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Select Committee on Environment, Transport and Regional Affairs Fifth Report

DELIVERING SUSTAINABLE WASTE MANAGEMENT

Entrust

146. Beyond the credit scheme itself, there has been much criticism of the operating practices and behaviour of the regulator of the scheme, Entrust. The Guardian newspaper made various allegations in April 2000 about abuse of the scheme and also suggested that Entrust itself was behaving in an improper fashion. The newspaper submitted a dossier of evidence to this inquiry. We did not investigate these allegations ourselves but Entrust and Customs and Excise have examined the allegations about abuse of the credit scheme and have reported that none constituted a breach of the regulations of the scheme. Nevertheless, many witnesses were directly critical of the performance and behaviour of Entrust. These criticisms echoed our own last year when we concluded that "The structure, operation and accountability of Entrust lacks clarity and openness."[238]

147. We explored one aspect of Entrust's work in particular: its interaction with the landfill tax credit users' group, the Environmental Bodies Council (Ebco). In the first instance, we were struck by the contrast between the draft memorandum from Ebco (which reached us via The Guardian) and the final memorandum from Ebco. We suspect that the dramatic watering down which took place between draft and final may have been the result of falling foul of Ebco's agreed terms of reference with Entrust which state:

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The terms continue:

"to represent the views of all EBs to ENTRUST and other relevant organisations, which include, HM Customs & Excise, Government Departments, Select Committees of the Houses of Parliament, bearing in mind the last sentence of paragraph 3 above [the quote reproduced above]"

148. We see no reason why Ebco should be hamstrung in this way which, where Select Committees are concerned, borders on being discourtesy to Parliament. Other aspects of this agreement seem to have been barely observed: the numbers of meetings held between Ebco and Entrust have been limited and, as a result of a dispute, no minutes have yet appeared from the meeting between Ebco and Entrust in April 2000. There has been much tension between Ebco and Entrust over the budget for Ebco, a row which continued after the appearance of both Entrust and Ebco's former chairman, Dr Malcolm Aickin.[240]

149. It is clear that the relationship between Ebco and Entrust has been strained but we were struck by the immature attitude of Entrust to this problem. Entrust argued that, under the chairmanship of Dr Malcolm Aickin, Ebco was too focussed on long-term issues, rather than providing practical feedback and advice about the way the scheme works for environmental bodies which Entrust notes is the purpose of the Council.[241] Entrust concluded that Ebco would be much more effective under its new chairman.[242] For Entrust to deal with the apparent conflict with Ebco by burying their heads in the sand, failing to agree minutes for meetings and awaiting a new chairman, seems immature and unprofessional.

150. We have previously pursued the subject of the democratic representation on the board of Ebco. In our Report on The Operation of the Landfill Tax, we concluded that "it is essential that this group [Ebco] reflects the diversity of Environmental Bodies and is accountable to them."[243] Ebco have tried to fill each of its regional posts by holding elections at its regional meetings. When quizzed on this matter, Entrust told us that:

244

This seems weak: an adequate organisation should be able to attract candidates for such posts relatively easily.

151. If Entrust is to remain as the regulator, it must work with Ebco to enable the council to form a representative and effective users group. This will require greater co-operation and professionalism from both Entrust and Ebco. We expressed disappointment with the nature and progress of Ebco nearly two years ago: it is simply unacceptable that Ebco is not established and working well by now.

152. As suggested by the quotation from Ebco's terms of reference above, Entrust also displays an entirely inappropriate - and indeed counterproductive - sensitivity to criticism, even that designed to assist it in doing its job properly. We understand that Entrust has now withdrawn its offer to Malcolm Aickin to chair an "improvement panel", set up by Entrust "to gather opinions from the many stakeholders with an interest in the strategic development and the continuation of the Landfill Tax Credit Scheme". This appears to have been done as a direct result of Dr Aickin's comments on the evidence Entrust gave us.[245] This kind of behaviour is unacceptable for any regulatory body. Entrust, however, is a relatively new body overseeing a unique scheme. For a body in this position not only to ignore constructive criticism, but effectively to sack the giver of such criticism from a job apparently designed expressly for the purpose of offering it, seems perverse in the extreme. It is now clear why Ebco was so reluctant to submit its original memorandum to us. If this is the way Entrust treats those who are in any way critical of it, it is also understandable that there should have been such difficulty attracting nominees for election to Ebco.

