclude borrowing, we could make that more difficult to achieve, particularly if banking is to be permitted. The points made by Members of the Committee about the different circumstances of different waste disposal authorities underpin the importance of a trading scheme. It is also important that an overall scheme, which does not exclude matters such as this, should be available for consultation so that the whole issue can be seen in context.
In response to the specific point raised, WDAs will need to meet the targets. Some will bank but it is important not to lose allowances because we need to be certain that WDAs are pulled into the system.
Lord Greaves: I am grateful to the Minister for that reply. However, I do not believe that she responded to the particular point that I raised—that is, the system
GC 32
may have built into it a disincentive for authorities. In a particular year, authorities may gain allowances that they are not using and they may be able to move those forward to succeeding years. As a result, they will stand still in terms of performance in relation to landfill. For example, this year they may send a certain amount of biodegradable municipal waste for landfill and they may still be sending the same amount in two years' time because they are able to carry allowances forward.
Under those circumstances, authorities might take a very short-term view. But at present many local authorities are forced into short-term views by the financial circumstances in which they find themselves. I raised the point about the potential disincentive within the system to people to continue to improve year by year. The noble Baroness did not tackle that.
5.45 p.m.
Baroness Farrington of Ribbleton: I am sorry that the noble Lord, Lord Greaves, feels that way. The incentive is the fact that in the end the disposal authorities have to meet their targets. We are talking about the period and the mechanism for achieving that. However, if the noble Lord is not satisfied with the answer, I would be delighted to write to him, sending copies to other noble Lords.
Lord Greaves: I have the promise of a letter, and perhaps I will get a Christmas card as well! I beg leave to withdraw the amendment.
Baroness Farrington of Ribbleton: So that there is no misunderstanding, I am afraid I do not send Christmas cards. However, I shall include the noble Lord, Lord Greaves, on my list of would-have-been Christmas cards, and my donation to charity as an alternative will be increased.
Amendment, by leave, withdrawn.
[Amendments Nos. 16 to 18 not moved.]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 19:
Page 4, line 38. leave out paragraphs (c) and (d).
The noble Lord said: This group of amendments deals with the question that if local authorities were allowed to carry the balances forward, there would be no need to set quantitative limits to those balances. Any serious over-allowance can be dealt with subsequently when there is a new annual target mode. If there were no inter-year utilisation of allowances, there would be no need for a system of charging for the facility of making inter-year allowances. We believed that it was worth tabling the amendments again to probe the Government's thinking behind the particular wording of these clauses. I beg to move.
Lord Livsey of Talgarth: On this probing situation, paragraph (c) makes provision for quantitative limits, as has been said, on the inter-year utilisation of allowances.

GC 33
The impact of Amendment No. 19 would negative that by leaving it out. Presumably the amendment could allow unlimited transference of allowances from one year to another as a result of the amendment. The result could be that it would assist those councils that have been particularly slow in taking action and in catching up and it could enable other councils to speed up in earlier years. Two effects of that could be beneficial. On the other hand, it would be difficult to plan for the amount of control available.
I refer to Amendment No. 21. It refers to subsection (3) which includes a long list of provisions. I refer to one of them. Paragraph (i) makes provision for levying fees and charges, for example, on persons engaged in inter-year utilisation of allowances. I have some concerns about that. Are the fees to be levied likely to be prohibitive? No Minister would admit to that, but that could be the case. They could have a negative effect and perhaps would be likely to discourage inter-year utilisation of allowances. Picking up on that one point, this is perhaps an example of why this amendment has been tabled. I would be interested to see whether I can be reassured on that point, for example.
Baroness Farrington of Ribbleton: The Bill refers to "inter-year utilisation", which relates to years between target years. It is extremely important to place on record that, while variance can be accepted and is part of the market scheme, in inter-years there can be no transference over the target years. The target years are, thus, the fixed points that apply to the individual authorities. The Bill allows appropriate flexibility between those two fixed points. I hope that helps the noble Lord, Lord Greaves, with the issue he raised before.
The amendments would remove from the examples of provisions which the regulations make, those which limit inter-year utilisation of allowances, including quantitative limits on inter-year utilisation of allowances and suspension of inter-year utilisation of allowances and the charging of fees.
We believe it is useful that allocating authorities should be able to provide for inter-year utilisation of allowances, giving maximum flexibility. Thus, for example, if a waste disposal authority were planning a major investment in year 3, it could use the allowances in earlier years, knowing that borrowing would be compensated for in later years. Again, I flag up the difference between that and the target year. Equally, allocating authorities may need to set limits on such uses of allowances for other years. There may, for example, be concern that there should be a maximum, to ensure that in scheme years between target years the amount of biodegradable municipal waste landfill does not exceed the amount permitted to be landfilled in the previous target year.
The noble Lord, Lord Livsey, raised questions about the use of fees. The intention is that these could be useful to compensate for additional administrative costs and to discourage unnecessary inter-year
GC 34
utilisation. Therefore, I assure him that it would not be intended to be on a scale that would be punitive and savage in the way he feared.
We believe that these are issues for each allocating authority in setting up a scheme and it is proper to express the full range of flexibility they might need. I hope I have reassured all noble Lords on that point.
Lord Dixon-Smith: I am grateful to the noble Baroness for her response, which helpfully set out the background very fully. That is what we hoped for when we tabled these amendments. We will study the details and in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 20:
Page 5, line 7, leave out from "for" to "requirement" in line 8 and insert "the allocating authority to make available to each waste collection authority full financial resources incurred by each waste collection authority in order for it to comply with any"
The noble Lord said: I shall speak also to Amendment No. 36. We spoke earlier today a bout the cost of implementation of a lot of this—building incinerators and so on and the work associated with the removal of landfill. However, we have not spoken about the cost to local authorities of implementing the Bill. These days, we constantly have new regulations, new inspections and everything to worry about. The cost of implementing this in a local authority is considerable. We have two types of authority that will incur expense.
Each collection authority—as I mentioned earlier, in Essex we have 12 district councils—may have to have an employee to monitor the Bill. In Maldon District Council, for example, £40,000 of expenditure puts 1 per cent on the council tax. That shows the effect that the Bill might have locally. Essex County Council will probably have an expenditure of over £100,000 a year just on the implementation of the Bill. The Local Government Association has been doing sonic work nationally about how much the Bill will cost and we will have the full figures later. This is just for the implementation of the Bill, not building incinerators or minimising waste. Unfortunately, we are also taking people away from minimising waste and from looking at the ways in which we might implement the Bill, just to do the paperwork associated with it. We must take this into account.
The Minister spoke earlier today about a generous amount of money being put in the settlement for waste disposal. I can speak for the seven or eight authorities—the large counties surrounding London, representing about 10 million people. We have had an increase of about 3.7 per cent and we will have that for three or four years, because a great deal of dampening has been built into the settlement. Considering we have to pass forward to education something like 6 per cent, the councils around London will have council tax rises of probably between 15 and 20 per cent for the next three or four years. That is without investing any money in waste disposal.
In moving this amendment I am suggesting that some provision must be made for the day-to-day expenses that local authorities will incur in implementing this Bill. We spoke earlier about the potential costs of the Bill and we understand the reasons behind it, but someone really ought to give some serious consideration to the costs.
I hope that the Government will make full allowance in what is now called FSS—it has had all sorts of names over the years, but it is now the FSS grant to local authorities—for the cost of implementing this Bill in future settlements. I beg to move.
Lord Greaves: I support the amendments moved by the noble Lord, Lord Hanningfield, in this little group. The noble Lord spoke widely about local government finance and the financial effects on local government of implementing this legislation—perhaps quite rightly, because this is the first time we have had an amendment that has addressed the issue of money, although the amendment itself is drawn rather more narrowly.
First, I support what the noble Lord said about the general financial implications of the Bill for local government. It would be very helpful if at some stage during our discussions—and I do not expect to have this immediately—the Government would tell us clearly what effects they expect it to have. It would be very helpful if the Minister could provide us with that information. It may be that the Government expect waste disposal authorities to absorb the costs of this in some way and are not expecting to make provision in whatever the local government support settlement is now called. If that is their view and intention, it would be helpful to understand that.
It would also be helpful to understand the implications for two-tier areas. We keep returning to the problems of two-tier areas, because this legislation is about waste disposal authorities, but to be successful it will have to have the full co-operation and assistance of waste collection authorities. I am not sure that the Government have fully understood that these are different tiers of authority. Although an increasing number of different co-operative and consultative arrangements are being developed in different areas to try to bring the two together, only an optimist would say that those arrangements were all working perfectly, or could be expected to work perfectly during the time when this Bill is being implemented. That is the first major point that has been raised.
These amendments are more narrowly drawn because they are about the costs of providing information into certain specific instances. I congratulate the noble Lord, Lord Hanningfield, on tabling quite neat amendments that delete the penalties for not complying with the rules and replace them with resources in order to allow the authorities to comply with the rules. I do not expect the Government to accept that, but we must ask why these penalties are here.
GC 36
Local and public authorities generally have a vast number of duties laid upon them by legislation. It is not normal for specific penalties for non-compliance to be laid down in the legislation imposing those duties. There is a series of general ways in which citizens, the Government or whoever may take action against local authorities for not doing what the Government want them to do or what the legislation tells them to do, but it is not normal for detailed penalties of this kind to be attached to particular requirements. It is not clear to me why the Government feel it necessary to attach penalties in specific cases of duties to provide information which are not unusual or particularly onerous. Perhaps this is part of a growing tendency by the Government to want immediate powers to force people to do things even if they are not being very efficient in doing them. If that is the case, one increasingly asks why the Government do not take over the whole damn thing, close down elected local authorities and do it all themselves. There is a clear, specific question as to why these penalties are thought necessary in the Bill in this instance.
6 p.m.
Lord Stoddart of Swindon: I, too, support the amendment moved by the noble Lord, Lord Hanningfield. Those of us who have been in local government know all too well how authorities are saddled with legislation and duties placed on them by the Government with the assurance that the Government will see that they are properly financed. However, when the time comes, they are not properly financed and the cost is left with the council tax payers. There is no doubt that the burdens being placed on council tax payers, particularly in the South of England, are considerable. Those of us who pay council tax—and I presume that is all of us—know perfectly well that over the last years council tax in many areas has gone up by four and five times the rate of inflation. Of course, the Government get away with that as they have not imposed the tax directly, so the poor old local authorities get the blame for it.
As the Cabinet system spreads its awful tentacles around the country, we increasingly find that there is less accountability. You have nine people making all the dispositions and the rest of the members—there are 57 in my local authority—have nothing to do and are supernumerary. Any protest they make will be squashed by one group or the other and they will be silenced. Therefore, there are real difficulties of meeting costs in the local areas.
We have not discussed enforcement yet. It is difficult for an ordinary Member of this Committee to understand exactly how it will work and how the various complicated provisions will be enforced. Perhaps we should have some idea of that and of the costs of the enforcement. One could go on about that but I shall not do so tonight. No doubt other points will be raised later on.

