Examination of Witnesses (Questions 40
MONDAY 10 JUNE 2002
40. Mr Hayward was giving us some examples earlier
on where you had not been able to get decisions from processors.
What is the consequence going to be for your business?
(Mr Hayward) As was mentioned earlier, the first thing
that we would obviously continue to do is to deal with the issue
as responsibly as we possibly can. That said, the uncertainty
that there is around what I can do as from 16 July is obviously
beginning to affect my business. In the short term, the easy solution,
I suppose, is to stock-pile the waste on my site, but that is
not a solution to the problem, of course, and, quite frankly,
that is a story that this industry and many others have seen before
and thought we had passed on from 20 or more years ago, and we
do not wish to go back there. That is a legacy which just gets
worse. That leads then to issues of solutions. At the moment,
a worst case scenario would be that if I cannot find a disposal
route in the UK because of capacity issues, I would probably look
to ship the waste to Europe, which is a moral dilemma; is that
really the way we want to be doing things?
41. I thought you could not ship waste abroad.
I thought there was a protocol about that.
(Mr Hayward) There are protocols. It is a complex
process to do, but it is not impossible. There are hurdles and
things we have to fulfil but it is possible, and of course, if
that is an option that ultimately is closed to me, for whatever
reason, either because of capacity or because of regulation or
because of cost, that might mean that I remove my production.
That becomes another issue. That is obviously not something I
wish to contemplate at all, being a third generation family company
in the north-east of England, but if needs must, that is what
we have to do.
42. Take me through the cost issue. Mr Rodger
was telling us earlier on that this was a market and the market
would respond, and the price is going to go up because the amount
of landfill is going to go down, the amount of hazardous waste
will go up, and there is a lack of clarity and speed on the timetable.
How much extra are you going to be paying do you think, Mr Hayward,
to dispose of your bi-products?
(Mr Hayward) Again, without knowing what the options
areand that is part of the uncertainty that I and my colleagues
in member companies are faced withexamples that we have
done in terms of calculations of what might be range from something
like an additional 10-30 per cent on the cost of a product. It
depends on the different circumstances. This in a global industry
where we face challenges from the Far East and pressures on costs
all the time. It is not going to be an easy solution, certainly,
but I do not think I would wish to come at this today from a cost
point of view. This is actually about certainty and capacity.
Those are my first concerns today. What I can see is that we have
a looming problem, and I can foresee consequences that we would
not wish to contemplate, because we want to try and deal with
all the issues responsibly, but at the moment there is precious
little help in understanding how to solve the problems.
43. Who would give you that help?
(Mr Hayward) As we have heard earlier, it will come
from guidance from a variety of different sources, starting from
the Commission and then transposed through the UK process.
(Ms Hackitt) The problem we face here is that, with
the lateness of the guidance from the Commission in the first
place, every one of us in the chain is under a very tight squeeze.
This is not in any way intended as criticism of any of the other
UK parties, from the regulator through the waste disposal people;
the squeeze is on all of us, and we are at the end of that process
as the generators of the waste in the first place. This is a much
broader industry problem than just the chemical industry.
(Mr Hayward) If I can give you an example, I am aware
of a couple of waste disposal companies where capital decisions
are pending, but once the capital decisions are taken, they will
take some time to implement before the capacity becomes available,
and that capacity availability and the timing of that capacity
does not fit with the industry's needs.
44. Before coming to a conclusion about how
much you are going to have to pay, you have to decide the basis
on which that cost is levied. You state in your submission that
the idea of charging on the basis of hazard is something which
you would not find acceptable on the grounds that it would be
tantamount to an environmental tax; you prefer a mechanism which
would mean charging on the basis of the effort required to dispose
of a product. Can you tell me how that would work? It could presumably
have as a consequence that the charges for the most hazardous
waste might actually be significantly lower than charges for waste
which was relatively benign, if still hazardous.
(Ms Hackitt) We need to be clear which particular
aspect of charging we were referring to in that comment. That
comment relates to how we are charged for regulation of waste
disposal, not for the disposal of waste per se.
45. Tell me how that will work in terms of the
effort. Why would it cost somebody a lot less in effort to regulate
a very hazardous product than a non-hazardous product?
(Ms Hackitt) It may well not do. It may be that the
hazardous product requires more effort, but our view as an industry
over a whole range of issues in terms of charging for regulation
tends to be that it should be on the basis of time spent in carrying
out the task rather than a levy in effect based on hazard or impact.
46. But that would depend in itself presumably
on the efficiency of the regulator as well, would it not? After
all, there are a great deal of regimes in best value in local
government, where almost everybody gets a star or two for something
they do. If Mr Hayward ended up in a one-star local authority
and your competitor was in a four-star local authority, you would
have as big a competitive disadvantage as if you were facing continental
competition with much lower charges for their regulation.