153. Other criticisms of Entrust have centred on features like the payment of fees to directors. On the subject of Entrust's constitution and remuneration from the directors, Dr Malcolm Aickin agreed that "Entrust have a remarkable ability to change their constitution and regulations at a whim."[246] Dr Aickin also noted that "to give them the opportunity to set their own remuneration without reference to anyone outside is putting temptation in their way which probably should not be put in their way."[247] Indeed, Lord Cranbrook, chairman of Entrust, acknowledged this to be the case and stated that he would like to see Ministers involved to deal with such matters.[248]

154. More generally, witnesses argued that a regulator which was closer to Government would be required to make a success of the scheme. The South West England Environmental Trust wrote that Entrust is "a rather expensive operation for such a limited role" and went on to suggest that:

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Similarly, The Guardian concluded that Entrust should be replaced "with a regulatory body committed to transparency and accountability ... We would suggest that a new regulatory body membership include Government, the voluntary and community sector, local government, technical experts, and a representative of the waste industry."[250]

155. Certainly, at a time when waste management should be undergoing a transformation, the regulator of the Landfill Tax Credit Scheme should be able to play an active role in guiding credits into the right projects. The recommendations we have made for the Landfill Tax Credit Scheme will require a regulator which has direct Government backing. Although we found no evidence that Entrust has done anything which can be considered wrong in a strict sense, the way it is set-up, the limited role it can play and, to some extent, its behaviour, have left it a tarnished organisation in need of radical change. To a large extent, this failure must be considered to be a result of the convoluted and unsatisfactory system which defines the way the Landfill Tax Credit Scheme is intended to operate. On reflection, we conclude that the best interests of the Landfill Tax Credit Scheme will be served by the replacement of the regulator, Entrust. The new regulator should be closer to Government and will be required to play an active role in steering the credits available into the most appropriate projects.

Players

156. Every individual and every organisation, public or private, bears some responsibility for the creation of waste and ultimately, how that waste is handled. To introduce changes to the system will require real effort from all. In this section, we consider what the implications of a target of sustainable waste management are for the main groups involved.

Government

157. The Government is failing to seize the opportunity to change waste management. We have noted our disappointment with the treatment of minimisation, incineration and other aspects of the Waste Strategy 2000. The Government's embarrassing ambivalence towards incineration means that its policy is not clear and cannot be subjected to full scrutiny. On this policy, more than any other in the Waste Strategy 2000, it is clear that there is a lack of real "buy-in" to sustainable waste management as a goal for all Government Departments. Further proof is provided by the low targets set for green procurement across Government (see below).

158. The Strategy itself often uses the right words but the absence of strong and convincing policy levers to deliver the sentiments expressed is a major concern. More than any individual aspect of the Government's approach and strategy, it is the workman-like approach to waste, with a transparent lack of imagination or ambition, which has depressed us most. There is nothing fundamentally wrong with the Waste Strategy 2000 but it is not the document to fire business, Government Departments, local authorities and the public with a passion to make the much talked of 'step-change' required. As it stands, the Waste Strategy 2000 does not provide the necessary strategy to achieve a real step change in waste management. It is a flawed document which provides, at best, a partial vision of what we should be doing with waste. It is principally a response to the need to comply with EU legislation and fails to step out of this essentially defensive mode of thinking.

159. There are three specific aspects of Government policy which deserve some additional analysis here: the overall fiscal regime within which waste management operates, the formation of the Waste Resources Action Programme and the greening of Government Departments' procurement.

FISCAL REGIME

160. In attempting to move waste from the bottom of the hierarchy upwards, fiscal instruments are likely to prove one of the most flexible and versatile mechanisms. It is, therefore, disappointing that only a single inferior and rather ineffective instrument is in place: the Landfill Tax. Witnesses called for taxes on the use of virgin materials,[251] or a 'Sustainability Levy' which could be applied to all goods and services and would reflect the cost of disposal.[252] Certainly, there is much that can be done here both with new fiscal instruments and with the revenues raised from those instruments.

161. The Government told us that it had no plans to introduce a tax on incineration, nor radically to increase the landfill tax and use its revenues constructively within the waste industry. Officials from the DETR stressed that introducing new measures was "non-trivial".[253] The problems facing waste management are also non-trivial and it will take ambition in all areas of policy, including fiscal policy, to overcome them. Some witnesses suggested that a body be set up at arms-length of Government to consider the fiscal climate for waste management and what changes were required.[254] The UK Round Table on Sustainable Development, for example, has advocated the appointment of a task force to look at the use of economic instruments to minimise waste production and maximise recycling.[255]

162. We have recommended that the landfill tax be increased, and an incineration tax be introduced, and that much of the revenues from those two taxes be put to implementing a more radical overhaul of the waste management. But these are only the most prominent and clear-cut of the gaps in the fiscal regime. There is a need for some over-arching analysis which considers what the combined effect of such mechanisms is likely to be and spots where problems may arise or new instruments may be needed. If such a study had been undertaken rather earlier, it is possible that some of the most serious problems of the Landfill Tax and its credit scheme could have been avoided. We remind the Government of its commitment to expanding the use of environmental taxation. We urge it to take a considered and holistic look at the fiscal regime for waste management. This should, in particular, consider what instruments will be required to achieve the necessary long-term transformation of waste management. Without a consistent and coherent set of fiscal instruments in this area, we risk shifting waste from one technique to another without reference to any overall strategy.

