HL Deb 30 November 1993 vol 550 cc496-520

3.8 p.m.

Lord Lewis of Newnham rose to move, That this House takes note of the report of the European Communities Committee on Packaging and Packaging Waste (26th Report 1992–93, HL Paper 118).

The noble Lord said: My Lords, in rising to speak to the Motion standing in my name on the Order Paper I should like to start by emphasising that one of the prime concerns of the directive was with environmental problems. The directive is addressed to problems that packaging and packaging waste create for the environment. The present solutions are leading to the distortion of a single market because of differences in national measures being employed to control packaging and packaging waste. The aim of the directive is to consider proposals that will set essential requirements for packaging which will allow free movement of goods within the Community and reduce environmental pollution.

Sub-Committee C of the Select Committee on the European Communities has carried out an inquiry into the proposal for a Council directive on packaging and package waste. The report of the proposal was published in October. The government responses were received at the end of last week. I should like to thank the Minister for those replies.

It is important to recognise that any legislation concerned with packaging will affect many industrial sectors. Any industry which uses packaging in transport or storage to ensure that the final product reaches the customer in good condition—I refer to the food, drinks or electronics industry—will be affected by the directive. It is perhaps important to appreciate that packaging performs many functions, some essential and others useful. The packaging of foods, which contributes to hygiene, the avoidance of waste and convenience to the customer, is well recognised, as is the safe transport and distribution of many sensitive goods, as in the electronics industry. However, excessive packaging of some goods contributes in a very visible way to the general environmental problems associated with waste disposal.

The committee has visited Brussels, Bonn and Paris to examine schemes proposed or in place in those countries. Germany has introduced a sorting and collecting system, the Duals System Deutschland (DSD.), which I shall outline in a moment. That is providing considerable problems over waste disposal. The French are developing a collection scheme (Ecoemballage) which has similar problems to the German scheme but also significant differences which seem to be avoiding the problem over "waste" mountains.

In Belgium we were informed of the proposed eco-taxes. Other schemes in place are the Danish ban on non-returnable bottles, which makes the importation of canned drinks illegal, and the Dutch non-statutory scheme of a "packaging" covenant.

The initial proposals in the directive are for targets of a 90 per cent. recovery of packaging waste, with 60 per cent. being recycled, leaving approximately 10 per cent. for landfill. In the UK 90 per cent. of domestic waste at present goes to landfill sites. Those targets were to be attained within 10 years. Recently, however, revised proposals have been made, with a limit of 60 per cent. to 50 per cent. recovery, with 30 per cent. for recycling, and a more limited time-scale of five years. I believe that the position will then be reconsidered.

It is also proposed that provisions are made for comprehensive statistics on packaging and packaging waste. Those are to be collected and passed on to the Commission. The data base being proposed seems to the committee to be over-elaborate. It is indeed difficult to assess the packaging content of domestic waste. However, it has been assessed at approximately 25 per cent. for the UK. Waste due to packaging as a whole is only 1 per cent. of the total waste. The majority of the waste is associated with agriculture and industry and a considerable amount with the construction industry. That still leaves something of the order of 50 million tonnes of packaging waste for the Community as a whole, which is not an insignificant amount.

The present government target for 25 per cent. recycling by the year 2000 was set in 1990. However, recently the Secretary of State for the Environment has challenged leading representatives of the packaging industry by Christmas to put forward plans to recover between 50 and 75 per cent. of the UK packaging waste and also to indicate measures that will help the ailing recycling industry. Noble Lords will note the word "ailing". The measures have to include, first, a commitment by business to carry the costs of collecting and reprocessing; secondly, finding measures to increase the markets for recycled materials; and, thirdly, providing safeguards for the recycling industry for plastics and paper from foreign imports. It will be interesting to see how those challenges are met.

In their response to the report, the Government state: By introducing this initiative, we believe that we will be able to demonstrate, in discussions on the directive, that it is possible to reduce the environmental impact of packaging significantly without placing unreasonable burdens on industry or consumers". Since I believe that the Belgium presidency is pressing for an agreement at the Council meeting on 3rd December, I assume that the Minister will be able to tell us the outcome of the survey.

One of the more pressing and immediate problems arises from the position in Germany. The German system, introduced in 1991, requires the producers of packaging to be responsible for the collection and recycling of the packaging waste. Incineration and landfill in Germany are not normally acceptable methods of disposal of packaging waste, which imposes a large burden on the recycling capacity within the country. The old directive refers to 90 per cent. recycling. That has clearly been a major problem. It has led to paper and plastic wastes being exported at negative prices to countries even as far away as Indonesia and South America. That threatens schemes in other countries, and in particular affects the recycling industries in those two areas. Waste mountains in both plastic and paper are now occurring in Germany.

In contrast, the slower implementation of the scheme for France, and the acceptability of incineration and incineration with energy recovery as methods of recycling, has avoided the problems which arise in Germany. In Paris we were told that the form of the waste recovery scheme must also recognise the local circumstances; the solution for Strasbourg may not be the solution for Marseilles. The French scheme, which is relatively restricted when compared with the German scheme, also adopts and utilises the local collecting schemes for waste already in operation on an economic basis. That is not the case with the German situation. Those are two points for which the committee had considerable sympathy.

One immediate problem with the proposed directive is that it does not differentiate between materials when considering recovery targets. Perhaps I may illustrate that point by citing some of the variations which can occur. Metals such as aluminium and steel have a much higher potential for recovery and recycling. Over the past four years the recycling of aluminium cans in this country has increased from 2 per cent. to 16 per cent. The capacity of the existing plant is a maximum 65 per cent. recovery assuming that the market does not change. The Aluminium Federation told us that aluminium was extremely favourable for recycling as the energy saved in recycling was 95 per cent. compared with the production of virgin aluminium. However, it felt that the initial target of 90 per cent. recycling was unattainable but that the target of 60 per cent. was demanding but attainable.

It is possible to absorb all the scrap steel. Magnetic separation in domestic waste can be carried out efficiently. The committee had an opportunity to see that process in operation. However, few waste disposal sites have that facility. A magnetic separation unit is considered to pay for itself over a period of approximately two years. That suggests that there should be a wider use of the separation procedure, and perhaps encouragement to install that type of procedure.

In 1992, about 12.5 per cent. of steel cans were recycled in this country; in Germany the figure was 50 per cent. British Steel Tinplate believes that a figure of 50 per cent., the more recent target, is still too high and unlikely to be attained in the UK by the year 2000. It also points out an important factor: energy recovery and composting are not alternatives available for steel, which places an even bigger burden on recovery processes.

