Produced by Professor Chris Coggins

Executive Summary

This Paper is specifically about funding for Local Authority waste management, and summarises the key changes since the early 1990's (see also 'Summary Table'). The focus is primarily on England.

Historically Local Authorities received income from local sources (currently the Council Tax) and various  government grants  - in terms of waste management, through the Environmental Protection and Cultural Services  (EPCS) grant, which is not ring-fenced for specific Local Authority Services within this broad heading.

During the 1990s a variety of other sources of income for waste recycling and composting were developed, but few benefited all Local Authorities. These included Recycling Credits and Packaging Recovery Notes. Similarly, Supplementary Credit Approvals (SCAs) were available for a number of years to support new recycling/composting infrastructure investment.

The landfill tax was introduced in October 1996 and accompanied by the Landfill Tax Credits Scheme (LTCS), with Approved Object C/CC covering :-

C -  research and development, education and the collection and dissemination of information for the purpose of encouraging more sustainable waste management practices - subsequently modified to cover :-

C - encouraging the use of more sustainable waste management practices

CC - encouraging the development of products from waste or the development of markets for recycled waste

For Local Authorities, this provided a range of funding for pilot projects - but not directly, and through a variety of third parties. Access to this source of funds ceased with effect from 1st April 2003, except for on-going projects with confirmed funding A Legacy Fund  was established  from 1st April 2003 - 31st  March 2004, to finance projects which would otherwise have ceased to operate .

Dedicated funds from landfill tax money have been allocated through the Waste Minimisation and Recycling Fund, and further tranches will be available from the Waste Management Performance Reward Fund. A range of funds for Local Authorities, and other organisations, are available under the Waste Implementation Programme (WIP) and through the Waste and Resources Action Programme (WRAP).

Local Authorities are now having to bid competitively for funding to support waste management, with many being critical of the time and effort this takes in addition to operational duties. Money from national sources for capital infrastructure has to be supported by local revenue commitments.

The Paper also covers funding for capital infrastructure through the Private Finance Initiative (PFI), community enterprises in waste management, the new burdens procedure and brief comments about private sector funding sources.

Funding sources for research-oriented projects involving Local Authorities as partners, e.g. research councils and universities, are not covered in this Paper.

The Materials Recycling Week State of the Nation Report, commissioned to establish attitudes of Local Authorities, and conducted in October/November 2003, reported that the average amount of  money needed annually, for each Local Authority responding to the survey, to meet BVPI recycling targets was estimated at more than £500,000.
 
Funding for Local Authority Waste Management

Historically, household waste management in the UK has been seen as a public service and has been funded through grants from Central Government to Local Authorities. Overall government support has increased by 25% since 1997. Waste management tends to be small when compared to the costs of education, health, the police and other social services. Government figures indicate that Local Authority expenditure on waste management (including recycling) increases from 1.45% in 1999/2000 to 1.51% in 2003/04. It is estimated that Local Authorities spend £1.6 - £1.8 billion on municipal waste management per annum.

Currently, this block grant is allocated under the Environmental Protection and Cultural Services (EPCS) and waste collection, street cleansing and waste disposal is grouped with a range of other Local Authority services (including libraries, local transport, flood defence). The declared cost of these waste services in 1999/00 amounted to £1.81 billion. In the Comprehensive Spending Review of July 2002 an increase of funding of 10.6% over three years was announced, with further increments dependent on the outcome of the review of Waste Strategy 2000 by the Performance & Innovation Unit of the Cabinet Office. The funding is not 'ring-fenced' for specific  services, and actual expenditure reflect local circumstances and priorities, local politics and offers only limited scope for strategic medium or long term planning and investment. The table shows the allocations following the 2002 Spending Review :-

2002/03  2003/04  2004/05  2005/06  2006/07  2007/08

£8,961m  9,435m  11,152m  11,217m  11,606m  12,040

The Comprehensive Spending Review in July 2004 adjusted the figures for 2004/05 and 2005/06 upwards, and the funding for 2006/06 and 2007/08 includes recycled revenues from increases in landfill tax. Recycling of landfill tax revenues in 2005/06 will be carried out in the autumn (of 2004), as part of the local government revenue settlement, so that EPCS allocations are revenue neutral to Local Authorities. The government also announced it was to introduce three-year revenue and capital settlements for Local Authorities following a full consultation.

As part of overall efficiency savings, the Comprehensive Spending Review estimate that c. £300 million could be saved in waste management in England over the Spending Review period, e.g. through joint working, procurement, etc.

In April 2004, a Parliamentary question was asked as to how Local Authority funding for waste disposal and waste collection is calculated.
'Recycling is the responsibility of both the waste disposal and waste collection authorities. It is therefore part of the group of services included in both the county-level and the district-level Environmental, Protective and Cultural Services (EPCS) Formula Spending Share (FSS). The formula used for both the county-level and District-Level EPCS FSS can be found in Chapter 4 of the Local Government Finance Report (England).
Formula Spending Shares are neither grant nor are they the Government's assessment of how much an authority should spend on a particular service. They are simply the formulae used in the calculation of formula grant. Formula grant is un-hypothecated i.e. it may be spent by the authority for any purpose. It is up to each authority to decide how much should be spent on each service given its local priorities.
In January 2004 the government announced an allocation of   £20 million for 2004/05, to help all Local Authorities in England reach their 2005/06 recycling targets. The grant to each Local Authority in England is based on a simplified version of the EPCS formula, linked with population density and area size, and is similarly not ring-fenced.

'Ring-fencing' of the government grant for waste management services was the subject of a research study funded by Central Government  in 2002, but has led to no changes in the EPCS formula as yet.

The other main source of funding for Local Authorities is the Council Tax, introduced in 1993/94 and levied on the value of residential properties in one of 8 bands (based on 1991 evaluations). Each year householders are given details of the previous and projected annual spending on public services, but there is no definitive 'ring-fencing' of Council Tax money. In September 2003, The Office of the Deputy Prime Minister (ODPM) warned against further 'double-digit' increases in Council Tax (averaging 12.9% in 2003/04), and  threatened to re-introduce 'capping' on Local Authorities who propose rises of more than double the rate of inflation (currently 5.8%). In March 2004 the average increase for Band D properties was reported to be 5.9%.
 
In January 2004 ODPM issued a warning to 31 Local Authorities threatening to cap them if they imposed Council Tax rises in excess of 5%, with a further 25 councils being warned in February 2004.  Surveys during January 2004 indicated  a larger number of Local Authorities would exceed this figure, e.g. a survey by Local Government Chronicle quoted nearly 80% of Unitary Authorities and 70% of county councils plan to increase council tax by over 5%, many with accompanying service cuts. The average rise was in fact 5.9%. In April 2004 the government announced that four large Unitary Councils (Nottingham, Telford and Wrekin, Torbay, Herefordshire) and two districts (Fenland in Cambridgeshire and Shepway in Kent) were to be capped.

Council Tax has increased by 70% since 1997, with education, social services and the police competing with waste management for additional funding. Council Tax provided 19% of net spending by Local Authorities in 1993/94 and 26% in 2003/04. Of £80 billion, education accounts for 37% and 'other services' (including waste management 17%).

The new Local Government Act, passed in early September 2003 will potentially allow Local Authorities to keep a share of the business rates - kept by Local Authorities until 1990 when it was taken by the government and re-distributed nationally. An initial review of the balance of funding between central government and Local Authorities was completed by ODPM by July 2004, and further study (to report in 2005) will probably include proposals  for a revised property tax, with 10 bands (more bands at top and lower end), possibly to be introduced in 2007 when properties are due for the first revaluation since 1993.

A Consultation Paper was published by the Local Government Association in January 2004, putting forward various options :-

 a reformed and more equitable property tax : increasing the number of bands at either end, reviewing the discount system, possible discounts for particular groups, interaction between council tax and council tax benefit, review frequency of revaluation (mow every 10 years), how tax is calculated (e.g. as a percentage of capital value)

 the progressive localisation of the non-domestic rate. In 1990/91 this accounted for 29% of council expenditure, and 22% in 2003/04. Referred to above, expected to come into force in 2005/06 and would raise £330 million per annum. The business rate raised £15.6 billion in 2003/04

 the transfer of a proportion of national income tax to fund local government directly, either initially as an assigned revenue, developing into a local income tax or as a local income tax immediately. The LGA estimates that 6-7 pence of the basic rate of income tax is around 25% of total net Local Authority income, around £18 billion

 a reduction in grant to Local Authorities consistent with this shift of national income

These proposals could lead to the local funding sources increasing from 26% to 72%, with greater accountability at Local Authority level.

     Current basis  Possible basis
     2003/04 (£bn)  2003/04 (£bn)

 Rate Support Grant  24   12
 Other grants   14   8
 National business rates  15.6
 Local business rates     15.6
 Property tax   19   19
 Income tax      18

 Total    72.6   72.6

 Central government  74%   26%

 Local government  26%   72%

Source : Local Government Association (2004). The balance of funding : a combination option. Proposals for reforming local authority revenue.

The debate over direct or variable or differential charging householders for these services was raised in 1998 in a draft waste strategy document (and has been discussed again in 2002 by the Strategy Unit of the Cabinet Office). In both cases there has been considerable local and political opposition. See also the report funded by CIWM (EB) 'Waste Collection : To Charge or not to Charge?' published in 2003.

One of the few examples in the UK to have introduced a type of direct charging is Blaby District Council in Leicestershire. The Council  switched to wheeled bins in 2001, using powers under Section 46 of EPA 1990 to charge for containers. They introduced 140 litre wheeled bins for waste, together with a 140 litre green-lidded wheeled bin for recyclables on request, and garden waste is only collected in special pre-paid sacks. Recyclables are collected on alternate weeks. If the waste wheeled bin is filled before the end of the week, households can buy refuse sacks from the council or have a 240 litre wheeled bin for an annual rental fee. Of the 37,550 properties served, only 7% are renting the larger bin of buying refuse sacks. During the first year the amount of recyclables has risen by 55%.