THE WASTE AND RESOURCES ACTION PROGRAMME (WRAP)

163. The Waste and Resources Action Programme (WRAP) is a new body which was set up by the Government in the Waste Strategy 2000 and is intended to be developed as a partnership between DETR, DTI, the private sector, the Environment Agency and the devolved administrations. WRAP has a remit from Government to "overcome market barriers to promoting re-use and recycling" and started work on 1 January 2001. It will be given funding of £30 million by Government over the next three years. In addition, WRAP will seek funding from other sources, including the private sector, and will be eligible for funds from the Landfill Tax Credit Scheme.

164. A body like WRAP has been required for a long time and witnesses universally welcomed its formation. Many witnesses suggested that the initiative will require more funding if it is to have a significant impact:[256] Andy Moore from the Community Recycling Network described the funding available as "relatively measly."[257] Although this funding may be adequate if WRAP is to play a simple catalyst role, greater resources will be needed if it is to play a fuller role in creating and stimulating markets for recycled materials.

165. WRAP did not officially start work until 1 January 2001 but the Chairman, Vic Cocker, was appointed last year and we invited him to give oral evidence to the Committee. WRAP's performance before the Sub-committee was disappointing. In itself this is not so worrying; but WRAP will be responsible for persuading business, the public and Government of the need to co-operate and develop new markets for recycled materials. If it cannot persuade a sympathetic Committee that it is going to have an impact, it may struggle to convince those with less interest in these matters. In many cases, persuasion will be the only tool which WRAP has at its disposal.

166. We are concerned that the Waste and Resources Action Programme could fail due to inadequate resources or lack of persuasive powers. The Government must monitor the performance of WRAP and step in if the organisation is struggling to reach its objectives. We also suggest that our successor Committee conduct an inquiry into the work of WRAP during the next Parliament. Further, setting up WRAP should not be seen by the Government as solving the problem of markets and any proposals emanating from WRAP which require Government action must not simply be sidelined.

PROCUREMENT

167. Considerable power can be wielded simply through the purchasing decisions made by Government Departments. For too long, the 'greening' of procurement (at both national and local government level) has been prevented by concerns about increased costs of less environmentally damaging goods. In the Waste Strategy 2000, the Government declare that:

"We will therefore pilot arrangements for a scheme under which environmental policy will require public procurement of certain recycled products, initially paper goods."[

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Many firms, other public bodies and individuals have been purchasing recycled paper for many years and to be told that this is now going to be Government procurement policy impressed few.[259] For example, the Local Authority Recycling Advisory Committee (LARAC) told us that:

Waste Strategy 2000

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LARAC went on to say that the procurement plans in Waste Strategy 2000 failed to show decisive leadership.

168. The case for a broader and deeper procurement policy was outlined by Biffa Waste Services Ltd:

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169. The absence of a credible and meaningful green procurement programme has been recognised by many for some time now. In our Report in 1999 on Reducing the Environmental Impact of Consumer Products, we noted that "if consumers are to make an effort to buy less environmentally damaging products, so should Government". This point can equally be applied to the need to convince the public to play an active role in changing the way we deal with waste. The Government has argued that the main barrier to greater 'green' procurement is the regulatory and policy framework within the European Union.[262] However, some Government Agencies have managed to develop more effective procurement policies than Government Departments. For example, if one takes a look at the format of the Environment Agency's procurement policy,[263] it embraces a whole range of factors including the environmental performance of the potential supplier.

170. The plans - or lack of them - for greening the procurement practices of Government Departments are perhaps the clearest indication that the Government fails to believe in transformation of waste policy. The need for a greener procurement policy extends beyond the simple creation of larger and more stable markets for less wasteful products. For example, WRAP is planning to pursue a 'Buy Recycled in Business' programme[264] but the force of the message is undermined by Government's failure to adopt the advice it offers to others. The Government's plans to 'green' procurement practices are woefully inadequate. We urge the Government to press ahead with a more ambitious and rapid program of greening its procurement practices. Buying recycled paper is a simple first step: if Government is to set other businesses an example and help provide stable markets for recycled materials, it will need to be dramatically more ambitious than is currently planned. We suggest that Government take the Environment Agency's procurement practices as a starting point from which to work. A web-site should be established so that central and local Government, along with the various agencies can share information on greening procurement practices.

238 The Operation of the Landfill Tax, Environment, Transport and Regional Affairs Committee, HC 150-I (1998-99), paragraph 69 Back

239 Available on Ebco's website: http://www.ebco.org.uk Back

240 Ev p218 (HC 36-II) Back

241 Q859 Back

242 QQ860-862 Back

243 The Operation of the Landfill Tax, Environment, Transport and Regional Affairs Committee, HC 150-I (1998-99), paragraph 57 Back

244 Q846 Back

245 Ev p218 (HC 36-II) Back

246 Q783 Back

247 Q785 Back

248 Q873 Back

249 Ev p183 (HC 903-II) Back