With glass, there is a much greater public awareness of recycling. I think that we are all aware of the bottle banks for different coloured glasses and the interesting and determined way in which people use them. It is an interesting statistic that the UK is at the bottom of the European table, with only 19 per cent. recovery of glass compared with the figure for the Netherlands of 73 per cent. That perhaps illustrates the magnitude of the potential problem; and the position has not been improved with the proposed cut next year in prices paid for cullet to local authorities by British Glass Recycling. That is clearly causing concern to local authorities, and in some instances it will remove all the income from the recycling process. Other variations in payments appear to be affecting some of the small collectors. I believe that one firm, Ochil Glass Recycling in Scotland, has reportedly gone out of business because of the changes.

The recycling of plastic packaging proves the most difficult. Approximately 8 per cent. is recycled in the UK, with plastic bottles being recycled at only less than 1 per cent. The presence of cheaper imported plastic also affects the market and possibly reflects the position in Germany. The Plastics Federation indicated that only a small fraction of plastic used in packaging in household waste was suitable for recycling due to the contamination and expense of sorting and washing such material. Perhaps I may point out that recycled plastic cannot be used for certain purposes, particularly those involving food containment. In general, there was a belief that incineration with energy recovery was the best and most preferable mode for dealing with plastic, although, as I stated previously, it is not an acceptable method of recycling in the initial directive. I am not clear whether the recent negotiations on the directive have altered the situation and would certainly appreciate the views of the Minister on that point.

At a meeting of the Environmental Council in October, Germany promised to stop exporting plastic packaging waste to EC countries by Christmas. However, as I believe the Department of the Environment has indicated, that does not solve the problem; it merely postpones it. Until markets are found in Germany, we shall have mountains of recycled plastic rather than mountains of recycled plastic waste. As the price of the initial plastic waste is subsidised, the recycled material will be commercially cheaper. The prospect is then that we may be passing this on and causing problems to our own recycling industries. The German approach to the problem poses the question of whether the present German ordinance and DSD are contrary to the Treaty of Rome. I should like to ask the Minister whether the Government take a view on the legality of the system and when the Commission is expected to give its views on the point, which I believe it is also debating.

Another important product to be considered for recycling is paper and board. It represents a large percentage of the total waste, being approximately 35 per cent. The British Paper and Board Industry Federation felt that the proposed 90 per cent. target set by the initial directive for recovery was unrealistic. One important factor to remember in this area is recovering the cost in the low value of the product and the cost of transport if it involves long distances. The recycling industry will also suffer from the market distribution set by the German system, which is effectively once again subsidising its waste. The industry was set an upper target of 60 per cent., which involves only the recycling of better kinds of waste, with the suggestion of incineration and composting still playing a major part in the recovery.

One problem which the committee felt was proving a difficulty was the so-called hierarchy of waste management. That is the preference, first, for prevention followed by recovery, then recycling and finally disposal. That clearly has an immediate appeal, but it does not always necessarily correlate with the most effective environmental or energy-saving procedures. It may be a useful guide, but it does not cover all possible solutions.

Perhaps to illustrate the point I may cite two cases which we met. We were informed by the German Coffee Association that its use of aluminium and plastic lightweight packaging involved a major saving in transport, and replacement by a more readily recyclable material such as metal or glass would increase the number of lorries on the road by a factor of three, with all the concomitant energy and environmental problems associated with that.

Another example is the recycling of milk bottles, which is common practice in this country, but it requires five litres of water per bottle, which must be heated to ensure sterilisation. That makes it a feasible prospect in certain parts of the Community, but I suggest that where water is scarce it could be a difficult operation to put into practice.

Article 11 of the directive draws attention to the use of economic instruments as a method of controlling packaging and packaging waste. The use of a landfill levy to move the economic advantage from landfill to, say, incineration has been suggested in the latest report of the Royal Commission on Environmental Pollution. The landfill tax has also been given support by British Steel Tinplate and the British Paper and Board Industry Federation.

An alternative and more direct economic indicator would be perhaps a packaging tax, but the committee felt that it would have to be extremely high to affect the purchasing behaviour of consumers and would probably fall disproportionately on the poorer consumer. The committee felt that economic instruments could and should have a role to play in the management of packaging waste, but it does not necessarily have to be uniform across the Community and must recognise individual solutions consistent with avoiding discrimination between states for free movement of goods.

In summary, the committee felt that the present systems in operation have problems in effecting the operation of the single market within the Community. The German system, in particular, is causing severe problems, especially in paper and plastic recycling, producing waste mountains and leading from a rather dogmatic assessment of the relative merits of the principal methods of waste disposal, the hierarchy of waste management of recovery, recycling and landfill.

The committee suggests that there should be a more direct acknowledgement of the market's capacity to absorb waste products and a more vigorous support of the proximity principle, in which individual member states aim to deal with their own waste disposal and do not export their waste problems. From environmental considerations and the increase in the production of waste, there should be a direct attack on the reduction and minimisation of packaging, particularly on the packaging per item. At present the manufacturers and producers of packaging do not have to meet the costs of disposal and there is no economic incentive to reduce packaging. We feel very strongly that this should be corrected.

The recovery and recycling of materials vary. For aluminium and steel, as opposed to plastics, the case for recycling is clear. Other materials are intermediate in position, but cannot be recycled indefinitely. I think that that is particularly true of paper and board.

With regard to targets, we are not convinced that the same targets should be set for all materials, and we recommend that incineration with energy recovery should be considered as a recycling process, as well as other forms of recovery such as composting, to meet the directive's targets.

The limitation of landfill to 10 per cent. of the waste stream does not seem to the committee to be sensible and ignores the different geological possibilities in different countries. We suggest that targets for landfill should be set locally or nationally.

Finally, perhaps I may thank the members of Sub-Committee C. I very much appreciate their enthusiastic approach to what I think is a very important report. Perhaps I may couple that with an acknowledgement of the great help from our clerk, Mr. John Goddard, by whose efforts the study was carried out very expeditiously. I also acknowledge the considerable help of our two specialist advisers, Mr. Nigel Haigh and Dr. Nicholas Handley. As noble Lords will remember, Mr. Haigh is director of the Institute for European Environmental Policy and Dr. Handley is a lecturer in economics at the University of Stirling. In conclusion, I also thank all those who gave evidence to the committee during the course of the inquiry. I beg to move.

Moved, That this House takes note of the report of the European Communities Committee on Packaging and Packaging Waste (26th Report 1992–93, HL Paper 118). —(Lord Lewis of Newnham.)

3.30 p.m.

Baroness Hilton of Eggardon

My Lords, I should like to begin with a tribute to our chairman, the noble Lord, Lord Lewis, whose wise and patient chairmanship took us through a convoluted and complex topic. I also pay tribute to his very comprehensive introduction, in which he covered many of the points that I intended to make, although I hope that I may be able to bring to them one or two slightly different slants.

Only 1 per cent. of all waste in this country—which includes agricultural and industrial waste—is packaging waste. But it constitutes 25 per cent. of household dustbin waste. Therefore, as the noble Lord, Lord Lewis, said, it is subject to public education and to local methods of disposal.

