Clause 7 - Trading and other transfer of landfill allowances

Waste and Emissions Trading Bill [Lords] – in a Public Bill Committee at 8:57 am on 8th April 2003.

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Photo of Norman Baker Norman Baker Liberal Democrat, Lewes 8:57 am, 8th April 2003

I beg to move amendment No. 11, in

clause 7, page 5, leave out lines 40 and 41.

The sun is shining a little on the Liberal Democrats this morning, and I am happy to leave it there. However, I concur with the hon. Member for South Holland and The Deepings (Mr. Hayes): it would be useful if the information that was available could be drawn to the attention of hon. Members. It need not be provided, but it would be useful if we knew that it was available and had been told how to gain access to it.

The amendment deals with trading and other transfers of landfill allowances. My hon. Friend the Member for Guildford (Sue Doughty) and I seek to remove subsection (3)(f), which would allow local authorities to employ brokers to facilitate such transfers. We have two reasons for wanting to remove that provision. First, the transfer of allowances ought to be simple. Waste disposal authority employees will be knowledgeable about such matters; they will have been responsible for letting contracts and will therefore know how to do the job. I suggest that they are capable of dealing with their opposite numbers in other authorities to facilitate such transactions. The idea that they might need, or would even want, to employ brokers to facilitate transfers is slightly worrying.

Secondly, I can imagine local authorities running up huge bills by employing brokers. Doubtless their services will not come cheap, as they, like solicitors and lawyers—I do not wish to libel any of the latter who might be in the Room—have an interest in making things go on for as long as possible. I believe that they will add nothing to the process. Indeed, good working relationships between waste disposal authorities, which will be essential, could be marred and undermined by the intrusion of a third person who might wish to push an authority further than it wanted to go. That would introduce a jarring note into an otherwise useful process. I fully support the concept of a landfill allowance, but it should be left to local authorities.

I am also concerned that there is no restriction on who can qualify as a broker. Could Biffa, for example, provide brokers? If so, that is dangerous and unwelcome; it could lead to dissension among local authorities and increase costs. I hope that the Minister will think very carefully about it.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed Conservative, Mid Bedfordshire 9:00 am, 8th April 2003

It is a pleasure to serve under your chairmanship, Mr. Griffiths.

The amendment was proposed by my noble Friend Lord Dixon-Smith, and it is interesting that Liberal Democrat Members have taken it up. The argument is that the Bill provides for the intervention of third-party brokers in the trading of waste disposal allowances. Lord Dixon-Smith considered that to be wrong; he believed that the only parties that should be allowed to trade in allowances are WDAs, of which there are a limited number. He contended that all local authorities know and work with one another; they are familiar with arrangements across boundaries and counties. He believed that normal meetings and lines of communication were sufficient and would allow

WDAs with surplus capacity to locate WDAs that were deficient in capacity and do business with them over the phone.

The Bill also provides for the necessity of regulation to define how the third party should behave when involved in trading practices. Lord Dixon-Smith believed that to be unnecessary. In response to those arguments, Lord Whitty suggested that the measure was intended to give local authorities flexibility when operating the scheme and, at the same time, to safeguard public interest in relation to propriety. If they wished, local authorities could choose to contract out their operations or buy in professional advice.

Lord Whitty said that there was no question of additional costs. I found that a surprising statement. He went on to say that if local authorities wished to outsource their activities and if professional brokers became involved, the Government would need to regulate their involvement, so the Bill covers that eventuality. He did say, however, that no local authority would have to employ a broker.

Understandably, brokers will engage in such activities to make a profit. Can the Minister tell us how much profit brokers are likely to make? Obviously, any profit made will be at a cost to the local authority, the WDA, and if that cost is a significant burden, will it not be transferred to the consumer? Do we need what may be unnecessary insurance that will impose an extra layer of administrative and bureaucratic burdens? It will take precious funds away from local authorities—funds that should be spent on investment in sustainable waste management infrastructure.

Amendments Nos. 38 and 11 both seek to amend clause 7, and I wonder whether we need the clause at all. Would not it simplify procedures if we got rid of it and streamlined the bureaucracy?

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

My hon. Friend referred to the debate in the other place and to the nub of the argument, which is whether the clause will create additional burdens, bureaucracy, uncertainty and confusion. It seems to me that a forceful argument can be made for saying that bringing another party into the process will do exactly that. As it is, local authorities will have to undergo a substantial process of change in adapting to the Bill's constraints and demands. We raised the important issue of flexibility when the Committee last met, and my hon. Friend has rehearsed it again. It is important that local authorities have enough flexibility to meet these demanding targets.