In March 2004, in response to a Parliamentary  question, the Secretary of State for the Environment responded that amendments to Sections 45 and 51 of the Environmental Protection Act 1990 would be required allow Local Authorities to adopt direct and variable charging schemes for the collection, processing, treatment  and disposal of household waste and for household waste delivered to Civic Amenity sites respectively. Provision would also need to be made under such powers for secondary legislation to provide for the exercise of these powers by Local Authorities.

In February 2004 in a legal test case in the Republic of  Ireland (Dublin City Council v. Samuel Wright), the Irish Court ruled that flat-rate direct charging for collection and management of this waste is consistent with EU law, with reference to the 'polluter pays principle'. From January 2005 all councils in the Republic of Ireland are to set up schemes to charge households for the amount of non-recyclable waste they produce.

In June 2004 Defra indicated that it was close to finalising details with a selection of Local Authorities over incentive schemes to encourage recycling. Ideas being discussed included :-

 incentives are more favoured than 'sticks'

 people who  separate and recycle  should benefit

 a points reward scheme is more probable than direct cash payments

 credits against council tax
 

Alongside these issues is the potential role of 'localism' : empowering councils to achieve service delivery improvements through decentralisation and more community leadership focussing on integration rather than division. Various public opinion surveys now put public service quality above the economy in terms of the electorate's concerns.

The government published Regulatory Reform : the Governments Action Plan in February 2002, and this included a measure to allow Local Authorities to charge for the deposit of un-segregated  household waste at civic amenity sites in order to increase household waste recycling - although this will require new primary legislation. Again, no progress has occurred.

One of the first initiatives to provide additional financial support for recycling were Recycling Credits, introduced in April 1992 under Section 52 of EPA 1990, in order to promote recycling. Waste Disposal Authorities (WDAs) are obliged to pay such credits, based on the marginal cost of landfill, to Waste Collection Authorities (WCAs) who divert such waste from landfill. They may pay such credits to community sector groups, although ODPM proposals in July 2004 include making such payments a statutory duty, to include re-use as well as recycling and increased flexibility to allow better joint working arrangements. Unitary Authorities (UAs), being concerned with collection and disposal, can only do so through internal accounting. However, Recycling Credits are not 'ring-fenced' and there is evidence through Best Value inspections to show that some Local Authorities are using them to fund other service priorities. Chartered Institute of Public Finance and Accountancy (CIPFA) statistics for 2001/02 report that £30 million was paid to WCAs and £6.3 million to third parties.

In February 2004 a proposal by Lancashire's Cabinet Member for urban and rural regeneration was made to replace the current system of paying districts by the tonnage of recyclables they collect, currently £29.63 in 2003/04. This would be replaced with a payment for every household that is provided with a 'three-stream' kerbside recycling service, as long as the districts confirm how the money is to be spent. The three-stream service involving green waste, dry recyclables and residual waste. The proposal is called 'Cost Sharing', with districts signing a cost-sharing protocol with the county, and committing themselves to  provide 90% coverage of households by 2005/06.

A survey of recycling officers by LARAC in March 2004, ahead of a Defra consultation on recycling credits, found that 71% of Local Authorities might abandon recycling schemes if the recycling credit system was ended. The average recycling credit reported in the survey was £33.66, ranging from £24.50 to £43.00. This amounts to an average of c.£200,000 for each Waste Collection Authority, representing an average of 29% of their overall recycling budgets.

An ODPM Consultation Document in July 2004 proposed changing the method of funding Joint Waste Disposal Authorities (via a levy on constituent authorities that is apportioned by unanimous agreement or  in the absence of this, base on the Council Tax of each authority) to a tonnage basis or introducing similar charge-based arrangements.

Packaging Recovery Notes (PRNs) were introduced under the 1997 Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations to promote the collection, sorting and re-processing of packaging wastes. They are based on tonnages being recycled or composted by accredited re-processors. Some £280 million was generated in PRNs/PERNs between 1998 and 2002.Evidence from various reports indicate that very little income has been received by Local Authorities for such purposes, with a survey in 2002/03 reporting 93% of Local Authorities had received no tangible benefits. Prices of PRNs are published each Friday in Materials Recycling Week, and there is a private sector trading floor (www.t2e.co.uk). There have been instances of potential fraud with issuance of PRNs, inquiries into wood in 2003 and plastics in February 2004.

 Municipal incinerators generating heat and/or power were able to claim 19% of their waste inputs as combustible inputs eligible for PRNs due to (energy) recovery. This practice was expected to cease following the European Court of Justice ruling in July 2002, confirmed by the Commission in May 2003, that such incineration is disposal rather than recovery. However, in December 2003 a working document of the conciliation process between the European Council, Parliament and Commission proposed a new version of Article 6, paragraph 1(b) of the Packaging Directive (94/62/EC), and this was incorporated in the amended Packaging Directive (2004/12/EC) of February 2004 :-

"No later than 31 December 2008, 60% as a minimum be weight of packaging waste will be recovered or incinerated at waste incineration plants with energy recovery". (new text emphasised).

In a Statement by the Council, the Commission and the European Parliament in February 2004 they declared their common intention to propose similar amendments, as appropriate, to other relevant legislation.

With more end-of-life product waste streams (WEEE, ELV, batteries) being targeted by EU Directives, there may be a case for introducing Material Recovery Notes (MRNs). This would be consistent with the 2003 Thematic Strategy on Waste Prevention and Recycling which argues for material-based (and not end-of-life product waste) recovery and recycling targets. The Report on recycling future increases in landfill tax revenue (see Annex 3) reviews a proposed Business Recycling Incentive Scheme (BRICS), with recycling/composting facilities issuing a Waste Recycling Evidence Note (WREN) to the waste management company/business that supplies it - and such WRENs would have a tradable value. The proposal was grouped under Low Priority Options as not being practical to be applied to SMEs, with a low value of £3 per tonne and it would be payable on all recycling and not just incremental recycling.

Other proposals in this category of bidding mechanisms/tradable permits were the Waste Abatement and Landfill Revenue Incentive Scheme (WALRIS), developed by Defra and modelled on the UK Emissions Trading Scheme (UKETS), a Fund for Resource Efficiency (FRE) and a Recyclables Obligation Scheme.

During the 1990s the government provided powers to borrow money for waste management through Supplementary Credit Approvals (SCAs). One of the largest allocations, for c. £6 million, was to fund the first purpose-built Material Recovery Facility (MRF) in Milton Keynes.

The last (open) award of SCAs in 1997/98 were all allocated for home composting projects , and the majority of respondents in the HDRA 1999 survey provided bins at subsidised prices, with 30% offering than at cost from the supplier, with offers of free home compost bins continuing to fall since this funding source ceased.

SCAs are still available  for landfill re-mediation and related engineering projects, but annual amounts are variable - £2.25 million p.a. 1999/02 and 12 million in 2002/03.

A new guide was published by Defra in early 2004, and with effect from April 2004 SCAs are to be abolished for contaminated land capital projects. Instead, Local Authorities will be free to make borrowing decisions according to what they can afford, subject to government controls over revenue support grant aid, and government funding for Supported Capital Expenditure (Revenue) -  SCE(R). Funding applications for 2004/05 must be submitted by 31st March 2004.

The Local Government Act 2003 provided a new 'prudential' system of capital finance controls that gives Local Authorities increased freedom to raise finance for capital expenditure, where they can afford to service the debit without Government support. This replaces the  Basic Credit Approval and SCA system, which accounted for about a third of all Local Authority capital investment. There are reserve powers for Government to set limits on borrowing and credit, but it is envisaged that these would be used only in exceptional circumstances. This Act imposes a duty on each Local Authority to determine an affordable borrowing limit, which would be subject to the scrutiny of its external auditor. More detailed information is given in the report by Enviros and Deloitee for the Mayor of London.

Defra is also able to offer loans at the UK Reference Rate, at 9.68% in June 2004, if projects meet specified requirements (e.g. WIP New Technologies) but cannot be funded appropriately by other mechanisms within  State Approval guidelines.

Funding from the Landfill Tax Credit Scheme were used to fund various Local Authority 'demonstration' and 'pilot' Object C/CC recycling projects. It was essential that such projects should be innovative, aimed at enhancing knowledge, and capable of being widely disseminated to provide best practice guidance and advice to Local Authorities and others on meeting the demanding BVPI targets. It was important that they should not be used to provide funding support for a local operational service, and most projects involved third party involvement/management. Incomplete data is available on actual funding for Local Authorities due to variations in application and reporting procedures.

Funding was allocated through registered environmental bodies or a distributing environmental body (D-EB) to organisations which were not-for-profit (e.g. a company limited by guarantee, trust or unincorporated association (like a friendly society or charity). The organisation must not be controlled by a Local Authority, a body corporate controlled by one or more Local Authorities nor a registered landfill operator.

Criticism of the Landfill Tax Credit Scheme that expenditure focussed on Approved Objects other than sustainable waste management, led the Government in May 2001 to set landfill operators an indicative target that at least 65% of LTCS should be allocated to Approved Objects C/CC. Despite this target being achieved, the government announced in November 2002 that LTCS would no longer be applicable for Approved Objects C/CC. Local Authorities were only able to access funding for demonstration/pilot projects, and government criticisms of LTCS failing to deliver a 'step-change' towards sustainable waste management were the reasons for this change.

A review of the Landfill Tax Credit Scheme has been undertaken by Viridis, with the Final Report published in January 2004. A report on  ways in which future  increases in landfill tax could be recycled to business, prepared by Integrated Skills Limited, was published in February 2004 (see Annex 3). 

The majority of the landfill tax money previously allocated for these Approved Objects   (£100 million in 2003/04, £110 million in 2004/05 and 2005/06) will be redirected to public spending on a new sustainable waste delivery programme. Following discussions with local government stakeholders, a Waste  Performance Reward Fund for Local Authorities will be established to replace the Waste Minimisation and Recycling Fund which first operated in 2002/03 and 2003/04.