GC 37
We come now to the question of penalties on local authorities. Who will pay those? Presumably there will be a system of fines so that local authorities, which are already under pressure, will be fined—goodness knows how much—for doing what the European Union and the Government want them to do. That will mean that their council tax payers will have to pay even more. What about penalising properly elected local authorities? Local authorities and governments will be fined for not doing what the bureaucrats, if I may put it that way, consider they should do.
The amendments are important and should be supported. This is the first Grand Committee that I have attended and I understand that we do not take votes in Grand Committee. What a pity. I believe that we would pass many amendments, particularly this one. I support the amendments. I hope that the Minister will be able to satisfy the Committee that they are not necessary because he will do something about them.
Lord Dixon-Smith: I support my noble friend Lord Hanningfield and everything said in his support on these two amendments. It will be remarkable if the Minister can reassure the Committee on the financial front; it has never happened yet so I do not expect him to be able to satisfy us on that point.
At Second Reading in regard to penalties I said that my view of the penalties on local authorities was to fund the deficit position that the Government may find themselves in at the end of the period. That raised a hollow laugh at the time but it was not entirely an inappropriate comment. I certainly do not want to pick up on the way in which local authorities work. There was enough debate on that subject when the Local Government Bill went through in, I believe, 1999 but sadly, much of what we predicted is now coming true with what I would suggest is maligned effect. Those are basically sensible amendments and although I do not expect the Minister to satisfy my noble friend, I look forward to his response.
Lord Whitty: The noble Lord, Lord Dixon-Smith, correctly discerns that I am unlikely to be able to accept these amendments. They concern resources. but I repeat that in this spending round there has already been a significant allocation of resources. We also have the National Waste Minimisation and Recycling Fund, which has approved 142 bids for a wide variety of projects—£76 million in all.
In addition, there are the PFI provisions that many of the capital projects will want to consider and there are other sources of funding. Thus, there is no problem of funding in relation to this scheme as a whole. However, we clearly need to keep that under review, as we and the Treasury shall, not least following the publication of the waste strategy that was produced the other week at the same time as the pre-Budget review. We shall need to reassess the funding implications of that.
GC 38
Funding is, however, an issue which the Government have to take on as one of their responsibilities to ensure that this is delivered. But in these amendments we are talking about compensation for running the scheme.
I find the amendments slightly odd in that they relate to waste collection authorities rather than waste disposal authorities, whereas all the obligations are on waste disposal authorities. There are no obligations in any direct or indirect sense on waste collection authorities. An issue may arise as to whether a two-tier system exists between the waste disposal authority, which has to meet the obligation, and the waste collection authority, which is judged not to be helping to meet those obligations. That then becomes a matter for joint determination rather than compensation from the Government for the costs of meeting the operation of the scheme.
Even in relation to the objectives which the noble Lord, Lord Hanningfield, sought to achieve, the amendments are misconstrued in that one can only compensate for something that is being done to a disposal authority. It is not sensible to do that. The obligations are to meet targets which are not only a European and a government requirement; I believe that all parties recognise them as being desirable. Therefore, it is not sensible for the Government to undertake to compensate the cost of authorities administering a scheme to meet that outcome.
The penalties referred to by the noble Lord, Lord Stoddart—other than those for exceeding targets—are imposed on the waste disposal authorities in order to act as an incentive to comply with the requirements. Overall, I believe that all political parties are committed to those requirements. Therefore, we are arguing only about means. Penalties are one way of ensuring that the delivery takes place. Obviously individual local authorities will try to avoid the penalties. That means that the penalties must be more substantial than the cost of compliance.
None of that requires compensation. It certainly does not require compensation to collection authorities; nor, in my judgment, does it require compensation to disposal authorities. I would therefore resist the overall idea of compensation. However, in any case, the amendments are directed at the wrong tier of authority.
Lord Hanningfield: I want to pursue the amendment a little further with the Minister. The collection authorities are very small and any increase in expenditure will place a considerable additional burden on them. The Local Government Association anticipates that it will have to keep records and that it will have to use some staff to help the disposal authorities to comply with the legislation. We do not believe that the collection authorities will get by without doing any work at all. The disposal authorities are far larger and will possibly have more resources, but the provision will have some impact on the collection authorities. For very small authorities, a small amount of expenditure can mean a I per cent rise in council tax.

