Thank you for the opportunity to respond to your consultation. Our response is attached to this letter. As a preface we felt it might be useful to outline the structure of our response in this covering note.

  Biffa Waste Services is the third largest waste management company operating in the UK—it is the largest wholly British owned waste management company and can justifiably claim to be the most diverse in terms of its spread of interest in industrial/commercial and domestic collection, landfill, liquid waste stream and specialist hazardous waste management systems. The company has a turnover in the region of £250 million at a current annualised rate and is also in the top three waste management companies operating in Belgium. We are a wholly owned subsidiary of Severn Trent Plc—ranked in the Times Top 100. As such we can claim to be a full environmental services management operation with experience in mainland Europe as well as the UK collecting and disposing a wide range of consumer end life products.

  We operate municipal refuse collection services for around 600,000 households each week generating approximately 500,000 tonnes of discarded material annually. In addition we collect or landfill an additional 5 million tonnes from industrial and Waste Disposal Authority sources.

  The core focus of our interest lies in the reverse logistics chain for consumer goods once they have become "waste" but we also cover a wider brief in sustainability issues and "eco-foot printing".

  We wish to emphasize the need to consider these issues in the following broad context/priority areas:

I.  Data, indicators and measurement systems.

II.  Macro economic priorities and triggers for change.

III.  The focus of liability for action.

IV.  Funding the liability for action.

V.  Round-tabling.

  Reference to these is contained in our specific response but summarising our logic:

I. Data, indicators and measurement systems.

  Fundamental to the development of environmental assessment systems for consumer products is a sound infrastructure of scientific assessment and measurement utilising a common framework of data capture and measurement involving all in the supply chain for consumer products. At the moment no such common infrastructure exists and there is no obligation on those in the supply chain for any product to report environmental data in the form of mass, toxicity or other yardsticks. The closest approach to this has occurred in packaging but those initiatives for integrated common standards have only appeared in the food retail supply chain. An assessment of environmental impacts of consumer products needs to incorporate a uniform waste classification code backed by a common set of data capture and software standards/protocols. This will provide much greater transparency for members of the public to understand the relative priorities between different consumer goods streams as far as environmental impacts are concerned. Responsibility for this function should be addressed and funded—whether in the DETR, DTI, Office of National Statistics or Environment Agency.

II. Macro economic priorities and triggers for change.

  Shifts from a lower to a higher paradigm of environmental performance may occur through exhortation but are more likely to result from clear economic signals developed by Government as a mechanism to shift behaviour away from environmental "bads to goods". Those instruments range from end of pipe fiscal instruments, middle of pipe regulatory pressures, front of pipe virgin input taxes and, finally, a system of Tradeable Permits based on target setting for performance enhancement. The interplay between these four sets of instruments needs to be modulated to the environmental characteristics of the pollution created by different consumer goods. We believe that Producer Responsibility is an underpinning liability that drives the whole process, however, and see legislation in this area as an important prelude to genuine results.

III. The focus of liability for action.

  If any environmental improvement of lasting significance is to occur we believe the current disassociation between pollution from supply chain management up to the point of sale and additional pollution which results from the management of those products once they become waste must be ended. This holistic approach is essential in environmental terms but it is dependent on economic triggers we summarise in IV below.

  In consequence we believe that a clear framework for Producer Responsibility needs to be developed to kick-start the economy into this new performance paradigm. Two options present themselves in terms of operational and funding methodology. The first is to give this responsibility to public sector bodies who then organise contracts and fund the cost of this process via some form of hypothecation on locally raised environmental taxes (this approach appears to be one which Government is developing in relation to road transport pricing).

  This area suffers from substantial inbuilt operational inefficiencies and lack of co-ordination inevitably attendant on around 657 district, county and unitary bodies all applying separate solutions to their own agendas. The second option is to establish formal Producer Responsibility where major companies or sector supply chains accept formal legal and financial responsibility for end life management of products they consume and sell to the public.

  This option offers substantive benefits compared to the former (both in economic as well as environmental terms) for the following reasons:

(i)  substantive scale efficiencies can be brought to the solution by letting major contracts. Haulage and transport is a major element in the eco-balance for end life retrieval of these materials and scale contracts for entire regions rather than small clusters of population will result in significant economic, social and environmental benefit (Appendix 1).