The landfill tax in the UK was introduced in October 1996 at £7 per tonne for active waste (wastes with the potential to undergo significant physical, chemical or biological changes, usually when deposited in a landfill) and £2 per tonne for inactive/inert waste. The rate for active waste was increased to £10 with effect from April 1999, and an escalator of £1 per tonne per annum to reach £15 with effect from April 2004. In November 2002 the Chancellor announced that the escalator would be £3 per tonne with effect from April 2005, with the aim to increase the tax to £35 in the medium-long term. Government estimates that 52% of revenue from landfill tax increases will be derived from Local Authorities, with the increase being 'revenue neutral' to Local Authorities - see earlier table of EPCS funding - although as explained earlier, this funding is not ring-fenced for waste management.

Assuming limited change to reported household/municipal waste tonnages between 2001/02 and 2005/06 for England, this new escalator could mean an additional £70+ million per annum to be paid for by Local Authorities. Even achieving a national recycling rate of 25% in 2005/06, together with continued growth in waste arisings, the annual increment in landfill tax payments by Local Authorities based on a £3 per annum escalator could be c. £60+ million. In addition to normal growth in waste arisings latest government figures suggest that c. 145,000 new homes will be needed each year to meet changes in family size and life cycle.

The Comprehensive Spending Review of July 2004 also announced that the new landfill tax escalator would be 'revenue neutral' to business as a whole, with revenues, rising to £146 million per annum in England by 2007/08, being used to support business in improving business efficiency.

Annex 3 summarises the Treasury-funded report on recycling future landfill tax increases, the aim being  to ensure that such increases are revenue neutral to businesses. Most of the proposals are to assist businesses and not Local Authorities. Priority proposals were recommended for certain industrial (including food, beverage and tobacco and basic metals and fabricated metal products) and commercial businesses (wholesale and retail trade, hotels and restaurants, education, social work and public administration, other services). Such businesses could target similar waste streams (paper, cardboard, glass containers, metals, food and catering) to household/municipal wastes - and potentially provide enhanced tonnages to make new recycling/composting facilities viable. Such items are generally available in larger quantities per site, more homogeneous and potentially less contaminated.

One Low Priority Option of potential relevance to Local Authorities is a Waste Management Compensation Fund, with households and businesses within a certain radius of a new waste management facility being compensated for the dis-benefits associated with such a development, e.g. through reductions in council taxes and/or business rate taxes. A recent Defra-funded study indicated that  house prices in the vicinity of a landfill were adversely affected, the cost amounting to £1.52 - £2.18 per tonne of waste landfilled, and this could indicate the level of such a compensation payment. Although also having a potential impact on facilitating planning consents for new waste management facilities, the number involved (200 - 1,500+) could be a major disadvantage.

This proposal is similar to 'Section 106' agreements in Planning Acts, whereby developers may be required to put a proportion of their profits to 'community use' within the neighbourhoods affected by a development, as a condition of being granted planning permission. Examples include school extensions, traffic calming, and play areas.

In contrast, and in order to promote sustainable waste management, the government introduced the Waste Minimisation and Recycling Fund (WMRF) - 'The Challenge Fund', and this funding 'replaces' LTCS.  This Fund allocated a total of £118.7 million to 254 Local Authorities in England during 2002/03 (Round One) and 2003/04 (Round Two), based on competitive bidding.

       Round One   Round Two
         
Partnership working between authorities   £12,524,545 (30%) 19.6m(26)

  High performance innovation & best practice  2,522,944 (6)  3.0m (2)

 Helping turn round low performance   19,927,074 (47)  40.0 (52)

 Developing community initiatives    448,904 (1)  1.4m (4)

  General projects      6,947,586 (16)  12.3m (16)

 Total      42,371,053  76.3million   
As part of this programme, a 'ring-fenced' sum of £21.3 million was allocated to London under the Capital Waste Minimisation and Recycling Fund, with slightly different categories :-

 Kerbside recycling schemes   £7,698,000 (36%)

 Estates recycling schemes    4,862,000 (23)

 Bring recycling     9,000 (0.04)

 Infrastructure projects    4,852,000 (23)

 Waste awareness schemes    2,1000,000 (10)

Re-engineering civic amenity sites   1,738,000 (8)

 Waste minimisation projects   37,000(0.2)

 Total      21,296,000

In July 2004 a further £3.5 million was allocated for the recycling awareness campaign 2004/06.

On 4th July 2003 the new Environment Minister, Elliot Morley,  announced further grants to Local Authorities for the early introduction of waste minimisation and recycling schemes. An extra £24 million of Government grant is being allocated to support schemes in London (£3.6 million) and 13 other Local Authorities (£21.3 million). This is funded from landfill tax that was retained and administered by landfill operators but is now collected through changes that were made to the tax regime for the landfill of waste with effect from 1st April 2003. The money is for 'near misses' when £76.3 million was allocated earlier in 2003 in the second tranche of the Waste Minimisation and Recycling Fund, subject to detailed negotiations on the precise funding requirements.

The Government also promised to discuss support schemes in 10 other Local Authorities where proposals were thought to have considerable merit, but where there are outstanding technical, deliverability or value for money questions to be resolved. In September 2003 six of these received £4.3 million (Barnsley and Doncaster MBCs, Carlisle, Halton and Warrington, Merseyside WDA, North Yorkshire and Stoke-on-Trent), technical, delivery or value-for-money issues to be resolved for the remaining four.

In August 2003 UK Environment Minister Elliot Morley told Local Authorities that a further £135 million would be made available for sustainable waste management initiatives in England. Bidding details were published in October 2003, when funds of £90m will be made available for 2004/05 and £45m for 2005/06, plus an additional £20 million for London. Money for pump priming will come from the Waste Minimisation and Recycling Fund.

At the same time a new Waste Performance Reward Fund Grant (WPRG) was announced for 2005/06. This new Fund/Grant will reward Local Authorities for improved outcomes in waste management and meeting agreed performance criteria (see later). In summary, for England :-

   WMRF  LTCS  WPRG
     
 2002/03  £42.3m  ?

 2003/04  76.3 + ... 84 + ?

 + London 21.3 + ... 3.6 + ?

 2004/05  90  

 2005/06  45    45

 2006/07      90

 2007/08      110

WMRF - Waste Minimisation & Recycling Fund - 'The Challenge Fund'
LTCS - Landfill Tax Credits Scheme
WMPRG - Waste  Performance Reward Grant

The figure for WMPRG for 2007/08 was revised in July 2004 from £90 million to £110 million.

In October 2003 tenders were invited for the National Waste Minimisation and Recycling Fund for England, confirming the above figures

   2004/05   2005/06

 England  £76.3 million  38.15 million

 London  13.7   6.85
There were two categories :

 Partnership Projects are for treating large quantities of waste (over 200,000 tonnes) with a list of 33 possible Waste Disposal Authorities. Of these there will five very big proposals (Group A, eligible for  at least £3 million in 2004/05 and £2 million in 2005/06) and 12 smaller projects (Group B, eligible for at least £1.5 million in 2004/05 and £1 million in 2005/06).

 Bids for General Projects can be by an individual authority or two or more Waste Collection Authorities, with the limit for bids being £1.15 million. Unsuccessful bids for Partnership Projects will be considered under General projects.

All projects required robust business plans with value for money project outcomes and communication strategies. To support these infrastructure bids, the Waste and Resources Action Programme (WRAP) will fund communication strategies proposed by Local Authorities (see later under the Waste Implementation Programme, Work Stream Eight).

In December 2003 the successful bidders for Partnership Projects were announced, with £62.5 million being allocated. Thirteen applications were unsuccessful.
 £2.5 million each  Buckinghamshire, Derbyshire, Shropshire/Gloucestershire

 £5 million each  Cambridgeshire, Cheshire, Devon, Essex, Greater
Manchester, Hampshire, Hertfordshire, Lancashire, Merseyside, Somerset, Suffolk

Most bids included kerbside recycling (dry and/or green waste), bulking/MRFs, civic amenity sites and some included community/reuse schemes and in-vessel composting. Unsuccessful bids were then put with bids for General Project funding.

In February 2004 the results of the General Projects was announced. In total 170 applications were submitted, with 28 applications being allocated £22 million unconditionally (Annex A list) and 23 applications being allocated £21 million subject to undertaking further work on their communication strategies as part of the WRAP funding (Annex B list). All figures are provisional and are dependent on agreeing capital costs to achieve best value for money and resolving any outstanding details. They are for 2004/05 and 2005/06, and provisional funding ranged from £20,995 to £1,500,000.

http://www.defra.gov.uk/environment/waste/localauth/wastefund/index.htm

Annex A  Annex B

 Dry materials kerbside collection  £13,273,976 (60%) 5,241,565 (25)

 Green waste kerbside collection  3,326,419 (15)  7,505,636 (36)

 Dry + Green waste kerbside collection 1,754,477 (8)  7,858,344 (37)

 Civic amenity sites   2,730,314 (12)  350,000

 MRF     494,500 (2)

 Composting Site    471,418 (2)

 Recycling    20,995

 Waste minimisation - nappies     140,000

 Total     £22,072,099  £21,095,545

In the November 2003 Pre-Budget Report, the Chancellor confirmed the figures for the Waste Management Performance Fund for 2005/06 and 2006/07 :  '... will provide non-ringfenced incentives for (English) local government to deliver a step-change in sustainable waste management performance'. Consultation would take place in 2003 on the Performance Reward Fund, together with how the landfill tax increases from 2005/06 onwards will be made revenue neutral to local authorities.

A Consultation Paper was published on the Waste Performance Reward Grant  in January 2004 with the following proposals :-

    2005/06  2006/07  2007/08
        and subsequent years

Pump-priming grants  £45 million 30  30

First year rewards  -  60  30

Second year rewards  -  -  30

Total    45  90  90

These would be based on one of four options outlined in the Consultation Paper :-

 use the combined measure of recycling and composting as in the statutory BVPIs

 use recycling as the sole measure, thus reducing any perverse incentive for Local Authorities to divert resources towards kerbside collection of garden/green wastes at the expense of home composting and/or other recycling services and infrastructure

 use other measures such as energy recovery

 use per capita household waste collected as  a measure of success in reducing waste, e.g. via home composting

The deadline for comments was 31st March 2004 : LAWPP@defra.gsi.gov.uk

In the Comprehensive Spending Review announced in July 2004, the figure for 2007/08 was increased by £20 million.

