Waste Electrical and Electronic Equipment

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Mr. Darvill: Given that the UK trades throughout Europe, would it not affect our businesses if other countries imposed such burdens on manufacturers? Therefore, if a manufacturer or country decided to follow that route, it would be a single market issue.

Mr. Gibb: Each nation should have the right to take such a decision. If a country did so, its standard of living would fall. If a Government decided to tinker with their value added tax system to encourage consumers to buy recyclable products, that would cause the country's standard of living to fall due to lower revenue from VAT receipts. Every country should be entitled to take a decision that would make their manufacturers more inefficient than ours. That should not automatically be a single market matter—nor should differing rates of corporation tax—although the hon. Gentleman has argued that it should be. Competition among member states is a good way of keeping burdens to a minimum, especially corporation tax burdens.

It has been proposed that manufacturers should be forced to take back their products at the end of their useful lives because that would encourage them to design recyclable component parts. That is a clever notion. However, such a market response could be triggered in a less burdensome and bureaucratic way by ensuring that alternative ends for such products reflected their true cost. It astonishes me that landfill sites are economic, given that building land in west Sussex costs over £1 million an acre. The market will always respond if it receives the correct, gentle signals. Major retailers already offer to remove customers' old washing machines or fridges to encourage them to purchase new products. It is troublesome to have to hire a van to take an old fridge to the Wandsworth dump, as I have recently discovered. I would much prefer to buy such a product from a retailer who offered to take away my old machine.

Market responses are always preferable to the heavy hand of the law and the Government machine. The market will find the cheapest and most efficient ways of responding, which rarely cause unforeseen consequences. Waste is a difficult issue because, if free municipal tips did not exist, irresponsible people would dump their refuse in a quiet country lane at night rather than pay a fee to a contractor. We have already recognised that problem, which is why we have a free refuse collection service and why we have municipal dumps paid for from local taxes. We can find a domestic solution to the problem by combining what the local authority does with the waste with incentives for consumers to buy equipment with which it is easier for the local authority to deal. I have suggested lower VAT rates during this debate. Anything would be better than this complete and utter mess, which will undoubtedly become as unworkable as the waste packaging directive.

Dr. Ladyman: The hon. Gentleman has just described the current situation and told us that, in his experience, it is not working—that he had to take a fridge to the dump and does not know what will happen to it. How can he argue that that state of affairs will change?

Mr. Gibb: I did not argue that there was no problem. There is a problem, and it came to my attention a few weeks ago as a result of taking a fridge to the dump. I am saying that we should be having a debate in Britain about how to respond to this problem domestically. For example, we could respond by having differential VAT rates. That is just one idea, off the top of my head. If we debate the issues as a nation, we will come up with many other ways to encourage people. We should provide a market signal that they should be buying products with more recyclable components.

I am saying not that there is no problem, but that we should find domestic and market-oriented solutions to the problem. Otherwise, this scheme simply will not work. I guarantee that the waste from electrical and electronic equipment—WEEE—directive, if implemented in the UK, will not work, just as the packaging directive has become an unworkable nightmare. Under the packaging directive, the manufacturer of a component for, say, a tractor is responsible for the packaging used for that component, even when its purchaser has taken it to the other end of the country for use on a farm. The manufacturer remains technically responsible for that packaging, so no one obeys the directive. People are finding ways around it.

There is no point in passing laws to deal with problems if those laws are absurd and unworkable. That is precisely what the WEEE directive is, with the added problem that it will cost industry billions of pounds a year. The Minister appears to share that view. She made it clear in her explanatory memorandum that the directive may be

    ``difficult to implement in practice, since the directive applies to such a wide range of goods.''

The memorandum goes on to state that the directive is

    ``likely to impose significant further burdens on business, and the likely costs and benefits have not been fully assessed.''

It goes on:

    ``In addition, the Government is assessing the desirability of specific provisions, including those on treatment and recovery, to ensure that the requirements are appropriate for all types of products and represent the best practical environmental option.''

That is also the view of industry, despite what the Minister said. The Industry Council for Electronic Equipment Recycling—ICER—is a cross-industry group that deals with waste electronic equipment issues. It is drawn from materials suppliers, producers, retailers, recyclers and the waste industry. It is very critical of these directives and states that some of the targets—the recovery and recycling and re-use targets—

    ``are unattainable, e.g. 70 per cent. recycling target for equipment containing cathode ray tubes (CRTs) when there is no accepted recycling process for CRTs. Others may be technically attainable . . . But the costs of achieving this marginal increase in recycling/re-use will be disproportionate to the environmental benefit.''

