Direct & Variable Charging

What Is It?

The UK must improve its performance on household waste reduction and recycling quickly if it is to meet European targets and to achieve truly sustainable waste management in the future. The need for householders to reduce the quantity of, separate and sort their waste properly, recycle and where possible compost as much as possible has, therefore, never been more important.

For this reason, Government and local authorities are looking at different ways of encouraging behaviour change. One approach currently under discussion is direct and variable charging (DVC) for waste collection which would involve charging householders based on the amount of residual waste they actually produce. This is in direct contrast to the current system whereby householders in the UK pay a fixed annual sum through the Council Tax without a link to the quantity of waste collected.

Direct and variable charging schemes would typically involve charging householders for the amount of residual waste they produce requiring collection and not charging for recyclables.

This could be done based on weight of waste collected or on the number and size of containers used.

The Background

The UK needs to improve its performance on household waste reduction and recycling. Local authorities face very demanding targets originating from EU legislation to divert biodegradable waste from landfill. Failure to achieve targets will incur a fine per tonne over permissible limits

The Government's pre-budget report in 2006 confirmed existing policy to increase the cost of landfill disposal through maintenance of the Landfill Tax Escalator, with the potential to apply revised and potentially more costly measures in the future. So, in addition to the possibility of fines, the growing cost of landfill is increasing the pressure on local authorities to reduce the total amount of wastes arising and increase recycling levels. If they don't succeed in doing this, the growing costs involved will ultimately have to be passed on to the householder.

Voluntary recycling schemes for householders coupled with educational/promotional campaigns have succeeded in changing behaviour and helped to increase household waste recycling in recent years, on average from 6% to 27% between 1998 and 2006. Take-up and consistency levels have varied considerably dependent on socio-economic factors and individual preferences. However in order to reach future targets of 45-50% consistently across all local authorities a further step change in behaviour is essential.

Legislation currently precludes UK local authorities from charging for waste services according to the amount of waste collected from individual households. This is in direct contrast to practices in different parts of Europe and the United States where variable charging is becoming common place.

These countries have embraced the 'polluter pays' principle into waste management systems at the household level. This approach has been much supported and reinforced by recent European policy and legislation. In 2005, the European Commission's Thematic Strategy on the Prevention and Recycling of Waste revised future waste policy direction for the EU with its main goal for Europe to become a recycling society that seeks to avoid the production of waste and to turn any waste generated into a resource.

Government policy has suggested the continued promotion of economic measures, such as landfill taxes and 'pay as you throw' systems to encourage householders to recycle more.

The Issues

DVC is not an option currently open to UK local authorities but policy makers, politicians and representative bodies have increasingly been calling for a change.

Research previously undertaken by CIWM's Environmental Body reached a number of observations and conclusions relating to DVC including:

• Increasing costs of waste disposal have caused a number of countries, including the United States, Belgium, Italy, Denmark and the Netherlands, to introduce DVC schemes.
  
• Where DVC schemes exist, authorities commonly report significant reductions in the amount of residual waste requiring collection.
  
• In addition to improving recycling levels, such schemes have a role to play in overall waste prevention because they make people think more about not producing so much waste in the first place.
  
• For these schemes to work best, they need to operate in conjunction with a quality collection service that maximises opportunities for recycling and green waste collection.
  
• There is no 'right' scheme, for example weight-based versus pay-per-sack.
  
• Flytipping and other forms of criminal activity were identified as possible dis-benefits of this approach and therefore requiring a focus on effective enforcement.
  
• DVC brings greater financial transparency. It also improves data capture in terms of collection statistics and patterns - vital for the effective development of waste management policy in the future.

Greater media and public attention relating to DVC in recent months has reflected concerns and misconceptions about the introduction of such an approach in the UK. This highlights the importance of effective communication when introducing such schemes.

More recent research commissioned by CIWM in January 2007 reiterated many of the conclusions of the earlier study, also highlighting some other important issues relating to DVC:

• Equity issues would need to be taken into account when considering the desirability of introducing schemes and the form that they should take eg low income families, flats and multiple occupancy properties.
  
• The introduction of variable charging might encourage the householder to make greater and more frequent use of Household Waste Recycling Centres (HWRC). Local authorities would therefore have to take this potential increased usage into account when developing the schemes.
  
• Variable charging could be used in conjunction with other allied practices such as alternate weekly collection, incentive schemes such as prize draws and compulsory recycling. However, joint application with compulsory recycling in the UK would be so different from current practices that it would probably be seen as too heavy handed and cause public and political opposition.

In considering stakeholder and public views, the research also highlighted:

• The importance of Government support in assessing, developing and implementing DVC schemes.
  
• Several surveys in which the public had shown themselves to be in favour of non-recyclers and/or high waste producers being fined or paying more for their waste collection.

CIWM Views

CIWM believes that legislation should be changed so that local authorities are able to introduce DVC schemes if they believe this is appropriate in their particular circumstances, but that this should not be a mandatory requirement.

There are a number of issues that local authorities have to consider in deciding whether to introduce DVC and what form the scheme should take.
These include:

• Individual characteristics of local authority areas including collection systems, socio-demographics, geography and housing stock.
  
• Ensuring fairness and that no groups of householders are disadvantaged.
  
• Implications for neighbouring authorities in terms of waste 'migration' via for example HWRC provision.
  
• What DVC options are available and in which situation they are most appropriate?

CIWM therefore recommends that a robust appraisal system and guidance on the selection of a variable charging scheme is provided by central Government to local authorities looking at all these issues. In addition, guidance should be provided on communications and deployment issues.

In order to inform guidance for local authorities, it is recommended that pilots and trials of different DVC schemes are applied in areas with different socio-demographic characteristics, collection systems, geography and housing stock.

Central Government's role in the development of schemes is critical. In addition to providing guidance on option appraisal, planning, financial management and implementation, CIWM believes that Government should:

• Give clear and unequivocal support for DVC in all appropriate fora (including political and media).
• Attempt to obtain cross party support for the issue. This recommendation is made with a strong understanding of local government practice and the potential for this to become a key local election issue.

CIWM also stresses the importance of three other key issues:

• The provision of robust, reliable and comprehensive recycling and composting services to households are an essential pre-requisite for the successful application of DVC schemes.
  
• Effective communications about DVC at both national and local level. When introducing a scheme, local authorities should provide a clear explanation of the requirements of the system and the potential benefits, including potential financial savings, to householders. This requirement extends to the clear itemisation of charges within the revised billing system.
  
• Strong and effective enforcement to ensure the correct use of systems and prevent inappropriate and illegal waste behaviour.

CIWM Position Statements represent the Institution's views at a particular point in time. They remain under constant review, in the light of new experience and research.