Funding for England and Wales, drawing from the landfill tax income, is via the so-called Barnet Formula : the allocation to England is set at 100, the allocation to Wales is 5.9, thus Wales gets 5.9/105.9 = 5.571%.

In Wales, the Welsh Assembly Government has allocated £88 million over five years from 2003/04 to promote Local Authority recycling, involving projects ranging from raising awareness to market development. £21 million was paid out in 2003/04 and £21 million will be provided for 2004/05.
In Northern Ireland, £26million was allocated in October 2003 for the 26 councils, representing 42% of their funding needs too implement waste management plans in 2003/04. This compares with £2.2million made available in 2001/02.

Some Local Authorities have already considered Public Sector Agreements (PSAs) where the government (through the Office of the Deputy Prime Minister) will provide additional income if recycling targets are achieved in excess of the Best Value Performance Indicators ('stretched' targets), together with waste minimisation.

The current PSA 2003/06 commits Defra to 'improved performance on waste management as measured by a basket of indicators' under the strategic heading of 'Sustainable Consumption and production'

 Objective V involves the promotion of sustainable management and prudent use of natural resources domestically and internationally
 PSA target 6 focuses on the enabling of a 25% recycling or composting of household waste by 2005/06

The PSA is currently under review and will probably cover the period up to 2010, and the new Waste Performance Reward Grant may link with this scheme, although the money may not be ring-fenced for waste and recycling, but would be available for waste-related PSAs.

In order to meet Landfill Directive targets the UK government has proposed a system of tradable landfill permits - now called 'allowances' - (and supported by over 70% of response to the March 2001 Consultation Paper). These would be allocated free to WDAs (and UAs), based on biodegradable municipal waste tonnages. The Waste and Emissions Trading Bill received Royal assent in November 2003, and a Consultation Paper on the 'Landfill Allowance Trading Scheme' (in England) was published in August 2003. Wales and Northern Ireland have decided not to implement a trading scheme for landfill allowances, although Scotland  will do so.

Waste Disposal Authorities in England will have their targets announced in the summer of 2004, with 2005/06 being the first target year. Progress towards targets for 2010 will be 'back-end loaded' with bigger diversions of biodegradable waste from landfill nearer to 2009/10. Monitoring will be via a mass balance method, based on 68% as the biodegradable content of municipal solid waste. Waste Disposal Authorities will be able to ban, borrow (up to 5% of target tonnage) or trade allowances - except in the key years of 2010, 2013 and 2020. Although promoted as an opportunity, many Waste Disposal Authorities are expected to bank allowances rather than trade, in order to minimise the financial risk of being fined (at £200 per tonne)  for not meeting their targets.

The UK has also introduced  tradable certificates in the energy sector and these might offer additional potential for channelling funding into relevant  waste sectors. These include the Climate Change Levy and Renewable Obligation Certificates.

The penalty for not meeting these targets is to be c.£200 per tonne, based on twice the cost of the most expensive waste treatment option such as anaerobic digestion or in-vessel composting. Some in the waste industry feel that the threat of such fines may be important that actual fines, with Local Authorities being forced to cut other public services in order to pay the fine. As an initial guide, the waste industry (and Local Authorities) awaits with interest what penalties (if any) central government will impose on Local Authorities if they fail to meet recycling/composting targets in 2003/04 (most are expected to do so ?) and/or 2005/06 (regarded as much more challenging). In January 2004 the government repeated its warning that it is prepared to use its powers to intervene formally where Local Authorities fail to meet their statutory targets - but this would be very much a last resort.

It was been estimated by Ernst & Young in 2002  that it will cost the UK c. £7 billion to implement the Landfill Directive, equivalent to £2 million per day over the next ten years.

The role of Local Authorities has changed markedly since the early 1990s. The role of waste regulation has passed to the Environment Agency, and the private sector is more involved with waste collection, waste disposal and overall waste management. The trend is for more dialogue and partnerships between the public and private sectors, although with reference to funding and finance there is the dichotomy between public service v. private profit.

A new private sector initiative was launched in Autumn 2003 by European Metal Recycling to help Local Authorities boost their recycling rates and target more waste packaging, called the 'emr reload fund' (see . For larger schemes up to £80,000 is available for a new or expanded project, with the opportunity to apply for an additional 50% of revenue support in year two and a further 35% in year 3 - £140,000 in total to apply for. £20,000 is available for smaller projects. The closing date is 30th January 2004.

Eight Local Authorities were awarded funding in March 2004 : Manchester City (£50,000), Harlow (£30,000), Blaenau Gwent  (£12,000), Bolsover ( £5,000), East Riding of Yorkshire  (£11,966),  Lincoln (£4,937), Swansea (£2,100) and Somerset (£1,000).

In May 2004 container manufacturer Straight announced a £100,000 Fund to help Local Authorities promote home composting. Intended to be used for leaflets, calendars and other consumer promotional literature, the funding is available through regional companies, provided Straight products are offered to local households. A larger variety of home composter type and size is being offered in 2004.

Funding for Local Authorities available from the Waste Resources and Action Programme (WRAP) is listed in a later section.

The above figures allocated to Local Authorities in England, and funding periods, are in marked contrast to  funding awards in Scotland in May/June 2004 :-

 Orkney, Shetland and Western Isles : £15 million

 Dundee : £25.9 million

 East Dunbartonshire : £23.4 million

 Renfrewshire : £28.4 million

 East Lothian : £19 million

These funds are for promoting waste reduction, recycling, composting and recovery and cover the period 2004/05 - 2019/20, and are part of a  £250 million Strategic Waste Fund established in Scotland to implement the national waste strategy. 

   http://www.scotland.gov.uk/library5/environment/stwf.pdf

These awards for 15-year periods are in marked contrast to the awards for 1-2 years in England. One Local Authority (Burnley) was awarded £520,000 to expand its existing fortnightly paper collections to collect glass and cans in December 2002. When this (capital) fund expired in April 2004, the council decided to cease collections of glass and cans with effect from July 2004 and green waste collections with effect from October 2004. A number of other Local Authorities in England were successful in bidding for capital funding but, declined to take the funding when they realised the scale of future revenue requirements to be met by the Local Authority.

 
Funding for Waste Management Capital Infrastructure, with specific reference to PFI

Traditionally capital infrastructure has been funded by waste management companies, sometimes in conjunction with Local Authorities or as their agents in waste management contracts

The Private Finance Initiative (PFI) was introduced by the Conservative government, retained  and extended by Labour to promote capital investment in waste management infrastructure.

Specific waste management criteria apply to the award of PFI credits :-

 Projects  must demonstrate clear links to the objectives of  Waste Strategy 2000. In two-tier Local Authority areas, proposals should demonstrate how the two tiers will work together to deliver the targets. The authorities' draft or complete Municipal Waste Management Strategies will contribute towards this

 Recycling and composting are central to Waste Strategy 2000 and should be part of waste PFI schemes. Proposals should demonstrate how the schemes :

 Projects should aim to match or exceed local performance standards for recycling set under Best value

 Projects should contribute to longer term national targets for recycling in Waste Strategy 2000

 Projects should support the authorities' plans for recycling as set out in their Recycling Plans or Municipal Waste Management Strategies

 Proposals should show how Projects would take into account the obligations under the Landfill Directive

 Proposals should make clear how Projects would cut waste as required under Best Value

 Proposals should demonstrate that other relevant authorities, the public, and interested parties have been consulted

 Proposals including incineration must demonstrate that all opportunities for recycling have been considered first and that there is no barrier to the future development of recycling. Schemes should include proposals for combined heat and power where possible

These last  criteria was introduced in 2000 - because PFI Projects have been perceived as being of most benefit to capital-intensive schemes such as incineration.

Private sector partners are contracted to raise funds, design, build and usually operate/manage such PFI Projects. Contracts are normally for 25-30 years. The private sector provides the finance to fund the required capital infrastructure. The objective of PFI is to introduce private sector management skills, expertise and finance into capital intensive and complex Projects in such a way that Project risks are allocated to the party (public or private) best able to manage them. In this way, risk allocation is optimised and hence value for money achieved, despite the public sector being able to borrow more cost effectively than the private sector. The Government repays the capital, operating and finance costs  through regular annual payments (the 'annuity charge') over the length of the contract.

PFI Projects are often criticised as being  drawn-out, time-consuming (early schemes took up to three years to negotiate) and expensive. The cap of £25 million on the award of PFI credits often  does not reflect the actual capital expenditure commitments, but acts as a subsidy to Local Authorities in meeting such commitments. The agreed capital expenditure is provided by the contractor, using either its own resources (on-balance sheet finance) or those of a bank (Project finance) : for example, the Onyx East Sussex PFI Project has been funded by the company, whilst Shanks in East London has obtained bank funding. The award of PFI credits is subject to meeting various requirements, including a recycling target in excess of 50%.

Central Government has demonstrated its support for PFI Projects in waste management in various spending reviews. The sum of £200 million of PFI credits were committed in the Spending Review of 2000, and £355 million in 2002. However, despite their commitment, the impact of PFI on the waste management sector to date has been slow. In August 2003 the Government committed an additional sum of £478 million.

By the summer of 2003 only eight waste PFI Projects had reached financial closure. The Treasury had emphasised the importance of waste PFIs in July 2003, and is committed to supporting six new schemes  over the next three years, probably focussing on recycling and MBT/BMT in order to help deliver the targets set down in the Landfill Directive. In addition, new funding streams (£32 million) have been made available to assist in the development of energy technology

Two changes to the waste PFI were made in November 2003 :

 The cap of £25 million  for a single PFI application was raised to £40 million - with higher figures considered for exceptional environmental solutions, or further value for money considerations such as amount of waste dealt with and partnership working between authorities justify it

 References to incineration have been removed to be replaced by a greater consideration of the waste hierarchy, bringing the criteria in line with the Government's view as laid out in Waste Strategy 2000 - 'the use of residual waste treatment options involving recovery should be considered and their use justified in line with the waste hierarchy and should demonstrate that there is no future barrier to reduction, reuse and recycling efforts'

Key issues to be considered with PFI are careful (and early) attention on structuring of Projects to achieve objectives determining the reference Project. In addition, adopting an 'holistic' approach to waste management, viewing waste as a service rather than as an end product, joint working, risk transfer and Value for Money, deliverability, competition and procurement (services and products).

