Reforming taxation will create jobs and secure energy supplies

As the Environmental Services Association gathered on Tuesday this week (10 November) with the aim of influencing the Treasury on environmental taxation, Neil Grundon, deputy chairman of Grundon Waste Management, says the occasion marks a huge opportunity for a “root and branch reform” of the way waste management is taxed in the UK:

Neil Grundon, deputy chairman, Grundon Waste Management
Neil Grundon, deputy chairman, Grundon Waste Management

If you step back and look at what the country needs to continue its economic recovery, I think few would argue with the joint answers of more jobs and a secure energy supply.

Starting with the latter, a few days ago newspapers revealed that the National Grid is expected to confirm very shortly that Britain faces the highest risk of blackouts in almost a decade this winter. Householders are being warned that they will have to pay billions of pounds in subsidies to fossil fuel power stations to prevent the crisis worsening. Another possibility is to import more electricity from Europe via sub-sea interconnectors or reducing the amount of energy being exported to Ireland.

Here’s a solution – stop exporting nearly three million tonnes of waste every year to Europe, where it is burnt as a coal substitute, and use it instead to create energy for the home market by fuelling UK-based Energy from Waste (EfW) plants instead. See waste as an energy resource rather than something to be disposed of.

Which brings me neatly on to the earlier point about employment. If the Government would give the go-ahead for more EfW facilities, then it would effectively be a massive job creation scheme, delivering job opportunities for both skilled and unskilled labour across the country.

Of course, I recognise it isn’t going to be that simple, but I do think we are missing an opportunity if we don’t look at the bigger picture and consider what could be achieved if we are brave enough to change the status quo.

We all know that when the landfill tax was introduced, it was designed to be self-extinguishing, increasing to such a point that materials would find new homes in other products, be recycled or used to create energy.

Of course, that didn’t happen and it has only been since the tax was raised to £70 or more that it has begun to have an effect. Looking back, I think its introduction was right at the time, but landfill tax now needs an overhaul to get us where we need to be in the future.

And, because the price increase happened in a single year, it gave no time for the industry and its infrastructure to prepare for change. Hence the fact that it’s cheaper to export waste to the Continent.

I believe the problem with waste management now is less about actual recycling and more about the myriad of subsidies, levies, tariffs, taxes and targets we have to manage.

This weeks’ meeting provided a chance to kickstart a review of all these figures with the hope of gaining clarity and simplicity which is easy for everyone to understand.

Take the domestic market – unlike all other utilities, householders are not directly responsible for their waste collection and treatment bills, so it is very difficult to demonstrate why, where and how they can do more to recycle.

At least with commercial customers, our services are standardised with bins for recycling, food waste, energy from waste and – if the business requires – separate containers for glass and cardboard.

The system is easy to understand, priced according to weight and volume, and customers are regularly informed of their obligations.

Transparency, especially when it comes to the relatively newer technologies such as anaerobic digestion, means it is far easier to convince these customers of the benefits of segregating food waste than it is your average householder, who waves goodbye to their waste each week and thinks little more about it.

What I would like to see is the introduction of a tiered or banded approach across the industry, creating the root and branch reform which I believe we so desperately need.

Firstly, I’d introduce a phased ban on organic material from landfill, such as wood, food waste, etc., giving time for the industry to invest in the infrastructure it needs to support such a move.

We need to ensure that recycling and MRF remain the cheapest option and are the first choice methods of disposal wherever possible.

On the topic of tax and subsidy, I’d consider reform of the entire PRN system and, although I would leave landfill tax as the most expensive option for the time being, in due course I’d vote for a freeze and a gradual reduction.

We must remember however, that taxation isn’t a blunt instrument, it needs to be just one tool in the Government’s long term waste strategy. Used cleverly, it can help to continue to divert waste away from landfill, but even more importantly, it can also earn revenue for investment in the building blocks of the UK’s future waste infrastructure.

As an industry, this is the commitment we need. We want to understand more about the Government’s vision for waste and we need the support to help us achieve what needs to be done.

If we can persuade the powers that be to embrace at least some of the measures suggested here, then that will go a long way to helping secure the future of the UK waste industry.

By making it less cost effective to ship waste overseas; by giving the industry time to develop the infrastructure it needs to treat waste as a much-needed resource; by securing our energy supplies for generations to come – and at the same time creating a raft of jobs – we can work together to make a real difference.

The time for debate is now and I’d be very interested to hear the thoughts of my industry colleagues.

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