There is discretion for departments and regulators as to how to set out the evidence base. However, it is desirable that the following points are covered:
· Problem under consideration;
· Rationale for intervention;
· Policy objective;
· Description of options considered (including do nothing);
· Costs and benefits of each option (including administrative burden);
· Risks and assumptions;
· Direct costs and benefits to business calculations (following OIOO methodology);
· Wider impacts;
· Summary and preferred option with description of implementation plan.
Problem under consideration
At present, Local Authorities are required to collect waste, if asked, from organisations listed in Schedule 2 of the Controlled Waste Regulations (1992) (CWR). This list includes among others, schools, hospitals, prisons and various types of self-catering holiday provision; it does not distinguish between private and public sector organisations. The CWR allow Local Authorities to make a charge for the collection of this waste, but not for its disposal. This legislation was passed at a time when disposal costs were minimal, before statutory EU targets to reduce waste going to landfill and the introduction of the landfill tax.
Defra commissioned Enviros in 2009 to produce a report on the current management of Schedule 2 waste in order to inform the review of the legislation.
They found that the current split of public to private Schedule 2 premises is 32% and 57% respectively (with an additional 10% being categorised as either public or private), however some 75% of the waste, by weight, arises in the public sector.
At present, around 50% of this Schedule 2 waste is collected by private waste contractors even though they charge for both collection and disposal. This situation seems to have arisen as a result of a combination of factors, including variable interpretation of the legislation, but for larger premises in particular, by the more flexible and tailored waste services available from the private sector. However, the escalating costs of disposal including pre-treatment requirements and Landfill Tax means that many of these contracts are becoming a more expensive option than Local Authority collection. Some organisations have already switched to Local Authority (LA) services to take advantage of the cheaper fees, and there is a significant risk that large amounts of waste, which Local Authorities have not budgeted for, will come into the public sector for disposal.
The Enviros report calculated in 2007/08 this would amount to an additional 600,000 tonnes of waste transferring into the public sector. They assumed that if recycling rates of 30% could be achieved for this waste, then around 400,000 tonnes would be landfilled, placing an additional cost of £24-£32 million pounds, based on charges of £60-£80 per tonne of waste and also assuming that the recycling services cover their own costs. This represented an increase of between 2.2% and 2.9% in disposal costs for local authorities; these costs are offset by a reduction in disposal costs for Schedule 2 premises currently paying private waste contractors for the full cost of disposal.
Rationale for intervention
Unfortunately, due to the age of the Regulations, it has not been possible to locate any record of the considerations leading to its introduction so it is not clear why the legislation did not allow the recovery of disposal costs for Schedule 2 waste, so we can only speculate on the reasoning.
The policy landscape was fundamentally different in 1992 – the ‘polluter pays’ principle was not embedded in public policy for example, and there was no Landfill Tax. There have been substantial changes in the legislative framework, including the introduction in 1999 of the Landfill Directive, which requires pre-treatment of waste and restricts the types of waste which can be disposed of in landfill, and the Waste Framework Directive, which has been revised and implemented in domestic legislation this year. Amongst a range of measures it enshrines the principle of the waste hierarchy as a priority in law, and introduces requirements for the separate collection of paper, metal, plastic and glass.
In 1992, the vast majority of waste would have been disposed of in landfill at minimal cost, so it is important to note that disposal costs would have been negligible when compared to the cost of collection when these regulations were first introduced, unlike today when they make up over 50% of the cost of handling waste, and so the ‘polluter pays’ principle would not have been a material consideration in disposal charging. It is, therefore, more appropriate to consider the merits of the legislation against current public policy.
Currently, at a time of tightening public spending, it is more important than ever for the taxpayer to no longer subsidise the waste disposal costs of private businesses. Again the position here has moved on from when the legislation was first introduced, with far more private businesses operating premises that would have mainly been in the public sector at the time of the original legislation (for example private hospitals and care homes.)
In the public sector, the split of responsibility for meeting the cost of waste services creates confusion and opacity within public budgets, and public funding is not aligned to expenditure where Schedule 2 premises switch between Local Authority and private sector waste services.
As the cost of disposal continues to rise, Schedule 2 premises have increasingly been moving from private-sector contracts to Local Authority waste services, creating a shortfall in Local Authority funding that has been met by the taxpayer. Central Government funding for waste services is not ring-fenced. The most recent spending review and local Government settlement did not include any element of funding for management of waste from Schedule 2 premises. Local Authorities are, therefore, currently funding Schedule 2 waste disposal costs from council tax and other parts of their non-ringfenced budgets.
Local Authorities are concerned about the effect of large amounts of Schedule 2 waste coming back into the public sector because the disposal costs would be a significant drain on their resources and this material has not been included in their strategies for meeting their landfill diversion targets as required under the EU Landfill Directive. In addition, the existing Regulations insulate organisations listed in Schedule 2 from the full costs of the environmental impact the waste they produce causes, reducing the financial incentive for these premises to reduce waste or to recycle.
The Regulations pre-date, and consequently do not reflect the polluter pays principle (PPP) that underpins all EU and UK waste legislation of the past fifteen years. They include some out of date terminology and are generally agreed by users to be difficult to interpret in places.
Policy Objectives
To remove public funding of private business costs. Allowing local authorities to recover the full costs of the waste service from non-domestic users will benefit the taxpayer. In addition, both public and private sector Schedule 2 premises will be incentivised to reduce their waste disposal costs.
To remove the market distortion. By removing the public funding of Schedule 2 premises’ disposal costs, we aim to create a level-playing field for private sector waste management businesses. This will also increase the ability of Schedule 2 organisations to choose the most appropriate waste management services for their circumstances.
To promote waste reduction and recycling. Amending the legislation to ensure that it effectively contributes towards Government policy aims of reducing waste, increasing recycling rates and providing non-domestic waste services based on the 'polluter pays' principle.
To promote localism. By giving decision-making powers and responsibility for non-domestic waste service fees back to local authorities, they can make decisions on how best to support local organisations and be fully accountable to their local electorate for their decisions.
To have legislation which is clear and easy to use, and subject to regular review. This will help local authorities and service users to understand their respective rights and responsibilites.
Description of Options considered
1) Issue Guidance
The original guidance, issued in 1992, does little more than restate the legislation, a factor that has contributed to significant variations in how the Regulations are interpreted and applied. Although there are frequent disagreements on interpretation between Local Authorities and Schedule 2 customers, there is no case law to clarify the issues.
We could seek to issue more detailed guidance, to set out our interpretation of the legislation, and to encourage stakeholders who disagree with our interpretation to seek judicial review to clarify the legislation in the Court.