Conversely, there is also the issue of clarity. The proposed change is significant and, although the message is simple, the implementation will be complex, given the complicated relationship between authorities, and their different profiles and performance, which we discussed at our previous sitting. Many people are concerned that the addition of a third party will reduce clarity and add to confusion.

I would therefore like the Minister to be tested on the issue, and I am interested to hear his views. Like

me, he will have studied the report of the Lords debate. I have it close to hand, and I was reacquainting myself with it as my hon. Friend spoke, because I wanted to be clear about the arguments. The Minister will be aware of those arguments, which were put in a measured and sensible way by Members of the House of Lords with some expertise in this field. I would like firm assurances that the clause will not lead to extra bureaucracy in the way that my hon. Friend suggests.

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

The Minister will be tested. Indeed, we are starting by discussing a matter that has caused some concerns, which I will try to allay.

As has been said, the issue of brokers was dealt with in another place, and my ministerial colleague, Lord Whitty, explained the position. The amendment would prevent regulations from making provision for licensing and regulating persons engaged as brokers in the transfer of allowances. The Bill does not prevent the use of brokers—of course, it does not require them either—and the current provision is intended only to regulate and license such persons. However, I acknowledge the intention behind the amendment, and I appreciate the concerns that have been expressed.

Let me explain brokers' intended role in the trading scheme. First, the allowance scheme is not intended to be speculative. Landfill allowances can be held only by waste disposal authorities; indeed, clause 7 expressly prevents regulations from authorising the acquisition of allowances by anyone other than a WDA. However, the Bill does not prevent WDAs from using brokers. WDAs that feel that a broker's expertise in markets would help them to trade more effectively will be able to make use of that expertise. That is the purpose of involving brokers.

Let me make it clear, however, that we do not intend to help to create a whole new breed of broker to draw money out of the system—absolutely not. Local authorities are used to working with each other, and many have particularly good experience of working in partnership on waste management issues. I fully expect that most WDAs will choose to negotiate with known colleagues when trading allowances. However, to many authorities, the idea of trading is, frankly, alien, and smaller authorities might not have sufficient expertise to deal with such a scheme without the use of outside help.

The use of brokers is not compulsory; it is simply an option. If a local authority does not want to use them, it will not do so. In our view, there is no value in forcing WDAs to trade in a certain way that is not suitable for them, particularly before consultation on the issue has taken place. If brokers are used, we believe that they should be subject to regulation. That is different from the situation in most private markets, which are self-regulating. However, I am sure that hon. Members would agree that, where public money is concerned, self-regulation might not be sufficient to ensure public trust in the system.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

Is the Minister proposing that there should be any restriction on who may qualify as a broker? More specifically, do the Government intend

to ensure that those who have a commercial interest in the outcome of negotiations cannot act as brokers?

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

Yes, there will be a requirement to be licensed as a broker in order to perform this particular role. There will be clear rules of engagement, which will be covered in regulations.

The hon. Member for Mid-Bedfordshire (Mr. Sayeed) asked me about profit, but I cannot possibly say what the profit might be in any particular contract. It would depend on the individual arrangements between the broker and the WDA. I repeat, however, that it will be a matter for the authority, and if an authority does not want to be involved with the associated bureaucracy and expense and thinks that it can do the job perfectly well itself, I am sure that it will not engage a broker. That seems to be perfectly satisfactory.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

I omitted to welcome you to the Chair, Mr. Griffiths, which was an unforgivable and unpardonable error, so I welcome you now, and hope that you will forgive me none the less.

It seems important to establish what kind of people the brokers might be. It has been suggested—the Minister sensibly referred to the difference between large and small authorities in this respect—that an authority might act as a broker itself or have an in-house service, which it might also offer to others. However, that would seem to be precluded by the idea that anyone who might benefit from the outcome of the negotiations should not be involved in the process. Then again, given that authorities are used to dealing with each other, that would not seem to be unfeasible, especially, as the Minister rightly says, if one takes account of subsection (2)(a).

That provision makes it clear that the private sector cannot acquire landfill allowances, which might act as a disincentive for the private sector to get involved. Some sort of in-house arrangement would help to provide the support for smaller authorities which the Minister rightly identifies as an issue.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

Order. I remind hon. Members that interventions should be kept short.