(Mr Hayward) I am not sure that is necessarily the
case. This is one component of the regulatory framework, and again,
it is common practice to be charged for disposal of waste depending
on what the waste is. It is very common, for example, for you
to be charged for the COD content of a waste in direct proportion
to what it is. What we are talking about here is the process of
managing the waste disposal route.
47. Who does that?
(Mr Hayward) It is managed through the Environment
48. I picked up from your evidence that it was
this regulatory aspect that you were concerned about. You said
at the beginning that the disposal of waste is a commercial activity,
so when you contract for a commercial company, who comes along
to inspect it?
The Committee suspended from 5.27 pm to 5.40
pm for a Division in the House.
Chairman: Before the break I was asking who
was actually doing the regulation, and just for clarification,
you were saying that the Environment Agency do it. Perhaps you
could spell out how this regulatory process is conducted.
(Ms Hackitt) The question you were asking us related
to cost and charging.
49. The point was that the industry produces
a service for disposal as a private enterprise activity, but the
line of questioning that we were pursuing was about paying for
the regulatory element of it, and I was intrigued when you said
the Environment Agency did this. Does someone pop up every time
something is being disposed of, or do they come and examine records?
What are they actually regulating?
(Ms Hackitt) All waste has to be diligently recorded
by those who produce it and those who dispose of it. It all has
to be very carefully documented and those documents have to be
made available to the Environment Agency. It is for that administrative
role, the regulatory overseeing that both the waste arisings are
being handled properly by the producers and also disposed of,
that we consider needs to be handled through time spent. We fully
accept that market forces apply to the nature of the waste and
how it is disposed of.
50. Is there currently a charge for this regulatory
(Ms Hackitt) Yes.
51. What is its current basis of levying?
(Mr Rodger) Essentially, cost recovery.
52. Is that done on a per company basis or a
per waste disposer basis?
(Ms Hackitt) As far as our industry is concerned,
it will be the time spent looking at the company's records and
the waste produced as part of a variety of regulatory interactions
that we have with the Agency. You must recognise that for us in
the chemical industry at least, our interactions with the Environment
Agency cover not only waste disposal but also effluent, emissions
to air and so on through our Integrated Pollution Control regulations.
So there will be a range of issues over which they will look at
the way we handle it within the industry and charge for the time
spent looking at that administration.
53. If this is a paper chase, why should the
paper chase be longer and more costly with one form of waste than
(Ms Hackitt) We do not believe it should be.
54. You said you believed the charge should
be proportional to the effort. My question is why should the effort
be different with different sorts of waste if this is a paper
(Ms Hackitt) To be fair, this is a point of detail,
but in our view, for simplicity when dealing with the regulators,
the best thing is that it is handled on the basis of time spent
and that that interaction between ourselves and the regulator
should be handled in that way.
55. Is there a relationship between hazard and
time spent or not?
(Ms Hackitt) There may or may not be. It will vary
on a variety of factors, for instance, the quality of the record
keeping within any given company. So the diligence with which
a company handles this whole issue is as likely to affect time
spent as the nature of the hazard of the material.
56. In that sense, companies can have the management
of the regulator's costs to some extent within their own hands.
The more efficient they are, the less the burden upon them.
(Ms Hackitt) Yes.
57. So when Shanks states, talking about the
use of alternative treatment technologies, that the increased
costs should be managed through producer responsibility, which
will discourage the production of hazardous waste, they seem to
be saying the best way of dealing with hazardous waste is not
to produce it. Is that your view as well?
(Ms Hackitt) Absolutely. We would not disagree with
that at all. We are in a commercial business just as they are,
and our own evidence already submits that our industry has worked
hard to minimise waste to date because of both the environmental
and cost drivers. It is not good business to produce waste that
it costs money to dispose of, but as Mr Hayward said earlier,
there are some constraints imposed upon us by the chemistry which
mean there is a certain amount of waste that there seems to be
no alternative but to find disposal routes for given some of the
processes we are involved in.
58. Ms Hackitt, you have twice mentioned the
industrial waste forum and how important you think that is. You
have got the Minister signed up to it, allegedly. Who else is
keen to be part of this?
(Ms Hackitt) We have written support from the Environment
Agency. The Chief Executive of the Environment Agency wrote to
the Minister supporting our proposal herself when she saw our
letter, and we have support from waste disposers and from other
industry sectors involved in this. The key to it all is to single
out industrial waste and deal with it as a specific issue, separate
from the bigger issue in volume terms of municipal waste, and
the different factors that influence industrial waste we believe
deserve special treatment by all the actors involved.
59. So the focus has not been on you, this will
put the focus on you, it will get all the stakeholders together
in a shorter chain, you will all understand the problem and you
will reach a solution.
(Ms Hackitt) That is what we hope, yes.