If all parties agree with our interpretation, then guidance could improve consistency of fee charging across the country and reduce disputes. This guidance would have no statutory basis, and would not resolve the fundamental problems with the Regulations; the subsidised fees and lack of incentive to manage waste sustainably.
There are no significant costs associated with the production of guidance but, by publicising the availability of the subsidy, it is likely to accelerate the rate at which Schedule 2 organisations seek waste services from Local Authorities. We assume that, as waste disposal becomes progressively more expensive, almost all Schedule 2 waste that is currently handled by the private sector would come into the public sector to avoid waste disposal charges. We have assumed that around 10% of Schedule 2 premises will continue to use the private sector in order to benefit from services tailored to their specific needs, despite the greater cost.
We have assumed that the switch to Local Authority waste services will take place gradually to reflect, though to a lesser extent as a result of the guidance, imperfect information on LA charging and Schedule 2 premises holding long term contracts with commercial operators.
2) Repeal and replace the Controlled Waste Regulations 1992
This is the preferred option. We propose to replace the Regulations to allow waste disposal authorities to charge for disposal of all waste arising from non-domestic properties.
We would exempt charity shops and re-use organisations from disposal charging on the grounds that their activities contribute to waste prevention by encouraging and facilitating the reuse rather than disposal of goods, thereby benefitting taxpayers by reducing tonnages going to landfill. The Regulations will be amended to explicitly define waste from these sources as being household waste, and ensure that they are entitled to free disposal.
The proposed powers would continue to be permissive, allowing local authorities the ability to make decisions on charging that best reflect the needs and priorities of local people.
Baseline - Do Nothing
In order to assess the implications of both options being adopted, the table below shows the amount of Schedule 2 waste Local Authorities would handle if no further intervention took place.
Headline Assumptions
The methodology involved uses the 2007/08 Schedule 2 waste figures from the Enviros report and projects these forward based on the following assumptions.
Annex 2 is taken from the 2007/08 Enviros report and provides a breakdown of the total schedule 2 waste per premise and by the amount within and outside the municipal solid waste (MSW) stream for both England and Wales. As can be observed from the tables, the public/private split per schedule 2 premise differs for each region. For example, the public private sector split for “care homes for England is 81% and 19% whereas for Wales this is 94% and 6%. Therefore to ensure regional disparities are accounted for, the below assumptions are applied separately to England and Wales rather than to the sum of the total waste.
The proportion of total Schedule 2 waste in the municipal solid waste (MSW) stream, 4% is assumed to be constant
The rate of MSW waste growth (and therefore the level of Schedule 2 waste arisings) is based on our in-house econometric modelling applied to both England and Wales. The analysis models different growth rates for Schedule 2 waste under the “Sensitivities” section.
The composition of the Schedule 2 waste is assumed to remain constant based on the 2007/08 split.
The proportion of Schedule 2 waste managed within the MSW stream progressively increases at 5% per annum as disposal costs become more expensive. The report by Enviros is a static assessment providing information on the amount of Schedule 2 waste for England and Wales only for 2007/08. There is no other information available to assess the profile of schedule 2 waste for prior years and thus to forecast the baseline the analysis primarily links the 5% increase per annum to changes in the landfill tax and tightening of budgets. As figure 1 indicates, a significant proportion of Local Authorities charge for collection only and thus there is scope for more Schedule 2 premises to consider this a viable option as the savings in disposal costs become even more substantial. The 5% is applied to the percentage currently in the municipal waste stream for each Schedule 2 premise category separately for England and Wales.
Prior to 2019/20, the analysis has
modelled Schedule 2 premises gradually using LAs for their waste
collection and disposal to reflect mainly imperfect information on
LA charging as is reflected in the report and Schedule 2 premises
holding long term contracts with commercial operators.
Table1: Schedule 2 waste arisings within MSW stream in England and Wales for the years 2010 to 2020
|
Schedule 2 Premises for England & Wales – tonnes within MSW Stream |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
|
NHS Hospitals |
6,066 |
6,352 |
6,686 |
7,063 |
7,478 |
|
Private Hospitals |
1,006 |
1,054 |
1,109 |
1,171 |
1,240 |
|
Residential Hostels |
1,029 |
1,078 |
1,134 |
1,198 |
1,269 |
|
Care Homes |
19,161 |
20,065 |
21,120 |
22,310 |
23,619 |
|
Child care facilities (pre-school) |
13,106 |
13,724 |
14,446 |
15,259 |
16,155 |
|
LEA Schools |
170,321 |
178,354 |
187,740 |
198,309 |
209,953 |
|
Private Schools |
3,486 |
3,650 |
3,843 |
4,059 |
4,297 |
|
Further Education Colleges |
83,905 |
87,863 |
92,486 |
97,693 |
103,430 |
|
Universities |
132,753 |
139,015 |
146,330 |
154,569 |
163,644 |
|
Self Catering Accommodation |
31,107 |
31,023 |
31,100 |
31,287 |
31,546 |
|
Caravan Sites |
20,887 |
21,873 |
23,024 |
24,320 |
25,748 |
|
Campsites |
8,255 |
8,644 |
9,099 |
9,611 |
10,175 |
|
Penal Institutions |
11,259 |
11,790 |
12,411 |
13,109 |
13,879 |
|
Charity Shops |
6,501 |
6,808 |
7,166 |
7,569 |
8,014 |
|
Schedule 2 Waste within MSW stream |
508,842 |
531,291 |
550,902 |
587,529 |
620,448 |
|
% Within MSW stream |
48% |
50% |
53% |
55% |
58% |
|
Schedule 2 waste Outside MSW stream |
548,909 |
521,118 |
491,090 |
473,842 |
449,732 |
|
% Outside MSW stream |
52% |
50% |
47% |
45% |
42% |
|
TOTAL SCHEDULE 2 WASTE |
1,057,751 |
1,052,409 |
1,041,992 |
1,061,370 |
1,070,180 |
|
Schedule 2 Premises for England & Wales – tonnes within MSW Stream |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
|
NHS Hospitals |
7,929 |
8,356 |
8,942 |
9,503 |
10,103 |
|
Private Hospitals |
1,315 |
1,394 |
1,483 |
1,576 |
1,676 |
|
Residential Hostels |
1,345 |
1,423 |
1,517 |
1,612 |
1,714 |
|
Care Homes |
25,046 |
26,558 |
28,244 |
30,017 |
31,912 |
|
Child care facilities (pre-school) |
17,131 |
18,147 |
19,318 |
20,532 |
21,828 |
|
LEA Schools |
222,633 |
235,472 |
251,057 |
266,149 |
274,802 |
|
Private Schools |
4,557 |
4,832 |
5,139 |
5,461 |
5,806 |
|
Further Education Colleges |
109,676 |
115,884 |
123,104 |
130,362 |
138,110 |
|
Universities |
173,528 |
183,572 |
195,682 |
207,972 |
221,101 |
|
Self Catering Accommodation |
31,859 |
32,202 |
32,586 |
32,984 |
33,396 |
|
Caravan Sites |
27,303 |
28,904 |
30,789 |
32,722 |
34,788 |
|
Campsites |
10,790 |
11,424 |
12,168 |
12,932 |
13,748 |
|
Penal Institutions |
14,717 |
15,600 |
16,596 |
17,639 |
18,752 |
|
Charity Shops |
8,498 |
8,994 |
9,583 |
10,185 |
10,827 |
|
Schedule 2 Waste within MSW stream |
656,327 |
692,760 |
736,205 |
779,646 |
818,563 |
|
% Within MSW stream |
61% |
64% |
67% |
70% |
72% |
|
Schedule 2 waste Outside MSW stream |
424,447 |
397,649 |
369,242 |
339,288 |
314,357 |
|
% Outside MSW stream |
39% |
36% |
33% |
30% |
28% |
|
TOTAL SCHEDULE 2 WASTE |
1,080,774 |
1,090,409 |
1,105,447 |
1,118,934 |
1,132,920 |
To summarise for both England and Wales the total Schedule 2 waste dealt by local authorities between 2010/11 to 2019/20 is estimated to be 6.11mt and 0.38mt and for commercial operators 4.11mt and 0.23mt respectively. Please note these figures aggregate England and Wales therefore the “% with MSW stream” and “% outside the MSW stream will be different when considering the two regions separately. Please see tables 4 and 5 for the percentage split by region.
