HC Deb 31 March 2004 vol 419 cc488-96WH 4.15 pm
Mr. Huw Edwards (Monmouth) (Lab)

I am pleased to be able to raise the issue of the recycling of printer cartridges and the waste electrical and electronic equipment directive, known as the WEEE directive. The purpose of the debate is to urge the Government to incorporate print cartridges in the implementation of the directive by the UK and to consider printer cartridges as electrical equipment rather than consumables.

I raise the matter because of the threat to the recycling industry that remanufactures printer cartridges, and the threat to the environment. The threat arises from the anti-competitive practices of some major manufacturers of printers and print cartridges, which use smart chips and, worse, killer chips, to prevent the reuse of printer cartridges. That could have a serious impact on the recycling industry in the next two years. Unless printer cartridges are included in the implementation of the WEEE directive as electrical equipment, killer chips and devices that thwart recycling will be considered permissible, despite the intentions of the European Union.

I acknowledge the help that I have had in preparing for this debate from the United Kingdom Cartridge Recyclers Association, and especially Mr. Malcolm Kerman of LaserXchange, in my constituency. I am also grateful to Friends of the Earth for its support for the campaign. It has said: The Government must support the reuse of printer cartridges by ensuring that they are covered by the WEEE directive. I have written to my hon. Friend the Minister about the matter a couple of times and tabled some parliamentary questions. I am grateful for the opportunity that I had to discuss the matter with him at the recent meeting of the all-party group on sustainable waste. Like many other hon. Members, I signed early-day motion 512, which has been supported by hon. Members from both sides of the House.

One of the companies in the industry is based in my constituency. It is called LaserXchange and was formed in 1990. It now employs just under 100 staff. The company specialises in collecting used printer cartridges, mainly from charity shops. Those cartridges are taken to the factory, opened and refilled with toner. The remanufactured cartridges are then sold to consumers as cheaper alternatives to new cartridges.

The practice benefits consumers, who find the cost of recycled print cartridges substantially less than the cost of the new product. Typically, a new black cartridge for the printer in my office in Westminster would cost £23.50, whereas a recycled or reused cartridge from LaserXchange would cost only £9.95 plus VAT. The prices for colour cartridges are £36.72 plus VAT, or £16.95 for a re-used cartridge.

The main products remanufactured at LaserXchange are laser toner cartridges that are used mainly by businesses, but the firm also manufactures inkjet cartridges, which are generally used by individuals with home computers. I have visited the LaserXchange factory twice in recent months—most recently with my right hon. Friend the Secretary of State for Wales, who is also, of course, the Leader of the House. He asked me to consider to what extent recycled cartridges are used in the Palace of Westminster and in the Departments. I shall come to that matter a little later.

Collecting used cartridges from consumers and supplying the remanufacturers is a valuable source of income for charity shops such as Oxfam, Cancer Research UK and the British Heart Foundation. Seventy per cent. of the cartridges collected by LaserXchange come from those three charity shops. The remainder come from scout groups and schools. The charity receives about £2.50 for each cartridge collected. The industry therefore supports the developing world and the voluntary sector in the United Kingdom. Last year, LaserXchange distributed £162,000 to those three charities.

Apart from LaserXchange, there are several other major printer cartridge remanufacturers, including Green Man Toner in Epsom, IT Imager in Hemel Hempstead, PBTI International in Wells, Somerset, Applied Film Industries in Newcastle-under-Lyme and Cartridge World Ltd. based in Harrogate. There are also about 80 other companies in the industry. LaserXchange believes that its industry is under threat from increasingly sophisticated microchips, which are inserted into the cartridges. These are called antiremanufacture devices, and according to the UK Cartridge Remanufacturers Association, nearly all new laser toner cartridges sold by international companies, such as Hewlett Packard, Lexmark and Xerox, contain such microchips, which can prevent or make uneconomic their remanufacture and use.

