November 4th, 2011
by Phillip Ward
Presumably it was a coincidence that on the same day that Defra unveiled the Business Waste Collection Commitment, the taxmen announced an £8m refund to Leeds City Council – having decided that local authority trade waste services should not be subject to VAT. It was certainly not a coincidence that the Commitment appeared alongside a slew of research reports and guidance from WRAP on the mechanics and economics of trade recycling collections which had been waiting for months to see the light of day.
Local authority advantages
Giving local authorities a push to improve customer service and a 20% tax advantage may pose a challenge for another Defra initiative; the Responsibility Deal it has signed with the commercial waste service providers in the Environmental Services Association (ESA). Under the deal Defra has committed to “…ensure a level playing field between private sector and public sector service providers for trade waste and SMEs.”
The VAT advantage only adds to the commercial head start enjoyed by many authorities, who have the opportunity to offer trade clients marginal pricing on the back of their existing domestic or other collection rounds. The planned abolition of the Landfill Allowances Trading Scheme (LATS) from April 2013 may also encourage local authorities to expand their services, as they need no longer be concerned about a trade waste collection service tipping them over their landfill allowance.
Even so, it is not certain that local authorities will have the appetite to press their advantage. Under financial pressures, they are short of management capacity. Not all have existing trade waste services that provide a suitable customer base or domestic services that are configured to be attractive to commercial customers. Many are bound by long term contractual arrangements and will have to wait to address this issue.
Removing SME barriers
One intriguing possibility was identified in research conducted for WRAP by Eunomia into the barriers to SME recycling. Could local authorities, using their commissioning role, or local Chambers of Commerce or Business Improvement Districts undertake a collective procurement for waste and recycling services to meet local SME needs?
Examples of collective trade waste procurement are already emerging, for example in the Southbank and Holborn, and seem to be delivering better services at lower cost. The attraction for waste companies is the promise of larger contracts with improved collection efficiencies. The prospect of meaningful savings could be the spur to address some of the identified barriers to SME engagement with recycling.