Redefinition of Municipal Solid Waste Arisings
The term “municipal waste” is used in relation to the EU Landfill Directive targets to reduce biodegradable municipal waste to landfill, and in the related Landfill Allowance Trading Scheme for England and the Landfill Allowances Scheme[8] in Wales. The definition of municipal waste is household waste, and waste that is similar in nature and composition. Until relatively recently, it was interpreted quite narrowly to refer to waste collected by local authorities. This would have included all household waste (whether from domestic properties of from the non-domestic premises listed in Schedule 2) and any commercial or industrial waste collected by the authority.
Following discussions with the European Commission in 2010, the UK’s interpretation of the definition of municipal waste was revised. As a result we now use the following terms in relation to waste managed by local authorities:
Local Authority Collected Municipal Waste (LACMW)
LACMW refers to the previous ‘municipal’ element of the waste collected by local authorities. That is household waste, and any commercial or industrial waste which is collected by the local authority and which is similar in nature and composition to household waste. It excludes construction and demolition waste
Local Authority Collected Waste (LACW)
All waste collected by the local authority. This is a slightly broader concept than LACMW as it would include all LACMW plus any construction and demolition waste which is collected by the authority. LACW is the definition that is now used in statistical publications, which previously referred to municipal waste.
Municipal waste is now interpreted as a much broader subset of waste. This is based on the European Waste Catalogue classifications of waste and covers household waste and around half of all commercial and industrial waste.
It should be noted that the Controlled Waste Regulations (1992) do not contain any reference to “municipal waste”, as the classification of controlled waste is not dependent on the body that collects it.
Current financing of Schedule 2 municipal solid waste (MSW) arisings
Local Authorities in England currently do not have funding for Schedule 2 disposal costs. The money to support Schedule 2 premises’ waste services is not included in the Revenue Support Grant and therefore the impact of the policy options on Local Authority budgets will not be double counted. The disposal costs of waste from Schedule 2 premises will not form part of LA bids for central funding in the future.
Charging policies of local authorities that provide a collection to different types of premises
Taken from the Enviros report, the charging policies for waste disposal authorities varies considerably reflecting both the misinterpretation of the current legislation and contractual obligations in providing the service.
The full cost Local Authorities will incur within the baseline and over the appraised period assumes that the current charging options and their proportions stay the same up until 2020. Thus of the Schedule 2 waste which enters the MSW stream, local authorities incur disposal costs for the proportion which “charge for collection not disposal”, both collection and disposal costs for the proportion where this is “no charge for collection or disposal” and no costs for “charge for collection and disposal”. For “assumed don’t know/other” the modelling has not applied any costing and held it constant.
Figure 1: 2007/08 charging policies for Local Authorities to Schedule 2 premises
Source: Enviros Consulting Ltd 2009 Understanding current management arrangements for Schedule 2 of the Controlled Waste Regulations 1992 waste (WR0308) Defra
Waste Management Costs
Though the analysis will calculate the estimated disposal costs LA’s will face as a result of both options, that is issuing guidance and amending the legislation, this will not be included in the final NPV. This is because waste collection and disposal costs merely transfer from the commercial sector to the public sector for both options and therefore do not incur new additional costs.
Both within the baseline and for the following options we have assumed that the management of Schedule 2 waste is the same as that of municipal waste arisings.
For future projections of waste management, figures taken from the LAWRRD model in Defra provide MSW recycling rates for England and applying this to the Schedule 2 waste within the MSW waste stream can provide estimates on the tonnages of recycling and remaining residual waste.
For Wales, the “Towards Zero Waste” 2009 strategy provides targets on the amount recycled and composted for years up to 2019/20 and these percentages again were used to estimate the recycled and residual waste figures.
For the proportional split on how the residual waste is disposed of (energy from waste or landfill) and of which is recycled (MRF or composted) the analysis takes the most recent breakdown from WasteDataFlow for England and StatsWales for Wales and assumes constant thereafter. In the risk and sensitivities section the analysis models a scenario where all waste is sent to landfill to reflect the extreme case.
Figures for the gate fees for the various treatments are taken from WRAP Gate Fees Report 2009 to calculate the disposal costs. Similarly for collection costs the analysis used WRAP’s “Kerbside Recycling: Indicative Costs and Performance” report.
Landfill Allowance Scheme
Local Authorities may face additional costs from the Landfill Allowance Trading Scheme/Landfill Allowances Scheme when dealing with the additional Schedule 2 waste managed previously by commercial operators. Note that the future of LATS is being considered as part of the Government’s Review of Waste Policy. Currently, waste statistics show that Local Authorities are making good progress towards meeting the 2010 target and are in fact sending less biodegradable waste to landfill than the total allowances allocated to them. This situation however may change for future targets as the diversion will be more difficult to achieve.