Before we began the inquiry, I had two assumptions. One was that a considerable reduction could be made in the amount of packaging that was used. That matter was not directly addressed by the draft European directive. But we heard a considerable body of evidence about the importance of packaging: for hygiene; the shelf life of perishable goods; transport; and storage—and, so far as the producers and manufacturers are concerned, because it provides a convenient place for putting their advertising. Packaging is undoubtedly important for all those reasons. But, as the noble Lord, Lord Lewis, said, more could be done; for example by setting targets for the quantity of packaging in relation to the retail price of goods, and in encouraging producers to use less, and thinner, packaging.

The second assumption that I had made before we started the inquiry was that in the hierarchy of dealing with packaging waste, as the noble Lord, Lord Lewis, said, recycling and re-use was always better for the environment and made less use of raw materials and energy. That assumption was also shared by the European Commission, which said that from an environmental point of view recycling was preferable to incineration with energy recovery. Friends of the Earth also set out a hierarchy of importance whereby packaging should first be reduced, then be re-used, and then be recycled before other methods of disposal are considered.

However, paradoxically, there are occasions where efforts to recycle or re-use all packaging leads to more damage to the environment. For example, if there are only one or two recycling plants in the whole country, the energy used and the pollution caused by long-distance transport of often bulky packaging may exceed the energy and pollution costs of production from raw materials.

Secondly, re-usable packaging often has to be stronger and bulkier. Replacing plastic covering for food, often unre-usable because of contamination, with re-usable glass or tinplate could be environmentally more damaging. As the noble Lord, Lord Lewis, mentioned, a study was done to that effect by the German Coffee Association which shows not only that three times as many lorries would be on the roads, but also that in place of 11,000 tonnes of plastic film, one would require either 120,000 tonnes of tinplate, with all the costs of production, or 470,000 tonnes of glass. Therefore, even though those materials might be re-usable, there would be enormous costs in terms of transportation, cleaning and initial production.

There are, moreover, physical limits to some types of recycling. Paper and board, as the noble Lord, Lord Lewis, said, may be used only four or five times before the fibres become too short for further use. Paradoxically, in this case the use of the raw material may have some beneficial effects on the environment. Rapidly growing young trees, although they may be boring monocultures, and unaesthetic, may sop up more carbon dioxide from the atmosphere than do mature forests.

However, some materials are highly suitable for recycling and more could be done. Aluminium in particular, which sells for something like £600 a tonne, is economically attractive to the industry. In the past four years in this country, not only has recycling of aluminium gone up from 2 per cent. to 16 per cent., but in the first six months of this year, 56 per cent. more was recycled than in the first half of last year; so the pace is accelerating. Quite clearly, quite high targets, such as, ultimately, 90 per cent. of aluminium recycling, could be set, which would have enormous benefits not only in terms of the constant re-use of the aluminium but also in terms of the reduction in bauxite mining with its environmental pollution and destruction.

As the noble Lord, Lord Lewis, said, steel is another material which is well suited to constant recycling. But currently only 12½ per cent. of steel cans are recycled. That is another area in which public education could be more effective.

In regard to glass, the arguments for recycling are considerably less clear, partly because the costs of recycled glass are approximately the same as for glass which is produced from the raw materials. The raw materials themselves are abundant. Recycled glass is heavy to transport, with the attendant costs of lorries and their pollution. The government target of 60 per cent. is realistic; but there is, particularly in this country, the problem of recycling excess green glass as we are not a wine-producing country and it is therefore difficult to find uses for it.

In conclusion, dealing with packaging waste turned out to be much more complex than I had supposed. Different materials require different solutions and different targets. The need for different types of recycling will vary from one European country to another. Unlike Germany, we have no shortage of landfill sites. If properly managed, they need not pollute water systems, and the methane can be used for energy production. Incineration with energy recovery, which is widely used in France, produces less residue and is a process that will be expanding in this country. Efforts should continue to reduce the bulk of packaging and to re-use and recycle wherever possible. But where that is not possible, the most energy-efficient and environmentally appropriate system should be used.

3.37 p.m.

Lord Beaumont of Whitley

My Lords, a lot of waste has gone under the bridge since I introduced the Beverage Containers Bill into this House in 1981. The whole of the scene for waste disposal, dealing with waste in the best possible way, and recycling, has changed. Noble Lords did not give that Bill a Second Reading. Indeed, the noble Lord, Lord Sainsbury—I refreshed my memory by looking at Hansard—in spite of the fact that I gave him a real plug for what was then, I thought, the best red plonk on the market, voted against it.

It is worthwhile that we should pay attention to this matter, and great tribute is due to the committee that produced the report. I am only sorry that the debate has attracted so few speakers. Indeed, it has attracted only three of the 12 members of the committee. When a debate on a report of this kind is absolutely swamped by every member of the committee having the chance to express their views, that is not a good thing. However, I would have hoped that more than three members would have taken part in today's debate.

It is a worthwhile report on a subject about which the public feel strongly. Although that feeling may be a mixture of opinions which do not stand up very often to logical examination, nevertheless on the whole we can have no doubt that we have to minimise waste and recycle as much as possible. The hierarchy of dealing with these matters; namely, to avoid packaging at all where possible and after that, to re-use that packaging in different ways which have been worked out as being basically the right order is something that we should stick to where we can. Where that hierarchy fails—some examples have been given in the report and in today's speeches—we should examine the reasons for failure. One reason given in certain areas is that the hierarchy fails because it does not take into consideration the long distance that waste has to be taken in order to be recycled. That is an absolutely fair point. No one doubts that the hierarchy has many exceptions and that we should treat every problem on its own terms.

One suggestion is that we should look in slightly different areas to solve our problems. For a solution to our problems we tend to look to Europe-wide legislation, to countrywide policies and often to very high technology. Surely, we should try to deal locally with local problems and find intermediate and suitable technology rather than large technology, dealing with every problem as it comes. It is in that area that the work of local government can be useful. From these Benches, I am particularly proud that Liberal Democrat councils almost entirely lead the field in that area. Plenty of other councils do very well, but the shining examples picked out time and again—not merely by my own party' s propaganda units but by observers in general —are the Liberal Democrat councils; for instance, Sutton and Richmond.

I have a reservation about the lowest possible cost to households. That point is made on page 17 of the report. I am not sure that that is where we need mainly to attack the lowest possible cost. The lowest possible cost should be attacked where it hits very hard certain sectors. On the whole the ordinary household is able to bear the ordinary cost of dealing with waste if told what to do and encouraged to do it.

Of course the poor will find it very difficult. One of the side-effects in an economy in which the poor are getting poorer is that it becomes more difficult to do what should be done because it hits the poorest worst. That is absolutely true. Such measures do hit the poorest worst. That is another reason why the economic and social security policies of this Government should be revised. When we take new steps to deal with conservation, waste and anything which will cost more for poor households, that problem must be addressed.