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

I should say that I, too, failed to welcome you to the Chair, Mr. Griffiths, and I wish to correct that oversight.

I do not believe that WDAs that have a broker operating with them will be precluded from offering that expertise to others, but it is unlikely to happen in most circumstances. Subject to consultation, rules will be introduced and regulations laid before Parliament. We want to keep the arrangements as flexible as possible. Our only purpose is to try not to introduce the unnecessary involvement of brokers—quite the opposite—quite the opposite—but to enable smaller authorities that could use it to do so. There is no requirement and it will not happen often.

If authorities trade—something that is initiated by the Bill and is not a customary exercise for most of them—they should be able to draw on the best expertise available, and that should not be self-regulated. There should be proper regulation; no-one

will be able to declare himself a broker and make a nice tidy profit.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed Conservative, Mid Bedfordshire 9:15 am, 8th April 2003

My hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) made an interesting observation that the Minister has not fully addressed. We know that local authorities are trying to specialise and are offering other local authorities their expertise. If, under the regulations, an authority sets itself up as a broker, can it offer that expertise to other local authorities?

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

The hon. Member for Mid-Bedfordshire did not say so but implied that I had stolen Lord Dixon-Smith's amendment from the Lords. I can assure him that the amendment originated during a long train journey from Lewes to London. For reasons best known to South Central Trains, that journey took a circuitous route, which gave me the opportunity to read the Bill and to suggest amendments. However, the fact that I reached the same conclusion as the hon. Gentleman's colleague in the Lords would suggest that there is merit in the amendment. Two people think that it is worth pursuing; the Minister, sadly, does not make a third.

The Minister is right to say that the Bill merely allows local authorities to use brokers and does not require them to do so; that is perfectly proper. However, I have a feeling that once one or two local authorities start using brokers—perhaps the larger ones that can afford to do so—they will gain a perceived competitive edge. The consequence will be a cascading process, by the end of which virtually all authorities will have brokers. Once one does it, the others will follow.

The Minister rightly referred to the good partnerships between waste disposal authorities—we heard about them in an earlier sitting. Those will be put in jeopardy by arrangements with a jarring third party that will gain influence from one over the other. After all, the point for a WDA of employing a broker will be to maximise its benefit, probably at the expense of another authority. It will be in the broker's interest to reach an agreement on transfer that will be beneficial to one authority and detrimental to another. If the broker is not to gain the edge for the authority, what is he or she there for? The situation will cause disharmony between WDAs.

I am grateful to the Minister for saying that the regulations will ensure that there are restrictions on the types of person who can be licensed. I hope that he means, by implication, to exclude those who have a direct commercial interest. Employees of companies such as Biffa—I am not picking on it, merely using it as an example—would, therefore, be excluded. That is important, because they might have an interest in not following the process properly.

Let us say that authority A employs as a broker a company involved in waste disposal. If that company has a contract with authority B it might not wish to comply with the wishes of authority A; it may be in its interest to keep up the contract volume with

authority B. The situation would be unclear due to the conflict of interest between the broker and the WDAs.

The hon. Member for South Holland and The Deepings made an astute point about the potential role of WDAs in the brokering process. Local authorities are developing in-house specialities and seek to market those to neighbouring authorities. There is nothing new about that; for example, the district council of which I was a leader some years ago did the same thing with waste collection, street cleaning and grass cutting. Establishing a speciality and selling it to other local authorities is standard practice in local government. The Bill makes it possible for waste disposal authorities to set up their own brokerage and to market services to others. The Minister said that that is not precluded. Those services could even be marketed so as to benefit the originating authority, thereby creating a conflict of interest. The system that the Minister is setting up is not clean.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

That is true, but if the amendment were accepted, and lines 40 and 41 of page 5 were deleted, the process that the hon. Gentleman describes, whereby a larger authority provides a service, would be precluded. I asked the Minister whether that would be precluded under existing arrangements or other provisions in the Bill and he assured me that it would not. It would not be unhealthy for local authorities to co-operate in that way, but, even though I do not make a definitive judgment on the matter, that route would be closed if the amendment were accepted.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I can tell the Minister that I shall not press the amendment, because it is a probing amendment. Also, I accept that its effect would be to weaken the structure that I wish for, because it would remove the licensing arrangements, which, under the circumstances, it is better to have than not. The amendment's purpose is to raise the issue, which we have done successfully. However, at the end of this short debate, I am more convinced than ever that brokers should not have a role.

