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Lord Dixon-Smith: I would like to be absolutely clear about that. Does it mean that the allocations would be on the basis of total waste collected in a given area or on the basis of that which is already sent to landfill? This is a critical point.

Lord Whitty: The targets will be in terms of landfill but based on the total waste that arises—biodegradable municipal waste.

Lord Dixon-Smith: Perhaps I did not make myself clear. Will the initial allocations to waste disposal authorities be based on the total waste they collect at the present date or on the total waste that they presently send to landfill? If it is the total waste they collect, there will of course be some room for flexibility and I would like an assurance that that is what I should read into it. Then I have a final point to make.

Lord Whitty: The allocations will be based on the biodegradable municipal waste that is collected, not on the amount currently or historically landfilled.

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Lord Hanningfield: In 1991.

Lord Whitty: Yes, in whatever was the previous base year.

Lord Dixon-Smith: I am grateful for that assurance. That gives me a little bit more cause for optimism.

I wish to raise a final point. Again, I am sorry to have to do this in this way and if the Minister tells me it is an unfair fast ball I shall not be in the least surprised, but it seems to me there is a perfectly valid question to ask. What happens if the Treasury does its assessment and decides that the cost of meeting the liabilities under the directive by introducing treatment plants and so on—even allowing for the fact that we may be able to attract considerable sums from private operators who want to be partners in the business enterprises—is greater than the cost of paying the fines? What happens then? That is one reason why there is so much smuggling into this country of products such as tobacco and alcohol.

Lord Stoddart of Swindon: Perhaps I may raise a short point that has been worrying me about the training system as this debate has proceeded. As I understand it, one problem of landfill is that landfill itself produces greenhouse gases. That is one reason why we do not want landfill—as well as the fact that we are running out of landfill sites. However, if we are to have tradeable arrangements, does that not mean that waste will be conveyed from one area to another to be dealt with? Am I right? Perhaps I am wrong, but I shall continue. If so, it will have to be transported—presumably by lorry—which will add to the emissions that cause greenhouse gases. Has that been taken into account?

Lord Whitty: The noble Lord, Lord Stoddart of Swindon, is confusing two things. The trading scheme is not a literal trading scheme; people are not trading lumps of rubbish with each other. Clearly, that goes on already. As the noble Lord, Lord Dixon-Smith, pointed out earlier, most London boroughs dispose of much of their waste outside the area in which the waste arises—the noble Lord was principally concerned about Essex.

That will continue and there is nothing in the trading scheme that makes it more or less likely. Of course, that has the consequences to which the noble Lord refers, but what is traded under the trading scheme is not the literal waste, it is the allowance for one's ability to put that waste into landfill. It is almost a conceptual figure. Nothing physical moves under the trading scheme, and there is therefore no additional impact on greenhouse gases.

I shall answer the point made by the noble Lord, Lord Dixon-Smith, about the Treasury view in two ways. First, under the coming spending review, the Treasury has already made allowance in the allocations to my department and in the rate support grant settlement for notionally significant amounts of money to tackle those waste problems. Other

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streams—the private finance initiative and others—are available to deal with those capital dimensions, in particular, of waste disposal.

We shall return later to the question of assessing whether it is better to comply or to face the penalty for not complying, but the sanctions must be more expensive than the cost of complying. Otherwise we shall indeed have smuggling and various other analogous activities. One reason that the penalties are not specified in the Bill is that to some extent we shall have to set them in line with the market, which itself reflects the compliance cost. Otherwise the sanctions will not work.

5 p.m.

Lord Dixon-Smith: I have one final question before I withdraw the amendment, as I must. Has a serious attempt been made to assess the total compliance cost of the directive? I would be most interested to know if that is so.

Lord Whitty: I do not think that such an estimate can be made. There are different ways of complying with the target and those decisions will come down to the individual local authorities' waste minimisation strategies, to start with, as has been said, and the choice of alternatives to landfill will be different. Clearly there are significant capital costs involved in recycling, incineration and anaerobic digestion, but the choice of ways to meet the targets will be up to individual local authorities.

