Select Committee on European Union Forty-Ninth Report


Letter from Brian Wilson MP, Minister of State for Energy and Construction to the Chairman

  Thank you for your letter of 6 November.

  I apologise that you had only two working days to consider my proposal to lift the UK Parliamentary Scrutiny Reserve ahead of Environment Council on 17 October. The letter should have been issued from my office a week before. You correctly note that the European Parliament held their first reading on 2/3 September 2002. However, the Council did not consider these proposals until 25 September 2002. The likely detail of the political agreement for Common Position was not therefore clear until early October. My department will be updating its partial Regulatory Impact Assessment to take account of the political agreement. I will send this to you under separate cover as soon as it has been completed.

  Please find enclosed a copy of the Task Force report referred to in paragraph 13 of the Government response. This report is concerned with the spending of the revenue gained from packaging Waste Recovery Notes (PRNs) and Packaging Waste Export Recovery Notes (PERNs).

  Please note, however, that this document is still in draft and has not yet been finalised.

  I will keep you fully informed of future developments including any conciliation process and will write to you before any final agreement is reached.

15 November 2002

Letter from the Chairman to Brian Wilson MP

  Thank you for your letter dated 15 October which Sub-Committee B considered, together with the accompanying Government response, at its meeting on 4 November.

  When we were in Brussels before the Summer Recess, we were aware that the Presidency was attempting to secure political agreement before the European Parliament's first reading. The first reading took place on 2 and 3 September, so we were surprised not to have heard earlier than your letter of 15 October of the position you intended to take at the 17 October Environmental Council.

  We note that the basis for political agreement at the 17 October Environment Council meets the important UK requirement for the deadline to be postponed to 2008. We welcome this as well as the overall ceiling on recovery and recycling and the fact that a wider revision will not be incorporated with this document. We think that the differentiated targets will be a problem, especially for plastic, but accept that you have probably got as good a deal as our European partners are likely to allow.

  Nevertheless, it does look as though the differences between the Council and the European Parliament are unlikely to be resolved quickly and that the proposal will go forward for conciliation, presumably after the Parliament's second reading.

  We should, therefore, like to be kept fully informed of the conciliation process, and would expect you to report to us before a final agreement is reached between the Council and the Parliament. We should also like to see a copy of the Task Force report referred to in paragraph 13 of the Government response. In the meantime, will your Department revise its regulatory impact assessment to take account of the political agreement?

6 November 2002

Letter from Brian Wilson MP to the Chairman

  As promised in my letter of 13 November 2002, my department has now updated its partial Regulatory Impact Assessment (RIA) to take account of the Council's agreed Common Position, which we expect to be referred to the European Parliament during March. I have pleasure in enclosing a copy of the partial RIA.

  We now believe that the following broad timetable will be likely to apply:
March 2003The Council will refer the Common Position to the European Parliament
April/May 2003Committee discussions
September 2003European Parliament 2nd reading vote
December 2003Conciliation (if needed) and final agreement under Italian Presidency
January/February 2004Publication in the Official Journel
24 February 2003

Letter from the Chairman to Brian Wilson MP

  Thank you for your letter dated 28 February 2003 enclosing an updated partial regulatory impact assessment (RIA) to take account of the Council's agreed common position. This was considered by Sub-Committee B at its meeting on 10 March.

  We have already examined the possible costs for the UK industry in our report Packaging and Packaging Waste: revised recovery and recycling targets[10], and have now noted the figures produced in the updated RIA.

  We note that the original estimates for the overall costs to industry for the period 2002-2006 have risen from a range of £884 million-£1.15 billion and £1 billion-£1.2 billion (table 6 of our report) to £1.2 billion-£1.36 billion. The new figures demonstrate a narrowing of the range. But given the way in which the costs are expected to rise, the overall figures are not particularly helpful. What matters is the annual costs to industry for each of the years up to an including 2006. We should like to see these figures on the assumption that the increased targets will be met by the UK.

  We should also be grateful to learn what estimate your Department has made of the annual benefits expected to be achieved in each of the years up to 2006.

  Against this background, we cannot understand why the Government has set the same targets for 2003 as those for 2002.

  Clearly, what will concern industry would be an outcome that tended towards the targets currently favoured by the European Parliament with their much higher costs. We should therefore be grateful for an updated RIA based on the European Parliament targets, which gives annual figures for costs and benefits, as well as the overall figures for the period 2002-2006, after the European Parliament's Second Reading in September 2003.

12 March 2003

Letter from Brian Wilson MP to the Chairman

  Thank you for your letter of 12 March, regarding packaging and packaging waste.

  I have noted your concern about the apparent rise in the costs to industry from our original RA to the most recent one. This is because the timeframe covered has been amended to reflect the latest available information. The last partial RIA covered the 2002-06 period—the current estimate is for 2004-08. The reason for this is the agreement in Council of a "Common Position" which extends to 2008. The European Parliament is still pushing for a 2006 date. This is still reflected in the latest partial RIA.

  In addition, data on the PRN market for 2001 and 2002 respectively has been finalised and the Government has announced targets for 2003.

  The cost estimates outlined in the new partial RIA show the sum of costs over the relevant five year period for which the new targets are proposed. They also show the annual average costs and the costs in the final year.

  The estimated annual costs for each year are not shown because they depend on the target that will be set for each year and the estimated PRN prices. Showing the former would imply that the Government had already decided the targets for future years when this is not the case.

  The Table below presents the DTI's estimates of the annual costs to industry of the proposed new Directive targets given our estimates of future prices and targets in each of the years up to 2008.

  The benefits are very difficult to quantify, not only because it is unclear at present what the future costs of landfill will be to 2008, but also because the other benefits, such as energy and virgin raw material savings, litter reduction, the stimulus to innovation and awareness raising, are, by their nature, very difficult to value in monetary terms.

  The RIA points out that the estimates it presents can only be seen as indicative. This is a complex area requiring estimates of both benefits and costs five years out. The benefits themselves are difficult to quantify because of the reasons outlined above. The costs are also difficult to quantify, and it should not be forgotten that a sizable number of PRNs are bought and sold via individual contracting, the price and quantities of which are commercially secure. This specific information is not available to the DTI and we are obliged to make estimates on the basis of the publicly available PRN prices on the open market.

  Table 1: Estimates of annual costs to 2008 (£ million (discounted))
20042005 20062007 2008
Annual Costs£152-£163 £196-£210£223-£240 £261-£279£270-£289

  You asked why the Government had not increased domestic targets in 2003. The reason for this was that it was far from clear that there was enough research to show that an increase in targets was the best option, and it was unclear what the Directive targets were going to be, or to what deadline they would have to be met.

  I would be very happy to supply an updated RIA based on the European Parliament's targets after their second reading in June or July 2003.

8 April 2003

Letter from Chairman to Brian Wilson MP

  Thank you for your letter dated 8 April 2003 which Sub-Committee B considered at its meeting on 28 April 2003.

  We are grateful for this explanation, though we remain to be convinced about the true nature of costs involved in the implementation of the draft Directive.

  However, we accept that the critical period will be reached when the European Parliament's targets are known for certain after their Second Reading in June or July. We should be grateful to receive an updated regulatory impact assessment (RIA) on that occasion so that we can then compare the possible outcomes from conciliation.

29 April 2003

10   33rd Report, Session 2001-2002, HL Paper 166. Back

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