by Dominic Hogg7 minute read
There’s a hackneyed phrase that people often come out with when they are looking for improved data: ‘you can’t manage what you can’t measure’. Waste management strikes me as the perfect counter example: for anything other than waste collected by local authorities, the quality of the UK’s waste data is generally of terrible quality. Does that really mean we don’t know a thing about how waste should be managed?
Clearly not: we can, and do, manage waste. If we had waited to measure everything before we started to manage waste more actively, there still wouldn’t be much other than disposal happening with some waste streams today. However, this isn’t to say that data isn’t useful. If we knew more, and had better information, then we’d be in better shape to invest in the management of waste and to prevent it being generated in the first place. Unfortunately, the data does remain pretty poor. And it’s misleading, which becomes increasingly problematic as you try to make finer-grained policy decisions off the back of it.
In 2011 I had the dubious pleasure of trying to update the ‘activity data’ in the model the UK uses to report its landfill methane emissions to the UN Framework Convention on Climate Change. The landfill tonnage figures were obviously out of date at the time; so, I set about correcting them.
One of the biggest headaches was trying to make sense of the difference between the two sets of data being used: one from the Environment Agency’s site returns and the other from HMRC, based on landfill tax returns. The two seemed to be telling such different stories that I wondered whether anyone had previously attempted to reconcile them.
This was of more than academic interest, since although there was probably better knowledge about the wastes being reported by HMRC, from the perspective of landfill emissions, if the site Environment Agency return data included information on wastes capable of generating methane then they should have be included in the model.
I recall interrogating staff from the Environment Agency, SEPA and HMRC over how I could get to the bottom of the difference in the reported figures – how was it that so much more waste was being reported as landfilled under the site returns data than by HMRC? I recall being given a number of reasons, two of them being:
- that some landfill sites are not registered with HMRC – i.e. those which only accept wastes not attracting tax; and
- that the site returns data often included waste reported at a site which might not only include a landfill but also other facilities besides – i.e. some waste reported as received by the site would not actually be landfilled.
So it was with interest that I read in MRW about the Environment Agency data indicating that 43.9 million tonnes of waste was landfilled in England in 2015. MRW also reported that the pace at which landfilling was deceasing was slowing, and indeed had reversed in the most recent year. In fact, according to the Agency, the amount of waste landfilled had barely changed since 2009.
Surely this couldn’t be right?
I was immediately rummaging for the comparable HMRC figures based on landfill tax receipts. There was a palpable feeling of déjà vu when I looked at the figures, which indicated that since 2009, including waste exempt from tax, waste landfilled in the whole of the UK had fallen from 43 million tonnes to 31 million tonnes.
Until 2012, the Environment Agency figures track the HMRC data reasonably but over the last few years, they have parted company. Now the Environment Agency reports 13 million tonnes or so more waste being landfilled than does HMRC. Who would claim to know what had happened to the all of this waste, which HMRC simply has no record of?
Was HMRC treating landfillers, when it comes to tax, just like it treats multinationals? Or is there some obvious, clear explanation as to how and why the Environment Agency reports this waste as landfilled but HMRC chooses to ignore it?
Into this debate steps HMRC with its analysis of the landfill tax gap, helpfully reported by CIWM. HMRC seeks to understand the gap between the revenue which should be collected from the tax and the amount actually collected. This is around 12% of the total revenue take, or £0.15 billion in 2014/15, which is three times the level of the gap estimated in 2009/10. This does not account for waste being disposed at illegal sites (neither for the matter does the Environment Agency data), and so the main contributing factors are undeclared waste and wastes mis-described in respect of the appropriate rate of tax that should be applied. Of these two, only the former would have an effect on reported quantities of waste landfilled. Suffice to say, this does little to close the gap between HMRC and Environment Agency figures on waste landfilled.
What does this tell us? For one, it indicates that as the tax differential between standard and lower rates has increased, the incentive to mis-describe waste is likely to have grown, widening the tax gap. Second, the lack of meaningful attempts to reconcile such apparently divergent data tells us that there’s not much interest in obtaining quality data for the waste management sector – which everyone knew. Third, the size of the tax gap – at £150 million – is now sufficiently large that there could be plausible financial justifications for measures that may lead to a closing of the gap. This would be especially true if the measures also had some influence on the extent of illegal behaviour, recognising that this implies a further loss in tax revenue not accounted for in the tax gap analysis.
Getting on track
The irony here is that one such measure might be the implementation of a high quality, mandatory waste tracking system to be implemented across the UK, linked to electronic reporting of waste data. There are extremely good reasons to believe this would pay for itself, and looking at the HMRC figures, and based on what we know about illegal activity, the pay-back period would be very rapid indeed.
Such a system could help HMRC narrow the gap between what should be collected as tax and what actually is. Additional tax revenue might be generated from a reduction in illegal activity, and bringing waste into legal management routes would increase the value added generated by the sector for the UK economy. The key thing missing is a system for generating and reporting quality data, and for processing this quickly.
The utterly bizarre thing about the HMRC and Environment Agency data is that they can be interpreted as telling us completely different things: the former has landfilled quantities still falling (and quite rapidly), while the latter says that landfilling is not falling at all. Not to see a reduction in landfilling would be surprising, given the rise in landfill tax, continued increases in recycling over the period (notwithstanding the slowdown in England), the addition of millions of tonnes of incineration capacity, the export of waste as RDF to the continent, and other things besides.
I know which situation I think is more likely, regarding the wastes of interest to HMRC, but it really is incumbent on Defra to reconcile these datasets, or at least to highlight that they can’t be reconciled and explain why.
A version of this article first appeared in MRW.