GC 39
One problem that we have not discussed is that local government is keener than the Government on recycling and reducing waste. If we are not careful with the Bill, by minimising waste and by thinking of new ways to dispose of it, we shall take away resources from those who do such work. As an executive, the Local Government Association is involved, and I know of no authority that is not putting much effort into trying to do such work. The Bill will divert money away from that to keeping records and dealing in futures—in landfill coupons, as it were. The Government must recognise that in future settlements.
We had a settlement recently but its size meant a major redistribution of money. The 10 million people surrounding London—one of the most populated areas in the country—have suffered considerably. As I said earlier, we have received a settlement of only just over 3 per cent for all the 10 million people who surround London. That will certainly mean no investment there to implement the Bill for several years, because the settlement carries on through several years, through dampening of our resources. So that applies not just this year but for several years. I therefore cannot agree with the Minister that there is money for that—there certainly is not in the south of the country. The Government must recognise that there must be further government investment to implement the Bill and to help the whole waste strategy. Perhaps the Minister can give a few more answers, because we in local government cannot agree with the comments that he has just made.
6.15 p.m.
Lord Stoddart of Swindon: Before the Minister does so, can I ask him again about enforcement? Clearly, someone will have to enforce the Bill's provisions. We should know how that is to be done. Will there be an inspectorate, or what? How much will that cost? What will its powers be?
The other point is that disposal authorities are often the same as the collection authorities. By fining a disposal authority in one way or another, we will be fining a collection authority as well. The fact is that, whoever and whatever it is, the cost will surely be placed on the back of the council tax payer.
Lord Greaves: I want to pursue two points that have arisen. First, the Minister said that lots of money has been provided in the recent settlement for local authorities. Is he saying that the costs of implementing the Bill were specifically taken account of in the recent local government settlement?
Secondly, I return to the question of penalties, which are referred to in both the clauses to which the amendments refer. Those are penalties for not providing information in certain circumstances, and are to be set out in regulations—part of the skeletal nature of the Bill. What penalties are envisaged, at
GC 40
least in England, for non-compliance or failure to carry out any provision of required information? What does the word "penalty" mean?
Lord Whitty: The next group of amendments deals in part with penalties for failure to provide information, as distinct from failure to meet the targets—although I shall have to check on that. The enforcement agency in this context will in England be the Environment Agency. The priorities of the Environment Agency, which are already geared to waste minimisation and dealing with waste, must be directed at the inspection and delivery of the Bill's provisions. The strategy implied by this Bill—indeed the overall waste strategy—lasts much longer than the current spending round or the current rate support grant settlement. There will be a longer term resource requirement but, in terms of the overall increase in allocation of resources to local authorities, waste strategy requirements form a significant part of the changed overall allocation, as they were in the allocation to DEFRA in the three-year spending review.
I also said earlier that we will need to consider whether there are any additional funding requirements as a result of the waste strategy issued a few weeks ago. In that context, we will need to consider whether there are any additional funding requirements for the delivery of that and other aspects of the strategy. It is not necessarily the end of the story on resources, but there is access to other forms of funding as well to deliver the capital side of the strategy.
The penalties will be specified in the regulations and they may be different for different situations. For example, the penalty for failure to provide information will be different from penalties for actions which, in effect, amount to fraud or to providing misleading information. There are precedents for those penalties.
Lord Greaves: I am grateful to the Minister for allowing me to intervene. The two clauses that we are discussing refer to provision of information—for example, provision of information in relation to the inter-utilisation of allowances. The Minister said that penalties for that might be different from penalties for other failures. What kind of penalties are the Government considering imposing on waste disposal authorities if they fail to meet a deadline for information, or whatever?
Lord Whitty: The distinction that I was drawing was between sanctions for failure to meet the overall targets, which must clearly be substantial because they must be greater than the compliance costs to provide an incentive to comply, and penalties that relate to failure to provide information, fraud or whatever, where we have several possible precedents under various Acts for the kind of penalties necessary.
As I said, the next group of amendments deals in part with that and with the points made by the Delegated Powers Committee. It might be better if we

GC 41
dealt with that under that group of amendments. These amendments deal with the issue of resources rather than the issue of penalties.
Lord Greaves: I thank the Minister. The words that the amendment would remove from the Bill are those that,
"make provision for an authority to be liable to a penalty if it fails to comply with a requirement imposed on it of the kind mentioned in paragraph (f)".
The requirement in Clause 6(3)(f) is the requirement,
"to provide information in relation to their inter-year utilisation of allowances".
The provision in page 6 is similar, relating to the provision of information in relation to the acquisition and disposal of allowances.
Clearly it is necessary that waste disposal authorities provide a flow of information, without which the system would break down. However, that does not concern fraud or failure to meet huge targets—and therefore matters at the heart of the whole system, where authorities are penalised if they dispose of far too much waste or whatever. Those are bureaucratic tasks that rely on people carrying them out efficiently and providing information as required.
I submit that it is not normal in local government or in authorities generally for failure to comply with that bureaucratic task to meet penalties. Perhaps it is. I am trying to extract from the Minister what is meant by penalties. What kind of penalties might be thought appropriate to place upon a waste disposal authority that fails to provide such information by the due date? That is what we are talking about.
Lord Whitty: The Act provides for those penalties to be set down in regulation. We are now talking about the Environment Agency's enforcement strategy, for example. There are plenty of other regimes where failure to provide information leads to a penalty.
Whether we choose to mirror that exactly or to have a similar provision in the regulations is normally a matter for secondary, not primary, legislation. Today I am not in a position to give an indication of the level of penalties that we are talking about, but they would be similar to penalties for similar offences under equivalent regimes. There are examples of that in relation to local authorities, and in relation to private sector companies.
Lord Stoddart of Swindon: That is an important point. If we are to hear the level of penalties only when the regulations are published, that will be too late. We shall not be able to do anything about them. The House of Commons certainly will not be able to amend the regulations even if they are of an affirmative nature. I do not know whether they will be negative or affirmative but, in any event, the House of Commons will not be able to amend them. The House of Lords may be able to delay them, but once they are in the regulations, Parliament can do nothing about them.
If the penalties are greater than we believe that they should be, we shall have no possibility to alter them. It is therefore essential—perhaps not at this stage but
GC 42
certainly at Report stage—that we should be given some indication of the penalties, and whether they are to be financial or otherwise. If they are to be other penalties, what kind of penalties will they be, and will there be any penalties on officials or counsellors for failure to carry out their duty? We know nothing about this matter, and it is not right that we should pass legislation that incurs penalties without knowing what the penalties are.
That is not a democratic way to proceed. Indeed, it is a very autocratic way to proceed. It is a danger to local authorities, to those who serve on them, and to those who serve them. We should not allow it. I hope that the Minister will tell the Committee that he will give us some indication at Report stage of the penalties intended, and upon whom they are to be levied.
Lord Whitty: The noble Lord may consider that this is not democratic, but it is normal. This may not be the best argument in the world, but it is the usual way in which we pass Bills in this House, unless we are creating an entirely new offence. This is not an entirely new offence; it is failure to provide information required by the authorities, which has many precedents. Alternatively, it is fraud which is a criminal offence for which there are precedents. The noble Lord, Lord Stoddart of Swindon, may find it offensive or inadequate, but it is the normal way that we present Bills to this House, most of which are passed without this degree of scrutiny and objection. That may be wrong, but it is normal.
We shall consider what we can do for later stages, but the overall picture is that we are dealing with this roughly, approximately and proportionately in line with the way in which we deal with matters under other regimes.
Lord Hanningfield: We have had an interesting discussion which went further than the amendments that I originally put down. We wanted the Minister to acknowledge that in the Bill there are some real costs to local authorities, but no provisions appear to have been made. We do not seem to have that acknowledgement. We were told that we have had good settlements, but there are real costs in implementing the Bill, which will come later. Therefore, I hope that the Government will give further thought to the issue. The debate has shown that that is needed. No doubt we shall discuss it further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.30 p.m.
[Amendment No. 21 not moved.]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 22:
Page 5, line 22, leave out from "by" to "a" in line 24.
The noble Lord said: The purpose of these amendments is to explore exactly what is meant by a particular aspect of Clause 6, which provides that:
"An allocating authority may by regulations make provision for a waste disposal authority in its area to utilise for a scheme year landfill allowances allocated to it for a different scheme year'.
We have heard about the penalties on the authorities, but subsection (3)(j) continues,
"make provision creating offences for breaches of provisions of regulations under subsection (1)".
Here we are talking about the individual. Subsection (4) says,
"In making provision of the kind mentioned in subsection (3)(j), regulations under subsection (1) may provide for an offence—