There are one or two additional points to be made. First, we are short of information on the subject, despite all the work of the committee. The committee itself found that it was very short of the information that it needed. Noble Lords will remember the old military maxim: the time spent in reconnaissance is seldom wasted. I firmly believe that the time spent in obtaining statistics is seldom wasted. Statistics can become something to be pursued for their own sake and figures can be produced which nobody needs. But time and again in the proceedings of this House and another place, information which would help us to govern the country better and which ought to be available is not to hand because we have not got around to providing it.

Again, this is an area in which hypothecation is important. My party is examining more closely the need for some hypothecation to be brought into taxation. There appears to be a very strong case for it in this area. There is a case for taxes which are set aside to pay for improvements in particular areas and which indeed may be self-liquidating taxes in the sense that, if the product of taxation is used to help solve the problem, there will not be any more taxation in the future. Surely, that is devoutly to be wished. I know that the Treasury will resist to the last ditch hypothecation in almost any field, but I believe that it is an idea which must come. We shall have to make a breakthrough in this area as in some others.

There seem to be a number of general principles that should be applied. The first is that appropriate technology should be used at a local level. I have already commented on that. The second principle is that, although one understands the Government's position in not wanting to have compulsion where it is unnecessary, nevertheless voluntary effort by itself is not enough. To realise that one has only to look at the voluntary effort of the newspaper industry in recycling paper. I should be very interested if the Minister would tell the House what effective plan he expects to have by Christmas 1993 to meet his key objectives. Christmas 1993 is not very far off. We are embarking on the last month of the year. For such an important debate we should be able to obtain some idea of the progress that has been made in that particular challenge to the Government. It may or may not prove to be useful.

The next principle is the need for help to the poor when additional burdens are put on them to deal with such a requirement. The hierarchy to deal with it is much the same as the hierarchy which has been mentioned to deal with waste disposal. The best way of dealing with problems which hit the poor is to try to ensure that the poor are not so poor in the first place.

Finally, I believe that this is an area in which we are beginning to see the need for a move from classical to ecological economics. The best solution will not necessarily be reached by looking at the pounds and pence, or even the ecu end of the sum as it is outlined in classical economics. We have to look very clearly at the overall necessity for a sustainable economy which will sustain this planet, which will not overburden it with waste and which will produce a better and saner society. As a stage along that line I commend to your Lordships' House this report, produced by a great deal of hard work and containing much interesting evidence.

3.50 p.m.

Lord Brain

My Lords, it is a pleasure to follow the noble Lord, Lord Beaumont. He challenged the members of the committee to look at one or two of the points we made and I may comment on one or two of the points that he made. I thank my noble friend Lord Lewis for chairing the committee in such an excellent way, as the noble Baroness, Lady Hilton, said. We got through a great deal of work extremely quickly. We knew that to a degree we were firing at a moving waste van—the European Commission and the presidency were trying to get the directive agreed and therefore we had to work hard.

I thank also our two expert advisers. From his wide experience, Nigel Haigh gave us a great understanding of the ecological and environmental problems of packaging waste. Our economic adviser helped us a little to understand the complex problems of the economics of packaging, pricing and other matters.

The directive is needed. Many problems in packaging waste arise from the original German directive and the subsequent French, Belgian and Dutch schemes. I am not sure that the directive is right. For example, one of the problems that we discovered was that when an article had a green spot on it, as established by the German directive, all it meant was that somebody had paid their dues to get the packaging recycled. It did not mean, as many people thought, "This packaging is ecologically acceptable and is a good green item". We discovered that the Germans and the French, because of close frontier problems, had to agree that the green dot on a French package, which was not the same as the green dot on the German package, nevertheless made it acceptable to be retailed in a German store. The need for a directive is partly economic and partly environmental.

As the noble Lord, Lord Beaumont, said, we had a number of problems with targets and statistics. We could have spent much more time doing the reconnaissance that he would have liked us to do, but we would have found little in our field glasses. For example, items like paper are expressed in weight, but not as dry weight, average moisture weight or wet and soggy paper as recovered from the bin after a heavy shower. So the target is 60 per cent. or 90 per cent. of what? Calculating the amount of water allowed in the percentage is one of the problems behind the directive. That is why we feel that spending a lot of money on statistics—not necessarily viable and valid statistics—just for the sake of them should be looked at carefully and negotiated clearly in Brussels.

We felt that the system started from an exceedingly rigid scheme introduced in Germany, where, for political reasons and because "Greens" were strong in the last election, they had to ban unacceptable landfill. That was partly because they had absorbed East Germany and for many years the landfill zone for German waste was somewhat to the east of the previous frontier. Also they had environmental problems because they did not manage the landfill effectively.

Similarly, environmental pollution in the atmosphere due to poor incinerators meant that incineration was not acceptable. But one needs to look at the problem carefully. It will take 10 years to develop and install a suitable network for incinerating waste. But we have heard—I shall explain in a minute why—that plastic is difficult to recycle. Plastic is made from oil. Being oil-based, it may be a natural material to burn in order to recover the energy lost when it was originally manufactured. That is where problems arise with a rigid approach. Both I and the committee generally were in favour of flexibility. We felt that, within its own methods, a hierarchy within each country should decide which schemes were best and what the percentages should be. Therefore, flexibility is important.

I had considered giving a short illustration of a life cycle, but I shall not do so. The life cycle of each product and package—the noble Baroness, Lady Hilton, gave examples of glass and paper—can be considered in relation to the energy costs of moving items around; the energy costs of the way it is packed and the capital costs. There is a great deal to be said, and one should look at it in that way.

Pollution does not arise from waste; it arises from the way that waste is handled. There is noise pollution. When glass is crushed it is noisy. We discovered that in Germany there was an absolute ban on filling bottle bank containers between noon on Saturday and noon on Monday to avoid disturbance for the German population. Those are different problems.

I am in favour of reducing packaging as packaging. However, we heard that it is important to provide packaging that is strong, that protects the food adequately and that can be sensibly used and economically designed. For example, scent is over-packaged. But it is a high value product, as was recently concluded by the Monopolies and Mergers Commission, and the image is important. Packaging costs are totally irrelevant to someone who is buying scent. On the other hand, they may be highly relevant for other products. Each item must be considered separately.

Packaging must be used sensibly. In Brussels we were told that there had been a new design for a half litre or litre plastic milk pack. The thickness had gone down from 0.7 millimetres to 0.3 millimetres—a saving of just over 50 per cent. But it was practically irrecoverable for two reasons. First, there was more contamination from the milk. Secondly, it was not possible to reduce the thickness of the printing indicating who had packaged the milk, which cows it had come from and so forth. Therefore, when plastics are recycled one ends up with thicker packaging. Indeed, recycled plastic must be thicker because the product is weaker than the original.