It is possible to estimate the additional waste both the English and Welsh LA’s will send to landfill from Schedule 2 waste premises. If we are to assume that the composition of Schedule 2 waste is the same as that from households, the amount of biodegradable waste in MSW is assumed to be 68% for England and 61% for Wales.
The additional amount sent to landfill for the target year is as follows.
Table 2: Additional biodegradable tonnage of waste in MSW assumed to be landfilled in England
|
Year |
Schedule 2 Waste within the MSW stream |
Additional tonnage sent to landfill |
% to landfill |
Biodegradable (68%) |
England Target |
|
2012/13 |
524,895 |
38,479 |
39% |
26,166 |
7,459,998 |
For Wales the figures for landfill were obtained by using the “Towards Zero Waste” strategy which includes targets for the maximum level of landfill for years 2019/20 of 10%. The percentage sent to landfill was interpolated from the 2009/10 actual figures.
Table 3: Additional biodegradable tonnage of waste in MSW assumed to be landfilled in Wales
|
Year |
Schedule 2 Waste within MSW stream |
Sent to landfill |
% to landfill |
Biodegradable (61%) |
Wales Target |
|
2012/13 |
32,800 |
15,114 |
46% |
9,220 |
470,000 |
The consequence of this will be dependent upon how well LA’s are meeting their target. If all allowances are close to if not all used, the impact of the additional waste coming into the LA waste stream could potentially drive up allowance prices resulting in additional costs to taxpayers.
Costs and Benefits of Each Option
The following sections describe the costs and benefits associated with each policy for both England and Wales. Please see page 16 for the summary table of the policies.
Please note there is no data available on the growth of Schedule 2 waste or how it is currently being managed between commercial operators and local authorities for future years. In the absence of data, the analysis is based on the assumptions highlighted on page 9 which reflect the most appropriate models, statistics and reports currently available along with policy judgement.
The analysis calculates the full private costs of each policy option and reports the figures in present value terms.
Option 1 – Issue Guidance
Option 1 assumes that with better information on the current legislation, more businesses will become aware of the free disposal costs made available by Local Authorities and hence two effects are modelled.
1) More waste from Schedule 2 premises will be diverted from the commercial sector at a faster rate.
Similar to the baseline, with the landfill tax escalator increasing disposal costs, businesses will be more motivated to consider different options in managing their waste and therefore the analysis assumes a greater amount of Schedule 2 waste will be redirected to the MSW stream. An annual 15% increase is now applied to the percentage currently in the municipal waste stream for each type of Schedule 2 premise for England and Wales. As figure 1 highlights, in 2007/08 a significant proportion of Local Authorities were either charging incorrectly or unaware of the legislation requirements. Therefore such information failures account for the different rate of transition to the public sector for the Do Nothing baseline and Option 1.
It is assumed that by 2019/20 only those Schedule 2 premises which require specialised services that only commercial operators can provide will remain within the private sector. This is estimated to be around 10% -14% of the total Schedule 2 waste depending on the region. Examples of such tailor –made services which would induce this proportion to remain with private carriers relates primarily to collections. For instance, many Schedule 2 premises require daily collections or find it is more cost effective to have one waste provider collect all the types of waste from a site which is producing both household and industrial waste rather than opt for a LA which is not obligated to do so.
A summary of the results is indicated as follows:
Table 4: Schedule 2 waste arisings in England with issue guidance (tonnes)
|
Year |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
|
Schedule 2 Waste |
996,168 |
993,479 |
995,963 |
1,001,938 |
1,010,254 |
1,020,256 |
1,031,479 |
1,043,547 |
1,056,278 |
1,069,482 |
|
Within MSW stream |
479,025 |
544,835 |
623,560 |
714,823 |
787,618 |
839,367 |
870,372 |
899,491 |
932,506 |
967,299 |
|
% Within MSW stream |
48% |
55% |
63% |
71% |
78% |
82% |
84% |
86% |
88% |
90% |
|
Outside MSW stream |
517,144 |
448,644 |
372,403 |
287,115 |
222,637 |
180,889 |
161,106 |
144,056 |
123,772 |
102,183 |
|
% Outside MSW stream |
52% |
45% |
37% |
29% |
22% |
18% |
16% |
14% |
12% |
10% |
Table 5: Total Schedule 2 waste arisings in Wales with issue guidance (tonnes)
|
Year |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
|
Schedule 2 Waste |
59,089 |
58,930 |
59,077 |
59,432 |
59,925 |
60,518 |
61,184 |
61,900 |
62,655 |
63,438 |
|
Within MSW stream |
29,818 |
34,100 |
39,215 |
42,835 |
45,889 |
49,178 |
50,419 |
51,716 |
52,987 |
54,394 |
|
% Within MSW stream |
50% |
58% |
66% |
72% |
77% |
81% |
82% |
84% |
85% |
86% |
|
Outside MSW stream |
29,271 |
24,830 |
19,862 |
16,597 |
14,036 |
11,341 |
10,765 |
10,184 |
9,668 |
9,044 |
|
% Outside MSW stream |
50% |
42% |
34% |
28% |
23% |
19% |
18% |
16% |
15% |
14% |
The incremental difference in comparison to the baseline is as follows. By 2015/16 most of the schedule 2 premises where possible have shifted their waste to the Local authorities.
Table 6: Additional Schedule 2 waste entering the MSW stream due to issuing guidance for England (tonnes)
|
Schedule 2 Premises |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
|
Addition to MSW stream |
0 |
44,736 |
98,665 |
161,908 |
203,783 |
221,831 |
216,404 |
206,385 |
197,481 |
194,839 |
Table 7: Additional Schedule 2 waste entering the MSW stream due to issuing guidance for Wales (tonnes)
|
Schedule 2 Premises |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
|
Addition to MSW stream |
0 |
2,909 |
6,415 |
8,220 |
9,276 |
10,387 |
9,374 |
8,617 |
8,366 |
8,290 |
2) With clear guidance, the proportion of LA’s charging different to the legislation requirement decreases so that by 2019/20 all LA’s are only charging for collection only.
The following table shows the proportional split in different charging offered to each Schedule 2 premise for both England and Wales in 2010/11 and the subsequent effects after issuing further guidance by 2019/20. The modelling assumes by 2019/20 all local authorities will “charge for collection not disposal”. Furthermore the divergence is gradual to reflect contractual obligations and (though to a lesser extent) imperfect information continuing to persist in the market.