The Public Private Partnerships Programme (4P's) is a dedicated independent unit, established in 1996 by the Local Government Association, with the express aim of facilitating increased investment in Local Authority services through public/private partnership agreements, including PFI (www.4ps.co.uk)

In its response to the Waste Strategy Unit report Waste not, Want not, Defra confirmed the establishment of a Waste PFI Delivery Panel to accelerate the delivery of PFI projects. The response referred to 2wo additional tools  :-
 A set of desktop guidance for Defra assessors.

 A  waste management PFI procurement toolkit, being developed by 4P's with WRAP and Partnerships UK assisted by Ernst & Young. The aim of this toolkit is to provide guidance to Local Authorities when developing Projects and to create a Project delivery and contractual framework which reduces procurement time and cost.

A Consultation Draft Waste Management PFI Pack was published in October 2003.

The table below summarises those PFI contracts in waste management which have either reached financial closure or are currently in procurements. The individual dates are when the PFI contract was signed, rather than PFI credits 'awarded' by government. Other information includes  the appointed contractor and details of the proposed waste management solutions being funded. Most of these contracts are for 25 years, although the Isle of Wight contract lasts 12 years and Neath Port Talbot 20 years. Others have been confirmed by government, but actual contracts and proposals have not been finalised. The Kirklees PFI project has been written up by 4P's as a case study. The following table includes those PFI projects with dates of closure, and those still in progress.
In most cases, waste management companies have also contributed substantial sums of money in addition to PFI credits.

PFI Contracts in Local Authority Waste Management

Closed Projects

 Year Local Authority  Contractor Solutions

1997 North Staffs    upgrading efw

Dudley     efw

1998 Kirklees   Sita  iwm + efw

 Dundee     efw

Isle of Wight  Biffa  iwm + ivc

  Hereford +  Focsa  iwm + efw
Worcestershire    (efw not approved)

1999 Surrey   Sita

2000 Neath Port Talbot  HLC  MBT + efw + composting

 South Gloucs  Sita

 2003  East London  Shanks  2 x MBT

  East Sussex  Onyx  efw

  Leicester  Biffa  MRF + AD

 2004 West Sussex  Viridor  CA, MRF, TS, BF

  Dumfries/Galloway Shanks  MBT

In Progress

  West Berkshire    ecology village (CA  + MRF)

  Central Berkshire    CA + MRF + MBT

 Gloucestershire    3 x MRFs + composting

  Cornwall    MRFs, 2+ x AD

  Lancashire    4 x MBT + 5 TS
 
  Shropshire

  Wrexham  HLC  iwm + efw

  Cambridgeshire/    2 x MBT, efw, AD
  Peterborough

  Essex

  Northumberland    3 x CA, MRF, MBT, composting

  Nottinghamshire

Key :

AD Anaerobic Digestion
BF Bulking facility
CA civic amenity site
efw energy from waste
ivc in-vessel composting
iwm integrated waste management - collection, sorting, recycling, disposal
MBT Mechanical and Biological Treatment
MRF Materials Recovery Facility
TS Transfer station

NB  this table has been compiled from a variety of sources, it is not comprehensive and requires editing - for content and dates of award/procured. No financial figures have been included.
A series of acronyms describe the current status of PFI projects

BAFO   Best And Final Offer : may not always be needed
ISOP Invitation to Submit Outline Proposals : first part of negotiation, ability to work with
ITN Invitation to Negotiate (Tender) : very important, quality of tender, risk apportionment
OBC   Outline Business Case : land , procurement
PQQ   Pre Qualification Questionnaire : technical, financial
Pre OBC  Pre Outline Business Case
Pre OJEC  Pre publication in Official Journal of the European Community
Preferred Bidder  Preferred Bidder :  clarification of final details, appoint when ready
Financial Closure  c. 9 months later

During 2003/04, banks have become more involved with waste management funding as illustrated with the East London Waste Authority/Shanks PFI contract and the non-PFI waste management contract completed in March 2004 in Kent to build the new Allington energy from waste plant near Maidstone. In the latter case, Kent Enviropower (a part of Waste Recycling Group - now owned by Terra Firma Capital) has secured over £100 million in funding, including support from the Royal Bank of Scotland as well as in-house sources. This plant with an annual capacity of 500,000 tonnes is planned to open in 2006, and first proposals date back to 1997. Planning permission was granted in 2000 and IPPC permit in September 2003. Lurgi(UK) has been appointed as the engineering, procurement and construction contractor, with Finnish power company Fortum appointed to operate and maintain the contract.

As at May 2004 Defra was in the initial stages of discussing a proposed tripartite partnership of a Local Authority, a community group and a private waste management company for a PFI project.

Funded primarily by WRAP, in July 2004  4Ps and Defra published a Procurement  Pack to help Local Authorities bid for PFI money - covering the procurement process, the performance management framework, payment mechanism and issues affecting contractual structures and risk transfer.

 
The Waste Implementation Programme (WIP)  
www.defra.gov.uk/environment/waste/wastefund/index.htm

Following its response to the November 2002 Strategy Unity Report, Defra announced details of the Waste Implementation Programme in May 2003, involving a number of  Work Streams. Some funding from these Work Streams is accessible to Local Authorities or partners working in conjunction with Local Authorities. In the Landfill Allowance Trading Scheme Consultation of August 2003 this was described as the new Sustainable Waste Management Programme. Various changes were made to the Work Stream Factsheets which were re-issued in November 2003, including splitting data and research into separate Work Streams.

 Work Stream One - Local Authority Support   john.enright@defra.gsi.gov.uk

The Strategy Unit identified a major gap between central policy making and action at a local level. They underlined the vital importance of bridging this gap to bring about positive change to meet the objectives under the Landfill Directive.

This programme aims to establish an enhance support infrastructure to help Local Authorities overcome the barriers to improved performance and meet, or exceed, challenging statutory targets on the recycling and composting of municipal waste.

 Identify barriers to improved performance : by setting up a central store of knowledge on performance and barriers to improvement and establish new mechanisms to track performance

 Develop support products and services : by extracting and documenting good practice, best advice and guidance, and observations on the strengths and weaknesses of different approaches to municipal waste management

The programme will require systems for setting standards or marks of best practice against which to measure performance and developing tailored solutions and support options to solve particular problems.

 Work alongside other organisations to improve support and make it more accessible : to Local Authorities striving to achieve their statutory recycling targets, as well as to meet the reduction in biodegradable municipal waste going to landfill as set out in the Landfill Directive, which will be put into place as a result of the Waste and Emissions Trading Act 2003.

The organisational structure of the Work Stream aims to provide a single, improved interface between Local Authorities and central government, through a Local Authority Support Unit. All reports can be downloaded from  http://lasupport.defra.gov.uk.

Projects commenced ion 2003/04 and reports published in 2004 include :-

 Why some Local Authorities don't meet targets. (by AEA Technology).

 Recycling for flats : case studies of recycling schemes for housing estates, high-rise blocks and other areas of high-density housing.  (by Waste Watch and Safe Neighbourhoods Unit).

 Procurement of waste management services + toolkit to reduce procurement costs (in collaboration with CIWM and Enviros)

 Review of Municipal Waste Management Strategies and Waste Local Plans (by Eunomia).

 Waste Composition Analysis. Guidance for Local Authorities + Appendices. (Entec and Eunomia).

 Analysing the 'Mix' and interactions Between Household Waste Systems. Good Practice Guidance. (by Entec and Eunomia).

 Model for projecting and monitoring recyclables capture (by Entec and Eunomia).

 Review of Best Value Inspections

 Baseline information on civic amenity sites and projections with reference to WEEE.  (Network Recycling).

 Projected Recycling Rates for CA sites in England, 2003 to 2006. National Results and Overview. (by Network Recycling).

 Local Authority Good Practice Assessment in the Re-use and Recycling of Household Collection Bulky Item Waste Stream. Survey report. Literature Review. (by Network Recycling).

 Local Authority Good Practice Assessment in the Re-use and Recycling of Household Collection Bulky Item Waste Stream. Survey report. (by Network Recycling).

 Local Authority Good Practice Assessment in the Re-use and Recycling of Household Collection Bulky Item Waste Stream' Report to Defra on barriers facing local authorities in moving to good practice.  (by Network Recycling).

 Local Authority Good Practice Assessment in the Re-use and Recycling of Household Collection Bulky Item Waste Stream. Content for a toolkit and good practice guide for use by local authority officers. (by Network Recycling)

 Local Authority Good Practice Assessment in the Re-use and Recycling of Household Collection Bulky Item Waste Stream : Scope for the development of a centre of excellence. (by Furniture Recycling Network and Network Recycling).

Work Stream Two  - Local Authority Funding  ron.bates@defra.gsi.gov.uk

In the Defra response to the Strategy Unit Report in May 2003, the Waste Management Performance Fund was confirmed, and discussed earlier in this Paper.  This will allocate £84, £92 and £92 million  to Local Authorities in England in 2003/04, 2004/05 and 2005/06 through a 'reward' fund. Devolved Administrations will receive proportional amounts based on the Barnet Formula. The new fund will provide non-ring fenced incentives for local government to deliver a step change in sustainable waste performance for all households. The earlier section on Funding for Local Authorities includes more details.

 Managing the funds : including management and operation of the Waste Minimisation and Recycling Fund (or 'Challenge Fund'), designed to support improved waste management practice in England.

 Advise on the design of, and implement, the Waste Management Performance Reward Grant : which will be introduced in 2005/06 to replace the Waste Minimisation and Recycling Fund

 Delivery of waste PFI projects : ensuring full use of resources allocated to waste PFI in SR2002 and a throughput of projects consistent with waste policy ambitions and effective market responses.