(a) to be triable—

(i) only summarily, or

(ii) either summarily or on indictment;

(b) to be punishable—

(i) on summary conviction … or"—
very strangely, one might have thought—
"(ii) on conviction on indictment by imprisonment for a term not exceeding such period as is so stated (which may not exceed five years) or by a fine, or by both".
The amendments have two purposes. The first is to try to elicit from the Minister some explanation of what offence he thinks could be created in the trading of these allowances which would justify the penalty of five years' imprisonment, possibly with a fine. That is a very heavy sentence, which one would expect for major fraud or something of that nature. However, that is not what we are talking about. We are talking about responsible local authorities and individuals within them who, generally speaking, are law-abiding and do their best to serve their community. I find it odd that we push this as far as on conviction, on indictment, up to five years in jail.
That gives rise to a separate issue that has nothing to do with the Bill. Prisons are overcrowded already and here we are creating yet another offence which we are not certain about and which is not specified, because we are back on this wretched business of flying blind as it is all to come in regulations. By creating yet another offence, we are creating even more prisoners to put into a system that cannot carry the ones that it has already. That will probably result in honest people being turned into criminals as a matter of custom and habit. Although they have committed an offence, they will almost certainly not be habitual criminals when they go to prison. There is too much experience that shows that many people who are put in prison and exposed for a long time to a permanent criminal environment become infected with what you might call an incurable disease.
The amendments are directed at two issues. One is to try to explore what there is in here to create an offence of such severity that it would warrant that particular form of punishment. Then there is the subsidiary issue of whether we really want to send people who have done this to prison when we cannot handle the prisoners we already have. That is a serious point that warrants some serious consideration. We shall probably need to return to it, but I look forward to what other Members and the Minister have to say. I beg to move.
Lord Stoddart of Swindon: If no one else is going to speak, I shall support these amendments. I echo the
GC 44
sentiments expressed by the noble Lord. Lord Dixon-Smith. It is beyond belief that we should be proposing a penalty on indictment of five years' imprisonment or a fine of £20,000—or both. Damn it, you can get away with murder for less than that. A four-year penalty was imposed in a recent manslaughter case and here we are imposing a five-year sentence on indictment, as well as a fine of £20,000 for a breach of these regulations. That seems extremely high and punitive to the nth degree. What sort of society are we living in that we want to send people away for five years for breaching regulations? This is more like the Soviet Union than democratic Britain. We are doing this at a time when the prison population is projected to be 110,000 by 2009. Where on earth are we going to find all the prison places for the extra prisoners we are going to jail because they break some regulation under this Bill, which is implementing an EU directive? Where exactly are we going?
I am glad that I am not the Minister, because I would find it extremely difficult to justify this under any circumstances, but I suppose I had better sit down and let him try to do so.
Lord Hanningfield: I support these amendments. Whom does the Minister expect to go to prison? In local government circles this five-year prison sentence has made the Bill a bit of a joke. Who will go to prison from the local authority? Is it the leader? Or the chief executive? I suspect that that is not meant at all and it is meant to be someone who is trading criminally in this area. Perhaps the Minister might explain whom he expects to get these penalties, when everyone is trying to make certain we comply and do something about minimising waste and minimising landfill. I repeat, the provision has made the Bill a bit of a joke in a lot of circles. Is this the beginning of a new trend in legislation, under which we will all be sent to prison if we do not comply with the Government's ideas in local government? Perhaps it is a way of sorting out the future of local government.
Lord Whitty: I hasten to assure the noble Lord, the Leader of Essex County Council, that this is not a new relationship with local government. Nor is it really a threat to our prison populations. We are dealing with the regrettable fact that occasionally there is fraud in some aspects of local authority performance. The provision is for people who recklessly and knowingly provide false information in order to rig the market, in effect. That needs some fairly substantial penalties. The offences under these clauses involve that kind of fraud or near fraud. Operating as a broker in the market without a licence or in breach of a licence are the kind of offences we are talking about. We are not talking about inadvertently late or inaccurate information; we are talking about deliberate fraud.
I said earlier that when we came to this group of offences I would have some slight comfort for noble Lords who may be concerned about this, because the Delegated Powers Committee felt that the maximum penalties here were probably too draconian, important though the potential offences were. In further correspondence with the Delegated Powers

GC 45
Committee we have suggested that rather than these penalties we would be looking at the penalties provided in other circumstances where we are in effect transposing European Union law, where the maximum penalty would be imprisonment for no more than two years or punishable on summary conviction for more than three months or with a fine on level 5. That relates specifically to these offences. The lesser offences would relate to the normal Environment Agency regime.
I am not sure that this will entirely please my noble friend Lord Stoddart, but the Delegated Powers Committee has said that it would find the delegation to create offences acceptable if the levels for those offences I have just read out are those that would be applied under other equivalent legislation that was effectively a transposition of European directives. The Delegated Powers Committee accepts that that would be an appropriate maximum level of offences for these purposes as well. In that sense I am at least in part accepting the intent of these amendments. I am not deleting imprisonment entirely, but restricting the penalty, that could be applied for these offences. In that spirit I hope the noble Lord will not pursue these amendments as such, although we will return to this on Report with the Government's suggestions.
Lord Stoddart of Swindon: Can I clarify what this means, because it is not entirely clear? Perhaps the Minister would expand on that a little.
Lord Whitty: As to what the fraud might consist of?
Lord Stoddart of Swindon: Quite.
Lord Whitty: For example, it might be trying to acquire for the local authority the achievement of a level of reduction of landfill that they had not actually achieved, which they could then trade—in other words, creating a fraudulent credit in a market for which they would then get some return. The person who did that would probably be the officer concerned rather than the leader or the chief executive, but it would be that kind of offence.
Lord Dixon-Smith: I am grateful to the Minister for his explanation. The debate has revealed the difficulties that are put into an administrative system once a trading element is inserted into what is otherwise a relatively straightforward operation, particularly when the trading is in something that is almost notional. As the Minister has implied, if you create a false market by issuing false returns you can prove almost anything. I agree that might well create an offence that is worthy of the sort of penalty described. You could avoid it even more easily by not permitting trading and you would not have the bother. That might solve it. It would certainly solve the problem of the prison population as well.
We will have to study the reply, which was designed to be helpful. I am grateful for that, but I do not know that we are entirely satisfied. We may need to return to the issue again. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments No. 23 to 26 not moved.]
Clause 6 agreed to.
Clause 7 [Trading and other transfer of landfill allowances]:
6.45 p.m.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 27:
Page 5, line 34, after "allocated" insert "for the year in which the trade will be completed"
The noble Lord said: We think that unused allowances should be able to be carried forward and used by the waste disposal authority to which they were allocated. Transfers of allowances should concern only current year entitlements.
This is a probing amendment which will enable the Minister to explain a little more how it is envisaged that the trading of allowances will be carried on and, in particular, how it will be carried forward from prior years and borrowed from future years. It will give us a better understanding of how the trading will work.
We return to the matter of the substance of the Bill being in regulations and the difficulty caused by not having those regulations. Without some information from the Government, it is extremely difficult for ordinary, suspicious Members of the Committee—if I can describe myself as ordinary and suspicious at the same time—to envisage exactly how the system will work. Only the Minister can provide that. It would be interesting to know whether any pilot work has been carried out in relation to this issue and, if so, what happened. It would also be interesting to know whether a risk assessment has been done on the possibility of this blowing up in our faces.
If we devise a trading system that does not work, then we shall not help anyone. We have no way of judging whether or not what is being suggested will work. That is the purpose behind Amendments Nos. 27 and 29. Amendment No. 33 concerns a much narrower point. It probes whether the Bill as drafted would be a general ruling or whether it would be limited to specific trades or specific waste disposal authorities. It was tabled simply in order to elicit more information from the Minister. I beg to move.
Lord Livsey of Talgarth: I support the amendment because it tightens up the description relating to the year in which trade is completed. It is a good probing amendment, which will help us to clarify the situation.
Amendment No. 29 seeks to leave out paragraphs (c) and (d). Instead, it inserts wording which relates to the transfer of unused landfill allowances and the transfer of allowances allocated—or those which are yet to be allocated—for any subsequent year. That would appear to limit flexibility but, in fact, it could also put the onus on poorly performing councils to sort themselves out. I should be very interested to hear the Minister's opinion on that.

