Waste and Emissions Trading Bill [H.L.]

HL Deb 03 February 2003 vol 644 cc33-69

4.28 p.m.

Consideration of amendments on Report resumed.

Clause 1 [Target Years]:

Lord Dixon-Smith moved Amendment No. 2: Page 1, line 19, at end insert— ( ) The total of the amounts specified under subsection (1)(b) to (e) for a year must not exceed the amount allowed for any previous year.

The noble Lord said: My Lords, Amendment No. 2 is grouped with Amendments Nos. 4 and 6. The wording of all three is identical. When we debated this part of the Bill in Grand Committee there was general agreement that there was unlikely to be smooth progress in statistical terms towards the targets that would be reached and that waste disposal would probably shift in steps rather than in a smooth progression. Perhaps I can deal with the debate on this amendment and on a number of subsequent groups of amendments, but only briefly.

What is likely to happen is that because of the need to change the way in which waste is disposed of and the need for capital investment and so forth, there will be delay before things really begin to change and its pace will accelerate.

As regards the European directive, which governs these matters, there are two critical dates which we have to consider. They are absolute and there is nothing that can be done about them. Further on in the Bill, there is a clause which we shall seek to have excised. It contains a terrifying formula until plotted out on a graph when we find that it runs in a straight line. The formula then becomes comprehensible. The straight line gives rise to problems because initially people will be unable to meet it, but subsequently they may get ahead of the straight line.

We believe that it would be much easier if the Bill, as we suggest here, said: The total of the amounts specified under subsection (1)(b) to (e) for a year must not exceed the amount allowed for any previous year".

That becomes even more significant when we reach the question of a penalty regime. The Minister is bringing forward amendments which will enable the Government to pass on their penalty for failure to the authorities which caused the failure to arise in the first place. There are clauses within the Bill which give the Minister power to decide whether penalties should become payable or not, how they should become payable, or whether they could be deferred.

The Government are becoming policeman, judge, jury and everything else in the same cause. I shall probably have to say that two or three times during the course of today. This is the beginning of the process. These are straightforward amendments. In the light of the developments over penalties, we need to think very seriously about how the Bill is going to work. That is the reason for the amendments. I beg to move.

4.30 p.m.

Lord Livsey of Talgarth

My Lords, these are new amendments which seek to stop a waste disposal authority increasing the amount of biodegradable municipal waste sent to landfill sites from one year to the next. I believe that the amendments are rightly put forward as probing amendments. It will be interesting to hear the Minister's response. On the face of it, an increase in the amount of biodegradable municipal waste sent to landfill sites should not happen The proposal reduces the flexibility given to the waste disposal authority to use the provisions to carry allowances forward or backwards between years or to trade with other waste disposal authorities. That could inflict on councils less flexibility.

Lord Whitty

My Lords, when I first read the amendment I was slightly puzzled as to its intentions. I believe that I now understand what the noble Lord is driving at. As regards changing the situation, the amendment makes the scheme less flexible rather than more. The Bill already meets the noble Lord's objectives.

The default position between years is defined by the formula, and we come to that at a later stage. Were there unusual circumstances in which we had to agree a different rate of progress, then it would be open to the Secretary of State to vary the figures. The basic principle is that the Secretary of State will specify at the beginning of the process for each year what is required to reach the target. There is the possibility of altering it in view of changed circumstances. The figures are available for the local authority to achieve through each year of the process. The noble Lord suggests that the purpose is not clear. It is a view partly based, I believe, on a misconception that amounts would be set at various stages during the process. That is not the intention.

Amendment No. 4 raises a slightly different issue. I have some sympathy for what it tries to achieve. Obviously, it would be extremely unusual for any of the countries of the United Kingdom to be allowed to send more biodegradable municipal waste to landfill sites in a scheme year than in an earlier one. As I said, I anticipate that the regulations will specify from the outset the amount that can be sent in any specific year. However, the amendment would require that the amount of biodegradable municipal waste allowed to be sent to landfill sites would be less in each successive year under all circumstances.

We shall come to the provision and alteration of targets later. That gives us some flexibility; this amendment would override it. It would not allow sufficient flexibility to deal with unforeseen circumstances, for example, an outbreak of BSE or foot and mouth disease. Such an outbreak would require us to suspend some of the targets concerning landfill. That is why flexibility is in the Bill.

Amendment No. 6 contains an unnecessary precaution. The default formula is designed to ensure that the maximum amounts calculated using the formula represent the rate of progress needed to meet the landfill directive target. If we stick to that process there would be equal annual steps. I understand the position which the noble Lord takes, but the full effect of the amendments would be to introduce less flexibility and not more.

Lord Dixon-Smith

My Lords, once again, I am grateful to the noble Lord, Lord Livsey, for his participation and to the Minister for his response. He has replied very specifically as regards the amendments without considering the totality of the package I tried to portray and which we shall face when we have completed debate on the Bill. The Minister, or his civil servants, are going to face a very complex and invidious task as time progresses in consideration of the Bill. The complexity of their task will be caused because of the way in which the Bill is constructed at present. I shall study the Minister's reply, as I shall his subsequent remarks, when considering what further action I may need to take. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty moved Amendment No. 3: Page 2, line 7, leave out subsection (5).

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 5 and 70. The second report of the Select Committee on Delegated Powers and Regulatory Reform accepted the reasoning put forward by the department as to why it is necessary for the Bill to leave so much to delegated legislation. However, it considered that there must be an opportunity for debate on the way in which the wide powers conferred by the Bill will be used and therefore that the first regulations applying to England and made under Clause 6, which refers to borrowing and banking of landfill allowances, Clause 7, which relates to trading and other transfer of landfill allowances, and Clause 10, dealing with scheme regulations, should be subject to the affirmative procedure.

The proposed amendments to Clause 26 would give effect to this recommendation and also make similar provisions for Scotland and Northern Ireland. Where regulations are made under a mixture of powers— some subject to the affirmative procedure and some subject to the negative procedure—the regulations would be need to be subject to the affirmative procedure. In case the noble Lord, Lord Livsey, is about to ask, it is not necessary to set out affirmative procedures for Wales in the Bill as they are set out in the Government of Wales Act 1998.

I understand that the noble Lord, Lord Livsey, wishes to speak to his Amendment No. 71 to our Amendment No. 70. I shall listen to what he says and reply at the end of the debate. I beg to move.

Lord Livsey of Talgarth

My Lords, I thank the Minister for referring to Amendment No. 71. With the leave of the House, I hope it will be possible to discuss it in due course; it is an important probing amendment to see whether government Amendment No. 70 contains a number of loopholes. This is an important group of amendments. I accept what the Minister said about the Government's response to the first and second reports of the Select Committee on Delegated Powers and Regulatory Reform.

The first report expressed general concern at the extent of delegated legislation in the Bill. The Government responded that that was due to the need to delegate much of the operational material to Scotland, Wales and Northern Ireland and so the English powers also had to be made by statutory instruments.

The second report suggested a way forward: to make the first regulations in England subject to the affirmative procedure so that they were subject to at least a degree of scrutiny before coming into force. We agree with that suggestion. Amendment No. 70 makes all those provisions but in a slightly roundabout way. Amendments Nos. 3 and 5 remove some provisions for affirmative procedures which are then replaced under Amendment No. 70.

Our probing Amendment No. 71 is slightly technical. Government Amendment No. 70 refers to the first regulations to be made under Clauses 6, 7 and 10. However, it is likely that several different sets of regulations will have to be made under at least some of those clauses. Clause 6(3) at the bottom of page 4 has 10 paragraphs, (a) to (j), each of which may require separate regulations. If one reads that, one can see what I am driving at. There are similar long lists under Clause 7(3), which has 12 paragraphs—(a) to (1)—and Clause 10(2), which has seven more. Amendment No. 71 therefore refers to no fewer than 29 different matters.

The first regulations under Clause 6 could and probably will refer only to one or to a small number of these matters. That would leave all the other matters under Clause 6 to be dealt with by subsequent regulations. Government Amendment No. 70 might allow these subsequent regulations to be made by the negative procedure. That would clearly go against the Select Committee's wishes. This is the basic issue to be probed. I am sure that the Minister will want to address these points. We may return to the matter at Third Reading if it is not resolved to our satisfaction.

4.45 p.m.

Lord Dixon-Smith

My Lords, the noble Lord, Lord Livsey, has raised an important point about Amendment No. 70. Like him, we are interested to see whether it fully covers the situation raised by the Delegated Powers and Regulatory Reform Select Committee. I confess that we have not yet had time to study its implications throughout the Bill, but I shall be interested to hear the Minister's response because it is a worrying matter. This is a skeleton Bill and the regulatory powers are therefore considerable.

It would be true to say that the Bill cannot be implemented because all the executive clauses in the Bill require and depend on regulation. It is therefore important that, if possible, we should meet the requirements of the Select Committee because it gives us good advice and by precedent—although precedents are dangerous because one can always create subsequent ones—we try to comply with its recommendations.

Lord Whitty

My Lords, as both noble Lords indicated, we have complied with the Delegated Powers and Regulatory Reform Committee's recommendations by tabling what the noble Lord, Lord Livsey, rightly identified as the main Motion— Amendment No. 70. Amendment No. 71 would require all subsequent changes to the initial regulations, however minor, to be subject to the negative procedure.

Behind the amendment is an anxiety that the initial regulations would not necessarily be substantive. If we look at the areas covered by the clauses to which Amendment No. 70 applies, those regulations would have to be in place at the beginning to operate the trading scheme and the borrowing and banking of landfill allowances and so forth under Clauses 6, 7 and 10.