(ii)  This solution will trigger a causality between design, use, operation and end use disposal systems on an integrated basis by focusing manufacturers' minds on costs which are currently externalised.

(iii)  There will be encouragement for producers to incorporate available reuse material from their own product scrap supply chain in the manufacture of new products, substituting virgin inputs (especially if virgin input taxes are also developed or operational). This will be a significant contributor to creating genuine end markets for recovered material in so far as the supply chain can extend it's "ownership" to scrap from material it may have used months or years ago.

(iv)  Such a system encourages producers to create innovative cross sectoral arrangements with other sectors for the reuse of scrap material they cannot utilise themselves within a framework of long term guaranteed supply and pricing certainty. This point is expanded in section IV.

(v)  This system will encourage obligated producers to develop innovative marketing deals with sectors with whom their consumer goods have a natural interface. Many manufactured goods have a relatively low environmental impact in manufacture but good design can have a significant impact in terms of life use. Examples include vehicles, washing machines, tumble dryers, etc. Producer Responsibility could in many cases encourage innovative cross sectoral marketing packages for the benefit of the consumer as well as the environment.

  For instance—water companies could fund improved design and efficiency in washing machines on the basis that they will avoid future expansion in demand (which places additional pressure on their investment requirements for new bore holes, dams, reservoirs, etc.). Tradeable Permits of this type could reward best practice designs and the costs to the water company could be offset via NFFO type structures which have been used to such significant effect in the energy supply industry as a stimulus to renewable energy. Similar mechanisms can be identified in the automotive sector and gas.

IV. Funding the liability for action

  If Producer Responsibility is adopted as a key driver to the process then the pace at which environmental improvements on consumer goods are achieved assumes a preparedness on the part of Government to compensate those producers for the incremental costs of accepting that liability. Annually this could amount to £160 million for packaging, £30 million for tyres, £50 million for electronics and electricals (and so on . . . ) Compensation for such costs could be funded by a review of overall taxation policy on that consumer product sector (such as VAT), hypothecation from landfill and other environmental tax revenues or similar income sources derived from the taxation of economic "bads".

V. Round-tabling

  The development of closed loop systems as a means of minimising environmental impacts from consumer goods is also partially dependent on waste streams of one sector being used as raw material feed stock for the other sectors (tyres and cement, electronic goods and metal processing, packaging and energy, for example). In these circumstances Government needs to adopt a broad based approach acting as a facilitator to encourage cross sectoral dialogue and—more important—identify the obstacles which operate to obstruct improved environmental performance—notably in the form of the planning system or the structure of contract development for consumer products entering the domestic waste stream. Appendix 2 expands on this point.

  We would be more than happy to expand on specific issues you wish to take up in this consultation. As a company we are at the heart of identifying improvements to the logistics infrastructure most likely to be appropriate for enhanced environmental performance in a range of segregated industrial consumer goods sectors.

Peter T Jones
Director
Development and External Relations

  Municipal refuse currently costs the public purse around £1.4 billion per annum (approximately £23 per capita, £63 per family) split 80 per cent logistics/transport and 20 per cent disposal.

  In addition we estimate that around 1 million tonnes of material is currently being reclaimed for recycling in the domestic waste stream at a cost of between £100 million and £200 million per annum.

  The thrust of our argument is that there are over 450 Waste Collection authorities and over 60 Waste Disposal Authorities in this country who often find it difficult to work with each other both vertically and horizontally—for political, legislative or other reasons. In consequence the essential economies of scale in collection and disposal of end of life domestic materials—so essential to bring down costs—are lacking. We commend to government the benefit of allocating responsibility for waste strategy to the new regional seats of government. Domestic recycling—on the admission of a number of authorities who keep the appropriate records—appears to be between twice and three times as expensive as parallel schemes operating for industrial and commercial waste producers. This is because the latter elect to negotiate national programmes for specific material retrieval whilst households are far more numerous—a critical mass of 100,00 households or more is needed to operate cost effective programmes.