Current practices include using highly encrypted microchips to control cartridge functions, which prevent cartridges from being used a second time. These are referred to as killer chips, and use highly sophisticated microchips, operated by radio signals to control cartridge function. They are extremely difficult and costly to copy and make most of the cost of remanufacture prohibitively expensive. Article 4 of the WEEE directive makes the use of such devices illegal. I shall touch on that subject later.

According to one argument, substitute chips are available, so why we should worry? The Minister will know there is a concern that, with ever more encryptions being applied to the chips, the time and cost of producing a substitute mean that it is increasingly likely that they will not be available in future. The Minister's officials suggest that this will be addressed under the energy-using products directive, but can he guarantee that that will be the case? Can the remanufacturing industry wait until 2008 or 2010? From my own discussions, I hear that the industry might well not be in a position to benefit from the EUP directive if the Government do not act quickly. When I raised the matter on the Floor of the House during the Welsh affairs debate just before 1 March, I quoted some examples, including that of Hewlett Packard using killer chips. However, I have met officials of Hewlett Packard and received correspondence from them, and I withdraw that comment. It was inaccurate, and the officials assure me that, although they use smart chips, they do not use killer chips. Notwithstanding that correction, companies such as Hewlett Packard are clearly in competition and consider the remanufacturers to be a threat, although perhaps not a major one. However, the remanufacturers consider Hewlett Packard's devices, and those of other companies, to be a very serious threat to their industry. Unfortunately, there is no formal definition of a "killer chip", and that will be subject to much debate.

The WEEE directive aims to reduce the amount of electrical and electronic equipment becoming waste, and to achieve that through reuse, recycling and other forms of recovery. It also seeks to improve the environmental performance of all parties involved in the life cycle of electrical and electronic equipment. Member states must comply with the directive by 13 August 2004. Under article 4, equipment must not include any designed features that prevent it from being reused, unless there is a safety or environmental reason for doing so. The Government's position, as I understand it, is that printer cartridges are considered to be consumables, and are outside the WEEE directive's scope. That has been set out in letters to myself and other hon. Members, and in answers to parliamentary questions. However, the Minister will be aware that that view is contested by a number of legal and technical experts, who question, first, whether consumables are automatically excluded, and secondly, whether printer cartridges are not waste electrical and electronic equipment in their own right. He will also know that, if printer cartridges were included, it would not mean that all consumables had to be included, as there is no campaign for other consumables, such as batteries or CDs, to be included.

There are a number of key questions. Are consumables specifically included or excluded from the WEEE directive, or is that just the Government's interpretation? On what basis are printer cartridges deemed to be consumables? Does the directive provide the Government with the scope to include cartridges if they choose to do so? That last question is absolutely critical, because if the directive allows printer cartridges to be included, the Government must explain why they refuse to do so. I understand that as the directive is a minimum harmonisation measure it does indeed allow the Government to include cartridges.

I have made the point about whether cartridges are consumables, or whether the WEEE directive has been disputed by European legal and technical experts. According to Cornelius and Judge, in an article in the June 2003 edition ofImaging Spectrum magazine, modern printer cartridges are dependent on electrical currents and electromagnetic fields to work properly and are to be considered as IT and telecommunications equipment. They therefore should qualify as electrical and electronic equipment and should be considered under the WEEE directive. In effect, that means that although a printer has to be recycled, the printer cartridges that it uses do not. However, a printer is of no use without a printer cartridge; they are inseparable items and pieces of equipment.

The volume of waste from cartridges over the normal life cycle of the printer is 10 times that of the printer. The implication is that if cartridges cannot be considered as equipment, there may be severe environmental consequences and they are likely to end up in landfill sites rather than being remanufactured and reused. Such a practice is environmentally damaging and contrary to Government policy on sustainability and waste management, particularly the September 2003 publication "Changing Patterns: UK Government Framework for Sustainable Consumption and Production". Yet the Government state that they want to support the recycling of cartridges.