Although the noble Lord, Lord Livsey, is correct to say that there are a number of paragraphs under the clauses, they would all need to be regulated at the beginning of the scheme. Therefore, the first regulations would need to be comprehensive and substantive. Changes thereafter would be of a relatively minor and technical nature and would normally be dealt with by the negative procedure.

I hope that the noble Lord is reassured that, in complying with the Select Committee's recommendations, we are meeting the substantive point that the issues involved should be subject in principle to the affirmative procedure. Subsequent regulations could be dealt with by the normal negative procedure. I hope that that explanation is sufficient to convince the noble Lord not to press Amendment No. 71.

On Question, amendment agreed to.

Clause 2 [Non-target years]:

[Amendment No. 4 not moved.]

Lord Whitty moved Amendment No. 5: Page 2, line 24, leave out subsection (5).

On Question, amendment agreed to.

Clause 3 [Non-target years: default rules]:

[Amendment No. 6 not moved.]

Lord Dixon-Smith moved Amendment No. 7: Page 3, line 22, after "2004" insert ", for which the figures gathered in the financial year ending 5th April 2004 shall stand,

The noble Lord said: My Lords, when we discussed this part of the Bill in Grand Committee, there was general agreement that there was a potential problem. The key date from the point of view of the European directive is the July date on which the directive came into force, which is set out in the Bill. It has no other validity or relationship to anything else.

When we discussed how to record a waste disposal year, there was general agreement that local authorities in this country operate to a financial year from the beginning of April to the end of March. That is how we run our national accounts and everything else. All recording systems are based on that.

The purpose of the amendments is to put formally on the face of the Bill the fact that, preceding that date in July, the waste disposal year ended on 5th April along with local government and national practice. Therefore, we will not have to devise a new accounting year specifically to meet the European directive that consists of a period a little short of nine months from one financial year and three months and 17 days of another. That would be administrative nonsense, which we should be able to avoid.

In Grand Committee, the Government accepted that principle and said that we should be able to find a way around the issue. Therefore, I have tabled the amendment in the hope that it might be the solution. However, I am ever the pessimist and I shall not be disappointed, but I may be surprised.

For waste disposal authorities across the country this is a small but important point. It would be most welcome if the Government could accept this or indicate how they intend to meet the problem. I beg to move.

Lord Livsey of Talgarth

My Lords, we support these amendments, for the reasons given by the noble Lord, Lord Dixon-Smith.

Lord Hanningfield

My Lords, as a practising leader of a local authority perhaps I may add to those remarks. We normally work from April to April or sometimes from January to January. To bring in a July date for a fairly complicated piece of paperwork and record keeping would only add to the costs, about which I want to speak later. I hope that the Government will think again about the matter and will bring the date in line with others used by local authorities.

Baroness Farrington of Ribbleton

My Lords, we discussed these issues in Grand Committee. The amendments seek to change the definition of a scheme year to run in line with the financial year. As was made plain in Committee, we understand the intentions behind the amendments.

We have given the matter considerable further thought. We have concluded that there are legal and practical reasons why the scheme years should not be amended as proposed.

The definition of a scheme year comes from the Landfill Directive. The directive requires reductions by the specified percentages by not later than 16th July in the specified years. So there is a target date. That could create a problem—I say this in passing—for local authorities because reducing the period would make it harder for them to meet the specified date.

The other matter to which noble Lords should have regard is that there is a system of quarterly reporting. The process of quarterly reporting will take to the end of June. So there would be a period when the information had to be available anyway. That would provide consistent obligations and data across member states and would accord with other requirements that appear to fall due on 16th July—as I have said, the quarterly reporting entitlement.

We were aware of the strength of feeling and of the concerns raised by noble Lord. We do not believe that their fears are justified. However, we have written to the Commission to seek clarification as to whether any alteration would be in line with its policy on this particular directive. We hope to hear from it on that.

Lord Dixon-Smith

My Lords, I am grateful to noble Lords who have taken part and to the Minister for her response. I hear what she says about the difficulties of having a different date to that promulgated by the directive. That will be a problem even with quarterly reporting. The quarter ends at the end of June. I accept that the end of June is closer to the beginning of July than the end of April, but even with quarterly reporting one still has 16 days unaccounted for—if the Commission is that rigid. So there is a problem.

I shall be very interested to hear what the Commission says about the matter. I suppose that it is inevitable that the Commission will not have responded before we reach Third Reading. That is too much to hope for, but one never knows. I may not be disappointed, but I expect to be.

Therefore, we have a hiatus that will cause problems for local authorities. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 8: Leave out Clause 3.

The noble Lord said: My Lords, we are back to the graph. Clause 3 contains this wonderful formula which provides a default line with which waste disposal authorities must comply in years between the target years—in the event that the Government have not made another target, since they have that power.

In Grand Committee, there was general agreement that it was highly unlikely that a straight-line progression would happen. Waste disposal and planning authorities can see the directive and the Bill coming. They will unquestionably already be actively considering how they are to meet the Bill's requirements. The reality is that, if different disposal facilities or waste conservation systems are required, investment will be required. That investment will require new plant and buildings, and that means planning permission.

Waste disposal is a highly controversial subject in planning terms. It provokes the "nimby" factor in a way that I should like to think was completely unreasonable, but which, given human nature, is inevitable. It is likely that initially there will be a period when nothing changes very much. As time passes people will either accept some of these planning permissions and they will be granted or, indeed, the Minister may find that he has to grant them on appeal. If he does get appeals in this particular field I suggest that he will need to devise what I would call an accelerated process for hearing them if we are ever to meet the targets set by the Bill.

I return to Amendment No. 8, which seeks to leave out Clause 3. The clause sets a straight-line graph. We think that the key dates are the target dates mentioned in the directive. One could perfectly well leave those target dates—of which waste disposal authorities are fully aware—and not worry about other dates. I am moderately confident that they would meet them. But if we put a default line in the Bill the Minister might say that would encourage backsliders. I do not think that it will encourage anyone. I think that it denies administrative reality. For that reason, the Bill would be better without Clause 3. I beg to move.

5 p.m.

Lord Livsey of Talgarth

My Lords, I heard what the noble Lord, Lord Dixon-Smith, said. I understand why he seeks to remove Clause 3, which refers to non-target years. On the overall management of the scheme, is the purpose of the clause to allow the gradual attainment of the targets, rather than authorities falling behind and failing to meet them? It seems restrictive.

I am glad to see that subsection (8) provides that consultation shall also take place with Scottish Ministers, the National Assembly for Wales and the Department of the Environment. Why are the arrangements specified in such detail? What outcome does the Minister expect? Is the clause necessary to secure the targets outlined in the Commission's proposals?

Lord Whitty

My Lords, Clause 3, which Amendment No. 8 would delete, provides default rules for setting the maximum amount of biodegradable municipal waste in non-target scheme years. Clause 2 spells out the powers to set such figures for non-target years. But it provides that the Secretary of State may only specify maximum amounts for Scotland, 'Wales and Northern Ireland with the agreement of Scottish Ministers, the National Assembly for Wales and the department in Northern Ireland.

There is possible confusion about default powers: they relate, not to individual waste disposal authorities, but to the figures and the rate of progress agreed between the four countries of the United Kingdom as contained in Clause 2. Where agreement is not reached, a formula for the default situation in each country is needed. Initially, I thought that the Opposition's objection to Clause 3 was based on a simple aversion to having algebra on the face of the Bill—many noble Lords might share that opinion. But it became evident that the noble Lord, Lord Dixon-Smith, was adept at working out what the formula meant in graphical terms.

The formula applies to the split between the countries rather than the allocation by waste disposal authorities, which is determined by the Secretary of State in England and the authorities in the other countries. A default formula is needed; otherwise, if an agreement is not reached between the allocating authorities in the four countries, our ability to progress towards the targets set by the directive could be impeded. In the absence of an agreed figure for each intervening year, the natural equal progression between target years is assumed by the formula. I hope that the noble Lord will realise that the formula is not as inflexible as some of his remarks suggest.

Lord Dixon-Smith

My Lords, the problem with a formula is that it is always inflexible. I apologise for misrepresenting the situation slightly. Clause 3 deals with setting a default position for England, Scotland, Wales and Northern Ireland, the four countries of the United Kingdom. I would have hoped that the Government might have had sufficient confidence in the authorities to feel about them as I do; that is to say, the default position for target years is what matters, and each authority should be left to determine its position by its own devices. The Government apparently do not feel that. They want to have a default position that is subsequently negotiable if an unexpected situation arises. I shall study the Minister's reply. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [Allocation of landfill allowances]:

Lord Dixon-Smith moved Amendment No. 9: Page 4, line 6, leave out subsection (5).

The noble Lord said: My Lords, subsection (5) needs an explanation. It states: Nothing in this section shall be taken as requiring any allowances to be allocated to any particular waste disposal authority".

I am puzzled as to why the Secretary of State might not wish to give a waste disposal authority an allowance to dispose of waste. I cannot think why else they are there. Clause 4 appears to imply that the Government do not need to make allocations to all waste disposal authorities but could get away with allocating to only some. It may be a perverse interpretation, but I do not see how else one could read subsection (5). I repeat: Nothing in this section shall be taken as requiring any allowances to be allocated to any particular waste disposal authority".

If the provision does not mean what I have suggested, I shall be pleased to hear it. But the provision could be interpreted in that way, so we should do something about it, as I am sure that that was not its intended meaning. Subsection (5) is an oddity that has crept into the Bill, perhaps because we did not question it sufficiently at an earlier stage. I beg to move.