The pricing of packaging and of its disposal is important, as the noble Lord, Lord Beaumont, said, and I agree with him. The normal cost of collecting packaging waste (25 per cent. of the total dustbin load) can be borne as part of the rates. However, if a directive says, "You have to sort this waste; you have to put it in different coloured bins", more lorries will be needed because it will not be possible to collect all the different coloured bins in one day; and that will increase the cost. As we heard earlier, somebody may set up a scheme on a costing basis for the recovery price of glass, paper and so forth. But we over-recover; the market demands change and the local authority or the contractor will not receive a sufficient return on the waste. Therefore, they will need to charge more.

One of the problems of the German scheme was that initially, whatever the packaging, the price was so much per kilo. The Germans discovered very quickly that they were overpricing glass; the price was about right for aluminium and steel and perhaps for paper. But, my goodness, little pieces of plastic—we saw bales piled high—are much more difficult to pick up. One has to have a highly sophisticated sorting plant employing people to make sure that one gets the right kind of plastic in the right bin and that these white foam things go in one bin and the plastic sheeting in another. One also gets butter wrapped in metalised plastic. Another example is a carton of wine. The cardboard packaging is simple but there is also a handle. If one tries to recover the handle, one needs labour. Inside the carton there is an aluminised piece of plastic—perhaps two kinds of plastic. There is a major recovery problem with the aluminium.

The Germans set out with the idea that the great German engineers could in time—they did not allow enough time—design a new plant to convert plastic back into the oil it started from. I think, rather like the noble Lord, Lord Beaumont, that high technology solutions are not the answer to a low technology product and a low technology problem. I support the report.

4.2 p.m.

Baroness Dean of Thornton-le-Fylde

My Lords, under this rather simple heading of Packaging and Packaging Waste is a very diverse and complex problem, as we have already heard in the debate today. I welcome the opportunity to discuss this issue, especially in view of the meeting of environment Ministers later this week in Europe.

Many concerns have been addressed by the committee in looking at this issue and it has adopted a pragmatic approach. It is certainly a topic that needs a pragmatic approach. I should like to make one or two points arising mainly under "Opinion of the Committee", which I found particularly interesting to read. I very much agree with the committee when it says that we do not appear to have developed in the United Kingdom a culture to approach recycling in a positive way. It is an issue not just for the industry itself or for the Government in isolation. It is an issue for all of us. In itself it is difficult enough to push forward, and I certainly agree that more needs to be done.

I very much take on board the points made in paragraphs 40 to 46 of the committee's opinion where it talks about the distortion of the single market. The German ordinance has been mentioned several times, and it provides a salutary lesson. The ordinance on packaging was hailed by many countries in Europe, including this country, as possibly the benchmark for how we should deal with the tremendous amount of waste that is not recycled or reclaimed. As it has turned out, it has been a damaging ordinance not just in Germany but, as we have seen, here in the United Kingdom, too, and for the paper-making and board-making industries in particular. It has done damage to the recycling industry, small as it is, within the United Kingdom.

The ordinance was carried out against a background of being environmentally friendly and marking the way for others. I am delighted that the Germans have had second thoughts, and I agree with the direct wording in paragraph 6 of the report which says that the committee was puzzled how a country could introduce a system of waste collection with such bizarre and damaging consequences when it was devised with environmental objectives in mind. There is a lesson to be learnt here about pushing forward sometimes too quickly when it may have a profound effect not just on employment but on the economy as well.

We have to develop in the United Kingdom a culture of environmental concern. We are very backward compared with a number of other countries in Europe. We have to make changes in the way we deal with the whole issue. Indeed, one could question whether it can be dealt with by a European directive. It is such a complex issue that perhaps the directive should contain specific details of what can and cannot be done in industries which are so different and different in their ability to recycle their waste. I therefore welcome the committee's view that any replacement of the German system should be more pragmatic—the noble Lord, Lord Brain, used the term "flexible".

I was pleased to hear the noble Lord, Lord Lewis, say that the figures of 90 per cent. by weight of packaging to be removed from the waste stream in 10 years and 60 per cent. by weight of each material to be recycled are to be changed to something like 50 per cent. and 30 per cent. respectively. I had heard that that was a rumour. I had not heard that it was a fact. But if it is a fact, and if it is to happen against a five-year time cycle, it is something that industry in Britain could take on board more readily.

I have two main areas of concern. One is the level of 90 per cent. to 60 per cent. The other relates to my knowledge of the printing industry in particular. My previous union was very much involved with the ink manufacturing industry in the United Kingdom from the health and safety point of view of the people we represented. We made much progress, particularly in the elimination of toluene from printing inks which has a bad effect on the health of workers. That measure is not applicable over the whole of Europe, but I assure your Lordships that it is necessary for the health of people at work in printing companies. Once one is sensitised to ink containing toluene one never gets rid of that sensitivity. That kind of atmosphere can have a serious effect on one's health, particularly one's breathing.

In the draft directive there are proposals about heavy metals. If that part of the directive is carried through, the manufacture of ink in Britain will probably be impossible. I am assured that that is the case by chemists within the industry. We do not want a situation which may appear to be environmentally welcome—I certainly criticise both the printing and paper industries for their slowness in some areas in dealing with this—but which then affects the very economic well-being of the industry and is not practical to apply within it.

In conclusion, if the directive—one hopes, substantially amended—is to go through, I agree with the committee that it must have the legal basis of Article 100a. If that is the case, at least we will have similar treatment across Europe and not guidelines which some follow and some do not. That is absolutely essential and I hope that the Government will take it on board. If the directive goes through—I repeat, one hopes substantially amended—it must include legal backing.

4.10 p.m.

Lord Peston

My Lords, I am in particular difficulty today in addressing your Lordships on this matter. First, as opposed to all the other speakers, I am not an expert on this subject, and I shall make that abundantly clear during the course of my speech. Secondly, I believe that for the first time ever in speaking on any report of a Select Committee of your Lordships' House, I completely disagree with what the report has to say on the basic matters. I am completely unpersuaded by what it says. Of course, I rely as usual on the Minister himself to explain to me in his reply why I am mistaken. But it would be of no help to your Lordships if I were not to tell noble Lords of my views.

I am thoroughly taken aback by the remark in the Memorandum made by the Department of Trade and Industry that, We welcome this thorough report and concur with the bulk of its conclusions and recommendations". They perhaps can weasel out with the word "bulk"; but basically I do not. I shall explain the economics of that.

It is not because I do not believe that waste represents an important problem. Industry, left to itself and with free choice, will produce excess packaging and will not handle waste correctly because it will be concerned only with what are called private costs and benefits. It will not take account of the impact of excess packaging on society and the economy. So there is a case for intervention; but it is not clear to me. However, the adviser to the committee explains it very clearly and it is not obvious that the committee understands the matter.