GC 47
Amendment No. 33 seeks to leave out the words,
"or for specified scheme years",
and limits the provision to a specific scheme year. It encourages good practice but, at the same time, reduces some elements of flexibility. In general, we support the amendments but would like the Minister to comment on some of the aspects that I have mentioned.
Lord Whitty: The amendments attempt to restrict the scope of the new regulations so that they specify that trading can take place only in a specified year. That seems to cut across some of the arguments raised by Members of the Committee at an earlier stage when we tried to find ways of smoothing out the cost and the planning of schemes designed to meet these objectives. If you could only trade but could not bank, borrow or trade across the years, clearly it would be more difficult to smooth out those changes.
If, as the noble Lord, Lord Dixon-Smith, suggests there is a danger of the whole scheme not getting off the ground and it was seen by the majority of authorities as a problem if it was done outside a given year, it is possible that one would want to limit that. I doubt that. It is certainly not the Government's view that at this stage they should limit trading to within a particular year for the reasons that I have outlined. That would not give us scope to plan and to smooth our allocation of resources.
The intention of the clauses is to enable us to consult on the precise nature of the regulations. If the word came back from the local authorities that for reasons of safeness, so to speak, we should trade only within one year, clearly we would have to take that into account. That is not the general impression I have at the moment, and it is therefore not sensible for us to limit ourselves in primary legislation to that provision.
I am afraid I did not completely follow the arguments of the noble Lord, Lord Livsey, on Amendment No. 29 which, as he says, would appear to introduce yet more flexibility in the same direction, although he did say that it may help failing authorities. I am not sure how that would arise. It would restrict trading and therefore restrict the ability of all authorities to give themselves some elbow room in order to meet the targets over the period, but not necessarily in a given year. That is what the trading scheme is designed to provide.
Lord Livsey of Talgarth: Can the Minister say in the situation that he has just described whether there is insufficient discipline in the legislation to meet the targets that are set? I know that that is particularly difficult because governments of all colours are reluctant to tie themselves down until the regulations are published and when they have had consultations, for example, with local authorities. I understand that, but there appears to be a blank cheque which might result in targets not being met.
Lord Whitty: No, the discipline will apply in the target years. There is a great deal of discipline built
GC 48
into this process, but in order to meet those targets we believe, in part, that a market solution is appropriate. It is a limited market, but one which would enable what would otherwise be step changes in performance to be smoothed out. That seems highly desirable in those circumstances. If local authorities can arrange matters between each other in order to achieve that, that is a sensible outcome. To restrict them at that stage, would seem unnecessarily inflexible.
Lord Dixon-Smith: I am grateful to the Minister for his explanation. He is trying to be as helpful as he can be in the circumstances, and I am grateful to him for that. Since we are flying blind, that explanation must be helpful to us, but we shall have to study it seriously. As with all these explanations, there is a danger that one gives rise to further questions to which we shall need to return. At the present time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 28:
Page 5, line 34, leave out "or any other"
The noble Lord said: These are probing amendments. We appear to be envisaging a system where each allocating authority will have as one part of its strategy a reduction of waste from outside its area going to landfill in its area. But a waste disposal authority within the area will be able to trade allowances from another allocating authority—if we have understood the Bill correctly. That seems to be entirely permissible if we read the Bill with care. I cannot help wondering whether that is really what is intended.
Another potential problem is that we may have one area—let say England—operating one system and the Scots, because they have put part of the Bill through a different system, devising a second system and the Welsh devising a third. There is a risk that we could erode the integrity of the whole. The amendments are important from that point of view and I look forward to hearing the Minister's explanation.
Amendment No. 31 makes
"provision for limiting the length of journeys to landfill sites made by local waste authorities".
This returns us to a problem that I discussed when debating an earlier amendment: waste being dumped where it is convenient for it to be dumped rather than where it ought to be. One waste manager explained that he assumed that scarce resources would result in higher trading prices—this is on the trading of quota. Hence, if Birmingham were to run out of landfill within 30 miles of the city, that landfill could become a scarce resource and Birmingham could then trade up. At the same time, the landfill operator would charge more.
The problem could reach the point where it was cheaper for Birmingham to sell its close quota, buy something more cheaply that was further away and take the rubbish another 20 miles, perhaps. The overall cost equation for that may work out favourably. We would not want that to happen, but given the realities of creating a market, it could.
Finally, Amendment No. 32 allows the allocating authority to suspend the transfer of allowances. Again, we do not know the circumstances under which the Secretary of State, who would be the allocating authority, might decide to do that. We know only that the power exists. Once again, this concerns timing. When will he do this? Why? How much notice will he give of the change? Will he be able to suspend all trading of all allowances, or is he likely to suspend trading only in futures allowances? Might he suspend trading in past allowances that are surplus because authorities have met their targets? All the amendments have been tabled to elicit further information. I beg to move.
Lord Livsey of Talgarth: We support Amendment No. 28 because that tightens up the situation by removing the words, "or any other". However, we wonder about the purpose of Amendment No. 30, which would knock out allocating authorities and also specific scheme years, which seems to us to defeat some of the Bill's objectives.
I am worried about Amendment No. 31. I totally understand the environmental desirability of the short-distance necessity of going to a landfill site. However, in some parts of the United Kingdom, this situation does not apply at all. I refer, in particular, to Wales, where I come from. There, one county, which is a disposal authority, stretches over a distance equivalent to going from the Severn Bridge to the flyover just down the road here, and it has very few disposal sites within its boundaries. Frankly, what the amendment seeks to achieve would be impractical for that authority because of its sparse population and the small amount of material collected over a very wide area.
Therefore, the amendment would hit very hard in some parts of the country, and in some areas of Scotland that I also know well it would be particularly difficult. I have no doubt that the National Assembly and the Scottish Parliament would both make representations, and they would probably require far more flexibility so far as concerns the amendment. I understand that Amendment No. 32 is a probing amendment and we shall listen to what is said about it.
7 p.m.
Lord Whitty: In different ways, all the amendments are designed to limit trading and to reduce the flexibility that trading might deliver. Therefore, I have objections to all of them, although those objections differ.
Amendment No. 28 would prevent any cross-border trading of allowances. In other words, the Welsh, the Scottish and the English systems would each have to be watertight among themselves. In general, the Bill is designed to bring about a flexible system of trading allowances. Should all authorities introduce a trading scheme, the amendment would deny waste disposal authorities the flexibility to trade across borders. It may well be that the terms of the schemes would differ and that there would be difficulties in trading, but it does not seem sensible to limit that at this stage.
GC 50
As was the case earlier, certain misconceptions are repeated in this debate—that is, that we are trading allowances, not waste. Thus, there is no crossover between the fact that one might trade between a Welsh and an English authority or between distant authorities within England and the fact that physically one would be transferring any waste. Therefore, when we come to Amendment No. 31, which deals with miles and distances, as is the case now, it may be more economically attractive for an authority to use a landfill which is further away. The fact that there is a trading system does not alter those economics. While we may all deplore the environmental effects of that, it is not the Bill that puts the authorities into that position.
Amendment No. 32 would remove the power to suspend the transfer of allowances. Apart from confining the issue in terms of' time, Amendment No. 30 would also remove the power to make provision as to the originating authority in the scheme year for which allowances could he traded. Obviously both those amendments would not be necessary if Amendment No. 28, or something similar to it, were carried, preventing cross-border trade in the first place.
Our objective here is to promote the maximum degree of flexibility within an overall UK target. Although different allocating authorities—that is, different national governments—may establish different schemes, we do not believe it is sensible to provide a system which, in principle, restricts any exchange, transfer or trading between those authorities.
I repeat that none of what I have said suggests that the trading system will encourage the physical movement of waste throughout the United Kingdom. The trading system does not, of itself, have any impact on that. Because the whole point is to reduce the amount of waste that goes to landfill, it should reduce that. Therefore, for varying reasons, I hope that none of the amendments will be pursued.
Lord Dixon-Smith: I am grateful to the Minister for his explanation. He has thrown a little more light on to what was otherwise a dark place, which is helpful. However, I am not sure that we know enough about how this will work. I suspect that we shall know how it does not work only when someone first goes to gaol for five years because he has found a way to bend the rules. Nevertheless, I am grateful for what has been said and we shall study it, but we may need to return to this matter at a later date. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 29 to 33 not moved.]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 33A:
Page 6, line 12, leave out paragraph (f) and insert—
"( ) make provision for all trades to be carried out by direct transfer or sale between waste disposal authorities;"—
The noble Lord said: As with everything in the Bill, again, we are somewhat puzzled. From the implications of the Bill, it appears that we shall have