Lord Whitty

My Lords, to some extent I understand the reasoning behind Amendment No. 9, but it is not an immediately obvious approach. If there is an agreed allocation by the allocating authority in England, and it moves at a certain pace over the years, it could be inferred that every waste disposal authority in England should reduce its waste disposal requirements at the same rate. That is not the intention of the Bill; it is that the Secretary of State in England should take into account each waste disposal authority's situation, its achievements so far, and the speed with which it can reasonably be expected to improve. Without subsection (5). it could be inferred that every local authority in England, and likewise in Wales, would follow the same trajectory to meet the same target. That is not the intention of the Bill. It gives the allocating authorities—the Secretary of State, in England—greater flexibility than might otherwise be claimed

Lord Dixon-Smith

My Lords, I am fascinated. We have just agreed that a default formula is needed to apply at national level, but then that the default formula does not apply at local level so flexibility is needed. The difficulty is that the perverse interpretation of subsection (5) that I outlined is possible. Will the Minister look at its wording? It is unfortunate that it is included, when such an impossible interpretation could be made. A less ambiguous provision would be preferable. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Alteration of allocations under section 4]:

Lord Dixon-Smith moved Amendment No. 10: Page 4, line 9, after "time" insert ", before 31st December in the year before that for which an allocation has been made,

The noble Lord said: My Lords, Amendment No. 10 is coupled with Amendment No. 11. The Bill, as drafted, allows an allocating authority—the Government in the case of England—to make changes at any time to the allocated allowances with which a waste disposal authority must comply. The effect of the amendment is to restrict the ability to make those changes to the period, before 31st December in the year before that for which an allocation has been made",

and which the Minister wants to amend.

The lead planning time is not short-scale. It would be monstrous—as I believe the Minister will agree—if on the first day of the year the Government were to tell a waste disposal authority that its allocation had just been reduced by 20 per cent. Under the Bill, as drafted, that scenario is possible. It would not be unreasonable to require at least three or four months' notice on the face of the Bill.

As regards targets already incorporated into a waste reduction programme, it is unreasonable that once allocations have been properly planned for—there is a valid planning execution, particularly with a complying authority—the ground should suddenly be cut away from beneath the authority's feet by the Government's ability to change the allocations. These are significant small amendments, which will help everyone to move forward with more certainty. I beg to move.

Lord Livsey of Talgarth

My Lords, this is a reasonable amendment. We must consider the difficulties confronting local authorities during the planning process. The powers that the Secretary of State will have in relation to this proposal are rather open-ended. I am interested to know the Minister's opinion as regards lobbying by local authorities on matters such as this. It would be good to know whether he has received communications from local authorities objecting to this proposal.

Lord Whitty

My Lords, the anxiety behind Amendment No. 10 is understood. The Government's intention has been clearly set out to local authorities— at least so far as concerns England. The Government made clear at the beginning of the scheme their intention to allocate allowances to each waste disposal authority. Therefore, the planning lead time would be considerably longer than the lead time implied in the amendment; namely, before 31st December in the year before". Waste disposal authorities would know their allowances from the first year of the scheme through to 2020.

This part of the Bill allows a change in allowances in the light of unforeseen circumstances. I referred to this point in relation to an earlier clause. For example, should an outbreak of animal disease occur, an immediate relaxation of the targets for that year would probably be required. Looking back at the unfortunate events of 2001, the outbreak of foot and mouth occurred in February; the targets for the current and subsequent years would have been altered immediately in order to provide facilities whereby landfill could be used for waste disposal.

It would also be possible to think of other extraneous circumstances in which the allowances might be affected, either in relation to a particular authority or more generally. The Government consider it necessary to have these powers as a reserve position. Should the amendment be accepted, the Government would be allowed to change the allocation only if a change in circumstances had occurred prior to 31st December in the previous year. In view of the aims of this provision, Amendment No. 10 would be an unrealistic restriction. I hope that these amendments will not be pursued.

5.15 p.m.

Lord Dixon-Smith

My Lords, my first inclination, on hearing the Minister's comments, was to welcome the Government's intention to make allocations at the beginning of the scheme for the whole period of the scheme. I therefore began to think that my amendment was of less use.

However, the Minister went on to mention an outbreak of a major disease. The Bill is confined to "biodegradable municipal waste". We hope that the 30-year frequency of such tragic outbreaks is a thing of the past and that we shall not experience it again. With the greatest deference to the Minister, I do not think, by any stretch of the imagination, that the fact that such an outbreak occurred should affect what happens to biodegradable municipal waste, which is the concern of the Bill.

Lord Whitty

My Lords, to clarify matters, the capacity of landfill sites is affected.

Lord Dixon-Smith

My Lords, I accept that it affects the capacity of landfill sites. However, if the capacity of landfill sites is a problem, that is a matter which requires alternative steps. It does not require allocations such as this. It is a matter for planning and the provision of adequate facilities.

I have heard the Minister's comments. If anything, he has probably added some slight confusion. I shall not press the amendment for now. I shall need to study what the Minister said and think about it carefully. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 11 not moved.]

Lord Dixon-Smith moved Amendment No. 12: Page 4, line 20, at end insert— ( ) Any waste disposal authority which fails to agree with an alteration to its allocation may, within three calendar months of the publication of the alteration, appeal to the Secretary of State to have the alteration wholly or partially rescinded. ( ) The Secretary of State must publish his response and the reasons for it within the following three calendar months.

The noble Lord said: My Lords, Amendment No. 12 flows from our previous discussions. It raises an important point. If a waste disposal authority has its allocation altered, there should be a right of appeal, especially if it is altered downwards. If it were a case of expansion to meet a particular circumstance, that would be another matter. It would be rash to assume that the new system will be perfect. It will not. I imagine that within the total allocations distributed by the Minister, a certain amount of flexibility will be withheld. One area of flexibility is that the Minister might reduce some allocations. It struck us that., were he to do so, the waste disposal authority whose allocation was reduced should have the right of appeal against the reduction if it felt that it was being treated unreasonably. I beg to move.

Lord Livsey of Talgarth

My Lords, the first subsection in the amendment refers to a waste disposal authority appealing to the Secretary of State, to have the alteration wholly or partially rescinded". I can foresee a situation where wholly rescinding an alteration might be questionable; but there could be a marginal case for partially rescinding it where the proposal is seen to be unreasonable and the waste disposal authority does not believe that it can comply. I shall be interested to see whether the Minister will distinguish between "wholly" and "partially".

Lord Whitty

My Lords, the amendment would require an appeals mechanism to be established for appeals against alteration of the allocation. When we debated the previous amendment, I referred to alterations that might increase the allowance. This amendment clearly relates to alterations that might reduce the allowance. The exercise of the power to change the allowance downwards is already limited by Clause 5(2) and (3) of the Bill. Clause 5(2) provides that an allocating authority cannot withdraw an allowance that has already been utilised; and Clause 5(3) provides that an allocating authority, must ensure that the total amount of biodegradable municipal waste authorised to be sent to landfills by allowances allocated by it for a year does not exceed the amount for the year specified", under earlier clauses. Where an allocating authority does alter the allocation, it is required under Clause 5(4) to, publish a statement … detailing the alteration, and … explaining the basis for it". So there are significant restraints on the ability to alter, and alteration would have to be exercised reasonably. If the waste disposal authority felt that the power had been exercised unreasonably, it could seek a judicial review of the decision in terms of the basis for making the allowances.

I merely add that the way in which the appeals mechanism is specified in the amendment is slightly odd, since the appeal is made to the Secretary of State, when the alteration would have been made by the Secretary of State. In those circumstances it perhaps does not amount to much of an appeal.

Lord Dixon-Smith

My Lords, the Minister is essentially correct in his final point. But anyone who has ever served at a senior level in a local authority is entirely used to appealing to a Minister on a matter in regard to which the Minister is propagator, judge and jury. It is not unknown for Ministers occasionally to make an adjustment as a result of such appeals. So, although the method of appeal might not totally meet the Minister's requirement—I can well understand his not wanting to get into a situation where too many people were appealing to the Secretary of State on an issue at any one time—this is a no-cost situation.

It is all very well to say that an authority can go to judicial review, but that is expensive and time consuming. A matter is not taken to judicial review unless it is of great significance. I hear what the Minister says and I shall study his comments. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Borrowing and banking of landfill allowances]:

Lord Dixon-Smith moved Amendment No. 13: Page 4, line 23, leave out from "to" to end of line 24 and insert "carry forward any unused allocation

The noble Lord said: My Lords, Amendments Nos. 13 to 15, 26 and 40 are grouped together. These amendments relate to our belief that unused allowances should be carried forward if required. The borrowing of as yet untouched allowances from the future has, however, the makings of a disaster.

It has been said several times that the capital requirement for any programme of waste reduction is enormous. None of us wants incineration, but it will have to be part of the answer and it will be expensive. That is a fact. Anaerobic digestion, which we should prefer to see, is an even more expensive system. We are looking at major projects combining civil, mechanical, electrical and electronic engineering, along with some fancy biological technology.

It is not our intention to open a door to the possibility of any disposal authority or collection authority using forward allowances to help to justify a project which then builds up delays. We return to the business of straight-line targets. Borrowing from future allowances will create problems. That could be seen as a reason to delay construction which would ultimately result in failure to meet targets in future years. We are looking for a smooth progression; that is our reason for advancing the amendments. I beg to move.