In this connection, and while in an acerbic mood—and I shall continue to be—I was somewhat intrigued by the remarks of the noble Lord, Lord Beaumont of Whitley. I do not know what the subject of ecological economics is. Perhaps he will explain it to me at some time. I understood that the Liberal Democrat Party believed in classical economics, and I certainly do. I would advise the noble Lord that the way to approach this problem is by using the principles of classical economics which, in this connection, mean "let us examine and endeavour to quantify the costs of the waste which will tell us approximately what it is worthwhile investing in order to avoid those costs". That is the central principle of classical economics in this and in all other problems. What is immensely damaging to the British economy and which goes back to the time of Adam Smith (dare I remind the Liberals?) is remarks of the following kind: "Let us not pay any attention to costs. These matters are so important that we just go ahead and do them". Why I am so concerned about the Department of Trade and Industry (which used to call itself the Department for Enterprise) is that in welcoming this report, they seem to have lost sight of that classical economic principle.

The main point on which I reject the committee's report is that, in its view—to quote the noble Lord, Lord Brain—this directive is needed, and the Commission has a locus in this matter. I have read the appropriate section and I do not see what the argument is. I can see no case for the Commission poking its nose into a matter which I regard as overwhelmingly one to be approached by the principle of subsidiarity—that is to say, that these are matters for the concern of the individual nation. The report says: There can be no doubt about the need for quick action to control the proliferation of national measures". The report refers to "national measures" as further distorting and fragmenting the market.

As an economist. I have to say two things: the first is that there is considerable doubt whether there is any need to intervene in what individual countries are doing. That does not mean that the countries themselves should not be concerned with what they are doing. I am totally unpersuaded by the notion that individual countries acting on their own distort the market. I spent my life studying and lecturing on free market principles. This is the first time I have ever heard that packaging was a distortion of the free market. I like to learn about these things; but that is news to me. I do not see that what the individual countries are doing is a distortion. The Minister will deal with this matter definitively, but I can only react as a layman.

In reply to the question raised by the noble Lord, Lord Lewis, I simply do not see that this matter is in any way infringing the Treaty of Rome. If one regards the problem of waste as itself causing market damage—in other words, the argument which I put forward at the beginning that these costs are not fully taken into account—then it is in accord with the Treaty of Rome if, in my judgment, a government intervenes for its own country in order to offset that damage. I do not see a Treaty of Rome problem myself, but we shall rely on the Minister to explain that to us in a few minutes.

If I reject the view that the Commission has a locus here, which I do, and if I reject the need for a directive. I could then just sit down and say that the rest of the report is a complete waste—if noble Lords will forgive a play on words—of time. But there are one or two other matters which I might as well bring out while I am in this mood, and while I am on my feet. One is the attack on the Germans. I am somewhat bewildered, but I am here to be taught something on this matter. How can what the Germans are doing be damaging to the recycling industry? That is what the report seems to be saying. I am at a loss to understand that because what the Germans are doing is raising the demand for recycling facilities by their proposals because they are subsidising that kind of activity. I would have thought that would be enormously to the advantage of the recycling industry rather than damaging it—again, on the general ground that when the demand for services goes up, that is a good thing. If the market works, what should happen then is that new people enter the recycling field because it now becomes more profitable and there is an appropriate outcome.

Speaking as a mere common or garden economist, I am totally unable to follow what the committee thinks it is up to on that matter. As I have said, I do not see how in this case an industry can suffer as the result of an increase in demand for its services. The Germans may have made a mistake in subsidising what they are doing. It may turn out to be too expensive for them, which I understand to be the case. In those circumstances, they will learn the lesson which we all do when we sometimes make a mistake: they will stop doing it. I cannot see how either there is a case for intervention here or what business it is of the Commission.

As noble Lords can see, I do not believe that this report comes remotely to grips with the problem. Perhaps because of its sensitivity to environmental matters, I believe that the committee has gone off in the wrong direction. I have a final comment to make on the expert advice which it got and on how we might approach this matter. It is true that we have excess packaging because those who do the packaging do not bear the full costs of their activities. Then, as the Government themselves say, they believe in the "polluter pays" principle. These people will then be defined as polluters.

The way in which to get the market to work properly is to impose the true costs on them. That can be done in one of two ways. The way suggested by the Committee's expert adviser is that the activity can be taxed. The other way is inversely in that one can cease to allow all packaging costs as an offset to income in order to define taxable income. It can be done either way. That seems to be the right lines on which to approach this matter rather than in terms of detailed directives, uniformity in countries and all the typical Euro-blah.

There is a difficulty. Different industries will be affected in different ways. There is at least one industry about which I am very sensitive because of my membership of the Council of the Royal Pharmaceutical Society of Great Britain. I refer to the pharmaceutical industry, which has to have very high-class packaging. It does that partly as a sales gimmick. We can criticise that. It is also done partly as a protection for the very dangerous drugs which it is often dealing with. I hope the Minister will remind us of the present situation; but I believe that at one point the directive suggests that there would be a sort of "out" as regards the recycling of packaging which was itself dangerous. I am a little out of date now, and I am not quite clear what is the present position. It would certainly be wrong to recycle certain pharmaceutical waste packaging. That would be dangerous. My inverse point is that we have to ask ourselves, as regards industries where certain types of packaging are very important, whether we would really want to impose considerable extra costs on them.

I think that I can conclude by relying on having made my view of this matter very clear. I was tempted to say that this is a report on waste, and that the committee has made a contribution to that; but I thought that that was so nasty that I should not say anything like it, so I do not. I hope that I have made it clear to your Lordships that at least one Member of your Lordships' House is unconvinced by this report.

4.20 p.m.

Lord Strathclyde

My Lords, I am grateful to all noble Lords who have taken part in this debate, which I have found most interesting. I, for one, would like to congratulate the committee on behalf of the Government on producing this report.

I particularly enjoyed the speech of the noble Lord, Lord Peston, because I too come to the subject as a layman—at least, I came to it as a layman, but, having had a spell as a Minister in the Department of the Environment, which for part of the time looked after some of these areas of interest, and now being a Minister in the Department of Trade and Industry, I have come to have an appreciation of the problems. I started some time ago in the same position as the noble Lord, Lord Peston, but I have come over a period of time to agree more with the viewpoint that was expressed by the committee. I suspect that the committee has had to deal with some of the problems that were raised by the noble Lord, and I agree with him that some difficult issues are involved.

If left on its own, industry could of course face up to some of the problems that have been created by the use of packaging and by packaging waste. The problem that we face in this country and the solution to it is precisely the reason that the European Community has to be involved. These are cross-border problems, especially those that have been caused by Germany, but I shall deal with that point later.

I hope that having an early debate on the report has allowed noble Lords sufficient time to consider our written response. As I said earlier, I very much enjoyed reading the committee's report. I do not think that the noble Lord, Lord Beaumont of Whitley, should be unhappy with the fact that only three members of the committee are speaking today. I do not believe that that is necessarily a measure of the success of the committee. Indeed, it is sometimes useful if fewer committee members speak and if more non-members feel able to do so or come simply to listen to the proceedings.

