Producer Responsibility Obligations (Packaging Waste) (Amendment) Regulations 2010

My Lords, I apologise for not being here for the Minister’s speech, except for his excellent final paragraph, but I was caught in the Chamber, having intervened on what turned out to be a rather controversial occasion. Politeness meant that I had to remain there until it had finished. I should also declare an interest—two interests, really. I was the Minister who invented these regulations and drew up the environmental regulations that were accepted by the European Union. This is unusual, because these regulations were created by Britain and France together to avoid the interference in trade that had otherwise occurred. Therefore, the regulations are permissive in the means by which we meet the ends. It is a very British concept. I also declare an interest as chairman of Valpak, which is the largest of the organisations that help businesses to meet the obligations under the regulations. It is a not-for-profit organisation set up by British industry and covers about 65 per cent of those who have to meet the regulations. I declare an interest, but perhaps I also declare knowing something about how these things work, which is not easy because they are somewhat complicated. I have to say that there is a real and fundamental disagreement with the way in which the Government have decided to proceed. Britain has managed to become not the worst operator of recycling—as the noble Baroness knows, we have not been very good in our recycling record—by having the most permissive system that you could possibly have. It is very competitive and we have managed to do this probably more cheaply than any other country in Europe. Last year, it cost British business roughly £180 million to meet the obligations. It is likely to have cost German business about £1.8 billion. That is the difference in the efficacy of our systems; this is not a heavy burden on our businesses. Indeed, we actually have a positive advantage, because we run the system so effectively. I have to say that that is because we went in for a good capitalist system—it is competitive. Anyone who provides services has to compete with everyone else; if you do not provide or buy the evidence of recycling at the lowest possible cost, they do not come to you, they go to someone else. There is a real reason for this. The other reason why it has worked is that every year the targets have been lifted, not hugely but enough to keep the whole thing moving. Those who provide recycling facilities know that if they invest in them on the basis of this year’s demand, by the next year there will be sufficient increase for that investment to have been worth while. On the one occasion on which the previous Government did not act in this way, it had a very serious effect. Recycling facilities were laid up and the programme for the creation of such facilities was interrupted. It took us at least a couple of years to get back into the system. History shows that when you do this, it has a real effect. I ask my noble friend why he has decided to do this when almost the whole of British industry is perfectly happy to have gently rising targets. It has accepted that it is a sensible system. The noble Baroness mentioned SMEs. One problem with the system is that it has a very high de minimis level. Because of this, SMEs are to a large extent excluded. They do not normally put enough on the market to bring them into the system. That means that when you talk about meeting a percentage target, it is the percentage of a sum that is affected by the de minimis numbers being excluded. We could even have a situation in which we technically recycled more than 100 per cent of the total amount because we exclude so much at the bottom. This system is designed to help the poorest, those least able to pay and those with the least opportunity to have a proper system that enables them to manage the bureaucracy. However, I say to my noble friend that I have canvassed opinion widely. The industry, large and medium-sized players alike, very much welcomes the fact that the previous Government went into a system in which they advertised the increase in targets well in advance. People knew that they were coming and very much welcomed that fact. Therefore, when one has fundamentally flat targets, the effect on the system is serious. It is already serious. One has only to look at the effect on glass prices at this moment. They have been very much affected by this knowledge, which has been around for a long time; people have known what the Government had in mind. I put this to my noble friend; if we have two years of flat targets, there will be a considerable diminution in the amount of money that goes to local authorities. If the targets are low and people do not pay a proper price for recycling, the return to a local authority for collecting, say, bottles diminishes. It may be excluded altogether. A large number of local authorities may find it difficult in these straitened circumstances to continue with their services, which would be a great pity. I know my noble friend thinks that my warnings are not correct. However, we are both Conservatives. Conservatives normally go for their advice to those who actually do the job. There is a universal view among those who do the job that a gentle increase is the way to achieve this end. I would not have troubled your Lordships on this occasion. Indeed, it is my first attempt to speak in Grand Committee, which is daunting because of the small numbers that are present; it is a curious way of speaking. Perhaps this is an occasion on which declaring an interest is valuable. It shows one’s technical understanding of what is going on. I know that this is not a sensible system because we cannot change the regulations. However, I would like an absolute assurance that, if I am right, my noble friend will not wait for reports from waste committees and so on, but will return to this Committee next year with a change, which is perfectly possible under these regulations, to ensure that local authorities can go on doing their job and that British industry is listened to. That is what it wants. It would be improper of me to quote them, but hardly a household name agrees with the regulations. Most are overwhelmingly in favour of a gentle increase. Finally, I hope the Minister will set his face against those who somehow think that it is an imposition on British industry to do better in environmental matters than the rest of Europe. One of the things we are up against is that the European Union, of which I am a passionate supporter, is slow in putting all this right, so we are in position in which we can do this. It is a pity that we have not set an example and that we have not moved as we should have. I hope my noble friend will give a commitment to try this. If he is right, I shall be happy to come back on a suitable occasion and say, ““Mea culpa. I was wrong; the expert was faulty and the onlooker saw more of the game””. I would be as humble as he would wish me to be. In return, if it turns out that there is a serious diminution in the provision for recycling, and if there is a clear sign that local authorities are finding things more difficult than before, I hope he will give a commitment to come back to the House and lay a new order.