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

I understand that the hon. Gentleman will not press the amendment, so I shall not detain the Committee. However, I should like to comment briefly on some of the remarks he made in his second contribution which are additional to what he said at the outset. He believes that the provision could undermine partnerships between waste disposal authorities, although in my view it certainly would not. There is no obligation on authorities; they will engage in the process only if they believe that doing so is additional to the expertise that they have from those partnerships. He is right that there is specialisation among local authorities and WDAs. There is no reason why the provisions should interfere with that specialisation and its availability to another WDA.

The hon. Gentleman says that once the larger authorities start to use brokers there will be a cascade effect throughout all WDAs. I do not believe that that will happen, and there is no reason why it should. It is a matter not of giving a competitive edge, but of providing expertise in trading to an authority that does not yet have it. Once the authority has that expertise it

will stop using a broker. The provisions are for authorities that are starting on a process that they are very unused to.

Lastly, conflicts of interest from brokers will be covered in regulation and subject to consultation. I appreciate that the hon. Gentleman will not press the amendment, but I hope that he will take on board my belief that his fears and apprehensions are not grounded.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

Of course I accept that the Minister honestly holds the view that my fears and apprehensions are not grounded. I think that the matter might turn out quite differently, but history will be the judge of that. However, I disagree that the use of brokers will merely bring expertise rather than provide a competitive edge—expertise brings about a competitive edge.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

I want to press the hon. Gentleman on this important point. I do not like to defend the Minister too robustly in Committee, but I like to find common cause where I can. The hon. Gentleman should say precisely what he would recommend to a small authority without such expertise. He is right to say that expertise gives a competitive edge, and authorities that do not have such experience would not have that edge. Where would those authorities go if the amendment were accepted? They would not be able to go to another local authority, which would be my ideal, and they would not be able to go to a private third party.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

There is a potential difficulty for a small authority, but it would be less of a difficulty than the one that would be caused by the structure that will be created through the use of brokers. A small authority, faced with a large WDA with brokers, will have no alternative but to employ brokers to try to even matters up; its costs will then increase accordingly. Opinions might differ, but that is my honestly held view.

My other concern is about what will happen to the authorities that work together, which was referred to last week. That has not been thought through in this context. I am grateful to the Minister for saying that he will regulate to ensure that conflicts of interest are prevented in this situation. I simply ask him to consider whether conflicts of interest that affect waste disposal authorities should be covered by the regulation. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

I beg to move amendment No. 38, in

clause 7, page 6, line 1, leave out from 'for' to end of line 3 and insert

'the allocating authority to make available to each waste disposal authority full financial resources 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 as set out in sections 11 and 12;'.

We move to a different aspect of the clause. We have spoken a great deal about the extra obligations and new responsibilities of local authorities. There has been a general acceptance that that will require the acquisition of expertise. We know that there will be obligations to collect, to register and to record various

bits of information. Those are covered in this clause and in clauses 11 and 12. There is no doubt that it will be important to keep the records in a way that ensures their probity and efficiency.

The amendment deals with the additional cost of that process. I am sure that local authorities are already worried about the matter. I do not want to make an overtly party political point this early in the morning, but this has to be seen in the context of the seemingly ever-increasing number of unfunded statutory requirements. They have a cumulative effect. We have spoken about regulatory impact assessments. The cumulative regulatory and financial impact of measures such as this have to be taken into account. I worry that the process will create an extra burden and put an extra strain on the already tight budgets of local authorities.

We argue in the amendment that full financial resources should be made available for the waste disposal authority to comply with the requirements imposed on it under the provisions of subsection 3(h), and in clauses 11 and 12. That is not unreasonable. It will give an important signal to local authorities that the allocating authorities are planning to support them and to work in partnership with them to help them to meet the targets.

I have spoken before about the trepidation that will undoubtedly be felt by those authorities that are not at the forefront of performance in terms of the objectives outlined in the Bill. We need to reassure local authorities, and we certainly need to signal that the collaborative approach, which I have constantly advocated in Committee, is genuine. To that end, we need to consider the resource implications of the collection, registration, storage and use of information and other responsibilities outlined in the Bill. I hope that the Minister agrees. It is never easy for a Minister to make such a commitment, but I know that he shares my view that it is vital that this is done properly and co-operatively. In that spirit I urge the Committee to support the amendment.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes 9:30 am, 8th April 2003