 Management of local PSA targets (in conjunction with Waste Strategy colleagues), negotiating acceptable stretch targets for Local Authorities on the management of municipal waste, from a pot of money available from, and administered by, the Office the Deputy prime Minister

 Work Stream Three - New Technologies Programme         dave.brooks@defra.gsi.gov.uk

This Work Stream  aims  to overcome barriers within the UK market to the successful development and take-up of waste management technologies in England. The programme has been set up to encourage the development of proven and near-market technologies, reduce environmental impacts, divert increasing volumes of biodegradable municipal waste away from landfill and realise the inherent value of waste materials

 Waste Research and Innovation Programme : a funding programme for R&D projects into new technologies, aiming  to lead the development of cleaner, faster and cheaper ways of treating wastes. £2 million available through the Technologies and Research Innovation Fund .
 
 Demonstrator Programme : a funding programme to help establish  commercially viable waste treatment technologies, reduce perceived risks of implementation and provide accurate data on technical and economic performance. £30 million available and guidelines and application forms available end-January 2004. Managed by RPS.

Full details of these two programmes were posted on the Defra website in February 2004

http://www.defra.gov.uk/environment/wip/newtech/

 Waste technology support  :  impartial advice and support to Local Authorities and the Waste Management Industry, aiming  to increase existing knowledge and understanding of new technology and motivate the sector to make the necessary behavioural change. £4 million. Delivered via Enviros.

 Waste technology data centre : a joint project with the Environment Agency to develop a website resource of up-to-date information on waste treatment technologies  in the UK and abroad, and impartial advice on regulation, authorisation, performance and costs.
  www.defra.gov.uk/environment/waste/wip/newtech/index.htm

Work Stream Four - Data        john.scarborough@defra.gsi.gov.uk

The aim of this Work Stream, to be taken forward jointly by Defra and the Environment Agency, is to provide a sound evidence base for improved policy development, implementation, monitoring and evaluation, at both national and local levels.

A lack of information on specific waste streams, their growth rates, composition life cycles and impact is hampering the development of an effective waste strategy for household and other waste streams, and the ability to effectively measure and monitor progress,

This programme will therefore ensure effective co-ordination, provision and dissemination of reliable data on different waste streams over the next three years and beyond. This Work Stream was originally combined with Research.

 Data integrity project : to ensure a sound evidence base for developing, implementing and monitoring policy and to meet statutory and other reporting requirements. This will involve a comprehensive  review of current and future waste data and the development of systems to ensure the improved integrity and consistency of data high.

 Central database : to review the feasibility options for a widely available central database of data, which would enable more effective use of existing resources by reducing duplication and maximising the potential of existing information.

 An effective mechanism to monitor Local Authority and other delivery plan targets : to ensure appropriate data are available to monitor key delivery targets, and in sufficient time to identify problems and adjust policy responses where necessary.

Work Stream Five - Research   nick.blakey@defra.gsi.gov.uk

This Work Stream aims to provide a sound evidence base for improved policy development and implementation and reduce the potential for work to be duplicated.

In comparison with shorter-term research initiatives inn the Waste Implementation programme, this Work Stream will concentrate more on medium to longer-term initiatives, keeping an overarching view of needs both within and beyond Defra-led initiatives.

 Advisory group  and supporting management : to establish a research advisory group to provide an overview of current initiatives, to assist in the development of a research strategy and to improve co-ordination and delivery of planned outputs. Effective linkages with Work Stream Three and Four will be given early attention. The Waste & Resources Research Advisory Group was established in February 2004.

 Research review project : better knowledge and understanding of waste issues are essential to underpin policy making, negotiation and specific action programmes to change the way we generate as well as manage waste streams in the UK. This part of the Work Stream will develop and implement a comprehensive and reliable research strategy drawing on advice offered through the advisory groups, with strong communication links with other key delivery teams.  £5 million per annum over 3 years.

 Research information access system : to set up a central information access system beginning with a review study of potential options, examining outline costs and benefits. Such an access system will enable more effective use of existing resources by reducing duplication and maximising the potential of existing information.

This Work Stream will be managed within the Waste Strategy Division of Defra, as distinct from the other Work Streams being managed under the Waste Implementation Programme. The first News Release was posted on the following website in mid-February 2004.

(www.defra.gov.uk/environment/waste/wip/research/index.htm).

 
Waste Resources and Action Programme (WRAP)    www.wrap.org.uk

The Waste and Resources Action Programme  was allocated £40 million in 2000 to spend over 3 years on market development, R&D and developing fit-for-purpose specifications. The focus is on seven programmes :- paper, glass, wood, plastics, financial mechanisms, standards and specifications and procurement.

In 2002/03 WRAP spent £16 million. By programme, this included 35% on market development (market mechanisms, and an additional 6% on procurement and 5% on standards), 23% on paper, 9% on glass, 4% on plastics, 4% on wood. By activity, 39% was spent used for capital grants and 15% for materials R&D.

An aggregates tax (at £1.60 per tonne) was levied on primary raw materials with effect from April 2002, with three main aims (figures in brackets = spend by ALSF in first two years):-

 minimise the demand for primary aggregates (30%)

 promote environmentally-friendly extraction and transport  of primary aggregates (15%)

 reduce the local impacts of aggregates extraction (56%)

The Aggregates Levy Sustainability Fund (ALSF) was established for two years, managed by WRAP, with similar objectives to LTCS. An estimated £35 million will be available in the Fund for the first year (£58 million in first two years), out of an overall total of £385 million tax revenue to the government. A government evaluation published in February 2004, indicated that out of 433 projects, 80% have taken place at quarry sites (or within two miles) with about 70% of total expenditure disbursed on local projects.

On the other hand less positive feedback was obtained from industry, NGOs and Mineral planning Authorities - with an absence of the latter in identifying and selecting potential projects. A three-year extension has been proposed from April 2004 with the following recommendations:-

 to be supported by a monitoring framework, linking programme spend against ALSF's objectives

 to include a review a of all research spend to date and identify priorities for future research spending

 to develop a programme of activities to promote environmentally-friendly extraction and investigate the implications for State Aid

 to devise a proposal for the greater integration of stakeholders in ALSF

In March 2004, concerns were expressed in terms of its effectiveness :-

 £29.3 million allocated in 2003/04, with the budget cut to £20 million for 2004/06

 internal management problems with the ALSF

 rules prohibiting the carry-over of funds from one year to the next

 £341 million was received by Treasury in 2003 compared to the forecast of £380 million
 claims of a 5.7% reduction in production of primary aggregates between 2001 and 2002 could reflect  companies stockpiling before the levy's introduction in April 2002.

In December 2003 WRAP announced the launch of up to £10 million over three years to support and strengthen local regional market development programmes. A large proportion of the fund will focus on projects that create markets for the biodegradable elements of the waste stream, but applications can also include other material streams under WRAPs remit (glass, paper, wood, plastics) and those outside WRAP's remit (e.g. tyres, WEEE, ELV). Applications will assessed against contributing towards the tonnage target of 373,000 by 2005/06, commercial viability once funding has ceased and overall environmental impact. A co-ordinator for the ReMaDe Network UK is based at the Banbury offices of WRAPand by July 2004 £1.89 million had been allocated, with a second round of over  £2 million  being available from Autumn 2004.   Mervyn.jones@wrap.org.uk

In addition, WRAP has been given additional tasks with effect from 2003/04, as part of the Waste Implementation Programme, supported by additional funding. It is estimated that WRAP's budget will be £49.6 million in 2005/06 (see report by Integrated Skills Limited).

 Work Stream Six - Kerbside good practice and options

This Work Stream seeks to significantly expand and improve the performance of collection systems for dry recyclables and organic wastes, with a particular focus on kerbside collections  

 An organics market development programme : to provide support and investment to the composting sector to develop sustainable and reliable markets for increasing tonnages of organic material. This will include capital investment support for composting technologies, business development advice, continued work on compost standards, research and development work and specific initiatives with the landscaping and horticultural industries (£2.732 million).

 An advisory service to Local Authorities on recycling and organics : this will provide technical advice and training for Local Authorities looking to implement and improve collection systems for recyclable materials and organic wastes. A key aim will be to optimise the management of organic wastes through the appropriate mix of home composting, kerbside collection and use of civic amenity sites (£0.731 million)

In October 2003 WRAP announced a programme of £3million of funding to improve civic amenity sites, with a particular focus on enhanced collection of garden waste and also to support a broader range of improvement measures.

Phase 3 of funding to provide free training course for recycling managers in Local Authorities, community and private sectors who mange or develop and promote the collection of recyclable and/or compostable materials was launched in January 2004.

Work Stream Seven - Waste Minimisation

Actions to stem the growth of household waste are urgently needed to help the UK meet the requirements of the Landfill Directive and move towards more sustainable waste management

 A targeted home composting programme : up to 250,000 home compost bins will be distributed to partner Local Authorities to test types of bin, marketing initiatives and communication support mechanisms. Full evaluation of all schemes will take place emphasising standardisation of measurement in determining waste diversion rates. £6.656 million, with invitations for Local Authority partners in November 2003 and tenders for the evaluation study to be submitted in January 2004.

 Development of  reusable nappy services including support for SMEs and start-up support for nappy laundering services.  An initial focus on major urban areas is proposed linked to local economic development and neighbourhood renewal initiatives. £0.769 million.

 A major retailers  initiatives : seeking to work  with the top five supermarket chains  - both challenging them and supporting them to play their part in the key objective set for reduction of growth of household waste. £0.203 million.

 A waste minimisation  innovation fund : will be developed in year one for rollout in year two, aiming to provide resources to support innovation by retailers and others - in areas such as minimising material use in consumer products, design for minimum material use and maximum recyclability.  £0.200 million.