The directive will impact on all businesses in the UK, with a particular emphasis on those involved in the packaging chain—material producers, packaging convertors, packers and fillers, and retailers—to those involved in the collection, sorting, recycling and in the recovery of energy from waste and disposal of waste.

In October, the Presidency indicated a determination to achieve political agreement on the directive at the Environment Council meeting on 2nd December. In pursuit of this, it has brought forward, and is continuing to bring forward, significant revisions to the amended Commission text of 9th September. I will give further details of that when mentioning the relevant parts of the directive. I hope that that will be useful to the House.

We share industry's and the committee's concern about market distortions and problems which have been created by the initiatives of individual member states in this area. Many of these initiatives have been promoted on the basis of environmental protection, but have had significant practical or economic, and in some cases environmentally detrimental, consequences.

I refer in particular to the German Packaging Ordinance, which most noble Lords have mentioned. I am grateful to the noble Lord, Lord Lewis of Newnham, for his clear exposition of the limitations of the German scheme and its negative effects. It requires high rates of collection and the recycling of waste packaging and has led to the collection of far more waste than can possibly be recycled in Germany —and therein lies part of the problem but also, to some extent, some of the advantages. I think that the noble Lord, Lord Peston, would argue that it is a distinct advantage for the German consumer to be subsidising the cheap provision of recycled plastics in this country for our own recyclers to use. However, that has had a very serious effect on the infrastructure and collection industry in this country because the recycling industry prefers to buy subsidised German waste. The United Kingdom industry is not getting its raw materials at the same price as its German competition—and that has a serious, debilitating effect on British industry. In the age of the single market, it must therefore be right that the European Commission should have a role to play in seeking some sort of harmonisation of the rules that apply in dealing with recycleable waste.

Many noble Lords have asked about the roles of the Treaty of Rome and the European Commission in dealing with the German situation. We as a Government continue to press the Commission for an early decision. I understand that the Commission tried to take action on the Danish ban on the one-trip beverage containers, but the European Court of Justice ruled in favour of Denmark. However, that should not be used as an excuse for inaction in this case. The Commission must come to a decision on whether or not the German system breaks some of the fundamental principles underlying the Treaty of Rome.

I see an appropriate harmonising measure as one essential element in tackling and preventing distortions. However, I also recognise that the directive will not provide a short-term solution to the problems facing the UK recycling infrastructure. We have been concerned to take national measures and actions in parallel with discussions in Brussels.

The aims of the proposed directive on packaging and packaging waste are twofold: first, as a single market measure to harmonise the basis on which member states take action relating to packaging and packaging waste, in order to avoid distortion to competition and restrictions to trade and to contribute to the functioning of the internal market; and, secondly, as an environmental measure which is necessary on internal market grounds to reduce the adverse environmental impact of packaging.

The draft directive requires member states to establish national packaging waste collection systems in order to meet specified recovery and recycling targets. It requires member states to allow free circulation for packaging which meets the essential requirements of the directive and to take appropriate measures to ensure that only packaging which meets the essential requirements may be placed on the market.

The UK industry regards these harmonisation objectives as very important. The Government share that view and agree that this should be the main thrust of the directive. The directive also sets out recovery and recycling targets. We subscribe to the packaging and waste management "hierarchy" of waste prevention—re-use, recovery and safe disposal—but we recognise the vital importance of its flexible application. We would argue that recycling should not be considered to be automatically the better recovery option for all waste. We agree with the committee's conclusions on the application of the "hierarchy" in paragraph 105 of the report.

In answer to the noble Lord, Lord Brain, the Government subscribe to the idea of a broad waste management hierarchy. However, in each case a decision about which route to follow must be governed by the principles of using the best practicable environmental option. As stated by the noble Lord, it is important to take account of the economic and environmental costs associated with the transport of waste over long distances and the technical obstacles to repeated recycling. A high degree of flexibility is needed to take account of the differing economic, environmental and technical capabilities of the different countries and different regions. That is important and is a point on which I very much agree with the noble Lord, Lord Peston, and the noble Baroness, Lady Dean. Different countries will want to do things in different ways, and the directive is about setting the minimum standards.

Our main concerns as regards the provisions of the directive have centred around the target levels, economic instruments and essential requirements with which packaging must comply in order to be allowed free circulation. Although we are considerably encouraged by the flexibility being shown by the Presidency, we shall continue to seek further amendment.

Let me deal with the first of those concerns—targets. We have argued consistently that the targets for recovery and recycling set out in both the original and amended Commission proposals were unrealistic and unachievable. The noble Lord, Lord Brain, cleverly demonstrated the difficulty with targets. They fail to take account of the economic and environmental costs that would be involved in attempting to meet them. I emphasise to the noble Lord, Lord Beaumont, that the solution is economic and environmental. I am not sure how one can divorce the two. The whole point is to find economic instruments that cost out the environmental solution.

Earlier this month, the Presidency proposed that the targets should be expressed as bands. The present proposals are based on target bands of 50 per cent. to 60 per cent. for recovery and 30 per cent. to 40 per cent. for physical recycling averaged across all materials. Within the recycling target, a minimum recycling level of 15 per cent. is proposed for individual materials (plastic, paper and board, metal, glass and composite packaging). Member states would need to set in hand action plans to achieve recycling rates within those bands within five years of implementation.

We have been heartened by the signs shown by the Commission in recent negotiations that it may be content to agree to lower targets. We are encouraged that the Presidency's targets show greater realism in three respects. First, they are significantly lower than in the original proposal and are now consistent with our own domestic proposals for producer responsibility (in other words, 50 per cent. to 75 per cent. recovery by the end of the century). Secondly, future targets are to be reviewed after five years' experience, although the proposal anticipates that review will allow the levels to be raised. Finally, we feel that the use of a band for recovery target should strengthen the internal market benefit of the directive, because it should place a limit on what individual member states may attempt.

On our second point of concern, the current wording of the Presidency text of the article on economic instruments is declaratory and permissive, and makes specific reference to consistency with the Treaty. We should be concerned at any change toward the more prescriptive proposals made by the European Parliament.

Thirdly, we are not satisfied with the provisions on "essential requirements" to which all packaging would have to conform in order to obtain a guarantee of free movement. That is a vital part of the directive for assuring the single market, and details need to be right. We are continuing to argue for justifiable requirements. We are assured that the intention is that the directive will not affect current health and safety legislation, including that on hazardous waste, and international agreements on the transport of dangerous goods. I am grateful to the noble Baroness, Lady Dean, for the contribution she made with her detailed knowledge of the printing industry. I agree with her that the directive should pay due regard to health and safety and should not prejudice it.

I shall speak briefly on the legal base. We support the directive as a harmonising measure in support of the single market. We shall endeavour to ensure that the provisions of the directive reflect that. Thus, on policy grounds, we support the use of Article 100A as the appropriate treaty base for the directive.