Lord Livsey of Talgarth

My Lords, we debated these amendments in Grand Committee. They relate to provisions in the Bill for a waste disposal authority to utilise allowances from one scheme year to a different year. This is a complex matter, but the essence of the amendments is that they reduce the flexibility of waste disposal authorities—that is, county councils and unitary authorities—to manage the new scheme and adapt it to their own circumstances. For that reason, we do not support the amendments. We thought them useful in Committee—indeed, we moved similar amendments in order to probe how the Government see the scheme working. We believe that the explanations given in Committee were acceptable and we stand by that.

Amendment No. 40, on the face it, sets out the position in a much simpler, more understandable way than the Bill itself. However, it severely restricts the ability of waste disposal authorities to move allowances from one year to another—either a year earlier or a year later—and restricts allowances that can be traded. We believe that, like the other amendments, it would make life more difficult for the local authorities concerned. For that reason—we think it a good one—the amendment should be resisted.

Lord Whitty

My Lords, the noble Lord, Lord Livsey, has said much of what I would say. The whole point of providing a trading scheme in the Bill—it is a major part of the Bill—is to enable local authorities to meet their targets in a flexible way, given that some investment will be a step-change and the timing of it may not exactly fit in with the profile of the allocations given to them.

We are concerned to ensure that targets can be met cost effectively and flexibly. That is why we are providing the ability to transfer and trade allowances. In any trading system, borrowing and indeed banking are part of the system. The use of borrowing gives waste disposal authorities a vital flexibility in moving towards the requirements; allowing for regulations that provide for both banking and borrowing in effect underpins any trading scheme and therefore increases rather than reduces the ability of individual local authorities to meet the targets. For example, major investment in infrastructure could be required in many of the technologies to which the noble Lord refers. Investment could be required in years one and two but the infrastructure would not come on stream until year three. The waste disposal authority would need to borrow in the first two years knowing that it would be able to compensate for that borrowing and effectively pay back as soon as the facility was built and the capacity came on stream. That would not be possible if borrowing were not permitted.

The Bill's provision for a combination of targets and being able to borrow and bank around those targets increases rather than reduces flexibility. To remove that flexibility would undermine the whole dimension in the Bill of a trading scheme. I hope, therefore, that the noble Lord will think again and not pursue the amendment.

5.30 p.m.

Lord Dixon-Smith

My Lords, I agree in principle with what the Minister says about trading the allowances. However, we believe that trading those allowances should take place directly between authorities and not through the intervention of third parties. Trading allowances that one does not need is one thing; trading allowances from the future that one might need is entirely another. It is for that reason that we brought forward this group of amendments. I hear what the Minister says. It is to be hoped that the noble Lord is right. If not, we are all in deep trouble. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 14 and 15 not moved.]

Lord Dixon-Smith moved Amendment No. 16: Page 5, line 12, leave out paragraph (i).

The noble Lord said: My Lords, the provision is not helpful because it implies that third parties will be able to trade in allowances which should be traded directly between authorities. Most importantly, paragraph (i) makes provision for, the levying of fees and charges on persons engaged in inter-year utilisation of allowances".

I am not sure which person is trading. That is why we have brought forward the amendment. We are talking about waste disposal authorities which have something to dispose of. Is the chief executive of that authority the person who is trading? Is the treasurer of the county council behind the waste disposal authority that person? Is the leader of the council who agrees that the trade may be made the person who is trading? Alternatively, is it simply a commission rate for a third party who is involved in the trade and nothing to do with the people who originated it? The position is not clear. We think that it should be. I beg to move.

Lord Whitty

My Lords, the amendment would delete one of the provisions which are intended as examples of features of a scheme which would allow the scheme to function successfully. It would remove the example of regulations providing for the levying of fees and charges on those involved in inter-year utilisation of allowances. I understand that the example is fees and charges in relation to the waste disposal authorities. The provision of fees could be useful to compensate for the additional resources required for administering the banking and borrowing of allowances.

The level set would be intended to discourage unnecessary usage but would not be so high as to be a disincentive to engaging in the banking and borrowing required to enable waste disposal authorities to meet their objectives. A provision for fees and levies would in concept be to discourage unnecessary engagement in a trade and to encourage the use of borrowing and banking in ways which are directly related to the meeting of the targets; and, of course, it is permissive. In that sense, the provisions go some way to meeting the noble Lord's anxieties about the previous amendment. The proposed deletion would be negative to the regime he seeks which focuses on the achievement of the targets rather than the way in which they are achieved. It does not engage waste disposal authorities in unnecessary transactions in order to meet other objectives.

I hope that the noble Lord will reconsider the issue. I shall look again at the amendment to see whether there are other ways of achieving his objective. My understanding of the provision's intention would help to meet his objectives as well as mine.

Lord Dixon-Smith

My Lords, I am grateful to the noble Lord. I never doubt his intentions. The difficulty arises when the words on the face of the Bill are not sufficiently specific and are open to other interpretation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 17: Page 5, line 14, after "breaches" insert ", resulting or intended to result in financial or other material gain for the offender,

The noble Lord said: My Lords, the Bill provides that regulations may, make provision creating offences for breaches of provisions".

There could be many offences. We shall consider penalties somewhat later. The breaches should be, resulting or intended to result in financial or other material gain for the offender".

Simply creating offences is open ended. We should specify the nature of the offences. It is a small but helpful and vital point. I beg to move.

Lord Stoddart of Swindon

My Lords, I support the amendment and thank the noble Lord for bringing it forward. It must be clear in the Bill that there is financial or other material gain for the offender.

I have sought to follow the Bill at Second Reading, partly in Grand Committee, and today. I am glad that I shall not have to deal with the Bill's provisions. They are confusing in so many respects. Anyone who has to operate the measure cannot help but be confused. The people dealing with the provisions will not normally be mathematicians who can work out algebraic equations; they will be handling the stuff on the ground. Therefore, they could be in breach of the regulations without any intention of gain but simply and solely because of not understanding them or because no proper explanation had been given. Their superiors might not be able to understand the regulations—they might not be mathematicians either.

I hope that the Minister will take this matter seriously. I think he will accept that this is a complicated Bill. Any measure that comes out of the European Union is bound to be complicated, and this seems more complicated than the other stuff. I hope that the Minister will treat the amendment with sympathy.

Lord Whitty

My Lords, I understand the concern that we do not want an open-ended creation of offences, but I think that the amendment limits the Bill's powers too much. We might need the provision to create offences where there was a serious breach of the information requirements. We have in mind the offence of knowingly or recklessly providing information which is false or misleading in a material particular. Although we want such an offence to cover the situation where there is material gain to the committer of the offence, we do not wish to confine it to that. For example, a misleading or false provision of information could be designed to benefit the authority for which the offender worked. It could, in certain circumstances, lead to political gain within the authority for others or for what certainly could not be described as financial or material gain, or it could be designed for the benefit of the participating authority in a non-financial sense.

When the courts consider such an offence, they will need to consider why it was committed and for what purpose. We need a provision that allows the regulations to create an offence which covers all these contingencies and not simply one directly giving material and financial gain to the alleged committer of the offence. For that reason, I must resist the amendment.

Lord Dixon-Smith

My Lords, I am grateful to the noble Lord, Lord Stoddart, for his intervention. I find it somewhat sad that the Minister's advice on the workings of the criminal mind is fuller and more unfortunately realistic than mine. I had not considered that there might be other motivations for creating misleading information in this area. I hear what the Minister said and I understand it. With considerable regret, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Speaker (Baroness Ramsay of Cartvale)

My Lords, before I call Amendment No. 18, I have to inform your Lordships that if it is agreed to, I cannot call Amendments Nos. 19 to 23 inclusive

5.45 p.m.

Lord Whitty moved Amendment No. 18: Page 5, line 16, leave out subsection (4).

The noble Lord said: My Lords, I wish to speak also to Amendments Nos. 29 and 35.

In its second report, the Select Committee on Delegated Powers and Regulatory Reform accepted that the delegation to create offences in the Bill would be acceptable if the maximum level of offences were the level in the European Communities Act 1972. I have therefore tabled the amendments to provide for maximum penalties in line with the maximum penalties provided for under paragraph 1(1) of Schedule 2 to that Act. These will provide for the maximum penalty on indictment to be a term of imprisonment which may not exceed two years, or a fine, or both. The maximum penalty on summary conviction would be a term not exceeding three months and/or a fine not exceeding the statutory maximum or level 5 on the standard scale.

I am aware that there is concern about allowing the power to set penalties of both imprisonment and a fine, but there are a number of precedents. For example, Section 346 of the Financial Services and Markets Act 2000 provides for the offence of knowingly or recklessly providing, information which is false or misleading in a material particular".

The penalties are of a similar order. This offence applies to persons authorised to carry out regulated activities under that Act.

There are a number of other precedents, if your Lordships are interested—Section 44 of the Competition Act 1998, Section 93B of the Fair Trading Act 1973 and Section 11 of the Charities Act 1993. Although the provisions may be slightly different, they cover both imprisonment and a fine. Thus, to enable us to fix the same penalties for the offence, we need to retain the "or both" provision in relation to imprisonment on indictment.

In tabling the amendment, we have complied with the advice of the House of Lords Select Committee on Delegated Powers and Regulatory Reform, as we always try to do. I beg to move.

Lord Dixon-Smith

My Lords, these amendments are welcome. The level of penalties provided in this part of the Bill caused us considerable concern, and the amendments go a long way towards relieving that concern. In fact, they supersede our amendments very neatly. It is gratifying to see that the Government have taken on board the points raised in Grand Committee about this part of the Bill. I welcome the amendments.

Lord Livsey of Talgarth

My Lords, I welcome the amendments. Much detail is contained in Amendment No. 35 which will, as the Minister said, bring the Bill into line with recommendations of the Select Committee on Delegated Powers and Regulatory Reform. There is no doubt that, as previously drafted, the Bill was draconian in some respects. We are very satisfied with the Minister's proposals.

