Principal consultant for Eunomia, Peter Jones, says collectors of trade waste, and local authorities perhaps most of all, need to start thinking about how they will boost the level of recycling they achieve, and whether the days of a pure “pay by volume” system are numbered.
Whenever there’s a debate over how to boost household recycling rates and encourage waste prevention, it isn’t long before someone mentions pay as you throw (PAYT).
It’s widely thought to be effective – Treviso in Italy has reached an 85% municipal recycling rate on the back of a pay as you throw system. But in the UK it is controversial, and for most types of household waste, probably unlawful. That said, no-one has yet tested whether a ‘save as you throw’ scheme would fall foul of the Environmental Protection Act and the Controlled Waste Regulations that together appear to prevent councils from charging.
Guernsey adopting a PAYT scheme for residual waste brings the idea closer to home. If it works well on the island, it may be back on the agenda for the UK in the future; but it’s easy to predict the outcry it would cause.
However, in the world of commercial waste, charging is uncontroversial. Businesses are expected to meet the costs of having their waste collected and disposed of, whether that’s by the council or by a private company. Yet despite the widespread belief that PAYT would drive up household recycling, very few commercial waste collectors apply it fully to the businesses whose waste they collect.
In fact, despite the increase in the share of commercial waste collection costs that relate to disposal, the charging practices of many waste collectors have barely moved on since before the Landfill Tax was introduced. Waste is still for the most part charged for by volume, even though one of the big cost drivers for dealing with residual waste is its weight.
If you’re charging the same price for a heavy residual waste bin containing lots of food as for a light one, you’re making one customer subsidise the other. Another collector could very well come along and profitably offer the customer with a light bin a better price…
If you’re charging the same price for a heavy residual waste bin containing lots of food as for a light one, you’re making one customer subsidise the other. Another collector could very well come along and profitably offer the customer with a light bin a better price. Meanwhile, the subsidised customer has no incentive to lighten their bin – for example, by obtaining a residual waste collection. So why does the “pay by volume” model persist?
A significant reason, I think, is inertia. It is what clients and collectors are used to, and because it is what everyone does, it makes it relatively easy to compare the market. If one company gives you a weight-based price and the others all offer a simple ‘per lift’ price, how do you compare the prices? You might be inclined to disregard the ‘odd man out’.
Clients also like the apparent predictability of ‘pay by volume’. Even those who would benefit from weight-based charging may dislike the idea of not knowing exactly what they’ll be paying each month.
For collectors, there is the additional cost of equipping vehicles with bin weighing equipment is a consideration. It’s expenditure that might not seem worthwhile unless they were prepared to move a lot of customers over to paying by weight. It would also make billing more complex, perhaps requiring a system like direct debits.
And of course, few commercial waste collectors have any particular reason to boost recycling. There’s no great financial incentive for the collector, and amongst local authorities only Welsh local authorities currently have binding recycling targets that extend to the commercial waste they collect.
Assuming that the UK adopts the new [EU] targets – as seems likely, given the Brexit timeline – that’s likely to mean introducing some sort of monitoring system for commercial waste, and the need for measures to encourage recycling.
So, is there any reason to think things might change? Some waste collectors have moved some way in the direction of weight-based charging, imposing maximum weights for standard price residual waste bins, and surcharge customers that exceed the limits. That can be done even without widespread use of bin weighing equipment: some heavy bins are easy to spot (they’re the ones full of food waste!), and even a single truck equipped with weighing equipment is enough to allow borderline cases to be checked. This system can provide an incentive for customers to take up additional services to lighten their residual waste bin.
Unless something overcomes the inertia in the market, major change seems unlikely. However, disruptive change could be on its way. The EU circular economy package extends waste recycling targets to all household-like commercial and industrial waste, whether or not it is collected by local authorities. Assuming that the UK adopts the new targets – as seems likely, given the Brexit timeline – that’s likely to mean introducing some sort of monitoring system for commercial waste, and the need for measures to encourage recycling.
Such measures could take the form of a law requiring businesses to source separate certain wastes for recycling – the sort of thing contemplated under Part 4 of the Environment (Wales) Act. However, England has tended to prefer market solutions over regulatory ones, and it is hard to see how any market measure can succeed while ‘pay by volume’ continues.
Change seems to be in the wind, and all collectors of trade waste, and local authorities perhaps most of all, need to start thinking about how they will boost the level of recycling they achieve, and whether the days of a pure “pay by volume” system are numbered.