The retail industry is alarmed by the directive. The scope of the proposals remains ambitious, covering a multitude of appliances from small toys to household items. The industry feels that the initial scope should be restricted to large domestic appliances. I acknowledge that the Minister is seeking to achieve that, but she has not yet succeeded in doing so. I hope that, if she is not successful, she will stop the measure coming before Parliament. She has said that it should not apply to small appliances or to small businesses. If she fails to secure those exemptions, I hope that she will not bring the statutory instrument before the House—if she is returned at the general election.

Retailers have serious concerns about the requirements in the directive for collection points within retail space. Many issues make that proposal impractical, not least those relating to health and safety. Disposing of a fat-infested 10-year-old deep fat fryer or a fridge of which the door may be infested with pathogens has huge health and safety implications. All sorts of issues must be tackled as a consequence of these directives.

Like the scope of the proposals, the recovery targets are ambitious. UK processing facilities are currently limited and, in some cases, non-existent, as with cathode ray tubes. That echoes the point that was made by the ICER.

It has been suggested that no provision has been made for producers that entered and left the market before their products reached the end of their lives. The Minister acknowledges that she is trying to deal with that issue, but she may fail. What will she do if she fails to ensure that the European Community addresses the measures? Will she still bring them before the House and expect a compliant majority to vote them through?

The costs are staggering. The Federation of Electronic Industries said

    ``We, and other sectors of Industry, are greatly concerned that the proposed Directive has the potential to damage severely a strategically important sector of European industry . . . The financial impact of the measures on the UK will be enormous: running costs for the take-back schemes and meeting recycling targets could be 1.25 billion Euro/year; new investment-technological changes for phasing out certain substances, re-design, establishing take-back, providing information to customers and recyclers could be 2.5 billion Euro/year; and 6.5 billion Euro to deal with historical waste''.

Those figures are staggering. A euro, depending on circumstances, is about 66p or 62p. When one converts the figures to pounds, one sees that they are very large.

The regulatory impact assessment gives similar figures, so the industry is not simply making wild guesses. On the restriction of hazardous substances directive, the assessment states:

    ``Industry estimates that the one-off policy cost to firms of this Directive could be as much as £1.2 billion (annualised to a policy cost of £290 million p.a. up to 2008)''.

The Minister quoted that figure.

A host of issues need to be tackled. What about the economic and environmental impact of using alternative substances to those banned? The Minister referred to lead solder. If that were to be replaced by other substances, more electrical charge might be used to get through a less conductive metal. That has CO2 implications.

What about the CO2 effects of people making separate, deliberate journeys to take back their old toasters or personal computers? Evidence and research by PC World shows that, if people offer to take back an old PC when they buy a new one, they come back with it on a separate trip because they want to transfer all their files from the hard disc of one to the other. Such issues must be assessed. The Minister has said that more assessment needs to be undertaken of the environmental impact of alternative substances.

On the WEEE directive, the regulatory impact assessment states:

    ``Industry estimates that the costs of distributor takeback may be high. One preliminary estimate is that the cost of retailer takeback could be as high as £500 million per annum''.

That is £0.5 billion of extra costs per annum from one directive and £300 million extra from the other, so the total is £800 million. That is eight times the administrative cost of the working families tax credit, about which industry is now squealing.

I have great respect for the Minister, despite her left-wing pedigree. [Interruption.] Her former left-wing pedigree. She will remember a parliamentary question that I tabled about 18 months ago, in which I asked her to list all the regulations that applied to a refrigerator manufacturer who employed 1,000 people. Her first attempt at a response was to refer me to the website of the Department of Trade and Industry. I telephoned the parliamentary unit at the DTI to complain about that, as I do not see why a Department cannot simply tell me what regulations have been passed by the House. I presume that the regulations were proposed by the DTI, so there should not be a problem, and I think that the Minister would probably agree. I was informed that the DTI would try to respond.

The DTI lawyers worked on the problem and asked if I could wait a week, which was fine. They then asked if I could re-table my parliamentary question, which of course I did. I waited weeks and was eventually given the names of three regulations that applied specifically to fridges. There was no mention of all the other employment and company law, and health and safety and environmental rules and regulations that would also apply to the company.

I know that the Minister wanted her Department to give a full reply. Why should she not? It would not be any skin off her nose, as there is nothing to hide. The truth is that the Department could not give a full reply because my question was too difficult to answer. This Government of all Governments expect a full reply to be given to such questions by every manufacturer in the country.

We have reached saturation point with regulations. As a minimum, we need a regulatory moratorium of several years to let industry catch up. Ideally, we should start reducing the level of regulation, but so much is done by qualified majority voting. It would help if the Government were to vote against the measure. I hope that hon. Members who really care about what is going on—

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Prepared 28 March 2001