Lord Stoddart of Swindon

My Lords, I, too, am grateful to the Minister for taking account of what was said in previous discussions, particularly in Grand Committee. The previous penalties were draconian and completely unacceptable. But I wonder whether a two-year term of imprisonment provided for in the amendment is draconian, even so. Is this the sort of offence for which people should go to prison? We have heard from the noble and learned Lord, Lord Woolf, and the noble and learned Lord the Lord Chancellor that we should not put burglars in prison, certainly not for a first offence. Burglary seems a much more heinous offence than cheating under this Bill. I should have thought that the correct penalty in this respect should be an exemplary fine accompanied not by a prison sentence but by community service.

The Government have stated their confidence in the system of community service on many occasions. In this case, service to the community, coupled with a fine, would be a far better result for everyone concerned. Even at this late stage, I hope that the Minister will have yet another look at the issue to see whether imprisonment is necessary under the terms of the clause.

Lord Whitty

My Lords, I am grateful for the words of appreciation for having tabled the amendments, which I hope meet most of the anxieties. I note what the noble Lord, Lord Stoddart, says. He is not going to tempt me into commenting on the interesting discussions between the noble and learned Lord, Lord Woolf, and the Home Secretary on broader matters of sentencing policy. In this context we are talking about maximum penalties. In appropriate circumstances, the courts will be able to impose a more limited penalty, possibly avoiding imprisonment. The maximum penalty reflects the penalties for similar offences relating back to the standard of the European Communities Act—although I am sure that will not appeal to the noble Lord, Lord Stoddart. The provision has been adopted by various administrations for similar offences of producing misleading information for material benefit, under the Acts that I referred to. I therefore think it is appropriate in these circumstances too. That does not mean that there will be imprisonment for every first offence. The penalty is a maximum, not a mandatory one.

On Question, amendment agreed to.

[Amendments Nos. 19 to 23 not moved.]

Clause 7 [Trading and other transfer of landfill allowances]:

Lord Dixon-Smith moved Amendment No. 24: Page 5, line 45, leave out sub-paragraphs (i) and (ii).

The noble Lord said: My Lords, this is a probing amendment. Subsection (3)(a) says that regulations may: make provision for allowances to be acquired, or disposed of. only if— (i) allocated by the allocating authority".

Who else would give anybody an allocation that they could dispose of? I suppose allocations that had been traded could subsequently be disposed of, but this seems a little odd. We suggest that people should be able to trade only the allocations that they were given, so sub-paragraphs (i) and (ii) are unnecessary. This is a technical amendment to probe the Government on precisely what those sub-paragraphs mean. I beg to move.

Lord Livsey of Talgarth

My Lords, as the noble Lord. Lord Dixon-Smith, said, this is a technical amendment, brought forward from Committee. It relates to allowing the allocating authority—either a devolved authority or an authority in England—to make the trading and transfer scheme less flexible. We think this is desirable and support the reasons given by the noble Lord, Lord Dixon-Smith. The Government did not explain their view on this in Committee and we would like to know what they think.

Baroness Farrington of Ribbleton

My Lords, the amendment would remove the power to make provision in regulations for allowances to be traded or transferred only if allocated by a particular allocating authority and/or for specified scheme years. Such provision enables allocating authorities to prevent cross-border trading or to provide for it with certain countries. It also allows allocating authorities to restrict transfers of allowances to those allocated for the year in which they are traded, or to place restrictions on the trading of allowances that have been banked or borrowed.

We consider it important for allocating authorities to have the power to restrict trading in this way. The Bill seeks to set out a flexible framework for the scheme and to give the allocating authority for each country of the UK the ability to make their own decisions about the detailed operation of the landfill allowance scheme in regulations.

Each allocating authority will make its own regulations and each will consult on its scheme. We believe it is proper to give those allocating authorities the flexibility to frame their schemes as they see fit. The appropriate authorities in Scotland and Wales may see the benefits in relation to cross-border activity that noble Lords have identified as appropriate. However, it is not appropriate to restrict that ability for each of the allocating authorities to make its own judgment by taking a decision in advance.

I hope noble Lords will not press the amendment. We would hate to upset the Scottish Parliament or the Welsh Assembly. I can see the noble Lord, Lord Livsey, nodding his head.

Lord Dixon-Smith

My Lords, perish the thought that we should upset any subsidiary part of the United Kingdom. I am grateful to the noble Baroness for her explanation, which has helped. We shall study it. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 25: Page 6, line 5, leave out paragraph (d).

The noble Lord said: My Lords, subsection (3)(d), which the amendment would leave out, says: make provision authorising the allocating authority to suspend the transfer of allowances—

1. (i) whether indefinitely or for a fixed period, and
2. (ii) whether generally or to a limited extent".

The Minister has already said that the allowances will be known well in advance, which will allow reasonable certainty on long-term planning for waste disposal authorities. That sort of planning will be required if the capital investment that we hope for is to be forthcoming and if the required skills are to be developed.

At the end of the process, the amount of biodegradable municipal waste going to landfill has to be no more than 35 per cent of the amount produced in 1995. That is a huge change—even bigger in view of the fact that the volume of biodegradable municipal waste has been increasing by 3 per cent a year since 1995 and was increasing before that. Should any allocating authority decide not to allow transfer of allowances at any time, disposal authorities would have to plan around the change. To allow transfer and then suspend it would increase the hazard. The authorities would first have to plan around the change, and then plan around its suspension. That would make life impossible. We felt that it was better therefore to leave out subsection (3)(d). I beg to move.

6 p.m.

Lord Livsey of Talgarth

My Lords, Amendment No. 25 would make the situation less flexible. When replying to this amendment and others in Committee, the noble Lord, Lord Whitty, said at col. GC50 on 17th December last: 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".—[Official Report, 17/12/02; col. GC50.] The noble Baroness, Lady Farrington, in her reply to the previous amendment, took account of that response. But the Minister at the time did not explain why it is sensible, in this context, to allow a severe restriction on the scheme by suspending the trading allowances. This matter needs a little further probing and explanation.

Baroness Farrington of Ribbleton

My Lords, Amendment No. 25 seeks to remove Clause 7(3)(d) from the non-exhaustive list of the types of provision which the regulations, under Clause 7(1) may make. Paragraph (d) provides for regulations to, make provision authorising the allocating authority to suspend the transfer of allowances". As I have already explained—this was recognised by the noble Lord, Lord Livsey—we believe that allocating authorities should be able to provide for the transfer of allowances as part of a flexible landfill allowance scheme. However, the allocating authority must be able to retain some control and there may be circumstances—for example, a major emergency or a major change in policy altering the directive—where it would need to suspend trading, whether indefinitely or for a fixed period, generally or to a limited extent. It is for each allocating authority to decide the extent to which it should be authorised to suspend the transfer of allowances when making regulations to authorise trading.

I hope that that covers the unease expressed by the noble Lord, Lord Livsey, and the mover of the amendment, the noble Lord, Lord Dixon-Smith. This will be a matter for consultation. The result of that consultation and the regulations that emerge will come before this House through the affirmative procedure. I shall not be surprised if the noble Lord, Lord Hanningfield, watches carefully and takes part in the necessary consultation. I hope that with that reassurance the noble Lord, Lord Dixon-Smith, will not feel the need to press the amendment.

Lord Dixon-Smith

My Lords, the noble Lord, Lord Livsey, is helpful, as always. I am grateful also to the noble Baroness for her response.

I accept that circumstances change. If in the event there is to be consultation before any changes of this nature are made, that will go a long way to smoothing any difficulties. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 26 not moved.]

Lord Dixon-Smith moved Amendment No. 27: Page 6, line 12, leave out paragraph (f).

The noble Lord said: My Lords, subsection (3)(f)says that regulations may, make provision for licensing and regulating persons engaged as brokers in the transfer of allowances".

I sometimes feel that it will not be long before we are establishing a department in the Bank of England which will be trading waste disposal allocation.

I have no difficulties with allowances being traded between authorities. I have no difficulties with the trading, whether it is of unused allocations or even future allocations. But the idea that it may become a profession with independent third party involvement seems to go beyond reason.

Local authorities are used to dealing with each other. Waste disposal authorities are no doubt the same in that respect. A good exchange of information exists at that authority level. I am sure that if somebody had an allocation they wished to trade, there would be no difficulty in that being done directly. We do not believe that third party intervention is appropriate. That is why we tabled Amendment No. 27. I beg to move.

Lord Livsey of Talgarth

My Lords, perhaps I may refer to the previous amendment for a moment. Chivalry is clearly not dead in this ancient House and its traditions, and I thank the noble Lord, Lord Dixon-Smith, for his kind remarks.

We thoroughly agree with Amendment No. 27. This is the paragraph in the Bill which allows regulations to be made for waste allowances brokers. We are not convinced that such a new profession is necessary. We can see that there may be sense in a local authority or the waste disposal authority employing an officer who can engage in trading between two other waste disposal authorities other than his own—if they have the contacts and skills. That may in fact benefit the council itself. But we cannot see a role for the private sector in that respect.

I can think of other examples where perhaps it would have been better in certain circumstances if the private sector had not become involved. It made some of the processes extremely complex. Therefore, Amendment No. 27 is thoroughly sensible.

Lord Lucas

My Lords, even if the private sector became involved—I agree with my noble friend that that seems unlikely—why should the brokers need licensing? They are people who are trading between local authorities. Local authorities do not need consumer protection of that sort. I cannot see why under any circumstances we need the bureaucratic structure which the Bill would create of licensing, recording and introducing all sorts of tests for people to pass.

