Business

Waste crime costs the UK £800m a year

 

The illegal disposal and management of waste materials costs the UK economy up to £808 a year, a new report has found.

Waste Crime: Tackling Britain’s Dirty Secret’, undertaken by environmental consultancy Eunomia, was commissioned by research charity the Environmental Services Association Education Trust (ESAET) to evaluate waste crime’s ‘impacts on business, local communities, public finance and the environment’, and ‘call on government to take action’ against the ‘culture of criminality’ in the waste sector.

It is thought that this is the first time that the total cost of waste crime has been calculated. 

The report has been released ahead of Environment Agency (EA) budget cuts, which could result in up to 15 per cent of staff (potentially including those responsible for waste crime enforcement in England) being made redundant. It is in concern that these cuts could ‘mean a squeeze on enforcement’ that ESAET is outlining the ‘business case for enforcement activity’.

Indeed, it highlights that ‘the work carried out (by the EA) to date risks being undermined through cuts to the resources available to detect and stop waste crime’, stating that between 2011/12 and 2012/13 the EA core spending on waste crime was down from £17.4 million to £16.9 million.

Cost of waste crime

According to Eunomia, cracking down on the illegal management of waste resources would ‘quickly pay for itself many times over’, through increased tax income (such as Landfill Tax receipts), reduced clean-up costs (from flytipped waste), and a ‘thriving legitimate waste sector’ (which could invest in relevant waste infrastructure).

It was found that for every £1 spent on enforcement, at least £3.20 goes back to government coffers, with a further £2.40 ‘benefitting waste sector businesses and wider society’. 

In total, Eunomia found that illegal waste sites cost the UK economy ‘up to’ £808 million. However, Eunomia suggests that the best estimate is that illegal waste sites cost around £224 million a year; tax evasion by waste operators (who deliberately misclassify waste to avoid higher rates of landfill tax) £157 million a year; and the clean-up costs of fly-tipping around £187 per year.

The report reads: ‘Waste crime in the UK is widespread and endemic. It takes many different forms: at one end, a builder saving a few pounds by fly-tipping rubble in a local field; at the other, illegal waste sites processing thousands of tonnes of waste, and seemingly legitimate operators misclassifying waste in order to evade a tax bill that could total many millions of pounds.

‘Government has rightly implemented policy measures to support recycling and promote a resource economy, but these have raised the cost of legitimate waste disposal. Evading these costs allows criminals to profit; but while they gain, everyone else loses.’

It highlights that waste crime also affects the environment, with valuable material not being recovered, and some waste being illegally exported for ‘cheap, unregulated reprocessing’, which can harm both the environment and human health. However, it concludes that waste crime is largely motivated by economic reasons, as it ‘offers high rewards and relatively low risk of substantial penalty’.

Culture of criminality

Whilst researching the report, Eunomia also found several industry figures expressing concerns about the growth of a ‘culture of criminality’ appearing in the waste sector as ‘there appears to be a risk of…legal compliance increasingly becoming treated as optional’.

Indeed, it was found that the waste industry is seen as ‘an easy target’ for organised criminal gangs owing to the potential for ‘huge profits’ (by avoiding paying for legitimate waste disposal) and the ‘inadequate deterrent provided by ineffective regulation and lenient sentencing’. 

As such, Eunomia and ESAET welcomed the Sentencing Council’s newly-released guidance for judges, which encourages courts to impose harsher sentences on those found guilty of committing waste crim

Recommendations to government

To tackle waste crime, Eunomia outlined four recommendations to government:

‘Support proper enforcement of the law’

  • increase   and   protect   enforcement budgets to provide a minimum of: £25 million for the Environment Agency; and £10 million for HMRC and ‘other relevant departments and agencies’;
  • require the Environment Agency to report on how long it takes to investigate and resolve cases to promote speedier resolution; and
  • help industry and the public to play their part by enabling them to identify and report suspicious waste activity more easily.

‘Stop businesses becoming victims of crime or facilitating crime’

  • help landlords of waste sites to avoid becoming victims of crime by providing information and a template contract to protect against potential risks;
  • educate business advisers (e.g. Business Link staff) about the risks of waste crime; and
  • review and overhaul the Duty of Care requirements for producers of waste, ensuring that the system is credible and enforceable.

‘Get the rules right’

  • tackle tax evasion by introducing a testing system to check waste is correctly classified and charged at the right rate of tax; and
  • mandate that waste operators should make provision for the legal disposal of waste they receive in case of business failure, or of clean-up in case of fire.

‘Make the punishment fit the crime’

  • help courts set fines for waste crime that reflect its costs; and
  • Support the implementation of the Sentencing Council’s new (stricter) guidance for judges passing sentence on waste crime.

The report concludes: ‘The resources required for proper enforcement are small in comparison with the benefits, and the case for investment is strong. The budget for waste crime enforcement — which includes efforts by HMRC to collect the correct level of Landfill Tax as well as work by the Environment Agency on illegal waste sites and exports — needs to be protected and increased.

‘By adopting the recommendations of this report, government and industry working together will ensure that a small investment in better enforcement of waste regulations leads to major improvements in environmental and financial outcomes.’

‘Waste crime takes work away from legitimate business’

The author of the report James Fulford, said: “While waste crime can have serious environmental impacts, the motive is economic. It offers high rewards and relatively low risk of substantial penalty. It takes work away from legitimate, permitted waste operators, who therefore lose income. However, the profits come largely at the expense of the taxpayer,”

Barry Dennis, an ESAET Trustee, added: “We need to stop thinking about ‘waste crime’ as somehow being less important than other crimes.

“We recognise the real pressure on government funds. However, our report clearly demonstrates how the cost of enforcement activity to stop waste crime will quickly pay for itself many times over, through increased tax income, reduced clean-up costs and a thriving legitimate waste sector.”

“Seeing waste criminals held to account protects us all from environmental harm and economic disadvantage.  The legitimate waste industry is ready to contribute and looks forward to addressing this issue together with government in a spirit of co-operation.” 

The Chief Executive Officer of waste management company SITA UK and ESA Chairman David Palmer-Jones, welcomed the report, saying: "Waste crime is a man-made sore on the environment and is burning the economy to the tune of £800m a year. However, this situation is preventable with the right funding for enforcement measures.  

“We have witnessed the damage caused by under-funding our defences against natural floods. The flood of waste crime is now rising too, but we can look to recycle a small portion of the landfill tax levied from legitimate residual waste disposal into strengthening waste crime defences and enforcement.

“With a return to the economy on waste crime enforcement of more than £5 for every £1 spent, not to increase the budget is a wasted opportunity." 

ESAET said it will be sending a copy of the report to government and will be ‘seeking discussions with the waste and resource management industry representatives, as well as relevant Government departments’ on the report.

Read ‘Waste Crime: Tackling Britain’s Dirty Secret’.