UK: A Better Quality Of Life?

As the government takes a further step in the delivery of its environmental agenda, David Kilduff, Head of Public Sector and Private Finance at Walker Morris, considers the difficulties in funding some of the changes that are needed.

It is now a little over a year since the Government published its strategy for improving the quality of life for future and current generations based upon four key elements:

• Effective protection of the environment
• Prudent use of natural resources
• Social progress
• High and stable levels of economic growth and employment

‘A Better Quality of Life: A Strategy for sustainable development for the United Kingdom’, published on 17 May 1999, examined a host of interrelated environmental features from flora and fauna, resources and land management, water, waste, contamination and emissions. It emphasised the Government’s commitment to ensure that policies to promote and protect the environment would be a recurring and key feature of policy development and implementation – thus meeting our international environmental obligations, most notably from the Rio and Kyoto summits.

But policy development has not been matched by actions or the making available of sufficient finance in the public sector to promote solutions that achieve the desired goals. For example, the implementation of the contaminated land provisions of the Environmental Protection Act 1990 is aimed at accelerating the clean up of a range of sites which pose unacceptable risk to human health or the environment. Whilst the cost of remediation will, in the main, be borne by the relevant polluter or landowner, local authorities have not been given adequate additional resources to inspect and police the regime nor to meet the costs of remediation where this cannot be recovered from any other source.

Take also the implementation of the EU Landfill Directive that imposes on a national basis strict limits on the levels of biodegradable household waste that can be landfilled. Also the adoption of challenging targets for the recycling, composting and recovery of municipal and household waste imposed under the National Waste Strategy for England and Wales published at the end of May. By incremental movement in performance standards local authorities will need to recycle or compost at least 25 per cent of household waste by 2005, 30 per cent by 2010 and 33 per cent by 2015. Targets are also specified in the Strategy for recovery. These will be followed in England by the publication of a range of statutory performance standards covering not just recovery, recycling and composting but also cost and public satisfaction.

Local authorities’ performance will be judged by external inspectors appointed to oversee the recently introduced best value regime with sanctions for underachievement - witness the actions taken in other spheres of municipal services such as Education (by OFSTED) to appreciate the scope for such action.

The Strategy identifies a range of possible sources of funding for the major capital investment and additional revenue costs that will be associated with the step change in the policy and practice of local authorities required to meet these standards – but none of these are sufficient and fall well short of the sums required.

• It is likely that the Comprehensive Spending Review in July will make additional monies available for PFI projects which are at the front of the current pipeline of projects awaiting slippage or new money.
• The landfill tax credit scheme is proposed to be relaxed so as to allow funds to be used deliver an increase in the recycling of household waste – with most of the cash going to non-profit and voluntary schemes.
• Revenues from the sale of recovered and recycled products will be potentially stabilised and enhanced through concerted action by Government Departments to purchase recycled products and a Waste and Resources Action Programme dedicated to the development of new markets for such products.

Other potential sources include tapping into EU development funds and contributions from other public sector organisations acting on a joint venture basis. But perhaps the single most significant source will be private sector institutional funding that has been successfully introduced across a range of capital projects under Public Private Partnerships including the PFI.

This is because Government funding (whether through grants to local government or otherwise) will prove woefully inadequate for many authorities, with only a few benefiting from any significant help through the grant of PFI Credits. In such circumstances authorities will have to meet the costs of major capital investment and spiralling landfill tax obligations from their own resources. In turn this means a substantial hike in the Council Tax unless authorities are prepared politically to make significant cut backs in discretionary services. Efficiency savings and effective procurement techniques will help soften the blow as will other elements of the Strategy aimed at waste minimisation and reduction such as best practice and public awareness programmes.

The existence of the regulatory and performance regime described above means that there is no choice on the part of local government. It must develop and then implement a coherent and affordable waste management strategy that delivers the required performance and legislative outcomes through both the procuring of new waste management solutions as well as by revising its purchasing and resource management policies to promote all aspects of sustainability.