I wrote to every Department asking for their policy on recycling. The responses were interesting—varied but encouraging. My hon. Friend the Minister for Energy, E-Commerce and Postal Services stated: I agree that the remanufacture and recycling of printer cartridges is important for the environment and the safeguard of the remanufacturing industry. We have a system in place whereby used cartridges are deposited at dedicated collection points, local at several points on each floor of our buildings. The cartridges are collected on behalf of our stationery supplier. Wherever possible, these cartridges are reused and made available as products re-branded by our supplier.

The Serjeant at Arms also gave me an encouraging answer, as did Baroness Amos at the House of Lords, and an Under-Secretary from the Office of the Deputy Prime Minister. The Department of Health provided the only disappointing response. A reply from an official stated: After consideration your letter has been passed to the Department for Environment, Food and Rural Affairs who have responsibility for these matters and they will reply to you directly. That missed the point of the request, which was to ask the Department of Health what its policy was, not about wider Government policy.

In conclusion, the Government are clearly committed to recycling and the minimisation of waste, and Departments have indicated their support for recycling printer cartridges. I acknowledge that the subject is complicated and that the Minister has received much representation. I understand that his Department recently held meetings with both sides of the debate—the original equipment manufacturers and the remanufacturers—and I would be grateful if he could comment on the outcome of those discussions.

I urge the Minister to consider the position of the cartridge remanufacturing industry and the threat it is under from the use of anti-remanufacturing devices and other anti-competitive practices. Will he also state whether he believes that the EUP directive will protect the industry? How can he guarantee that and will it come into force in time?

The issue has been drawn to my attention because of the threat to a company in my constituency. I raise the matter on behalf of the 100-odd employees of LaserXchange, but also on behalf of thousands of individuals who want the right to buy recycled equipment for use with their computers and printers at home and at work, and of all those groups and individuals committed to the principles of recycling and sustainability. Encouraging recycling and the ending of anti-competitive practices that thwart the industry is in the interests of consumers, businesses and the environment. I urge the Minister to consider the points that I have made.

4.30 pm

The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms)rose—

Dr. Doug Naysmith (Bristol, North-West) (Lab/Coop)

I wonder whether my hon. Friend the Minister would give way before he starts speaking.

Mr. Timms

I give way.

Mr. Deputy Speaker

Order. It is a strange way of doing things, but the hon. Gentleman may carry on.

Dr. Naysmith

I intervene because we have an interesting situation, with two constituencies containing manufacturers of printer cartridges. Hewlett Packard is a major manufacturer and employer in my constituency. It is a high-tech industry—an example of the sort of employer that we attract. I want to reinforce the point made my hon. Friend the Member for Monmouth (Mr. Edwards): Hewlett Packard does not use so-called killer chips, or any other device to prevent the refilling or remanufacturing of cartridges, nor does it seek to inhibit the activities of that industry. It tells me that it supports the right of consumers to choose its products in that field, or to recycle products from other manufacturers, and believes that it can compete successfully on quality. Of course, that is a matter for the consumer. I hope that the Minister will take those comments into account in his reply.

Mr. Deputy Speaker

I hope that the hon. Gentleman will take advice on how best to make such an intervention in future.

Mr. Timms

I am grateful for the opportunity to respond to what has been said. I am particularly grateful to my hon. Friend the Member for Monmouth (Mr. Edwards), who has followed this issue with great interest and energy, and played an important part in drawing it to the attention of a wider audience.

This important issue has aroused strong feelings. In recent months, I have received many parliamentary questions—some of which were from my hon. Friend the Member for Monmouth—and an extremely large number of letters from hon. Members on this matter, which I take seriously.

It is important to note at the start that cartridge refilling is flourishing in the UK. About one third of the printer cartridges sold have been refilled. There is nothing in planned legislation that would put that at risk. I am told that a large expansion of the recycling operations is proposed. For example, one of the companies that my hon. Friend mentioned, Cartridge World, which has 210 outlets, lists on its website the sites where it plans to add another 90 locations. That will increase its number of outlets by 40 per cent.