I am sorry to say that I cannot agree with Conservative Members on amendment No. 38, although we have found common ground in relation to other amendments. Waste disposal authorities must be required to provide that information and must be subject to a penalty for not doing so. That is straightforward. If there were no such requirement or no such penalty, what would prevent them from not providing any information at all? We must have freedom of information so that we know what is happening. The acquisition and disposal of allowances must be an open process, because if the process is closed, it has the potential to be corrupt. The protection against corruption is openness, so it would seem to be perfectly proper to require such information and to impose a penalty if it is not provided. It does not seem to be an especially onerous task for waste disposal authorities to collect that information and make it available. We are not asking them to do a great deal.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

I am uncertain whether the hon. Gentleman has become a little confused on his long train journey. Is he talking about penalties or the additional resources required to meet the statutory requirements to collect, register and maintain information? They are separate issues. If he is talking about penalties, we may be moving on to another debate, but I do not want to do your job for you, Mr. Griffiths, because that would be impertinent. I just want to help the hon. Gentleman to collect his thoughts after his, clearly arduous, journey.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I appreciate the hon. Gentleman's concern for my journey. I am talking about both the penalty provision, set out in clause 7(3)(i), and the second part of the hon. Gentleman's amendment, because the two are linked. Let me turn now to the issue of resources for local authorities, with which the hon. Gentleman wants me to deal.

As I was saying, I do not believe that the provision will be terribly onerous for waste disposal authorities. The collection of information about the acquisition of disposable allowances would not seem to require a huge amount of paperwork, copious numbers of staff or people beavering away while burning the midnight oil to fulfil their obligations. It seems to be a simple matter. However, I have sympathy with the hon. Gentleman's general point that a huge amount of bureaucracy and extra cost should not be loaded on to waste disposal authorities, which is why, as the hon. Gentleman may have noticed, my hon. Friend the Member for Guildford (Sue Doughty) has tabled an amendment to hypothecate the moneys from fines and return them to waste disposal authorities.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

I want to be absolutely clear about what the hon. Gentleman is saying. I am unsure whether he is saying that the requirement will be a burden, which needs to be covered by what he describes as hypothecation—indeed, the Conservatives have tabled a similar amendment—or whether he does not think that it will be a burden. He says that people will not be burning the midnight oil and authorities will not require extra staff and, presumably, extra expertise, although he told us previously that expertise would be very important. So is he saying that the provision will or will not be a burden on local authorities and how does his opposition to our amendment fit with the amendment tabled to a later part of the Bill by the Conservatives?

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I do not know whether my argument lacks clarity or whether the hon. Gentleman is being obtuse. Either or, perhaps, both is the answer. I am saying that waste disposal authorities will face a general increase in responsibility and a greater administrative burden. Taking all those things together, it is right that there should be some financial support for waste disposal authorities, and I suggest that it should come from the hypothecation of fines and penalties. That general proposition covers the whole Bill. I happen to think that this particular administrative burden is light, so it need not worry us too much, but in so far as it exists it would be covered by the hypothecation of fines.

I shall not pursue the matter further except to say that the amendment will remove the sanction should

waste disposal authorities not report information. That is wrong. The requirement is not onerous; and if there is to be no penalty, why should the authorities comply? I hope that the Minister will agree that the provision should remain in the Bill.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed Conservative, Mid Bedfordshire

Speaking specifically about amendment No. 38, the duties required under paragraph (h) stipulate that WDAs should provide information on the acquisition and disposal of allowances. Likewise, clauses 11 and 12 impose burdens regarding the administration of the system—for example, monitoring duties, having to make evidence and information available, the maintaining of records and so on. I understand that failure to comply would lead to a penalty being imposed on the WDA—another fairly extensive burden. It will not be without cost, and although one upholds the concept of such a burden in the interests of transparency and the accountability of local government, it bothers me that nowhere in the Bill can one find any mention of funding being made available to WDAs to comply with those requirements.

I believe that the Bill needs an extra provision to make clear that adequate resources will be made available to WDAs to comply with the extra requirements that the Bill imposes on them. Friends of the Earth has estimated that the total additional cost of separated collection will be £17 per household per year, which is a total of just under £400 million a year for the whole of the United Kingdom. Councils are already spending £200 million a year, which leaves a shortfall of about £200 million. Will the Minister tell us where the extra resources will come from? That is a particular problem in the light of the local government settlement for rural authorities, as they often find waste collection much more difficult than urban authorities.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I broadly agree with the hon. Gentleman about the general administrative burden—of the Bill, rather than of the clause. We have a common cause on that. Will he say how much that administrative burden will cost the waste disposal authorities, particularly providing information on the acquisition and disposal of land?

