February 21st, 2014

Incentives and sensibility

7 minute read

by James Fulford and  Clare Pitts-Tucker


This week Eunomia, working in partnership with Serco, launched a new report investigating the impact of recycling incentive schemes. While giving some thought to Pay As You Throw (PAYT) and Deposit Refund Schemes (DRS) – types of incentive scheme widely used elsewhere in the world – we focussed on the benefits of offering incentives, or ‘rewards’, to residents for kerbside recycling.

Coalition ministers have been keen to highlight recycling incentives as an example of the difference between their approach to waste and that of the last government, portrayed as authoritarian and harsh. They weren’t without intellectual underpinnings, either. Thaler and Sunstein’s work on ‘choice architecture’, summarised in their book Nudge, had such an influence on the government that they set up a new Behavioural Insights Team to find ways to help, rather than force, people to make better choices.

Confident of the case for recycling incentives, the government put their money where their mouths were and offered £2m to fund councils (and other organisations) to pilot a variety of scheme designs to test what works. Brook Lyndhurst is reviewing the evidence generated by the pilots, whilst the parallel Eunomia/Serco research considered schemes which haven’t benefited from Defra funding. The intention of both projects has been to understand whether the various incentive schemes work, whether they’re cost-justified and what approach works best.


A nudge too far

Both the Eunomia report and Brook Lyndhurst’s interim report (the final one is due in autumn 2015) found that incentive schemes currently running in the UK appear to have at best a marginal impact on recycling and residual waste. Disappointing though this may be to government enthusiasts, for many in the industry it isn’t a huge surprise. Good promotional and information campaigns are critical to the success of a recycling service, and recycling incentive schemes represent one type of campaign – but nothing more. It’s far more important to get the service right in the first place.

You can read about the detailed findings in the reports, so perhaps there is a more interesting issue to explore here. How have ministers been ‘nudged’ into a preference for this one type of incentive scheme?

Initially, reward schemes were discussed alongside ideas such as charging householders for the waste they produce or penalising non-compliance with recycling rules. In the early 2000s, both approaches received promotion and support through the Greater London Authority, the Cabinet Office Strategy Unit, and Defra. By 2007 the debate had moved on and the sector – industry, local government and central government – was increasingly coming to the view that PAYT offered the best prospect of cost-effectively incentivising residents to reduce their set-out of residual waste and increase recycling. According to Defra’s Waste Strategy for England 2007 the government intended “to legislate to remove the ban on local authorities introducing […] financial incentives for waste prevention and recycling.”

The Climate Change Act 2008 duly made amendments to the Environmental Protection Act 1990, allowing for pilot schemes to be set-up in five areas.However, by this time the policy debate had picked up a public profile and its tenor radically changed. In a hailstorm of hostile coverage, and with the recession starting to hit household incomes, moves to explore new charges were shelved.


Binning the evidence

During 2007 and 2008 the then shadow local government minister Eric Pickles made first one, then a series of statements criticising local waste collection services and policies. His targets were ‘unfair bin fines’, reductions in the frequency of refuse collection and the possibility of new ‘bin taxes’. As each statement got favourable coverage from the Daily Mail, the Daily Telegraph or both, a destructive symbiotic relationship developed. Pickles’ profile rose each time he returned to the well, and the unthinking journos filled their pages with copy that chimed with preconceptions about loony local authorities. Received opinion seemed to crystallise around the perception that bin charges were bad, and the opportunity for intelligent debate receded.



Recycling incentives are rarely this well received. Photo by Clay Junell via Wikimedia Commons


However, the problem of how to increase public participation in recycling didn’t go away. In 2008 the New Local Government Network (NLGN), a think-tank with strong connections to New Labour, published a report Time to Waste. which contained various interesting ideas. However, in a press release launching the report, NLGN Director Chris Leslie (who was also the campaign manager of Gordon Brown’s successful bid to become Labour leader), put his own spin on the work: households should be given positive incentives to recycle rather than being “persecuted by individual fines”. In a classic example of what used to be called policy ‘triangulation’, New Labour sought to block a Conservative outflanking manoeuvre based on misguided and misinformed populism… by adopting the same line.

It may have been good tactics, but it wasn’t good waste policy. In barely the space of a year, a balanced and evidence-based policy debate regarding the benefits of charging for residual waste gave way to the option being roundly criticised in populist terms and without reference to the evidence by politicians of both major parties.