We are talking about grown-up people dealing between themselves. If someone can make a living as an intermediary, why should be need licensing? What unimaginable sort of problems does the noble Baroness envisage if those people were to trade in an unlicensed way?

Lord Stoddart of Swindon

My Lords, I too support Amendment No. 27. I cannot see what need there is for brokerage in this industry. Indeed, I cannot see how they will make much of a living; and if they do make much of a living, the costs on the local authorities and waste disposal authorities will be much higher.

We are all used to going to brokers for insurance. But a large number of people are involved in that industry. There are only a limited number of waste disposal authorities. If they need help, they can contact their own Local Government Association. I cannot see why we need brokers, as the noble Lord said. But if we do need them, why do they have to be licensed? Why put yet another layer of regulation on an industry that will have regulations piled on it along with the other provisions in the Bill?

Lord Whitty

My Lords, there have been slightly different approaches from noble Lords. Some do not like the idea of having brokers; others say that if we must have them, they should be free from restraint.

Clearly, local authorities will have to make their own arrangements as to how they engage in the market. They may well run their dealings in-house with their own internal expertise. An individual authority may consider that it is better to buy in expertise on a services basis. Those engaged in that process should be subject to some scrutiny, as brokers are in other markets. The provision is not a requirement on the waste disposal authorities to employ brokers, nor is it an attempt to create a wholly new profession to deal with this trading arrangement. It is to allow the authorities flexibility in carrying out the trade and to provide reassurance to the public that those who are acting as brokers do so within a reasonable framework.

That is why we want the power to set regulations for brokers. The provision does not prescribe how waste disposal authorities should carry out their business. I probably agree with the noble Lords, Lord Dixon-Smith and Lord Stoddart, that in most cases local authorities will be perfectly capable of carrying out the activity themselves. But if they are not, we need to ensure that those who act as brokers operate within certain guidelines. That is all that the provision requires. Its deletion would remove the ability to ensure that the market functions with integrity. I hope, therefore, that the amendment will not be pursued.

Lord Lucas

My Lords, I should be grateful if the noble Lord would answer my question. Can be illustrate the sort of evil that might occur if brokers are unlicensed? Most people indulging in trading in this country do so without having to obtain a licence, particularly if they are dealing with big companies and organisations. We are not dealing in a market that requires consumer protection. What damage could occur to local authorities if they dealt with an unlicensed dealer?

Lord Whitty

My Lords, it is true that most markets do not require brokers to be licensed by the state, but most markets do not deal with council tax payers' money. Public authorities need to ensure that whoever is trusted with those deals operates in a way that conforms with public service principles.

As for the other regulations, and as my noble friend Lady Farrington said on the previous amendment, the precise provisions for regulation will be subject to wide consultation. It may be that the licensing arrangements will be minimal, but some guidance as to how a brokerage operation should act when dealing with public authorities and council tax payers' money is required. The deletion of subsection (3)(f) would eliminate the Government's ability to regulate. It is not the same as brokering in an entirely private market, but it is true that such brokers are generally covered by some degree of self-regulation. The equivalent in the public sector market is that the public sector regulates.

6.15 p.m.

Lord Dixon-Smith

My Lords, I hear what the noble Lord says. If I interpret him correctly, he hopes that he is buying insurance against something that will never happen. He seems to think it unlikely that third parties will come into the trade because the capacity of local authorities' waste disposal authorities is already considerable and they have expertise in dealing with each other.

I have some sympathy with the argument that there should be a capacity to regulate in the event of third-party traders. My noble friend Lord Lucas is right that the vast majority of business by way of trade in this country is done through unregulated markets. If' one looks at all business in this country, one finds that the regulated part of the market is considerably smaller than that which is not.

I hear what the Minister said. If he wants to purchase that insurance, we should not prevent him as the premium is not unreasonably high. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 28: Page 6, line 20, leave out from "for" to end of line 22 and insert "the allocating authority to make available to each waste disposal authority the full financial resources necessary for it to comply with any requirement imposed on it by or under provision of the kind mentioned in paragraph (h) together with all regulations made under sections 11 and 12;

The noble Lord said: My Lords, in moving Amendment No. 28, I shall speak also to Amendment No. 39. Both are associated with the continuing cost of this legislation.

The Minister referred several times to the costs to the council tax payer and the council. We understand why the Government are proposing this legislation now, but in Grand Committee most of us said that the Bill represented putting the cart before the horse. The Government published the paper, Waste Not, Want Not, setting out future dealings with waste. We would prefer to discuss spending money on waste minimisation and deal with the problems of waste rather than talk about extra costs such as landfill tax and regulations. The answer in the end is to find new ways of dealing with waste.

The Bill will cost money. We have estimated that local government in Essex will have to spend £ 100,000 in extra staff, keeping records and so on. That £100,000 could do a lot of other things. The Minister in Grand Committee said that local government had had a good settlement. We certainly did not have a good settlement in the South East. Local authorities covering 15 million people have had only a 3 per cent settlement. We are having to consider removing some of the measures we have now, such as composting regimes and experiments. An interesting one that we had to get rid of in Essex was the real nappies campaign. Disposable nappies constitute a lot of waste. We had a good campaign to persuade people to use real nappies. But the campaign was one of our budget cuts last week. Under this Bill, we are talking about spending an extra £100,000 simply on paperwork.

The amendment would help local authorities to go back to what they should be doing, which is minimising waste rather than completing paperwork. Amendment No. 28 would oblige the Government to remunerate local authorities either by direct grant or by making certain that such remuneration was included in a grant given to local government. It is important for the Government to acknowledge the extra costs to local government and to reduce what is already a severely stretched waste budget.

Amendment No. 39 is slightly different. To many of us in local government, it is rather like the delayed discharge legislation involving social services and health authorities and the fines for people staying in hospital. The Government acknowledge that and have put extra money into the system so that local authorities can cope with people who are in hospital. We say that such fines should at least be returned to local government in some way to help minimise waste. That is what this is about. Where will the money go?

The Government have acknowledged a problem by introducing the delayed discharges legislation. Could they not acknowledge the problem in relation to this Bill? Could not the fines paid into the Government's coffers go not to the Chancellor but into the waste system so that they help to implement this legislation? I beg to move.

Lord Bradshaw

My Lords, I support the comments of the noble Lord, Lord Hanningfield. The whole process of waste disposal is extremely expensive for local authorities. We have had the same sort of settlement as that mentioned by the noble Lord. Next week, I shall be invited with other county councillors to increase council tax by 13.7 per cent. It is a huge increase. I think that the principles enunciated by the noble Lord in his amendments are entirely acceptable to county councillors, who are spending ever more each year on waste disposal. If we are to meet the targets that are set for us, we will have to continue to spend ever more. It is extremely expensive.

Lord Stoddart of Swindon

My Lords, I should like to say a few words in support of the noble Lord, Lord Hanningfield, who has brought forward these two very interesting amendments. As he said, at Second Reading and in Committee, we emphasised the need to prevent the waste arising in the first place; we cannot overemphasise that need. This burden is being imposed on local authorities by very often unthinking private organisations, be they retailers, packagers, or whatever. I know that the Government are taking steps and having discussions to address the issue. Like other noble Lords, however, I urge the Minister to take this point very seriously and to step up the Government's efforts to reduce the amount of waste at source. That would help local authorities, waste disposal authorities and householders more than anything else that we can think of.

On the amendment itself, as we have just heard, local authorities are very strapped for cash. In some areas in the South, authorities will have to increase rates not by 13.2 per cent but by up to 20 per cent. That is going to impose an enormous burden on the authorities themselves and, of course, on their council tax payers. Where the Government impose further duties on local authorities, they have some duty to provide the means of carrying them out. Unfortunately, they are not doing that. Unfortunately, far from allowing local authorities the sources of finance they ought to have, the government under both parties have progressively reduced local authorities' ability to obtain funds to carry out the work imposed on them by the government.

I think that the two amendments in this group try to get the Government to understand what local authorities go through and to do something about it. Certainly where fines are imposed, some of that should go back into the local authorities, who are the ones who have been injured. I feel that there is enormous support for what we have been saying. I hope that the Minister will take note of it.

Lord Dixon-Smith

My Lords, the issue of fines and penalties on local authorities is inevitably a very complicated question when 80 per cent of local government's revenue comes from the central government anyway. The fines and penalties are effectively a penalty levied on the Government themselves—unless, of course, there is a way of excluding fines and penalties from the generality of local authority expenditure. The Government already have a milch cow in the landfill tax. Although I know that it is a separate issue, at present. the Government's revenues from that tax are considerably greater than their return to the waste disposal business.

I must support Amendments Nos. 28 and 39. It is simply unreal to expect that the additional costs, and then the financial penalties, can be met just like that. Those costs will have a very real impact on local tax payers. They are a part of the total package. As I said, because of successive government decisions, and not only decisions by this Government, local tax payers are contributing too small a part of local government revenue. There is a problem. These amendments would do something to help local government to reduce that problem. I think that one should take steps to ensure that the person who created the problem is not the immediate beneficiary of the money coming back. Moreover, the principle must be correct.

Lord Whitty

My Lords, I have a degree of sympathy for some of the comments made, particularly in relation to Amendment No. 39. On the other hand, I do not accept some of the premises on which the amendment is based. The additional bureaucratic burden implied by the Bill is relatively small. The Bill requires waste disposal authorities to provide information which most authorities already collect.