GC 51
waste disposal allocation brokers, who presumably will be rather like brokers on the Stock Exchange. They will circularise authorities and try to find people who are in the happy position of doing rather well and having a surplus. They will try to buy that surplus and then go somewhere else and attempt to make a living selling it to someone less fortunate. That is how markets work.
I wonder whether that is an appropriate way to carry on. My experience suggests that the existing local authority networks work extremely well. I suspect that if my noble friend Lord Hanningfield found that his recycling and treatment plants in Essex were working extremely well so that he had surplus quota allocations available, he would have only to whisper it quietly on a dark night to a few colleagues. Then anyone who was unfortunately situated in the country would hear about it very quickly and one would not need the intervention of a broker at all.
The only reason for having a broker is that he is a market maker and may have a better idea of price. However, I cannot believe that my noble friend is so lacking in knowledge of what goes on that he would not realise that, if he had spare quota which someone else wanted, that would be something of value. Knowing his concerns for the council tax payers of Essex, I am absolutely sure that he would sell it for the highest possible price.
I find myself wondering whether we really need to include brokers in the Bill. Amendment No. 33A was tabled in order to remove brokers. Despite everything that has been said to the contrary, because one has to argue in these situations in order to elicit information, the market system has much to commend it but there is no need for a specialist broker.
Shortly we shall come to other amendments which suggest a different route, but my preferred route would be to leave the matter to the existing local government mechanisms. They would deal with it quickly and easily and at minimum cost to the whole system. I beg to move.
Lord Greaves: I have considerable sympathy with what the noble Lord, Lord Dixon-Smith, has just said. I have a general prejudice against brokers and people such as that. Perhaps the noble Lord does not share that prejudice. Nevertheless, it is refreshing to hear such views expressed by someone such as him. I regard them as being leeches on the back of everyone else who make large amounts of money without doing any real work—just shifting money, stocks and all the rest of it between other people. However, perhaps I am prejudiced about that.
We are not here talking about a market full of people who do not know each other. We are not talking of very many people at all; we are talking of local authorities and of waste disposal authorities, which form a relatively small subset of local authorities. We are talking about council officials who are part of a community. They meet each other; they
GC 52
talk to each other; they go to conferences; they are often friends with each other; and they talk to each other on the telephone.
I cannot understand why we need this new breed of waste disposal allowance brokers to enable someone in Lancashire to talk to someone in Essex, or someone in Merton to talk to someone in Kirklees, or wherever it happens to be, about whether they have surplus allowances and whether they want to sell them from one council to the other. That seems to be a fairly simple, straightforward process, unless there is some legal bureaucratic reason why it must all be done through highly legalistic documentation that ordinary council officials—or even ordinary council solicitors—cannot be expected to understand, so that we need a new specialist profession of waste disposal allowance brokers. I cannot understand that; it seems nonsense.
Is the Minister saying that these brokers will be a necessary part of the process—even if they are allowed to trade in such allowances and must be registered, accredited and put through some politically correct process involving equal opportunities and all the rest of it? Perhaps they will have to be checked against the police register; goodness knows what has to happen nowadays with everything. Is it being said that a council in Lancashire and a council in Essex will be unable to trade direct in the sensible way of ringing up to talk to people, getting the paperwork done by their solicitors and exchanging it, or will it be compulsory to go through this new profession?
Lord Whitty: I am deeply impressed by the description given by the noble Lord, Lord Dixon-Smith, of his noble successors' networking and marketing skills on behalf of Essex. No doubt Essex can take care of itself, as it can in so many other matters. It is clear that if his colleagues feel like the noble Lord, Lord Greaves, there will not be many Liberal Democrat councils seeking the service of brokers. The question is whether we should allow them. No, they will not be compulsory. Local authorities may well find that direct dealing is best. We are trying to introduce some transparency and flexibility into the system and it may be that some authorities find that it is helpful to have an agent or a system whereby a specialism grows up as the trade grows.
We do not seek to prohibit that in the Bill, but if such a profession is created, we seek to regulate it. That would seem sensible in the public interest; that is all that the clauses are about. The provision makes clear that regulations would need to provide that such brokers were licensed and subject to regulations and conditions of the licence. To return to the issue of penalties, breach of those licence conditions would be an offence. It is not that Lancashire or Essex will be required to employ some sharp-suited broker from the City, to whom they clearly would not want to entrust their trading arrangements. However, a respectable trade may develop that gives greater transparency to the market.