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed Conservative, Mid Bedfordshire

No; I will not tell the hon. Gentleman because I cannot assess it, and I do not have an army of civil servants to make the calculations. However, I can say that all the way through the Bill, extra duties are being imposed on local authorities and that they have costs. I stress the fact that the local government settlements for rural authorities have been extremely poor. Although they were dressed up to look much better as percentage figures, the extra burdens imposed on those local authorities are, in some cases, less than inflation—let alone the inflation in salaries, national insurance and other such things.

My first question is, where is the money coming from? Secondly, this part of the Bill does not contain adequate recognition of the two-tier system of local government in the management of waste. It is unclear how the waste disposal authority will pass to the waste collection authority the moneys that the collection

authority needs to fulfil its duty to provide waste in such a form that the disposal authority can make best use of it. Unless the Minister and the Bill give us a degree of clarity, the Bill is likely to fail in its execution.

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

I have sympathy with some of the concerns that have been raised. However, let me first express my gratitude to the hon. Member for South Holland and The Deepings for undertaking my role. He saved me the trouble of cross-examining the hon. Member for Lewes (Norman Baker), although I shall not intrude too much on private grief.

Obviously, this is an important issue. The hon. Member for Mid-Bedfordshire opened it up a little more, and I shall try to respond to his points, too. Central Government give local authorities a significant number of duties, and it is important that authorities have sufficient resources to carry them out when we add to them. I should tell the hon. Member for South Holland and The Deepings—I am sure that there is a way of rendering the name of his constituency more incisively, although I should probably keep to the proper title—

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)


The truth, however, is that the Government have tried to introduce a rule stipulating that local authorities on which we place extra burdens—I do not like that word, so perhaps I should call them functions—should be properly funded. That was not always the case under a previous Administration, but that is what we are trying to do. We are certainly not piling on new regulatory instruments without ensuring that they are properly funded. As I shall make clear, authorities are certainly fully covered in the case of waste.

Photo of Gregory Barker Gregory Barker Conservative, Bexhill and Battle

It is important to clarify that that is not the experience of countless administrations, including Rother district council in my area. Its leader has said that the new constraints mean zero provision for the cost of setting up a new system. He added that the Minister cannot simply

''will the end without willing the means.''

Eastbourne, in East Sussex, is introducing a new recycling system, but council tax has had to go up by 39 per cent. to fund it. The Minister talks about new resources being commensurate with the responsibilities that are being piled on local government, but his comments fly in the face of the reality.

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

I do not agree with that, and I shall explain why I am convinced that the hon. Gentleman is wrong when the point arises logically in my comments.

The amendment would not be consistent with the way in which money is allocated to authorities. As hon. Members know, that is done through the block environmental, protective and cultural services grant element of the revenue support grant, which is set every three years in the spending review. It would not be consistent to provide funding outside the block grant, as proposed.

In any case, the duty to provide information under the Bill—here, I do agree with the hon. Member for Lewes—should not prove terribly onerous. The amendment relates to providing extra information, but the hon. Member for Mid-Bedfordshire is hyping it a bit when he says that there will be fairly extensive new burdens. That will not be the case.

The system that the Environment Agency proposes to use in England and Wales to calculate the amount of biodegradable municipal waste sent to landfill will require WDAs to use only the records that they already keep. For the necessary calculations to be made, WDAs will need to tell the monitoring authority—we will discuss who that is in later clauses—only the quantities of municipal waste arisings and of waste that is diverted through recycling, composting, incineration or mechanical-biological treatment. As most WDAs are already collecting such information, the additional burden will be only one of reporting it to the monitoring authority. That cannot be construed as anything other than a fairly minor extra cost. Scotland and Northern Ireland are likely to take a similar approach.

As I said at Second Reading, I am aware that there will be some costs involved, but the Government already provide waste disposal authorities with significant extra resources for waste management to enable them to carry out the duties to which the hon. Member for Bexhill and Battle (Gregory Barker) referred. For example, in the last two spending reviews we substantially increased the provision for environmental, protective and cultural services, including waste. Spending review 2000 increased provision in this block by £1.1 billion over three years, and spending review 2002 increased provision by a further £671 million over the three years to 2005–06. Over those five years—the third year of the first review period is the first year of the second review period—the extra sum in this part of the revenue support grant, which is predominately although not entirely about waste, is being increased by slightly more than £1.75 billion. That is a very substantial sum. Expenditure in the three financial years 2005–06 to 2007–08 will be dealt with in spending review 2004, which we have already begun to examine.

