Clause 7 - Trading and other transfer of landfill allowances

Part of Waste and Emissions Trading Bill [Lords] – in a Public Bill Committee at 9:00 am on 8th April 2003.

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Photo of Michael Meacher Michael Meacher Minister (Department for Environment, Food and Rural Affairs) (Environment) 9:00 am, 8th April 2003

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.