The information is therefore already available and the additional burden will only be one of reporting the data to the monitoring authorities. In itself, that is not likely to create the type of financial pressures to which the noble Lord, Lord Hanningfield, and other noble Lords referred. Nor do I accept that that requirement is part of the overall pressure on local authorities.

Lord Hanningfield

My Lords, we have done an analysis through the Local Government Association of the provision's effect in large authorities. We think that it will cost large authorities such as Essex about £100,000. As I said, we could do several waste minimisation schemes for that. In such stretched circumstances, £100,000 is a lot of money.

Lord Whitty

My Lords, I note what the noble Lord says. He is clearly indicating that the way in which it is carried out in his authority will create that magnitude of problem. However, that is against the fact that, in the past two spending reviews, we have substantially increased the provision for environmental services, in which waste management is a major component. We have also provided additional funding through the waste minimisation and recycling funds. Significant additional resources are going in specifically for that purpose. The funding goes into the general grant in regard to the first category, after which it is up to the local authority to decide how it should be allocated.

The provision for allowing allocating authorities to place a financial penalty on waste disposal authorities who fail to provide the information in the form required is important to ensure that the trading scheme can operate at all. That provision therefore entails sanctions and penalties. Amendment No. 39 would require the money arising from those penalties effectively to be recycled back into the local authority's waste programme.

On the face of it, that has clear attractions, if, as the noble Lord, Lord Dixon-Smith, said, we can avoid the money going back to those who benefited from the original misdemeanour. However, it raises significant issues of principle and it is effectively a hypothecation of something approaching fine income, which has not hitherto been a part of the public finance approach. There are precedents for recycling this money within particular regimes. To be slightly Delphic, discussions are still proceeding in regard to what Amendment No. 39 covers in principle. Those discussions may or may not be completed by the time we reach Third Reading in this House, but we are actively and creatively examining outcomes not unadjacent to the outcome desired in Amendment No. 39.

I hope therefore that the noble Lords opposite will not press this amendment tonight but will instead watch this space. I hope to be able to say something more positive on Third Reading. if I cannot, the noble Lords can return to the subject at that stage. I should be grateful if, at this stage at least, the noble Lords could agree to withdraw the amendment.

6.30 p.m.

Lord Hanningfield

My Lords, I thank the Minister for that reply. On the matter of the first amendment, we will do some more work on the actual cost to local authorities, because it will be important for the Government to recognise that cost in the TSS. Even if the Government cannot accept the first amendment, I would like to pursue the second amendment further at a later stage. However, for today I accept what the Minister said.

Some money will come out of the system. No one is suggesting that it should go back directly to those who incurred the fines, but it should go back into the waste system. I repeat that that money could do much to help schemes for minimising waste. If it went back into that area, we could work on our main objective. All of us want to minimise waste. None of us want this kind of legislation— we would rather not have the waste in the first place.

The money should not go out of the local authority system—it should go back into it to help achieve our objectives. I am grateful for what the Minister said. We will wait until Third Reading before pursuing this matter any further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees

My Lords, if Amendment No. 29 is agreed to, I cannot call Amendments Nos. 30 to 33 inclusive.

Lord Whitty moved Amendment No. 29: Page 6, line 29, leave out subsection (4).

On Question, amendment agreed to.

[Amendments Nos. 30 to 34 not moved.]

Lord Whitty moved Amendment No. 35: After Clause 7, insert the following new clause—

"OFFENCES UNDER REGULATIONS UNDER SECTIONS 6 AND 7 (1) This section applies where—

1. (a) regulations under section 6(1) are making provision of the kind mentioned in section 6(3)(j), or
2. (b) regulations under section 7(l) are making provision of the kind mentioned in section 7(3)(l).

(2) The regulations may provide for an offence to be triable—

1. (a) only summarily, or
2. (b) either summarily or on indictment.

(3) Where the regulations provide for art offence to be triable only summarily, they may provide for the offence to be punishable—

1. (a) by imprisonment for a term not exceeding such period as is stated in the regulations (which may not exceed three months), or
2. (b) by a fine—
1. (i) not exceeding such amount as is so stated (which may not exceed level 5 on the standard scale), or
2. (ii) not exceeding such level on the standard scale as is so stated, or
3. (c) by both.

(4) Subsections (5) and (6) apply where the regulations provide for an offence to be triable either summarily or on indictment. (5) They may provide for the offence to be punishable on summary conviction—

1. (a) by imprisonment for a term not exceeding such period as is stated in the regulations (which may not exceed three months), or
2. (b) by a fine—
1. (i) not exceeding such amount as is so stated (which may not exceed the statutory maximum), or
2. (ii) expressed as a line not exceeding the statutory maximum, or
3. (c) by both.

(6) They may provide for the offence to be punishable on conviction on indictment—

1. (a) by imprisonment for a term not exceeding such period as is stated in the regulations (which may not exceed two years), or
2. (b) by a fine, or
3. (c) by both."

On Question, amendment agreed to.

Clause 8 [Duty not to exceed allowances]:

Lord Hanningfield moved Amendment No. 36: Page 7, line 3, at beginning insert -Subject to subsection (5),

The noble Lord said: My Lords, Amendments Nos. 36 and 37 are enabling amendments for Amendment No. 41. Amendment No. 41 deals with the most difficult part of the Bill. I do not like to keep talking about my own authority of Essex county council, but I am familiar with it and I know about the problems there. We are a large county with 12 district councils. Most of England is covered by two-tier authorities similar to Essex with its district councils. We can only achieve what is set out in the Bill by co-operation and working together with the two tiers of local government. In Essex, we have a consortium of all the authorities and we are trying to work together to minimise waste and to find out how to dispose of it. Essex county council is the disposal authority in that case.

The worst aspect of the legislation is that officers or members of Essex county council could be penalised, fined or even sent to prison through the actions of one of the district councils. Our 12 district councils are very different from each other. Some of them recycle virtually nothing at all and others recycle up to 40 per cent. I am sure that they all have ambitions to recycle more, but in a small district council £30,000 can put 1 per cent on the council tax and some of them are reluctant to spend very much money on such issues.

It could be a political matter as well. A district council might want to get a county council of a different political complexion into difficulties— perhaps get its members put in prison. The Government must think again about this matter. The Minister indicated in Grand Committee that they would do so. It cannot be the Government's wish that one group should be penalised for the actions of another about which they can do nothing. That is the most severe aspect of the legislation and something should be done about it. I hope that the Minister can help on this one. I beg to move.

Lord Bradshaw

My Lords, I rise briefly to support the remarks of the noble Lord, Lord Hanningfield. The performance of district councils varies very widely according to their political persuasion and factors such as their adoption some years ago of wheelie bins, which has increased enormously the amount of waste that they have to deal with. They now find themselves in great difficulty in withdrawing something which people have appreciated. However, a waste disposal authority has to have some safeguard against a collection authority that, for reasons of economy or just out of sheer political will, decides not to adhere to the forecasts.

Lord Dixon-Smith

My Lords, the problem is that much of the country is covered by two-tier authorities and faces real difficulties if some of the collecting authorities do not sufficiently rapidly comply with the requirements of the Bill. It would be difficult if the waste disposal authority were to be penalised in such a situation without being able to do something about it.

The amendment of my noble friend Lord Hanningfield goes a long way towards putting the matter right and should be given serious consideration. I know that the Minister is familiar with the problem and I hope that he will give a sympathetic response, even if he does not say yes.

Lord Livsey of Talgarth

My Lords, I would like to draw the attention of the House to Amendment No. 66, which has been grouped with the amendment under discussion. The amendment is designed to tackle the problem by allowing the penalty to be levied on offending districts by the allocating authority—the devolved administration or the Department of the Environment in England—and not by the waste disposal authority, as we might have been misunderstood to have said in Committee. We believe that neither solution is ideal, but the Government must explain clearly how the problem will be sorted out, because this is a matter of great importance, as the noble Lord, Lord Hanningfield, has already pointed out.

Lord Whitty

My Lords, as I indicated in Grand Committee, I have some understanding of the problem that these amendments are designed to address. Clearly, the main responsibility imposed by the Bill, which deals with waste disposal, must rest with the waste disposal authority, and that is why the sanctions are directed primarily at that authority. Nevertheless, I can imagine situations where the achievement of those objectives could be undermined either through malevolence or inadvertently by the actions of one of the districts within the county area in two-tiered parts of the country. However. Amendments Nos. 36, 37 and 41, which are designed to put some of the burden on the waste collection authority, are not appropriate. As they stand, a small failure by one of the constituent waste collection authorities could allow the waste disposal authority to avoid the penalty although the main reason for failure lay with that authority.

Incidentally, later clauses require the Government to have a strategy for England for reducing the amount of biodegradable waste going to landfill in total. Part of the delivery of such a strategy would be to assist waste disposal authorities and waste collection authorities to work closely together. The recently published Strategy Unit report set out the options on how we might achieve that. The Government are currently considering how to take forward the delivery of the strategy in light of the recommendations from the Strategy Unit. I am not in a position today to establish whether that would require legislative form as an alternative to the approaches of Amendments Nos. 36, 37 and 41. The approach in those amendments would not be an appropriate solution to the problem.

Amendment No. 66, as the noble Lord, Lord Livsey, said, would deal with the problem in a slightly different way and does not suffer from the same disadvantages. However, other disadvantages are implicit in it. Effectively, it gives the allocation authority and therefore the central administration a quite detailed role in monitoring relations between the county and district authorities. That could be a problem in itself. If there was always the long-stop of appealing to the central authority, that could also reduce the incentive for the district and county to work together to achieve the required outcomes.