Clearly, nothing in current regulation or technology is proving to be a barrier to the growth of that activity. I am pleased about that, because I agree with my hon. Friend about the important benefits of cartridge recycling, such as extra competition in the market, and environmental benefits. I am grateful to him for referring to the framework for sustainable consumption and production, which I launched with my noble Friend Lord Whitty last year. The framework sets out important aspirations on which the Government, the Department of Trade and Industry and the Department for Environment, Food and Rural Affairs work together.

The independent printer cartridge refill sector has raised concerns that innovation in cartridge technology could make competition harder. At the heart of the issue is the question whether third-party refilling will be made more difficult. Two things are clear. First, the issues surrounding the development of chip technology in printer cartridges and the reuse of chipped cartridges are complex and certainly not as clear-cut as some think.

Secondly, the Government have been worried by the absence of a dialogue between independent refillers and equipment manufacturers, such as Hewlett Packard. I am pleased to be able to tell the Chamber that DTI and DEFRA officials were able to bring together representatives of the United Kingdom Cartridge Remanufacturers Association with several of the leading manufacturers last week. The meeting was held in confidence, at the request of both sides, but it was the beginning of what I hope will prove to be a constructive discussion between the parties on those issues. Both parties told us that they found the meeting helpful, and there are high hopes that the dialogue can be taken forward so that there can be more of a common understanding of the issues surrounding cartridge reuse. I have arranged to meet UKCRA representatives on 29 April to take that discussion further.

UKCRA has pressed the Government to use the WEEE directive to address its concerns. The directive was agreed in February 2003 and is due to be transposed into UK law this summer. It sets requirements for the separate collection, treatment and recycling of electrical and electronic equipment and makes the producers—manufacturers and importers—of that equipment responsible for meeting the costs of those activities.

UKCRA has asked the Government to use the directive to address the killer chip issue. It argues that cartridge manufacturers would have to comply with the product design requirements of the directive which aim to prevent manufacturers from designing out reuse and recycling. The cartridge refillers are concerned that, in a fast-moving market, it would be difficult to source replacements for chips used by cartridge manufacturers, although they might be replaced and the cartridge reused. The refillers have said that they are concerned that the increased rate of technological development in that context will squeeze them out of the market, as the chips will become more difficult or more expensive for them to replace.

I believe that it is important to make a distinction between killer chips and other types of smart chip, although I agree with my hon. Friend that this is rather a fraught area in which to reach consensus on a definition. I suggest that a killer chip is one that is designed to burn out the print-head mechanism of a cartridge so that it cannot be used again. As far as I know, only one manufacturer has developed and patented such a killer chip. However, I am assured that that chip has not been used in any products on the market. Smart chips are often used to enhance the performance of cartridges for consumers; for example, they may assist in monitoring ink or toner levels in a cartridge. Their purpose is to provide an additional benefit to the user, and not to render the cartridge unrecyclable. Such chips do not prevent the refilling or reuse of the cartridge, although they may not be so easy to reset without proper equipment, to which refillers may not always have access.

We will continue to monitor the use of chip technology in cartridges.

According to our information, the technology for killer chips exists but there are currently none on the market, and there are no strong grounds for believing that that situation is about to change. Customer demand for more information on cartridge performance, partly driven by an investigation by the Office of Fair Trading into the pricing of new cartridges, has led to an increase in the use of smart chips in the past few years, and no doubt that trend will continue. However, so far, there is no sign of the sector's growth being seriously impeded by that trend.

I agree with my hon. Friend on the benefits of recycling, and I am keen to see those benefits harnessed. The refilling and remarketing of cartridges helps to mitigate environmental damage. There is a healthy refill industry in the UK, and I want to see that continue. I made the point earlier that reused cartridges currently represent just over 30 per cent. of the replacement cartridges on the market today. As my hon. Friend said, the DTI has a policy of actively encouraging the reuse of our printer cartridges.