The hon. Member for Mid-Bedfordshire referred to the Friends of the Earth calculation about separate collection, and that is the subject of a private Member's Bill. Friends of the Earth's calculation—these are its figures; I am not confirming them—is that it could cost £17 per household and up to nearly £400 million for the whole country. Even if those figures are correct, the extra provision more than adequately covers them. I give the same answer to the hon. Member for Bexhill and Battle. He should ask the leader of the council what extra amount the council received in the spending review periods for EPCS. That is the critical consideration. I would like to know how the amount that his council received compares with the figures that he quoted.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes 9:45 am, 8th April 2003

If the Minister believes that the money from central Government more than covers the

duties of local government, why is he opposing the private Member's Bill that is going through the House?

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

First, I am not opposing it; I said that I was content for it to proceed to Second Reading. There was no Division in the House because there was general agreement on all sides. There were two issues in the Bill that I would have to consider further. One is the 50 per cent. recycling rate; the other is the mandatory waste management strategy. I will return to those when the Committee discusses that Bill. We may reach the latter of those much earlier in this Bill when I make clear the Government's view.

Photo of Gregory Barker Gregory Barker Conservative, Bexhill and Battle

I note the Minister's comments, and I will write to him with details of the Rother situation. However, I must say that the experience in the country is that the distribution of the grants is not fair and is not uniform. I am sure that the sum that the Minister quotes is correct, but the deep concern of people in the south-east is that the grants are not being equitably distributed.

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

The overall distribution of the revenue support grant raises a much wider issue. For years under successive Governments it has become a party political issue because there are allegations that one section of the population is being favoured over another. All Governments firmly, vigorously and, in the case of my Government, correctly, deny that that is the case.

EPCS are important, but local authority waste management has also benefited substantially from the private finance initiative. Two hundred and twenty million pounds of private finance initiative credits was provided for in spending review 2000 for waste projects. That was increased to £355 million in spending review 2002; that is a 60 per cent. increase for the present review period. It is a substantial uplift in the provision of funding for major infrastructure projects.

Mr. Sayeed rose—

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

I shall give way in a moment, but first I wish to complete the trio of goodies about which I am sure hon. Members will be delighted to hear. We have also provided additional funding, from which many of their local authorities gained, for 2002–03 through the waste minimisation and recycling challenge fund, which was ring-fenced and provided an additional £140 million.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed Conservative, Mid Bedfordshire

The figures that the Minister talks about are cash figures. Although I have no doubt that he is quoting them accurately, it would be convenient for the Committee if the Department could at some stage say what the real-term funding is and set that against the extra burdens that have been imposed on local authorities and have those costed as well. It would be interesting to know whether local authorities are worrying their constituent members and others unduly when they complain that the Government have underfunded the burdens that they have imposed. If the Minister is convinced of the rightness of his case, I hope that the Department can produce the figures that back up the real increases, vis-à-vis the extra burdens that have been imposed on local authorities. At a time of local elections no local authority introduces a

massive hike in council taxes unless it has to; there must be a reason behind that.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

Order. I remind hon. Members that interventions must be short.

Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment)

I understand the hon. Gentleman's point. I do not have those figures to hand. I can give only the real-terms increase over the baseline 2000–01, up to the last financial year, which is a fairly short run. I do not know what the rate of inflation will be in the rest of the spending review 2002 period. One can measure that against extra functions, and the main one, which is a statutory recycling target, is the requirement to meet the mandatory performance standards on recycling, reuse, recovery and composting that the Government have laid down. We have provided an extra £140 million for that. In the light of that, many local authorities believe that they can meet those targets, whereas previously they did not. The hon. Gentleman can of course ask a parliamentary question to request similar information, but I shall try to provide him with information in due course.

We are working with the Treasury to try to find a way to hypothecate the penalties laid out in the Bill back to waste disposal authorities. That would help to ensure that money is not lost to the local authority system as a result of the allowance scheme. We shall debate hypothecation later.

The amendment would also remove the provision that would enable regulations to provide for waste disposal authorities to be liable to a penalty when they failed to comply with a requirement to provide allocating authorities with the information that they required in relation to acquisition and disposal of allowances. That is necessary—the hon. Member for Lewes is right about this—to underpin the effectiveness of any trading scheme. The information is vital in order to ensure that the trading of allowances between waste disposal authorities and across scheme years is recorded and monitored.