GC 53
It is important to recognise that those brokers are brokers. They do not own allowances; only the authority owns the allowances. The brokers may simply be there to help the system work better. If so, they must be regulated.
7.15 p.m.
Lord Livsey of Talgarth: Is the Minister saying that quick bucks can be made? I know that from the grain trade. is this a situation in which local authorities may be in competition with brokers for the money that could assist local authorities with some of their financial problems?
Lord Whitty: No, I am not saying that. I am saying that to maximise their benefit from the system local authorities may employ their own staff or, in the case of Essex, their leader, in such negotiations. On the other hand, they may employ someone else on a professional basis. We should not rule that out, but we should ensure that that person would be covered by regulations in the same way that local authority staff would be covered.
Lord Dixon-Smith: I am almost persuaded, but not absolutely. It seems to me that we are creating a hazardous career for someone. We are not sure whether anyone will use such a person and it appears that he will have to turn to other employment in 2020, which is not ideal for any young man starting up in business. One would hope—I hope that the Minister agrees with this—that if this Bill is successful, by 2020 we shall have met all the commitments, and most of the Bill will become so much redundant paper. That would be highly desirable.
That may not be so. It may be that the Minister has inside knowledge and knows that someone is already working on a successor directive to squeeze a bit more juice out of the same orange. Once the movement to diminish waste gets under way, the developments will create their own momentum, and we shall probably go much further in the end than the directive requires. The problems are all in the initial years and that is welcome. I am grateful for the response, which we shall have to study. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 34:
Page 6, line 12, leave out "persons engaged" and insert "Regional Development Agencies"
The noble Lord said: I almost said that I would not move this group of amendments. They postulate a different way of dealing with the matter of a third party involved in trading. Perhaps the Minister will say whether a regional development agency is a "suitable body" to act as a broker. It would in some sense have an interest, but it would be a disinterested party as between one waste disposal authority and another. It would be interesting to know the Government's reaction to that.
Lord Whitty: I would not want to prevent the RDAs developing that role, although it is not a very obvious
GC 54
role for them in that the scheme is not confined by region any more than it is in allocating authorities for the whole of England. Some of the trading could be UK-wide. I do not know that the RDAs recommend themselves for this role, but I would not wish to prevent them acting as agents.
The clause also refers to the regulations relating to registrars, which is a somewhat different role. We envisage the Environment Agency acting as registrar for England, and probably Wales, although I cannot strictly speak for the Welsh authorities. The registrar's role would be to hold the definitive record. That is a rather different job and one that would not be appropriate for the RDAs.
Lord Dixon-Smith: I am grateful to the Minister for his response. I am quite happy at this stage to withdraw my amendment. However, everything that is said and done in the Committee must be subject to the proviso that it will be studied and may promote further questions. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 35 to 41 not moved.]
Clause 7 agreed to.
Clause 8 [Duty not to exceed allowances]:
[Amendment No. 42 not moved.]
Lord Greaves Lord Greaves moved Amendment No. 43:
Page 7, line 2, at end insert—
"(1A) It shall be the duty of the waste disposal authorities to ensure that for any year after and including 2010, waste which has not been sorted at source and collected in such a manner as to enhance its recoverability through recycling and composting is not sent to landfills."
The noble Lord said: This brings us back to some of the fundamental aspects of the Bill. We are talking about biodegradable municipal waste. The Bill does not tackle the problems of reducing the amount of that waste at source. We can argue about where the source is. We suggest that there should be a duty on waste disposal authorities, in co-operation with waste collection authorities, to ensure that by a particular year—some people may consider our suggestion of 2010 to be too soon but we believe a year needs I o be set down—waste which has not been sorted at source and collected in such a manner as to enhance its recoverability through recycling and composting is not sent to landfills.
Unless we are collectively able to get to grips with the problems of separation at the source of collection, we will not get to grips with the problems of recovery and recycling. Failure to do so will mean that all the good intentions in the world in the Bill, all the financial penalties that are to be levied in the Bill, all the targets and levels of allowable waste in the Bill will come to nothing. We believe that it is reasonable and sensible to set a date by which waste must have gone through the basic process of separation and appropriate processing, whether it is recycling, composting or other processes—and it will be a combination of all of them. Unless the Government are prepared to set these targets, everything that is set down in the Bill will come to nought.
That is the purpose of the amendment. We believe that a timetable needs to be set by which waste collection authorities, waste disposal authorities and everybody else involved in the waste chain can work to eliminate any unsorted waste coming from households and commercial properties in the high streets of this country. I beg to move.
Lord Dixon-Smith: It is attractive to support the amendment but, as it is worded, one could not do so. Of course, one wants to see as much waste as possible segregated and collected in a segregated manner. However, unless we introduce a penalty, if someone persists in not segregating it—or if there is no market for the segregated material—we all have difficulties.
Curiously enough, if the noble Lord, Lord Greaves, had stopped at recycling, I would have had no difficulty. However, once the word "composting" is put into the Bill I am afraid we have to raise a separate issue that is very relevant to the whole question of waste disposal. There is no doubt that a lot of people see composting as a potential means of removing a great deal of waste that goes to landfill and using it beneficially.
My question is just a little matter of biosecurity. We had huge problems over pig swill treated to a far higher temperature than exists in any composting system that I have yet heard of, which gave rise to the foot and mouth outbreak from which this country is only just beginning to recover. It was a huge cost. We hope we have the BSE problem under control. That involves sterilisation systems even more sophisticated than anything required for foot and mouth disease. This is the first chance there has been on the Bill to flag up a real concern that we need to think extremely seriously about composting systems if there is a risk that, through composting, another foot and mouth outbreak could be set off.
The current systems are an open door for trouble, so we need to be extremely careful when looking at them. I am not aware that people have given much thought to that issue up to now.
Lord Livsey of Talgarth: I just want to point out that our Amendment No. 82 specifically addresses what the noble Lord, Lord Dixon-Smith, has quite correctly said. We shall debate it later.
Baroness Farrington of Ribbleton: These two amendments would have the odd effect of allowing landfill only of waste that has been separated for recycling. Unseparated waste could not then be landfilled at all. We think that these two amendments seek a far greater separation than is possible.
As earlier discussions show, we agree that separation is good and minimisation of landfill is very good. We recognise that as a laudable aim. However, including the requirement in the Bill in this form is asking too much of the waste disposal authorities. The Bill deals with implementing the requirements under the Landfill Directive to reduce the amount of biodegradable municipal waste going to landfills and
GC 56
to provide an economic instrument that will help the waste disposal authorities achieve their obligations. Source separation is a way of securing a good quality of secondary resources, but it cannot be an end in itself unless there is a market for the resources. I am sorry that the noble Lord, Lord Stoddart, is not here, because this is precisely the point he was making earlier. It has be to be given great consideration when looking at this issue.
We accept that this issue needs to be dealt with as part of a wider package of measures rather than linking it to this relatively narrow Bill. We support the idea. The Government's response to the Strategy Unit report will have something to say on this when we respond to it in the spring.
The issue raised by the noble Lord, Lord Dixon-Smith was to do with composting. I do not know whether he wishes me to deal with that now or, as the noble Lord, Lord Livsey, said, return to it later.
Lord Dixon-Smith: Would it help if I said that I am quite happy that it should be dealt with only once? I feel that I should toss the noble Lord, Lord Livsey, for the privilege but I am quite happy to deal with it on his amendment.
Baroness Farrington of Ribbleton: I thank the noble Lord and look forward to the rest of the debate.
Lord Greaves: I thank the Minister for her response. In defence of our amendments, I point out the words,
"in such a manner as to enhance its recoverability".
That does not mean that it all has to be recovered. That was written fairly carefully. The Minister says that is asking too much of landfill authorities. Our concern is that that is asking too much of the Government to provide the commitment, vision, leadership and finances that are necessary to do what we believe is required. We shall look forward eagerly to the Government's response to the Strategy Unit report. No doubt that will be debated.
We thank the noble Lord, Lord Dixon-Smith. for his comments on markets which are absolutely right. That again is an area where we believe that the Government should be more pro-active in intervening in the markets, where necessary, to support and to sustain markets that are necessary in order to sustain recycling. I thank him for raising the important issue of composting, to which we shall return later. We look forward to the Strategy Unit debate later in this Parliament. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 44:
Page 7, line 3, at beginning insert "Subject to subsection (5),"
The noble Lord said: In moving Amendment No. 44 I shall speak also to Amendments Nos. 47 and 51. Amendment No. 44 refers to a new subsection (5) which is proposed in Amendment No. 51. Several times today we have spoken about the problems of two-tier authorities. As I said earlier, in the east of England, 88 per cent of the public are served by two-tier authorities, and over 70 per cent of the whole land