In the current spending round, sufficient allocation is already raised to ensure that the early years are covered. I am informed that the impact assessment is available in the Library should the noble Lord care to refer to it, perhaps we can return to the matter later.

Lord Dixon-Smith: I am grateful to everyone who has taken part in the debate. In particular, I am grateful to the Minister, because he has done everything that he can to be helpful. I sympathise with him in his dilemma, but the only certainty to come out of the discussion is that we are flying uncertainly into an uncertain future. I cannot put it any other way. Perhaps that must happen. I have no doubt that we will return to this debate in many forms before we have dealt with the Bill, even if we do not return to this specific target—if I may use that pun.

Clause 3 agreed to.

Clause 4 [Allocation of landfill allowances]:

Lord Dixon-Smith moved Amendment No. 8:

    Page 3, line 44, after "made" insert "at least thirty weeks"

The noble Lord said: These amendments address the problem that the Bill as drafted simply states that,

    "An allocation must be made before the beginning of the year to which it relates".

That is fine, but if one is expecting those allocations to be on an ever-diminishing scale, a number of factors are involved. I will not go over the ground covered in debate on previous amendments, which complicate the issue, but if such allocations can be made on, let us say,

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lst February for a year beginning on 1st April, if the allocation is tight, that does not give anyone a great deal of time to do anything about it.

Unless we have a standard about the timing of Government edicts in relation to future allocations so that they arrive well in advance, local authorities will hear only a short time in advance. If we are to have steady progress towards the directive targets, we need an announcement of allocations by 1st September the previous year if dramatic changes are to be made. Then everyone would know well in advance where they were going. We cannot have these announcements made at the last minute. I would almost go as far as to say that you ought to be able to sit down now—whether or not you use the formula, which I disagree with—and say what the targets for the first, second and third target years will be and what each authority's share will be. I am sure that it is a fairly simple calculation which could be done, but whether any government would choose to make targets that far ahead remains to be seen.

The other point is that the targets are, in any event, amendable. Once again, however, amendments must come well in advance so that people have time to plan for change. If you have been aiming at one particular target, because we know where the theoretical line is, and reality suggests that a tighter target will be necessary, considerable planning will be needed. At a small scale, this comes back to the question of investment decisions and how things should be handled. One might be talking about training staff and so on. It is a continuation of the same argument but, in this case, on a much more micro scale. I am pleading that, when these announcements are made, they should be made well in advance of the year in which they are to apply. This is a very familiar argument, which the Minister will recognise from a number of other occasions about other issues. I beg to move.

Lord Livsey of Talgarth: I strongly support the noble Lord, Lord Dixon-Smith, on this amendment. It is clearly prudent to have a period of about 30 weeks' notice. Planning and budgeting are extremely difficult for local authorities. A great deal of detailed work and consultation with committees who are dealing with these matters are required. As we know, directions are very often made. Without this sort of notice so that we can see the precise parameters for decisions and actions, we would be operating in a dark fog.

Lord Whitty: If the Bill were solely confined to England, there would be no difficulty in meeting everything that the noble Lord, Lord Dixon-Smith, has indicated. This requires some flexibility on how the other devolved administrations set their allocations, which is why it is not laid down here.

I assure the Committee that we intend to set the targets for each waste disposal authority in England and the full allocation of its allowances at the beginning of the scheme. In other words, we would set the targets all the way through to 2020, taking account

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of the full derogation. The noble Lord, Lord Dixon-Smith, doubted that. That would give a real time per item for making some quite difficult planning and investment decisions, as the noble Lord rightly said.

That is our intention for England, well in advance of the timetable that noble Lords have argued for. However, I need to leave some flexibility for our Scottish, Welsh and Northern Irish colleagues, as they have a different approach to their method of allocation.

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