Without national political support and under threat of fervid criticism from the national press, no local authority applied to set-up a pilot charging scheme under the Climate Change Act. Yet only a year earlier, and without attracting much criticism, the LGA had been calling for councils to have this right.

Once Pickles took the helm at DCLG, the department sponsored The Localism Act 2011 which revoked the relevant clauses of the Climate Change Act. With them went the opportunity for councils to even consider introducing wholesale charge-based incentives. Instead, the government launched Defra’s Reward and Recognition Fund to pilot the reward schemes and assess their impact on public participation in recycling services and waste and recycling arisings.


Deposit account

That brings our account up to date. The initial evidence from the pilots is now in, and the horse the government backed, reward-based incentives, has turned out to be a bit of a nag. Along the way, the bet the form book might have favoured, charging-based incentives, has been rendered a political long shot.

Throughout this debate around incentives, DRS were receiving precious little attention. As a result, they retain a relatively neutral political status: perhaps too many people retain rose-tinted childhood memories of deposits on pop bottles for it to be perceived as negatively as a “bin tax”. Having been mentioned in the influential Cabinet Office report Waste Not, Want Not as an alternative incentive to encourage reuse, DRS were the subject of a little further research. However, the political view as stated in the Defra Packaging Strategy of 2009 had moved on very little: a nice idea, worth reviewing, but with some important practical obstacles.

The idea hasn’t gone away, though. In 2011 Eunomia produced research for the Campaign for Protection of Rural England (CPRE) on the costs and benefits of DRS. Whilst this has not led to any direct action in England, the Scottish Government has recently (February 2013) launched several trial schemes to test how container deposits and reverse vending systems may work in Scotland. Perhaps as English ministers review the reward pilot findings, the idea of deposit refunds will appear more attractive to them, too.

If incentives are to be implemented in spite of the less than promising findings, then it must be for the right reasons. Having undertaken research in this area over the last decade, we believe they can be used to positive effect in engaging residents and promoting recycling activities. But they are no more than that – a promotional tool to employ alongside other waste policies and measures proven to be effective. Incentives should not be considered as the solution.

The Eunomia/Serco research provides a valuable update on the status and impact of recycling incentives in the UK, but it also implies that it is time that the debate moved on if we’re to ascend from the recent plateau in English household recycling rates. We’ve explored the ‘carrot’ thoroughly and found it wanting; now the ‘stick’ merits another look, given the demonstrable impact of charge-based incentives. Aligning costs with desired behaviours is the most straightforward “nudge” of all. So instead of simply waiting for a better political environment, or for politicians willing to face down damning Daily Mail headlines, the waste sector needs to start talking again about the benefits of PAYT.

Some authorities are already finding ways to introduce elements of PAYT without stirring up a political a storm, and we have ideas for a number of other approaches that could be implemented even in the absence of strong central political leadership. It’s still just possible that PAYT could be rehabilitated… but that will be a topic for a future article.

There’s your incentive to come back to Isonomia next week.


James Fulford and  Clare Pitts-Tucker


James Fulford Director Clare Pitts-Tucker Junior Consultant

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Graham Simmonds
Graham Simmonds

I am not sure I agree with James Fulford from Eunomia’s assertion “We’ve explored the ‘carrot’ thoroughly and found it wanting”. My company Local Green Points runs recycling and waste reduction incentive schemes for councils and we shared data with Eunomia from our London Green Points – Bexley scheme for their research. Eunomia got data from 5 schemes for their research, and of these, 2 schemes showed strong improvements with recycling rates up and waste tonnages sent for disposal down; ours/Bexley’s is one of the 2 strongly performing schemes. The Eunomia data shows the other 3 schemes not performing so… Read more »

James Fulford
James Fulford

In response to the comment by Graham Simmonds, yes the data from Bexley showed a good improvement in the recycling rate. However, this data refers to only one part of Bexley, and the improvements seen do not apply to the whole authority. The London Green Points incentive scheme in Bexley was implemented in high rise properties and shows that the approaches taken have worked – but we cannot assume that this approach would have the same effect across the rest of the authority. Or that the effect would last over time. Neither can it be shown for certain whether it… Read more »