Table 8: Charging policies for Local Authorities to Schedule with proportions for England and Wales
|
|
2011/12 |
2019/20 |
||||||
|
|
Charge for collection &disposal |
Charge for collection not disposal |
No charge for collection or disposal |
Assumed don't know/ either |
Charge for collection &disposal |
Charge for collection not disposal |
No charge for collection or disposal |
Assumed don't know/ either |
|
NHS Hospitals |
20% |
64% |
12% |
4% |
0% |
100% |
0% |
0% |
|
Private Hospitals |
21% |
79% |
0% |
0% |
0% |
100% |
0% |
0% |
|
Residential Hostels |
20% |
60% |
15% |
5% |
0% |
100% |
0% |
0% |
|
Care Homes |
25% |
55% |
15% |
5% |
0% |
100% |
0% |
0% |
|
Child care facilities |
25% |
60% |
10% |
5% |
0% |
100% |
0% |
0% |
|
LEA Schools |
15% |
70% |
10% |
5% |
0% |
100% |
0% |
0% |
|
Private Schools |
20% |
70% |
5% |
5% |
0% |
100% |
0% |
0% |
|
Further Education Colleges |
20% |
70% |
8% |
2% |
0% |
100% |
0% |
0% |
|
Universities |
20% |
65% |
10% |
5% |
0% |
100% |
0% |
0% |
|
Self Catering Accommodation |
25% |
40% |
30% |
5% |
0% |
100% |
0% |
0% |
|
Caravan Sites |
20% |
50% |
20% |
10% |
0% |
100% |
0% |
0% |
|
Campsites |
22% |
50% |
15% |
13% |
0% |
100% |
0% |
0% |
|
Penal Institutions |
22% |
78% |
0% |
0% |
0% |
100% |
0% |
0% |
|
Charity Shops |
15% |
50% |
23% |
12% |
0% |
100% |
0% |
0% |
Costs of Option 1:
The issuing of guidance therefore has implications on both local authorities and Schedule 2 private businesses. For reporting purposes the analysis will assess the additional costs Local Authorities face from the additional Schedule 2 waste coming into the MSW stream and implications based on different charging policies.
Higher waste management costs to Local Authorities
The following analysis calculates the aggregate change in costs Local Authorities face depending on the specific type of charging policy they offer.
· As expected, the number of Local Authorities which offer “no charge for collection or disposal” reduces given that more Local Authorities transfer to “charge for collection not disposal”. Therefore the aggregate cost to the reduced number of local authorities who remain under this charging policy will decrease (as in total there are now fewer of them).
· The total cost for those local authorities operating a “charge and collection” policy is zero in both the baseline and from issuing guidance as costs are fully recovered. However, as above, the number of Local Authorities offering this type of charging policy decreases.
· More of the Local Authorities highlighted above are progressively moving towards “charge for collection not disposal” to comply with the regulation, and so the overall total costs under this category increases substantially (they can no longer charge for disposal).
No charge for collection or disposal
A proportion of Local Authorities in the baseline and as evident in the report charge for neither collection nor disposal and therefore with the guidance will have the opportunity to save on collection costs as more diverge towards collection charge only. The savings to Local Authorities are as follows:
Table 9: Change in Local authority costs from proportion offering no charge for collection or disposal (£m)
|
Increase in costs to LA's |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
Total |
|
England |
£0.00 |
-£0.27 |
-£0.62 |
-£1.11 |
-£1.97 |
-£3.04 |
-£4.28 |
-£5.55 |
-£6.82 |
-£8.03 |
-£31.67 |
|
Wales |
£0.00 |
-£0.01 |
-£0.03 |
-£0.07 |
-£0.13 |
-£0.18 |
-£0.25 |
-£0.32 |
-£0.38 |
-£0.43 |
-£1.80 |
|
Total |
£0.00 |
-£0.28 |
-£0.65 |
-£1.18 |
-£2.09 |
-£3.22 |
-£4.53 |
-£5.87 |
-£7.19 |
-£8.46 |
-£33.48 |
* please note negative numbers represent savings to Local Authorities
The total savings toprivate-sector Schedule 2 premises is £8.91m for England and £0.29m for Wales.
Charge for collection not disposal
With clearer guidance Local Authorities will face higher costs based firstly on more Schedule 2 waste coming into the MSW stream and secondly additional disposal costs for those that previously incorrectly charged for collection and disposal from Schedule 2 businesses.
Table 10: Change in Local authority costs from proportion offering charge for collection but not disposal (£m)
|
Increase in costs to LA's |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
Total |
|
England |
£0.00 |
£2.46 |
£5.52 |
£9.30 |
£12.52 |
£14.44 |
£15.53 |
£16.45 |
£17.51 |
£18.85 |
£112.59 |
|
Wales |
£0.00 |
£0.15 |
£0.33 |
£0.47 |
£0.59 |
£0.68 |
£0.70 |
£0.73 |
£0.76 |
£0.80 |
£5.22 |
|
Total |
£0.00 |
£2.61 |
£5.85 |
£9.77 |
£13.11 |
£15.13 |
£16.23 |
£17.18 |
£18.28 |
£19.65 |
£117.81 |
The net additional cost to Local Authorities from issuing guidance is £81million and £3million for England and Wales respectively over the 10 year period in present value terms. From private Schedule 2 premises this equates to additional costs of £15m for England and £0.41m for Wales. As stated previously, though these costs have been analysed and assessed, they are not included in the final NPV of the IA as they represent redistribution costs from commercial waste management operators to Local authorities.
Charge for collection and disposal
No impacts as local authorities recover the full costs of waste management.
Landfill Allowance Scheme
As option 1 would result in waste from the commercial sector entering the MSW stream at a faster rate, the additional biodegradable waste going to landfill is 21,811 tonnes for England and 1803 tonnes for Wales.
Table 11: Additional biodegradable tonnage of waste in MSW assumed to be landfilled in England
|
Year |
Additional Schedule 2 Waste within the MSW stream |
Sent to landfill |
% to landfill |
Biodegradable (68%) |
England Target |
|
2012/13 |
106,916 |
32,074 |
30% |
21,811 |
7,459,998 |
.
Table12: Additional biodegradable tonnage of waste in MSW assumed to be landfilled in Wales
|
Year |
Additional Schedule 2 Waste outside MSW stream |
Sent to landfill |
% to landfill |
Biodegradable (61%) |
Wales Target |
|
2012/13 |
6,415 |
2,956 |
46% |
1,803 |
470,000 |
Local Authorities who have insufficient capacity to divert waste to alternative treatments then landfill would either have to buy additional allowances or face fines of £150/tonne in England and £200/tonne in Wales.
GHG disbenefits from earlier shift to LAs
We have assumed that the treatment of Schedule 2 waste remains the same under either commercial operators or LA’s. There is no quantitative evidence available which shows how Schedule 2 waste is treated by commercial operators however with sufficient infrastructure and revenue, a higher proportion of the waste could be diverted from landfill to treatments higher up in the waste hierarchy in comparison. There are substantial environmental benefits from avoided landfill. Every tonne of residual waste diverted from landfill saves approximately 420kg of carbon at an environmental benefit of £45 (Landfill Bans model).