GC 57
Mass of England is covered by two-tier authorities. One could have the collection authority wanting to thwart the disposal authority for political or other reasons. Therefore, the disposal authority could be at fault because of a matter that it could not control.
As has been discussed several times today, one feels that that should be rectified or recognised somewhere in the Bill, otherwise the members of the authorities could be fined or imprisoned for something that they did not do themselves. That is why we feel strongly that Amendment No. 51 should be accepted. That would recognise that sometimes the disposal authority could be at fault for no reason of its own. I beg to move.
Lord Dixon-Smith: Perhaps I should say something about Amendment No. 62, which is in this group. The purpose of the amendment is to require collecting authorities to keep appropriate records. That will become essential. My noble friend Lord Hanningfield has already spoken about the potential liability of that. That may well require regulation so that the disposal authorities have accurate information as to what is going on, and more importantly, are able to supply accurate information onwards as they will be required to do. The amendment is fairly straightforward. Whether the Government are minded to accept it is another matter.
Lord Livsey of Talgarth: We thoroughly support the amendment. I have a great deal of sympathy with the situation in England where more than one authority operates in an area. Fortunately we have sorted that out in Wales where we now have single-tier authorities, and as a result life is much simpler and more straightforward. Clearly, where there are two authorities, the difficulties that have been described occur. The amendment is well worthy of support, because it would sort out those matters and ensure that things do not go wrong.
Lord Whitty: I recognise the situation to which the noble Lord, Lord Hanningfield, and others have referred. It is obviously important in all of this, as in the totality of the waste strategy, that where there is a two-tier authority structure, the waste disposal and waste collection authorities must work in partnership. However, the Landfill Directive and the allowances with which the Bill deals relate to the disposal authorities. So it must be the primary responsibility of the disposal authority to ensure that the amount sent for landfill does not exceed its allowance. Shrugging that off to one of the district authorities is not an appropriate sanction.
We will need to ensure that the delivery of the strategy is seen in a wider context than is provided in the Bill, so that it requires the waste disposal and waste collection authorities to act together and for there to be some horizontal agreements between the waste disposal authorities. The Strategy Unit report addresses that issue and sets out some options as to how that should be achieved.
However, in the context of the Bill, I do not think that the ability to transfer the cost of failure to meet a requirement to one or more of the district authorities
GC 58
is the appropriate method. Indeed, it could undermine the discipline on the disposal authority to act in accordance with the allowances limit. It could also provide an excuse, if one of the district authorities failed by a relatively small amount to deliver what had been the assumption about the collectable items of waste. That could then be used as justification for not meeting the target and for upping the precept or. that authority or other district authorities. That could remove the incentive for the waste disposal authorities to comply with their duty, and therefore undermine our ability to meet the European targets. I therefore do not think that is the way to proceed. Instead, we should encourage through other means the partnership between the districts and counties, in order to meet the overall waste strategy objectives.
Amendment No. 62 is confined to the question of provision of information by the collection authorities. I cannot really see what kind of information would be helpful, given that the operation of the sanction would apply to the disposal authority. However, I am willing to consider that to see whether there is anything that we need to cover in terms of information required of the districts in order to ensure that the full system works and that we have a full indication of how the strategy is going.
Without commitment, I will take that matter away and consider it, but I would resist any attempt to shove the sanction or the cost onto the district authority. The disposal authority must take the responsibility here.
Lord Hanningfield: One does not want to put the blame on the districts, but there is no doubt about the situation. I repeat that we have 12 districts in Essex, with varying degrees of recycling. Some are doing very well, but others are not doing well at all. I repeat that council tax can go up in leaps and bounds because of a very small amount of extra expenditure. Councils are often not willing to incur that extra expenditure on attaining high recycling targets. There are thus variable and patchy results from the district councils in our county.
We are working together—we have a consortium, which is working quite well—but, when it comes to it, district councils often will not put up their council tax. The county council sets aside a lot money in its council tax for waste disposal, but district councils often do not do it. Unless we have some kind of mechanism, I cannot see how we can force them to do it. We therefore may not meet the disposal targets required by the Government because of what district councils have done. I can see that that is a case for judicial review and all sorts of things. I cannot see disposal authorities accepting blame when the collection authorities have not co-operated or have not been able to co-operate in achieving the targets. Therefore, it surely has to be thought out a bit further in the Bill. Otherwise it just will not work across a lot of the country. A tremendous proportion of England is still covered by two-tier authorities and will be for many years to come, whatever happens. It is a problem. The Minister has to recognise that we have to find some

GC 59
mechanism in the Bill for getting the district councils to recognise their responsibility as the collection authorities.
Lord Greaves: I support what has just been said. About four hours ago I think the noble Lord, Lord Dixon-Smith, referred to easy processes of setting up separation and kerbside collection schemes. I thought these were not easy processes at all. Although they may not be as capital-intensive as some of the work that has to be done by disposal authorities, they still require substantial investment and substantial input of skill and resources to be carried out effectively.
There seem to be two instances in which this scheme might break down because in two-tier areas, district councils, as collection authorities, are not delivering the goods. The first is where they do not get on with the county council, or are not co-operating or cannot agree or whatever—the sort of situation referred to by the noble Lord, Lord Hanningfield. The second is where the collection authorities are only too willing to do what is required but simply have not got the resources to do it. The Minister says they can bid for things but that is no good if you do not win your bid, if you are competing against other people. There seems to be a potential source of great friction here between the two levels, as the noble Lord, Lord Hanningfield, rightly said.
The Government have to tell us, as part of the Bill, how they see such difficulties and conflicts being resolved. It is not a question of resolution where the two sides are working together and where the resources are there. It is a question of resolution where, for whatever reason, they cannot agree on what needs to be done and will not do it for that reason or where they agree on what is to be done but the resources simply are not there. To penalise the waste disposal authorities under those circumstances seems quite wrong. As the noble Lord, Lord Hanningfield, said, it is a recipe for judicial review and goodness knows what else, unless some other mechanisms are put in place, unless perhaps the allocation authority is given a direct
GC 60
role in relation to the collection authorities as well as the disposal authorities. There is a serious potential problem here even if it happens in only a few places. The Government have to think about that and tell us how they intend to do it.
Lord Whitty: I have recognised that there is an issue here that I would prefer to see resolved in a rather wider context of establishing effective duties and responsibilities through partnership between the two tiers of authority. Indeed, the overall waste management strategy implies that there is a responsibility on the collection authorities as well as the disposal authorities to act in partnership to meet the objectives of the strategy. That will be reinforced with the work done by the Strategy Unit, which was published the other week. I have no doubt we will return to this. I am not sure that it is appropriate for a mechanism within the Bill but the issue clearly has to be resolved in the real world to deliver these targets. We will no doubt discuss it at a later stage and will see whether there are other ways to achieve what all noble Lords wish to see happen.
Lord Hanningfield: I am grateful to the Minister for saying that. It is the biggest potential flaw in the Bill. All of us at county or strategic level work as well as we can in forming partnerships but there are real problems, often in the size of district councils and the way that they can deliver, even if they want to. We will have to return to this one later. I thank the Minister for what he has said and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 45 to 47 not moved.]
Lord Whitty: This may be a convenient point at which to adjourn until 3.30 p.m. tomorrow.
The Deputy Chairman of Committees (Lord Lyell): The Committee stands adjourned until tomorrow at 3.30 p.m.
The Committee adjourned at fourteen minutes before eight o'clock.