As the noble Lord, Lord Dixon-Smith, said, I undertook in Grand Committee to consider the matter further, and we are doing so. In a sense, it runs up against other principles—those of trying to reduce the number of strategies required and the degree of central interference in local authority management. However, we are trying to find a solution. As with the earlier group of amendments, I am not in a position to say whether we can produce it in time for Third Reading but we are working on it. I ask noble Lords—and the noble Lord, Lord Hanningfield, in particular—to give me some scope in this regard to establish whether we can come up with a solution that I can commend to the House at Third Reading. If not, we shall at a later stage return to this debate and to the various solutions proposed in this group of amendments. In the meantime, I hope that noble Lords will take account of at least some of my comments.

Lord Hanningfield

My Lords, I thank the Minister for that response. If the Bill is to work, a solution must be found to this problem. The Minister appeared to suggest that it was a fairly small problem. Geographically, most of England is two-tiered in terms of land mass. Most of this waste is therefore being deposited in that area. Whatever happens to regional government, it will probably be some years before there is regional government, even in the North East or North West, where there may be two tiers. For many years, we shall have to make this legislation work.

We welcome legislation involving Waste Not, Want Not to help us to minimise waste and to help the Government to take some initiatives. However, we understand that that is some time away. We are rushing through this legislation because we need it. This will happen and we desperately need to find an answer to the two-tier problem. As I said, we have a consortium in Essex that is working well. Districts, particularly small ones, have particular problems. Unless we have some ammunition to help us in that regard, the whole Bill will be difficult to implement.

I accept what the Minister says. I shall ask the Local Government Association also to examine the matter. We may be able to come up with a helpful suggestion in the near future; I am not sure when Third Reading will be. People need to put their minds to this. If the Bill is enacted as currently drafted, it will be flawed. I thank the Minister for his comments and. I am pleased that he is considering the issue. I shall certainly look at it again. We may make suggestions before Third Reading so that we can find a solution. Otherwise, the legislation will be very difficult to implement. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 37 not moved.]

6.45 p.m.

Lord Whitty moved Amendment No. 38: Page 7, line 12, at end insert— (3A) If—

1. (a) a waste disposal authority is liable under subsection (2) to a penalty in respect of a scheme year that is not a target year,
2. (b) that scheme year ("the penalty year") is later than the first target year, and
3. (c) the total amount of biodegradable municipal waste sent in the penalty year to landfills in pursuance of arrangements made by waste disposal authorities in the United Kingdom exceeds the amount specified under section 1(1)(a) for the last target year before the penalty year,

the authority is also liable to a supplementary penalty.

The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 64 and 65.

These amendments will insert new subsection (3A) into Clause 8 and make consequential amendments to Clause 25. The amendment to Clause 8 extends the circumstances in which a waste disposal authority would be liable for a supplementary penalty. We have concluded that that is necessary because on further consideration there were circumstances in the current Bill where a waste disposal authority would be responsible for the UK as a whole to be fined without any way of levying supplementary penalties.

Supplementary penalties are intended to enable at least a proportion of any fines imposed on the UK by the European Court of Justice for Failure to comply with a directive to be passed on to the individual waste disposal authorities that are responsible for such breaches.

Once a target year under the landfill directive has passed, there is a continuing obligation on the UK not to exceed the targets under the directive for that target year. The UK could be fined if, for example, it exceeded the 1910 target—I apologise, I am only a century out of date. The fine could be imposed if it exceeded the 2010 target in 2011. The amendment would ensure that the waste disposal authority would be liable for a supplementary penalty in all circumstances, including that one. However, Clause 8 as currently drafted permits a supplementary penalty to be imposed only in a target year. That would omit the circumstances I have just described

The new subsection also provides for a waste disposal authority to be liable for a supplementary penalty in scheme years between target years if it is liable to a penalty under Clause 8(2) and the amount of biodegradable municipal waste sent to landfill in the United Kingdom in that scheme year exceeds the amount specified under Clause 1(1)(a). That is a sensible precaution, which would enable any European-imposed fines to be shared by those who are responsible for our failure to meet the targets. I beg to move.

Lord Dixon-Smith

My Lords, we are moving deeper into the difficult area of penalties. Elsewhere in the Bill, we dealt with the problem of the Minister having flexibility to decide how to deal with penalties: to remit them, delay them and so on. We are now having to act to increase them and to deal with the post-target-year situation in which the country has to pay a fine. The Government are right to this extent: the Government are not a waste disposal authority. I should think they are jolly glad they are not. They could none the less be penalised and they want to push the penalty on to those who caused the problem.

If we are dealing with a situation in which the Minister has the power to decide whether or not the penalty should apply, the Minister will once again have to act as judge in his own case in order to recover moneys that the Government must pay on. I do have too much difficulty in deciding which way the Chancellor of the Exchequer would advise a Minister to decide such a matter, whatever the merits of the case. We are in a very complicated area. I hear what the Minister said and I note that the penalty that is in question in this regard relates only to exceeding the amount specified for the past target year. The Minister mentioned 1910—I am making the mistake that he made; I am getting my century wrong. He mentioned the 2010 target year and the possibility of a penalty being levied in 2011. I assume that if we get to 2015, the penalty would still relate to the 2010 target. Hopefully by then that situation would not arise, but if the penalty related to the graph that we spoke about earlier, I believe that there would be a problem. Perhaps the Minister would clarify that matter.

Lord Livsey of Talgarth

My Lords, we believe that this amendment is worthy of support in that it tightens up the system, builds on the target year and locks on to trading, transfers and so on. Clearly, this is important if the legislation is to be effective. If we want to see a reduction, there must be a means of applying methods to achieve that. We support the amendment.

Lord Stoddart of Swindon

My Lords, unless I have misunderstood the matter and misunderstood what the noble Lord, Lord Whitty, said, the situation is that if the Government—in other words, Britain—failed to meet the criteria under the directive the Commission could impose a fine, although the Government could appeal against that fine to the court. So far as I can see, we have now reached a situation in which the Government can be fined an unknown and unlimited amount by the European Commission or by the European Court of Justice and they are now seeking to push that penalty on to the people whom they believe have committed the offence.

We are getting into a convoluted state in which one authority can levy a fine on the Government. The local authorities did not go to Europe and agree to the directive; the Government agreed to the directive and therefore presumably they agreed that the Government could be fined. The Government did not say, "That is all right, the local authorities will pay that fine". As I understand the situation—these matters are complicated and perhaps I have misunderstood—they agreed to the directive in the full knowledge that, if the Government did not meet the targets, the Government could be fined. The local authorities did not agree to that. The local authorities had nothing to do with it. Having agreed to a directive under which a fine could apply, the Government are seeking to transfer that fine to the local authorities, which, as we have already discussed, are pretty strapped for cash. They would find it extremely difficult to meet a fine, particularly if it were a heavy one. Perhaps the Minister could comment on that.

Lord Whitty

My Lords, I can comment on that. It raises central issues of principle in regard to the way in which we implement EU law. The local authority in the frame would have breached UK law in relation to what would be prescribed under the provisions of the Bill. The fact that part of that led to an EU fine would mean that the local authority was already in breach of what are essentially UK allocations under this legislation. Although I understand the principal argument that the noble Lord, Lord Stoddart, is making, the breach arises primarily as a result of a breach of UK law, albeit in fulfilment of the obligations under the directive.

The Commission fine would be up to a maximum of £180 million a year, which is a pretty hefty amount. Were such a fine to be imposed as a result of particular waste disposal authorities' failure to meet their UK targets, it would be reasonable for the Government to pass on the cost of that fine, in whole or in part, to those waste disposal authorities.

Lord Stoddart of Swindon

My Lords, did the Minister say "£180 million"? That is an enormous fine that could be passed on to local authorities. I know a fair amount about European Union matters, but I had no idea that a fine of £180 million could be levied in breach of this directive. It is unthinkable; it is outrageous; and it is particularly outrageous for the local authorities that would have to bear it.

Lord Whitty

My Lords, that is the maximum fine. The degree to which we failed to fulfil the targets would inform the level of fine. The Commission, the Council of Ministers and the court have a jurisdiction in this matter—a jurisdiction that I know that the noble Lord, Lord Stoddart, does not accept and, in so far as he has to accept it, he resents it. Nevertheless, that is a fact of life. Therefore, having imposed targets on local authorities in accordance with Acts passed through Parliament, it is not unreasonable for the Government to pass on to the local authority responsible for the failure to meet the targets that led to a penalty on the Government all or some of the cost. We can debate the wider issues another time.

In reply to the noble Lord, Lord Dixon-Smith, the Commission, and if necessary the court, can impose only fines relating to failure to meet the target at the scheme date. Therefore, failure to meet the 2010 target will continue to be the relevant criterion until we reach the next scheme date. The intervening target—I refer to the algebraic formula that the noble Lord, Lord Dixon-Smith, dislikes—would not be subject to intervention from the Commission or a fine from the Commission. That would have to relate to the years for which the European legislation specified the target and would therefore be valid until the next one.

With that explanation and the additional explanation that the amendment extends matters in a narrow sense to the post-scheme year compared with what is already in the Bill—noble Lords have not challenged the situation in relation to the scheme year itself, although that may be an oversight by the noble Lord, Lord Stoddart; but we have passed that part of the Bill—I hope that noble Lords will accept the amendment.

On Question, amendment agreed to.

[Amendments Nos. 39 to 42 not moved.]

Lord Dixon-Smith moved Amendment No. 43: After Clause 8, insert the following new clause—

"WASTE DEPOSITED IN PUBLIC OPEN SPACES AND ON HIGHWAYS