Admin Costs
The guidance will be published on the website and therefore does not incur any substantial additional costs. The one off administrative burdens are defined as “administrative activities that businesses are required to conduct in order to comply with the information obligations that are being imposed”.
For Option 1 the time it would take to read the guidance would be 1 hour and the hourly cost of the member of staff in business completing this is £19.20. The price is therefore 1x£19.20.
The main admin burden will fall on all 378 Local Authorities in England and Wales resulting in admin costs of £7,258. Although most of the customers will rely on their local authority for information, many of the small customers like caravan parks and self-caterers will get advice from their trade bodies and the big premises (prisons, universities, hospitals and colleges) may also read the guidance fully. Such trade bodies and Schedule 2 premises account for approximately 2000 businesses and additional admin costs of £38,400.
The total admin costs for Option 1 is £45,658.
Loss to private waste contractors
Private sector waste contractors will be increasingly disadvantaged in the marketplace for handling Schedule 2 waste, as they are undercut by local authorities who are unable to charge for disposal of the waste. Without being able to establish the scale of this cost, as the data is commercially sensitive, this equates to approximately 1,546kt for England and 0.07kt for Wales. Such distortion prevents viable businesses from continuing to operate and decreases the overall competitive performance of the market.
Table 13: Additional amount of waste outside of municipal waste stream from issuing guidance for England and Wales (000t)
|
Year |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
Total |
|
Schedule 2 Waste |
0 |
-48 |
-105 |
-170 |
-213 |
-232 |
-226 |
-215 |
-206 |
-203 |
-1,618 |
Benefits of Option 1
Transparency Benefits
Issuing guidance would reduce the number and range of interpretations currently in use. Many local authorities are only looking for clarity and are not that concerned about the finer legal points. However, those that have devised strategies and invested heavily around alternative interpretations would not be so open to change and may persist with their interpretation unless and until a court rules otherwise.
Infrastructure certainty
The key factor to consider is whether, as the Enviros report states, the facilities currently used by local authorities have the capacity to accept the tonnage which is currently managed by commercial operators. The analysis calculates an additional 25% of Schedule 2 waste overall entering the MSW stream. Policy certainty can help LA’s forecast future waste arisings and subsequent disposal treatment demands, however a level of long-term uncertainty will remain as Schedule 2 customers can opt in and out of local authority services.
Subsidy to Schedule 2 businesses
Businesses of a type listed in Schedule 2 will continue to benefit from having their waste disposal costs paid by the taxpayer if they have their waste collected by their local authority, and more businesses may take up this option as the guidance makes them aware of their rights. The modelling calculates cumulative savings of £81million and £3million for England and Wales respectively. For private-sector Schedule 2 premises this equates to savings of £15m for England and £0.41m for Wales. Please see Annex 3 for further detail.
Of which to small firms
The Schedule 2 premises which tend to compose of small firms are self catering accommodation, caravan sites and camp sites. Although at consultation stage, the covering letter requested data from businesses to allow the analysis to improve its assessment of the impact on small firms, none of the responses provided any figures. Without therefore information on the business size for each category, we have assumed the proportion attributing to small businesses is in the region of 80% - 90%. Applying 85% to each schedule 2 waste category estimates the following decrease in costs to small firms.
Table 14: Change in waste management costs to Small Firms for England and Wales
|
Increase in costs to small firms (£m) |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
Total |
|
England |
-£0.00 |
-£0.10 |
-£0.23 |
-£0.39 |
-£0.60 |
-£0.81 |
-£0.91 |
-£0.82 |
-£0.74 |
-£0.66 |
-£5.25 |
|
Wales |
-£0.00 |
-£0.01 |
-£0.01 |
-£0.02 |
-£0.03 |
-£0.04 |
-£0.03 |
-£0.03 |
-£0.02 |
-£0.02 |
-£0.19 |
|
Total |
-£0.00 |
-£0.10 |
-£0.24 |
-£0.41 |
-£0.63 |
-£0.85 |
-£0.94 |
-£0.84 |
-£0.76 |
-£0.67 |
-£5.44 |
* please note negative numbers represent an increase in cost to Local Authorities
Option 2 – Amend the Secondary Legislation
Costs of Option 2:
Admin Costs
The admin costs for Option 2 relate to businesses reading and understanding the new legislation. The explanatory notes will be published on the website and therefore does not incur any substantial additional costs. The one off admin burdens for this option are greater as this guidance would take longer to read; 3 hours therefore the total cost of activity for 378 local authorities and 2000 large Schedule 2 premises and trade bodies is £136,973.
Taxpayer no longer pays for the disposal of waste from Schedule 2 businesses
Given that Local Authorities will be able to charge for services similar to those offered by private waste management companies; Schedule 2 premises would now cover the disposal costs for the amount of waste they generate. The total costs are estimated to be in the region of £251m for England and £14m for Wales. For private-sector Schedule 2 premises, this equates to £41.51m for England and £0.69m for Wales. Please see Annex 3 for the methodology and full breakdown.
Of which to small firms
As stated previously the Schedule 2 premises which tend to compose of small firms are self catering accommodation, caravan sites and camp sites. It should be noted that the majority of the small businesses who responded to the public consultation agreed that they should pay for their own waste disposal. Applying the same proportions as previously, the change in costs to small firms is as follows.
Table 15: Change in waste management costs to Small Firms for England and Wales
|
Increase in costs to small firms (£m) |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
Total |
|
England |
£2.47 |
£2.53 |
£2.57 |
£2.64 |
£2.70 |
£2.69 |
£2.69 |
£2.69 |
£2.70 |
£2.71 |
£26.4 |
|
Wales |
£0.08 |
£0.08 |
£0.08 |
£0.09 |
£0.09 |
£0.09 |
£0.09 |
£0.09 |
£0.09 |
£0.09 |
£0.88 |
|
Total |
£2.56 |
£2.61 |
£2.66 |
£2.73 |
£2.79 |
£2.78 |
£2.78 |
£2.78 |
£2.78 |
£2.80 |
£27.3 |
Benefits of Option 2:
Full Cost Recovery
As stated previously, the amendment of the Secondary legislation will enable Local Authorities to charge for both collection and disposal costs for all non-domestic premises but excluding charity shops and reuse organisations. The British Heart Foundation stated in the consultation responses they would face an additional cost of £200k per annum if this were to be extended to their charity shops as well.