I hope that I have persuaded most if not all hon. Members that although funding is an important issue on which it is virtually impossible to get total political agreement, the Government's case is nevertheless less sufficient in terms of what we have done. I hope that the hon. Member for South Holland and The Deepings can therefore withdraw his amendment.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

I am conscious of the fact that there is a real difference of opinion among members of the Committee on the funding and resourcing of local authorities in general, and in particular on their responsibilities for waste and the new responsibilities—I hesitate to say new duties: I was going to say burdens, but I know that that is contentious—that they will have as a result of the Bill. I am inclined to share the views of my hon. Friends the Members for Bexhill and Battle and for Mid-Bedfordshire on the impositions on local authorities.

I await the evidence from the series of parliamentary questions that the Minister has invited

my hon. Friend the Member for Mid-Bedfordshire to table, which will no doubt tease out the cumulative impact that I described of these things. However, the eloquence of the case put by the hon. Member for Lewes has strengthened my conviction that these are important matters. I did not intend to press the matter to a vote, but the hon. Gentleman has persuaded me to do so.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I am grateful for the hon. Gentleman's comments, which are kind, as always. I gently suggest to him, however, that although I have sympathy with his broad point about the support for local authorities and the consequences of the Bill, the matter on which he seeks to divide the Committee is extremely narrow and the implications for local authorities are very small. He is therefore choosing the wrong place to press the matter to a vote.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

Unlike the hon. Gentleman, my support for local authorities is whole and real. I do not qualify my support in the particular way in which he does. I am a robust advocate of local democracy and a sturdy defender of the interests of local government. The hon. Gentleman is rather more shaky on this issue, and perhaps more equivocal. I, however, do not share that equivocation, and it would be wrong of me to deceive members of the Committee into believing that I could. There are important new responsibilities. To be serious for a moment, of course we are not talking about a major additional burden—that would be a calumny. However, it is important to note that paragraph (h) states,

''to provide information in relation to their acquisition and disposal of allowances''.

and that clause 11(2)(b) talks about maintaining registers. Clause 11(2)(e) talks about

''evidence as to amounts of waste, or of waste of any description, sent to landfills'',

and clause 12(1)(a) makes provision for maintaining prescribed records. Clause 12(1)(b) makes provision for gathering prescribed information, and clause 12(1)(c) provides for making prescribed returns. I could go on and on quoting clauses on the maintenance of records, the gathering of information, the keeping of information and the storage of information. Some of that information must be supplied in a form that can be inspected.

Photo of Gregory Barker Gregory Barker Conservative, Bexhill and Battle

My hon. Friend further strengthens his case. I urge him to press the matter to a vote, because although it may not be a major issue in isolation, it is typical of the inconsistent imposition by the Government of yet more regulation, which comes unfunded and without resource, and which, ultimately, is a form of stealth taxation on local council tax payers.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs)

I see a Tory split emerging. Some members of the Committee are urging me to press the matter to a vote, while others are more reticent. All hon. Members, certainly in the Opposition, are wholly committed to the case for local democracy as I described it, but clearly there are differences of nuance.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed Conservative, Mid Bedfordshire

I suggest that my hon. Friend reserves his big guns for the big questions. This issue is very useful for teasing out a general concept. The Minister

has been good enough to agree, as far as possible, to draw a comparison between real funding increases and new duties imposed, and on that basis, I urge my hon. Friend not to press this particular matter to a vote.

Photo of John Hayes John Hayes Shadow Minister (Environment, Food and Rural Affairs) 10:00 am, 8th April 2003

I am on the horns of a dilemma: I must choose between my hon. Friends the sedate Member for Mid-Bedfordshire or the fiery young blood from Bexhill and Battle. On balance, I think that my hon. Friend the Member for Mid-Bedfordshire is right. However, it is important that we are clear that this will be real additional work and that we know whether an additional person will be employed to do it or whether someone who is already employed will be allocating a proportion of their time to it.

A cursory examination of the responsibilities is not enough. Some of the information must be kept in a form that can be presented and inspected; copies of records must be produced, and the whole process must be audited. It would be inappropriate for local authorities not to allocate sensible resources to that. They could allocate a member of staff or they could employ someone to do the job, and that has a cost. It is not unreasonable for that cost to be met.

Given the Minister's comments and because I do not wish to embarrass the hon. Member for Lewes more than he has already been embarrassed, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 ordered to stand part of the Bill.