The Government have a good deal of sympathy with the views of the cartridge remanufacturing industry. Many of the companies involved in that industry are small businesses competing with large manufacturers; they provide a valuable service, which gives real environmental benefits and minimises waste. They also help in providing consumers with a wider choice of cartridges than might otherwise be the case and, as my hon. Friend illustrated, often at lower prices. I also agree with him about the benefits from their support for charities.

However, the WEEE directive is not the right way to address concerns about competition in this area. The directive is based on article 175 of the EU treaty, which deals with environmental protection, and it might technically be possible for us to add cartridges to the scope of our UK implementation. However, I suspect that if we did we would be open to challenge because—this is the view of the specialists whose advice I have access to—it is very hard to define a cartridge as a piece of electrical or electronic equipment. There is certainly no requirement to do that in the directive, and I have not seen a strong case for gold plating the directive in the way implied.

I shall set out why that would not be helpful. First, there is a legal view that the directive applies to whole products placed on the market, not individual components or consumables. Computer memory chips, graphics cards, CD-ROM drives and others are in the same category. They need to be recycled only at the end of their life while still retained in the whole device, and it is the producer of the original whole product who is responsible, not the manufacturer of each component. It is clear that printer cartridges fall into that category, and the European Commission takes that view as well.

Secondly, the printer cartridge remanufacturing industry needs to consider the other effects on its operations of including printer cartridges in the scope of the directive. There are obvious cost implications for the manufacturers of the cartridges, which would need to take on the directive's producer responsibility obligations for supporting collection and recovery of the cartridges sold to domestic consumers. That would be likely to mean that the original equipment manufacturers had a strong incentive to take back cartridges when supplying new ones, which they would then have to reuse or recycle themselves instead of those cartridges being available to recyclers.

Lastly, printer cartridge remanufactures may become obligated under the WEEE directive. They would be liable for the end-of-life costs for any cartridges they refilled and put back on to the market. They would have to fulfil the various registration requirements and provide financial guarantees for the future recovery of their products. All those factors would mean that there would be fewer cartridges available for the remanufacturers to refurbish, and the refilling industry would have to take on a number of additional burdens that it does not currently have.

All cartridges currently on the market are capable of being refilled and reused, which I welcome. We are currently considering the approach that we should take to the implementation of the directive's provisions to require that producers do not prevent reuse of products in the scope of the directive. We are weighing the fact that the majority of respondents to our recent consultation on implementation supported our proposals for a voluntary non-legislative approach, with a suggestion of a business forum to consider eco-design.

Should killer chips appear on the market, the right way forward would be for the Office of Fair Trading to examine evidence of abuse on competition grounds. I am not convinced that a smart chip used on a cartridge to tell a user the ink levels in the cartridge is an anti-reuse or anti-competition device. It seems to be a useful innovation, and I would be reluctant to see legislation passed against such innovation on the basis of the evidence that we have seen so far.

Mr. Edwards

Will my hon. Friend accept that some of the smart chips will be smarter than we are assuming? They are likely to become more sophisticated. I wonder whether the Minister has visited any remanufacturing plants himself. Would he like to come to LaserXchange in Abergavenny?

Mr. Timms

I have not yet had the opportunity to visit one of the plants, but I am looking forward to a meeting next month with UKCRA. I am not in a position to accept my hon. Friend's kind invitation, but I will certainly bear it mind.

I think that my hon. Friend would agree that we should not use the directive to hold back the sort of technological improvements that are appearing in the industry, which some of those chips do provide in printer cartridges. If there is an issue of competition, it should be addressed in another way. The energy products directive that he mentioned is currently being negotiated and that would be—

Mr. Deputy Speaker


It being fifteen minutes to Five o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.