The statistical information requirements have been amended and reduced in the latest Presidency proposals, and we feel are now more consistent with the requirements of the directive.

Considerable concern has been expressed at possible costs of the directive, particularly at the assessment of compliance costs of over £2 billion per annum for the original Commission proposal. Estimates of compliance with the new lower targets in the Presidency proposal are informally put much lower at £100 million to £150 million per year. Much depends on the targets set for plastics and composites, where the costs of material recycling rise sharply. We shall have a much better indication when the industry brings forward its detailed proposals for producer responsibility.

We shall have to ensure that a system is in place in the UK to implement the directive. We expect the producer responsibility initiative to play a major role in that. In July, Ministers challenged those involved in the packaging chain to commit themselves to ensuring that between 50 per cent. and 75 per cent. of all packaging waste is recovered by the year 2000, by voluntary means. If the industries concerned cannot satisfy us by Christmas that they are committed to achieving the objectives, or if they persuade us that legislative backing is necessary, we shall need to consider moving towards a legislative approach to ensuring producer responsibility.

I have focused at some length on the problems that we perceive with the directive, but there are a number of clear benefits which would arise from an appropriately worded directive. Our support for a harmonising directive derives from those benefits. The alternative we should be faced with in the absence of a directive would be the likely proliferation of national schemes, each with its own requirements for packaging. Those could seriously impede the free movement of goods within the Community. The example of the Danish ban on one-trip beverage containers has vividly demonstrated that.

Earlier this year we undertook a formal consultation exercise—clearly, on the original proposal—and we have met a number of interested parties to gauge industry's views on the directive and on the Government's approach to it. In general, industry has been supportive of the approach we have taken and the need for a directive. The results of the exercise have helped greatly to identify problem areas and to inform government's negotiating position.

Particular benefits arise from the harmonisation elements of the proposal. For example, the elaboration of European standards will be particularly helpful in those areas where technical barriers to trade exist, by assisting the free movement of goods; the harmonisation of marking provisions would also be useful—there would be agreed marks for agreed purposes; and, of course, one of the underlying intentions of the directive is to ensure that member states' recycling and waste management plans do not cause detrimental effects. In conclusion, all those very real benefits will give UK companies the confidence to plan ahead up to and beyond the turn of the next century.

I am grateful for having had the opportunity to reply formally to the committee's recommendations. I hope that the reply has been helpful and that the noble Lord, Lord Peston, especially, may feel differently about the committee's report than he has hitherto.

4.37 p.m.

Lord Lewis of Newnham

My Lords, I should like to reiterate the Minister's final remark about the noble Lord, Lord Peston. I shall come back to it in a moment if I may. I thank the Minister for his useful commentaries. The remark about the Treaty of Rome is one that I anticipated that he would have to make. I am somewhat disappointed about the need for a reply by Christmas since I believe that if we are to take the Minister's reply to our report, there is an urgency associated with the meeting at the end of this week. We agree with the Minister about the concern over targets. The targets that were set initially seemed to us to be unrealistic. However, it is important to recognise that targets are part of this game. If we are to play it, then it is important to have targets, but they must be set realistically. The present suggestions fall into that category.

I hesitate, although I return to it again, to talk about economics. The one area in which I find economics even more difficult to understand is that connected with the environment. Cost benefit analysis and assessment of the value of the blue sky is something that yet eludes me, although I am sure that it is well within the capacity of established economic departments in the country. I shall come back to that point if I may.

On the legal concern, the point I tried to make at the very beginning was that although there was a temptation to consider this problem as an environmental one, our general feeling was that it was covered by Article 100A. It was more concerned with harmonisation aspects. I believe that that was also the point made by the noble Baroness, Lady Dean.

The noble Baroness, Lady Hilton, dealt with the hierarchical problem which worried the committee. That is associated with life cycle analysis which is the present way of considering the whole balance of energy and other valuable features involved in environmental questions. I much preferred the initial phrase which was "cradle-to-grave analysis", but that seems to have been overtaken by the more recent term. It is important in any of those considerations to recognise the importance of energy as equivalent to mass. It is an idea which surprisingly came from Einstein but it seems to have been totally ignored by the German community as a whole.

The noble Lord, Lord Beaumont, made some important points. I was interested to hear of his early incursions into some of those problems. I agree completely when he says that each of those problems must be considered on its individual merits. The proximity principle has been avoided in much of the discussion, but it is an important principle associated with waste and I am surprised that it has not been brought into our considerations to a much greater extent. My noble friend Lord Brain illustrated admirably some of the problems we investigated in this area. He illustrated how much we appreciated the advice given by our economic adviser, although it appears that it may have lacked strength in certain circles.

I was extremely interested in the view of the noble Baroness, Lady Dean, that the German system starts with what seems to be a very high idealistic approach. Anyone who had started with that scenario would have anticipated much more successful results. I believe that the problem of the German system is that the Germans do not charge for their waste at the end of the day. Many other aspects of their system have a great deal to offer but the fact that at the end of the day the disposal of their waste involves virtually no charge whatever has been, if not the Achilles' heel, at least a feature within the system which has caused problems.

We considered the point made by the noble Baroness, Lady Dean, about heavy metals. Johnson Matthey in particular were concerned with printing problems in that area. I cannot see a simple solution although, as a chemist, I believe genuinely that there are alternative methods of obtaining printing materials rather than by using heavy metals, which may make it possible to avoid the problem. I remind your Lordships that the problem about heavy metals is that they tend to be cumulative. Therefore, a potential problem for the future is created. That is why there is a sensitivity, if not a hypersensitivity, about that situation.

The point about the legal basis has been covered. The Minister was able to point out that the figures of 60 per cent. and 30 per cent. are fact and not fiction.

What do I say to the noble Lord, Lord Peston? I should never dare to disagree with an economist, particularly a classical economist.

Lord Dormand of Easington

All the more reason to disagree!

Lord Lewis of Newnham

My main anxiety as regards the problem is that now that the plastics industry is to recycle in Germany, this country will be in the difficult situation where the market is swamped with plastic which is considerably cheaper than in the other markets. That will undoubtedly affect our plastics industry. That is the point. If we want all plastic to be recycled in Germany, that is fine. But is that essentially the economist's view of the matter?

The other problem is glass. I believe that we have a tragedy on our hands. Because of the cheapness of the glass from Germany, our glass collection will be seriously affected. Local authorities will lose money on that. Therefore, there will be no high incentive for us to start collecting glass. The whole concept of going on a Saturday or Sunday to drop bottles in a bottle bank, as my noble friend Lord Brain pointed out, will disappear. That may not be considered undesirable but it will affect the whole concept of recycling as an ideal in a country such as ours. It is a subsidised position for all the commodities which are put back into the recycling process. That is the critical part of the operation. But as a layman, I hesitate to disagree with an eminent economist on the issue.

On Question, Motion agreed to.