In November 2003 WRAP invited Local Authority partners to distribute 250,000 home compost bins to households as part of a national pilot scheme to explore the impact of different types of bin, pricing, incentives and support material on home composting activity. An evaluation programme will accompany this distribution

Work Stream Eight - Waste awareness

Increased participation in recycling schemes and public understanding of issues involving waste will be essential for the UK to successfully meet targets for recycling and diversion of waste from landfill. £3 million in year 1 as part of an anticipated total programme cost of £30 million over three years. This Work Stream will build on the work of Rethink Rubbish, previously operated under the auspices of the National Waste Awareness Initiative

 A national programme of underpinning messages : to raise public awareness of waste issues

 A support package  : to improve the effectiveness of new or expanded recycling schemes on a local level

 A range of issue-specific initiatives : on home composting, re-usable nappy schemes, retailer campaigns

In October 2003, the Rethink Rubbish campaign received a £500,000 grant from WRAP to continue its work and boost activity, including the production of an awareness 'toolkit' for councils, further development of its website (www.rethinkrubbish.com) and a full programme of research and evaluation. WRAP took over responsibility for the campaign in January 2004, and announced  on 20th  February, 2004 that they will not be using the Rethink Rubbish brand as the basis for this campaign.

Based upon the findings from a formal review of the brand, commissioned by WRAP, it was concluded that whilst Rethink Rubbish had made great progress with engaging Local Authorities and some retailers, the campaign had not achieved "cut through" with consumers or engaged with major retailers. The review praised the success of Rethink Rubbish in attracting significant stakeholder support from local authorities and retailers, and in engaging celebrities to attract media coverage.

Rethink Rubbish will work closely with WRAP to ensure that the forthcoming national campaign builds upon the solid base that has been established and that the stakeholder links and resources we have developed are continued. Although formal funding for Rethink Rubbish will not continue after 31st  March 2004, a handover process to 30th  June 2004 will be funded and the campaign will continue to provide core support service for its stakeholders.

In April a 'guilt-free' national recycling campaign was revealed, supported by £8 million. Out goes playing on people's sense of duty along with the words waste, rubbish and environment. In come friendly, factual messages from ordinary people persuading that recycling is simple, mainstream and of benefit to them. Seven principles have been proposed :-

 recycling is mainstream : everyone is recycling and people need to belong

 focus on the facts and create compelling reasons : recycling will beneit people and their communities

 work on the tone of voice : friendly voices and no preaching

 we win this in the home and the community : breakfast radio, supermarket posters, freebies

 make recycling easier : consistent, action-oriented iconography

 cover people's lifestyles : at home, at work and at leisure

 work with partners : Local Authorities, businesses, local volunteers, charities

Also under this Work Stream, in December 2003 WRAP launched the Local Communications Fund to provide direct support for local communications initiatives through England, and working with the above national campaign. Funding will be awarded in three tranches :_

 up to £1.7million to support the continuation or expansion of existing local communications schemes that have a demonstrable effect on household participation in recycling and waste minimisation initiatives or well developed campaigns that van be ready to be rolled out early in 2004. The first tranche of money is to be spent by 31st March 2004

 up to £8.5million for communications programmes directly supporting new recycling infrastructure funded by Defra under the Waste Minimisation and Recycling Fund

 up to £8.5million to fund other communications activity delivered at local or regional level, intended to assist those Local Authorities which have not received infrastructure funding from Defra. Details released by WRAP in March 2004, supported by  a programme of Workshops across England.

 
New Burdens Procedure

The DEFRA response to  the Strategy Unit report also states 'Where any additional costs are imposed on Local Authorities as a result of the implementation of any of the Strategy Unit's recommendations, Government will fully fund these under the new burdens arrangements. It will be for the lead department to consult with the Local Government association in estimating the overall consequences for Local Authority funding'.

Under the New Burdens procedure, the Cabinet Office will be responsible for finding the resources to transfer into the appropriate local government finance settlement as reimbursement to local authorities for the costs of their statutory role in emergency planning. At present the cost of compliance for Local Authorities is paid out of the Civil Defence Grant. Some Local Authorities have chosen to fund the activity above the level of grant for many years, and this is likely to continue. Other responder bodies, such as the emergency services, tackle emergencies as part of their normal operational remit and have not received additional or special funding for these tasks. It is not proposed to change this situation.

The procedure has already been used  (?) with reference to the storage and processing of fridges under the Ozone Depleting Substances Regulations. £6 million was allocated for temporary storage of fridges for 2001/02. An additional £40 million was announced in July 2002 for Local Authorities in England to help them with the extra burden of storing, transporting and the safe recycling of old fridges during 2003/04.

From April 2002 the government allocated £50 million of revenue support grant (back dated to January 2002) to Local Authorities to cover the cost of removing insulation foam.

Local Authorities take back an estimated 50% of 2.5 million refrigerators each year, mainly through civic amenity sites and bulky household waste collections.

Similar funding has been made available for dealing with abandoned vehicles, £25 million across England, Wales and Scotland.

One problem is that the money is not actually 'ring-fenced' within Local Authorities for the specified purpose and is paid into the EPCS block of Local Authority funding.

Another potential problem come to light in July 2003, which may put 'new burdens' on Local Authorities. A recent study by the EU Scientific Committee for Toxicity, Ecotoxicity  and the Environment (CSTEE)  concluded that there was a concern to customers arising from the amateur use of creosote or creosote treated wood. The conclusions were discussed by the EU Marketing and USE Working Group on Dangerous Substances, and a new proposal was drafted and voted upon, which led to the publication of the Commission Directive 2001/90/EC. This Directive placed a ban on the use of creosote by amateurs,  and places restrictions on the use of creosote treated wood. As far as the UK is concerned :-

 the expiry of approval for advertisement  and sale of amateur creosote/coal tar creosote products by anyone other than the product Approval Holder or their agents  with effect from 30th April 2003.

 the expiry of approval for supply, storage and use of amateur creosote/coal tar creosote with effect from 30th June 2003.

This means that from 30th April 2003 retailers are no longer able to sell creosote to the general public, and from 30th June 2003 the general public will no longer be able to use wood preservatives that contain creosote/coal tar creosote. Where retailers have stocks of amateur use creosote products after 30th April 2003, they should contact their suppliers in the first instance, or their local waste regulatory authority. If members of the public have creosote after 30th June 2003 they should contact their local council for advice on disposal. Anyone supplying, storing or using amateur creosote products after 30th June 2003 may be liable to prosecution under the Food and Environment Act 1985. Enforcement will be carried out by the Health and Safety Executive, Local Authority Environmental Health Officers or Local Authority Trading Standards Officers.

Source : Health Directive Health and Safety Executive, Revocation of Approvals for Amateur Creosote/Coal Tar Creosote Wood Preservatives, 19th May 2003. A note appeared in the Luton/Dunstable on Sunday on 6th July 2003 with a reference to the HSE web site.
http://www.hse.gov.uk/hthdir/noframes/cresote.htm

The result in the UK was the publication of Statutory Instrument 2003 No 1511 (The Creosote (Prohibition on Use and Marketing)(No. 2) Regulations 2003 laid before Parliament on 10th June 2003.

In a further move, the EU is withdrawing 81 garden pesticide products from the UK market with effect from 25th July 2003, as part of an ongoing process to harmonise pesticide regulations throughout the European Union. These represent some 10% of garden pesticide products, and the majority are weedkillers and all contain one of  six active ingredients (2,3,6-TBA, dichlorprop, dikegulac, resmethrin, tar acids and triforine). Use by householders will become illegal with effect from 31st December 2003.

Local Authorities are likely to be burdened with both creosote and these pesticides, probably at civic amenity sites - although many such sites may not be licensed to receive such hazardous wastes. A survey by the  Pesticides Action Network has indicated that none of the civic amenity sites within Greater London are licensed to accept hazardous chemicals such as pesticides from residents. Instead, 32 out of the 33 boroughs subscribe to a hazardous waste collection service provided by the Corporation of London, with 51 collections of home/garden chemicals being made in 2001. An item appeared in The Guardian of 8th July 2003, outlining the changes and quoting a survey by the Crop Protection Association of over 24 Local Authorities with none having made preparations for the changes and most were not aware of their existence.

In February 2004 West Sussex announced that withdrawn pesticides will be accepted at all civic amenity sites, where staff will be on hand to ensure the hazardous materials are placed in special containers. (Source :  http://www.letsrecycle.com/info/localauth/news.jsp?story=3094      letsrecycle are also holding a Hazardous Waste Summit in Central London on 24th March 2004).

Another potential example arose in 2003 with discussions concerning the implementation of the Waste Electrical and Electronic Equipment (WEEE) Directive. It was suggested that Local Authorities might access funds under the New Burdens procedure for investment in civic amenity sites to receive, separate and store WEEE items. More recent proposals suggest  that WEEE retailers be asked to contribute £5 million per annum  2005/10 into a dedicated fund, under the terms of producer responsibility (the retailer take-back compliance scheme). Local Authorities would bid for funding to finance improved, or greater, separation collection of WEEE at civic amenity sites, and the procedure will be reviewed in 2008.

In February 2004 it was announced that Councils in London face a £2 million price tag to upgrade civic amenity sites to deal with 170,000 tonnes of WEEE items each year disposed of in London. Ten sites would need the most costly configuration (at £80,000 each) and the remaining 29 sites in London (at £39,000), with  labour and collection sites adding another £20,000. 
(Source : http://www.letsrecycle.com/info/localauth/news.jsp?story=3083).

Consultants writing the report also encouraged refurbishment schemes - using less energy, fewer resources and offering more employment and skills training. Refurbished washing machines sell for £1,500 per tonne, compared to £65 per tonne for scrap value.

The House of Commons Environment, Food and Rural Affairs Committee published its Report on the  End of Life Vehicles Directive and Waste Electrical and Electronic Equipment Directive in February 2004, and stressed the crucial role that civic amenity sites could play in ensuring that WEEE  equipment could be collected separately from the rest of municipal solid waste. The Report recommended further development of sites, and streamlining the process of gaining and amending waste management licences and of planning and amending planning permissions. The Report also recommended '...that the Government look again at the funds it has made available to Local Authorities for dealing with abandoned vehicles, specific in response to the Report exactly what these sums are and how they have been allocated and distributed, and ensure that they are adequate to deal with increased abandonment up tp 2007'. After 2007 the responsibility will lie with manufacturers.
 