  The new Regional Bodies could act as a catalyst to contract out collection and disposal services for the area under their remit (glass, paper, electronics, hazardous, etc) to achieve the best practicable environmental and commercial solution for each element in the waste stream. This will produce an immediate quantifiable reduction in the government cost burden of domestic waste driven by improved efficiency and economies of scale. This could save the public purse up to £400-500 million per annum if one moves to large regionally based negotiating frameworks. Implicit in this approach is the assumption that within a regional contract area the cost of the service is equalised for specific material streams thus removing the current discriminatory bias against rural areas.

  The third stage lies in agreeing—via round-tabling—the speed at which the industry producer sectors accept this latter charge in stages onto their books for incorporation in the selling price of the product. This is a form of `phased privatisation' of the cost and end life management of the materials but with the public body facilitating large scale concentration.

  The incremental costs of this process to industry could be evaluated through round-tabling processes with the DTI/DETR where consideration could be given to the financial offsets necessary to neutralise the cost of these actions. This is in line with the concept of fiscal neutrality for environmental initiatives but has the advantage of at least ensuring that solutions are managed on an industry sector specific basis. These offsets could take the form of investment grants for new technologies, tax breaks, training programmes and other similar measures against agreed timetables for key indicator achievement.

  Current waste collection bodies would retain responsibility for publicity and support. Regional authorities could operate on a population based budget with tradeable permits between those over and above target (again based on per capita yields).

  Districts unprepared to operate the regional retrieval plan (which would be offered free to them with funding precepts passed direct to the region) would be obliged to find their own scheme. Those doing nothing should be obliged to buy tradeable permits (from the regions) or face a precept for the equivalent amount.

  Below is a mass/toxicity diagram for different products in the waste stream (figure 1). Regional seats of government could let large scale contracts for the retrieval of individually specified materials and recharge those costs (identified through competitive tendering) to the relevant manufacturing sector obliged to meet those costs within the framework of Producer Responsibility Regulations.

  Support may be needed for those industries to pass through these costings transparently to the end consumer due to risks of "freeloaders" and importers or offsets identified as above. Clearly this is an area of potential conflict with the Treasury in so far as there may be an element of Landfill Tax hypothecation to fund such initiatives.

  Such initiatives need to be balanced against employment intensity given that "eco taxes" imply shifts of "burdens" from employment to resources (figure 2).

  On the assumption that shifts in behaviour by supply chains in specific industry sectors are best achieved through the pricing system, the fiscal sticks fall into five broad groupings regardless of sector:

—  Producer Responsibility.

—  Virgin resource taxes.

—  End of pipe taxation (Landfill Tax, etc.).

—  Tradeable Permits.

—  Regulatory taxes (fines/permits to operate, etc.).

  The fiscal carrots comprise a similar streamlined grouping:

—  One off investment grants.

—  Tax breaks on investment.

—  Sector dispensed inducements similar in operation to the Landfill Tax Environmental Bodies initiatives.

—  Educational initiatives.

  Individual industry sectors are in the best position to judge the appropriate mix of sticks capable of altering supply chain and consumer behaviour against pre-agreed targets. This is on the basis that some instruments (Landfill Taxes) could be irrelevant for high toxicity low mass material sectors (pharmaceuticals or insecticides, for example), demonstrating that across the board Government measures applied willy nilly will prove to be something of a blunt instrument. (See Figures 1 and 2).

  Given the presumption that fiscal instruments are the best mechanism to shift behaviour there is an implicit assumption that costs will rise in so far as Government will extract an economic "rent" through the "sticks" and this higher cost framework will be passed through the supply chain to the end consumer. The one off costs hitting that sector—in terms of re-investment in new manufacturing capacity, product redesign, staff retraining, incremental borrowing, etc., etc., will however, be compensated by "carrots" in the form of one off subsidies to move from a poor level of environmental performance to a mutually agreed superior one. Within such a framework the scale and pace of such a societal transition is thus determined on the basis of:

—  Mutual agreement.

—  Cost effectiveness.

—  Sector expertise.

—  Transparent accounting.

—  Managed time frames.

  All the above are key to ensuring that industry and commerce can buy into the process at minimum cost in terms of inflationary impacts of macro economic level in conjunction with local authorities, DTI, NGOs, supply chain interests and DETR.

December 1998