Opening the door

Environment minister Elliot Morley sets out the government's desire to see more private sector investment in waste

There are challenges ahead in waste management, but these can open the door to a £10bn investment opportunity for the private sector. While considerable progress had been made, greater investment will be required in order to meet our international obligations through the EU Landfill Directive.

The role of the private sector is an increasingly important one, which through the Private Finance Initiative can work with local authorities to provide more effective and efficient waste solutions. To meet EU targets, a mix of alternatives is needed to provide extensive new recycling infrastructure and technologies to tackle waste in place of landfill. Greater investment will be required in these kinds of services – up to £600-700m per year over the next ten years.

The government is working hard to send clear signals about the need for change and extra resources have been provided to support a more sustainable strategy. DEFRA’s Spending Review 2004 provided further resources to help local authorities to invest in value-for-money waste disposal facilities. An additional £275 million in PFI credits will be available over the Spending Review period, over and above the £355 million available in the previous review round.

Growing demand for PFI

There is clear evidence of a growing demand for PFI from local authorities, with nine waste projects already signed, and a further eight in procurement. DEFRA is aware of the barriers that prevent private sector investors from getting involved in waste management projects, but has confidence in current policies for local authorities to press ahead with planning applications for new waste management facilities in line with the new emphasis on minimisation, re-use and recycling.

In addition to providing funding, government has established the Waste Implementation Programme. WIP is devoting over £150m from 2003 to 2006 to strategic measures helping authorities to divert waste from landfill. When WIP discuss PFI and waste procurement with local authorities and industry, there is quite a lot of common ground in terms of the major issues we need to focus on. One of the first questions people ask is: “What are you doing to boost local authority procurement skills?”

WIP’s Local Authority Support Unit has been working closely with local authorities to identify procurement support needs. One of our first projects was an analysis of where local authorities sit in the procurement lifecycle, building up a picture of existing support available to local authorities and an analysis of specific procurement support needs. In addition, a new Waste Management Procurement Pack has been developed by the Public Private Partnerships Programme to provide specific assistance to local authorities in England with the procurement of waste management projects through the PFI.

Improving planning processes

New energy-from-waste plants, material recycling facilities, anaerobic digesters and composting facilities will have to be built. So, the next question we invariably get asked is: “What are you doing to improve the planning process for waste management facilities?”

I have written to all council leaders to bring government research into the health impacts of different kinds of waste management facility to their attention – and to highlight its key conclusion: that the weight of evidence from the studies so far indicates that present day practice for managing municipal solid waste in this country has at most a minor effect on human health particularly when compared to everyday activities.

DEFRA and ODPM have also been working closely together on two additional pieces of work, the revision of Planning Policy Guidance 10 and the development of guidance on Municipal Waste Management Strategies, which are currently under consultation. The aim is to deliver a more integrated and effective framework in England for securing the large-scale expansion in new waste management facilities.

The next key issue on people’s minds is: “What support are you giving to industry, and how do you encourage more investment in the waste market?” The UK needs to develop more sustainable options for disposing of waste without excessive cost. Various practical problems such as insufficient data and research on waste streams and the lack of sustainable markets for the output of waste treatment facilities have been identified as discouraging investment by a number of industry stakeholders. There are concerns, too, that more technologically innovative approaches need to have an established track record of operating commercially at an appropriate scale.

Communicating to the market

To generate greater confidence in the sector, DEFRA is working hard to communicate to the market the considerable programme of work being done to address these concerns. This includes the recent launch of a major public consultation exercise to canvass views on a national three-year waste data strategy.

WIP is also taking forward work to promote the development of new and viable waste management technologies as an alternative to landfill. This includes £30 million worth of funding to help establish new commercially viable waste treatment technologies. We want to reduce the perceived risk of implementing new approaches and provide accurate data on technical and economic performance. Choosing the right technology is important in today’s waste world and we want to give local authorities and their suppliers the best possible information on which to base their decisions. Increasingly, we need to see these new technologies being selected as key to waste PFI projects.

WRAP is focused on creating stable markets for recycled materials and products. WRAP’s work aims to build the capacity and desire of industry in the UK to use recycled materials, and enhance the ability of the recycling sector to generate the quality and quantity of material required.

How does the private sector get involved?

The UK wants a different approach to waste, capable of delivering economic and environmental dividends. We need to continue providing new facilities, new skills, new investment and new attitudes. These represent immense challenges to local authorities, to industry and to the public at large. And they can only be achieved by real partnership between central and local government and the private sector. DEFRA sees PFI as one of the best ways to support value-for-money investment in waste services. The current healthy throughput of PFI projects to procurement suggests that many local authorities agree.

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