Ultimately the choice of service provider will rest, as previously, with the creator of the waste based on who can provide the most appropriate service, however, this time without the distortion of the taxpayer picking up over half the cost of the Local Authority service. Should Local Authorities handle this waste, they too would be able to recover all costs.
Local authorities could now recover the full costs of handling the waste they previously dealt with in the baseline. The savings are £251m for England and £14m for Wales in present value terms. From private-sector Schedule 2 premises, this equates to £41.51m for England and £0.69m for Wales.
Table 16: Additional disposal and collection costs for Schedule 2 waste in England relative to the baseline (£m)
|
Year |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
Total |
|
Landfill Gate Fee |
-£3.3 |
-£3.2 |
-£3.1 |
-£3.1 |
-£3.1 |
-£3.1 |
-£3.2 |
-£3.3 |
-£3.3 |
-£3.4 |
-£32.1 |
|
Landfill Tax |
-£7.1 |
-£8.2 |
-£9.1 |
-£10.2 |
-£11.3 |
-£11.4 |
-£11.7 |
-£11.8 |
-£12.1 |
-£12.3 |
-£105.3 |
|
Efw |
-£4.1 |
-£4.0 |
-£3.9 |
-£3.9 |
-£3.9 |
-£4.0 |
-£4.0 |
-£4.1 |
-£4.2 |
-£4.3 |
-£40.4 |
|
Recycling* |
-£2.7 |
-£2.8 |
-£3.0 |
-£3.1 |
-£3.2 |
-£3.3 |
-£3.4 |
-£3.5 |
-£3.6 |
-£3.7 |
-£32.4 |
|
Total Disposal Costs |
-£17.2 |
-£18.2 |
-£19.2 |
-£20.3 |
-£21.5 |
-£21.9 |
-£22.3 |
-£22.7 |
-£23.3 |
-£23.6 |
-£210.2 |
|
Total Collection Costs |
-£3.7 |
-£3.8 |
-£3.8 |
-£3.9 |
-£4.0 |
-£4.1 |
-£4.2 |
-£4.3 |
-£4.4 |
-£4.4 |
-£40.6 |
|
TOTAL |
-£20.9 |
-£22.0 |
-£23.0 |
-£24.3 |
-£25.5 |
-£26.0 |
-£26.5 |
-£27.0 |
-£27.6 |
-£28.1 |
-£250.8 |
* of which is MRF and composting
Table 17: Additional disposal and collection costs for Schedule 2 waste in Wales relative to the baseline (£m)
|
Year |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
Total |
|
Landfill Gate Fee |
-£0.3 |
-£0.3 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£2.3 |
|
Landfill Tax |
-£0.6 |
-£0.6 |
-£0.7 |
-£0.8 |
-£0.8 |
-£0.8 |
-£0.8 |
-£0.8 |
-£0.7 |
-£0.7 |
-£7.3 |
|
Efw |
-£0.0 |
-£0.0 |
-£0.0 |
-£0.0 |
-£0.0 |
-£0.0 |
-£0.0 |
-£0.0 |
-£0.0 |
-£0.0 |
-£0.4 |
|
Recycling* |
-£0.1 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£2.0 |
|
Total Disposal Costs |
-£1.1 |
-£1.1 |
-£1.1 |
-£1.2 |
-£1.3 |
-£1.3 |
-£1.3 |
-£1.3 |
-£1.2 |
-£1.2 |
-£12.0 |
|
Total Collection Costs |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.2 |
-£0.3 |
-£0.3 |
-£0.3 |
-£0.3 |
-£2.4 |
|
TOTAL |
-£1.3 |
-£1.3 |
-£1.4 |
-£1.4 |
-£1.5 |
-£1.5 |
-£1.5 |
-£1.5 |
-£1.5 |
-£1.4 |
-£14.4 |
Polluter Pays Principle
Legislation covering this area will reflect the polluter pays principle. Schedule 2 waste producers will have greater responsibility for waste production and greater choice to use sustainable waste management options. This will yield GHG benefits in the form of waste prevention or increasing rates in recycling.
Please note some of the waste prevention benefits could possibly be slightly reduced should there be perverse consequences, such as Schedule 2 premises requiring users to take their rubbish home and thus increasing the amount of waste in the domestic waste stream. However, this scenario is considered highly unlikely.
In our analysis we have not factored in waste prevention given the uncertainty around its impact. To illustrate the environmental benefits of incentivising better behaviour please see box below.
Polluter Pays Principle
Effect 1: Waste prevention – Assuming a 1% reduction per annum in Schedule 2 waste arisings which Local Authorities charge for collection not disposal under the baseline.
Environmental Benefits: The maximum environmental benefits are the savings from landfill disposal and the embedded emissions. The maximum GHG benefits in for the 10 year period come to £3.98m in present value terms.
Financial Savings: This relates to savings in collection and disposal costs from no longer having to manage the waste that is being prevented. The savings this would yield range from £0 (if the firm has to invest in certain technology in order to achieve such reductions in waste) to £74 plus landfill tax, the most expensive form of collection and disposal per tonne of waste. For a 1% reduction in Schedule 2 waste per annum under the baseline, the cumulative financial savings are between £0-£8.3m for England and Wales.
Effect 2: Assuming an additional 1% of the total Schedule 2 waste per annum is recycled
Environmental Benefits: The saving in embedded emissions from recycling and landfill disposal yield benefits
of approximately £1.24m in present value terms.
Financial Savings: The net financial savings from sending more waste for recycling between 2010/11 to 2019/20 is £1.95m in present value terms. Again, this is the difference in collection and disposal costs for recycling relative to landfill.
Transparency Benefits
Similar to Option 1 there are greater transparency benefits from amending the legislation. More clearly worded and easily understood legislation would lead to fewer disputes over interpretation between authorities and their customers.
Local accountability
Local authorities will be able to choose whether or not to charge for collection and/or disposal, giving them the flexibility to support local social and private enterprise, and ensure best use of local budgets in a way that reflects the priorities of local people. Local taxpayers would have a say in whether their money should be used to support non-domestic waste disposal, which they do not currently have.
Infrastructure certainty
There would also be greater transparency of budgets for the local authorities and publicly funded Schedule 2 organisations. Local Authorities would have a better understanding of their longer-term liabilities, improving their ability to estimate current and future waste arisings and therefore be more likely to invest in the correct levels of infrastructure.
Other Benefits
Market distortions caused by local authorities being unable to charge for disposal would be removed. Hidden subsidies in the form of free waste disposal encourage waste creation as the benefits to business for every tonne of waste becomes greater than the cost of disposal. This also leads to the crowding out effect as private sector waste operators are adversely affected by the taxpayer picking up the cost of disposal when premises choose Local Authority waste services.