Funding for Community Enterprises for Waste Management

As indicated above, limited funding has been made available through the Recycling Credits scheme because of its discretionary nature to community enterprises, but many community projects have benefited from LTCS.

The New Opportunities Fund (£50m in all, with £38.75 million for England) is a Lottery distributing body, oriented to community enterprises involved in collection and/or sorting and/or processing of household recyclables. Guidelines were published in January 2003, the fund being called 'community recycling and economic development' (CRED). The programme, Transforming Waste, is part of a larger initiative, Transforming Communities, and aims to support a wide range of community-based projects. The Fund is restricted to community enterprises, but Local Authorities have helped community enterprises within their area to submit bids and link such projects with their own applications for funding. Such co-operation provides opportunities for matched funding.

 establish new waste recycling, reuse or composting schemes in areas where they do not currently exist

 expand existing waste recycling, reuse or composting schemes through collection of additional materials or by expanding the geographical area covered

 increase the weight of material recycled, reuse or composted through education or awareness raising activities relating to new or existing schemes

Projects are also expected to engage with disdavantaged communities to improve their quality of life and achieve a sustainable management of resources.

The programme is being managed by RNSC as the lead partner in a consortium comprising  Community Composting Network, Community Recycling Network, CREATE UK, Environment Agency, Furniture Recycling Network, London Community Recycling Network, LARAC and Wastewatch. (see www.rsnc.org/cred or contact cred@rsnc.cix.co.uk). The programme will end in March 2007, with about 250 projects being funded. A Business Support Team managed by CRN will deliver support and advice to potential and successful applicants. The team will also facilitate open days and visits to projects demonstrating best practice. Applications will be encouraged from priority areas with low performing recycling rates, absence of community waste sector activity and disadvantaged communities. The Environment Agency has appointed a Transforming Waste Technical Manager to advise and assist on regulatory, licensing and monitoring policies and procedures.

The guidelines contain detailed chapters on the application process, priorities and eligibility and assessment criteria.

An additional £1.5 million was allocated in early 2004, with a one year extension to the programme.

In May 2004, Defra announced that £4 million would be available in two tranches (£1.5 million  in 2004/05 and £2.5 million  in 2005/06), from the Waste Implementation Programme, to support innovatory community waste sector projects and provide business support,  especially those working with Local Authorities. The government also announced that in its review of recycling credits, re-use schemes would probably get more recognition. At least one reaction from the community sector has argued that much of this will be 'clawed' back by government :-

 £2,000 each year for a waste management licence to recycle wood, furniture, vegetable oil and WEEE

 meeting Animal By-Products Regulations for a typical community project requires c. £5,000 capital investment spread over 5 years

 £500 a year to register an exemption for community composting

In Wales, the Cleanstream Recycling Fund, administered by the Cleanstream Partnership (led by the Wales Council for Voluntary Action) in collaboration with CYLCH, WLGA and Environment Agency Wales. The programme has £3.25 million to spend, with around 40 projects to be funded.

In Scotland, the Transforming Waste Grant Programme is administered by the Transforming Waste Scotland Partnership (led by Forward Scotland), in collaboration with RAGS, Keep Scotland Beautiful and SEPA. The programme has £5.25 million to spend, with around 60 projects to be funded. In Spring 2004 Community Recycling Scotland was launched with £5 million funding over two years

In Northern Ireland, the New Opportunities for Transforming waste is administered by  Community Resource Consortium (led by the ARENA Network) in collaboration with Bryson House, Groundwork and the waste strategy groups. The programme has £2.25 million to spend, with around 15 projects to be funded.

A new capital fund will be available in 2004, Futurebuilders, with £125 million available to increase the scale and scope of the public services delivered by the voluntary and community sector. The first round of bids opens on 5th July 2004. See www.FutureBuilders

See also Guidance to Funders : Improving funding relationships for voluntary and community organisations published by HM Treasury in September 2003.

The Association of Chief Executives of Voluntary Organisations (ACEVO) have a Sure Funding working group, which has been looking (early 2004) at the reform of grant funding with an emphasis on social payments based on output-based cost savings and a Voluntary Financial Initiative to complement PFI.

 
Other Potential Funding Sources for Local Authority Waste Management

Traditional sources of funding from City investors for environmental projects in general and waste in particular have been difficult to obtain. However, there has been recent growth in ethical investment opportunities with The Co-operative Bank, Friends Provident  and Triodos Bank to the forefront. The latter specialises in banking facilities for charities, and projects focusing on social and environmental priorities. These are linked under the umbrella of 'socially responsible investment', with decisions based upon various social, ethical and environmental test criteria, e.g. conservation of energy and natural resources, environmental improvements such as recycling and waste management.

An emerging group of investment funds focus entirely on emerging environmental technologies, and some venture capital firms have become interested, partly due to the initiative by WRAP in setting up an Equity Investment Fund to promote recycling infrastructure. This is worth over £5.5 million including at least £1 million of private investment. This will provide access to equity and quasi-equity for early-stage SMEs in the recycling sector. In addition, WRAP has established a Lease Guarantee Scheme (eQuip launched in February 2004 with £5.8 million) to overcome some of the problems SMEs face when trying to obtain an operating lease. This Scheme has the potential to guarantee £40 million of assets representing a leverage of private funds of at least 1 : 12.

Pension Funds  (accounting for about one-third of the Stock market) are now involved in this sector, and since July 2000 they must now inform members via their 'Statement of Investment Principles' :-

 the extent (if at all) to which social, environmental or ethical considerations are taken into account in the selection,, retention, and realising of investments and

 their policy (if any) in relation to the exercise of the rights (including voting rights) attaching to investment

A Green Paper on Corporate and Social Responsibility is expected from the EU during 2004.

In terms of promoting social and economic regeneration, the Single Regeneration Budget (currently SRB 6) provides funding for designated areas in the UK, and various waste and/or market development projects have accessed such funding.

European Structural Funds are available for specific regions to promote economic and social regeneration, and waste management projects have benefited from such funding. See www.cec.org.uk

Under the European Regional Development Fund, Objective 1 (regions where development is lagging behind) funding is available for designated areas in the UK (including South Yorkshire and parts of Wales). This normally provides only a proportion of project funding, and there has to be a mix of private/public 'match funding' - often 40% or more. There are detailed output objectives in terms of, for example,  jobs created and new businesses established in order to justify the expenditure in terms of economic and social re-generation. See Annex 2 for an example.

Eligible projects include those involved with environmental pollution/enhancement and new technologies. detailed output objectives in terms of, for example,  jobs created and new businesses established in order to justify the expenditure in terms of economic and social re-generation.

'Leverage' criteria may be imposed alongside match funding, and in South Yorkshire in 2001 this was  being quoted as 7:1, i.e. for every £EU  there should be a 'multiplier' effect of £7 in terms of jobs, income and overall expenditure.

EU Objective 2 funding is available for areas undergoing economic and social conversion  in the UK, and similar criteria apply as above. In September 2003 it was announced that 8 UK projects are among 104 to be part-financed by the EU LIFE-Environment scheme. These include schemes to recover and recycle X-ray and other films, bioabsorption of metals from abandoned mines ands automated ELV battery recovery.

European Social Fund money is also available in these regions and areas.

 
Conclusions

There are now a range of funding opportunities available for Local Authority waste management. These may be focussed on capital and/or revenue expenditures and may be linked with particular stakeholders, perhaps for matched funding purposes and/or delivery of partnership projects (community enterprises, Universities, private sector companies). Some sources of funding for waste management have disappeared, such as LTCS, and the trend seems to be towards more bids having to be made in a competitive context requiring more skills, time, cost and effort on behalf of bidders.

Successful bids have to overcome a range of barriers, and the key to success may be to put together a  package of bids, providing relevant public/private proportions, required leverage, partnerships and supporting strategic policies to implement behaviour change and sustainable waste management - but linked with other economic, social and environmental objectives of sustainable development. For public funding, issues of State Aid rules have to be addressed (see Annex 1).

Key issues to be addresses in submitting any bids will involve the following :-

 do you want to bid?

 what do you want the money for ?

 can you support any capital bids with sustainable revenue commitment ?

 fund criteria

 the application form

 supporting information

 especially any private sector or community enterprise matched funding

 monitoring and evaluation

 (the author  prepared a separate Discussion Paper on these issues for a Conference in October 2003).

Among the key issues to be considered is that of risk, with Local Authorities having to take on board local political risks of planning, licensing and public acceptability, whilst the private sector has to consider the 'bankability of  waste projects and financial risks. Investing in hospitals and schools pose less financial risk in comparison to waste facilities, especially the uncertainty of changing legislation, new technologies and the above local political risks.

Another issue of contention in England is the short-term nature of funding, and the need/expectation to continue to submit bids on  regular basis - in contrast to Scotland where Local Authorities are being given funding for the period 2004/05 to 2019/20.

In contrast to the  Not-In-My-Backyard (NIMBY) opposition to new waste management facilities, the alternative is to offer local communities incentives to accept such facilities (Yes-In-My-Back-Yard - if there is a trade-off -YIMBY). In France, depositories for nuclear waste have been accompanied by increased expenditure on schools, hospitals, roads and other public infrastructure in targeted areas. In September 2003, NIREX initiated a debate on 'compensating' communities prepared to accept  underground nuclear waste dumps. Annex 3 outlines a further example, whilst Section 106 agreements have been used in the UK  in conjunction with planning development.

Superimposed on questions of funding are broader issues of the need for more joined-thinking at government level (including arguments for a Strategic Waste and Resources Authority) and whether waste management should be taken out of Local Authority control and run by utility-type organisations, probably at a regional scale.

 
An earlier draft of this paper was distributed to Committee Members of CIWM Waste & Resources Strategy Group, and other interested parties. Comments were received from Mike Wier, Bob Pocock, Gev Eduljee.  Comments on waste PFI were received from S. Hazelton (Ernst & Young).

Overall responsibility, however, rests with the author.

E&OE

Last updated  3rd August  2004.

Professor Chris Coggins
174 Old Bedford Road
Luton
LU2  7HW

Tel : 01582  412045  

Email : WAMTECH@Luton174.fsnet.co.uk
 
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