Finally the option also increases the potential for greater economic efficiency for both local authorities and publicly funded Schedule 2 organisations. Increasing competition should generate lower prices and encourage more environmentally efficient treatment of waste.
Risks and Assumptions
The main risk is whether Local Authorities will have sufficient infrastructure to deal with the additional Schedule 2 waste. Such incapacity could drive more of the additional waste to landfill and therefore result in higher disposal costs than estimated in this analysis. However, option 2 will remove the main incentive for large premises to choose Local Authority waste services.
The main key assumptions regarding the analysis were our in-house projections for waste growth and the proportion that is assumed to be landfilled for Schedule 2 waste. If we were to change these assumptions the range in the waste management costs to Local Authorities over the full 10 year period is as follows.
Table 18: Sensitivity analysis results
|
|
England (£m) |
Wales (£m) |
||||
|
Total waste management Costs (£m) |
Standard |
0% Waste Growth |
100% to landfill |
Standard |
0% Waste Growth |
100% to landfill |
|
Option 1 |
80.92 |
79.04 |
165.82 |
3.42 |
3.93 |
9.46 |
|
Option 2 |
-250.8 |
-246.6 |
-398.6 |
-14.56 |
-14.35 |
-£24.8 |
Direct costs and benefits to business calculations (following OIOO methodology)
One-In, One-Out
Fees and charges will be out of scope, except where they are being increased because of additional regulatory activity. Where the scope of fees and charges are unchanged but the levels are moving from subsidised to full cost recovery they should not be affected by One-in, One-Out. Conversely, where more efficient regulatory activity leads to lower fees and charges these can count as “Outs”.
Local authorities are not funded by central government for the disposal of Schedule 2 waste, and so these costs are borne by local taxpayers. Therefore, as confirmed by the Better Regulation Executive, this is not applicable to the Controlled Waste Regulations as the power given to local authorities is to charge a fee for a service and the policy option is moving from a subsidised fee structure to a full cost recovery one. Businesses are under no obligation to get their waste disposal service from the council.
Summary and preferred option with description of implementation plan
Table19: Distribution of costs
|
Option |
Who is collecting S2 waste? |
Who is paying for the disposal of the S2 waste? |
Who is paying for the collection of the S2 waste? |
|
1) Issue Guidance |
Increasingly LA’s as situation made more explicit through guidance |
Taxpayers |
S2 Premises |
|
2) Secondary Legislation |
LAs or Commercial Operators, depending on who offers more cost-effective service in individual situations |
S2 Premises |
S2 Premises |
Table 20: Summary of Costs and Benefits
|
Option |
Costs |
Benefits |
|
1) Issue guidance |
LAs incur additional maximum waste management costs of £81million and £3million for England and Wales respectively. These are transfer costs and therefore are not included in the final NPV.
Costs of issuing guidance - £0.05m
|
Transparency Benefits
Infrastructure investment due to policy certainty. |
|
2) Secondary Legislation |
Recovery of cost in present value terms of £251m for England and £14m for Wales in present value terms. These are transfer costs and therefore are not included in the final NPV.
Cost of amending secondary legislation - £0.14m |
Transparency Benefits- Clearer guidance, leading to fewer disputes and less confusion
Infrastructure certainty
Imposing PPP correctly
Removal of market distortions, creating greater economic efficiency
|
Specific Impact Tests for preferred policy choice: Option 2 - Amend Secondary Legislation
Equality Impact Assessment
The impact on Equalities of the proposed changes to the Regulations have been considered and found not to be relevant. The changes concern the power of authorities to charge institutions for waste disposal and therefore have no impact on individuals.
Competition Assessment
Removing the subsidy local authorities are required to provide by Law on waste disposal to ensure a level playing field for commercial operators.
Small Firms Impact Tests
The majority of ‘small firms’ likely to be affected by the proposed change of the Regulations are in the self-catering holiday accommodation and childcare (pre-school) categories. We believe that the majority of these are currently recipients of local authority waste services so potentially could see the greatest impact on their budgets, if local authorities choose to charge them for waste disposal. We have no data on the additional costs potentially incurred by these sectors, although we sought further information as part of the public consultation. Small firms who responded to the consultation generally agreed that a public subsidy of their operating costs was not sustainable. Please note that for indicative purposes, the analysis does provide an estimation of the overall costs to small firms.
To repeat, businesses are required by law to pay for their waste services but those that fall under Schedule 2 and use Local Authority waste services are currently receiving free waste disposal, paid for by the taxpayer, which they would lose under this proposal.
Greenhouse Gas Impact Assessment
Landfill tax incentivises both sectors to increase recycling and recovery operations and reduce landfill. Public and private sector waste managers will be subject to the same requirements to collect key recyclables separately from the residual waste stream under the revised Waste Framework Directive. Therefore we consider that any transfer of waste between the public and private sectors will have minimal impact on GHG emissions.
However, by allowing local authorities to recoup the full costs of handling Schedule 2 waste, we expect that many will be able to offer an improved recycling service to their current Schedule 2 customers. Removing the distorting effect of the current subsidy will also encourage Schedule 2 customers to seek out cost-effective recycling services from the private sector where their Local Authority is unable to meet their requirements. Overall, therefore, there may be a small positive impact on GHG emissions.
Wider Environmental Issues Impact Assessment
There are no wider environmental issues arising from the proposed change to the Regulations. The changes may cause a movement from one service provider to another but the laws governing waste management apply equally to private contractors and local authorities.
Health and Well-being Impact Test
Local authorities will retain the duty to collect from Schedule 2 premises, if requested, so public health will not be compromised. The proposed changes to the Regulations have no impact on the Health and well-being of service recipients or providers. The laws governing Health and Safety and the management of waste apply to whoever is providing the service.
Human Right Impact Assessment
The proposed changes have no direct impact on Human Rights.
Justice Impact Test
The proposed changes will make the Regulations more complete, remove the opportunity for variation in interpretation, reduce the need for legal challenge and ensure potential customers have a clear understanding of the services they can expect from their local authority at no additional cost.
Rural Proofing Impact Test
The duty on a local authority to make arrangements to collect waste falling under Schedule 2, if asked, has been retained in the proposed new Regulations to ensure that those in remote rural areas can be sure their waste will be collected even if private waste contactors refuse to collect from remote areas.
Sustainable Development Impact Test
The proposed changes are expected to foster the principles of sustainable development, by requiring Schedule 2 Institutions that use local authority services to pay for disposal of their waste they will be, for the first time, incentivised to reduce the amount of waste they produce (the highest aspiration of the waste hierarchy).
