More resources should be committed to countering waste crime, which new research indicates could be costing the UK economy as much as £808m.
In the report Tackling Britain’s Dirty Secret, which was commissioned by the Environmental Services Association Education Trust, the Eunomia consultancy said significantly increased funding for waste crime enforcement would result in long-term cost savings for the UK.
It calculated that every pound spent on enforcement would yield a return of as much as £5.60.
“Of this £3.20 would be received directly by government in taxes, with the rest benefiting legitimate waste sector businesses and wider society,” the report stated.
Barry Dennis (left) ESA director general, on behalf of the ESAET board of trustees, said: “Perhaps the single most important message of this report is that the business case for enforcement activity to stop waste crime is even stronger.
“It will quickly pay for itself many times over, through increased tax income, reduced clean-up costs and a thriving legitimate waste sector.”
Eunomia has called on ministers to ring-fence a £35m budget to counteract waste crime: £25m for the Environment Agency to expand its enforcement and £10m to HMRC and other agencies to tackle tax evasion.
In contrast, Defra has recently announced substantial cuts to the EA budget. Core spending on waste crime was already in decline, with £16.9m spent in 2012/13, down from £17.4m in 2011/12, according to the EA latest waste crime report.
The report stressed the importance of enforcement: “Whatever the level of penalties for waste crime, they will not act as a deterrent unless offenders believe it is likely that they will be caught and prosecuted. The threat of enforcement risks being undermined by cuts to enforcement budgets.”
There is a growing sense that as the rewards relating to ‘waste crime’ grow, a culture of criminality is taking root in the industry
Barry Dennis, ESAET trustee
However, it also noted that not high enough penalties may contribute to an increase in illegal operations.
Many case studies within the report cited criminals making vast profits from illegal operations and only having to pay back a small proportion of that money once prosecuted by the agencies.
For example, last year, MRW reported that Mark Jones and Simpson Environmental Services were fined a total of £25,000 after allowing 57,000 tonnes of waste to be illegally dumped on rented land.
Dennis said: “There is a growing sense that as the rewards relating to ‘waste crime’ grow, a culture of criminality is taking root in the industry.
Landfill tax evasion
The report stated: “Evidence on tax evasion is very limited, yet in the waste sector it is widely believed to be taking place on a very large scale.”
No prosecutions for landfill tax fraud have taken place for three years, parliament heard last month.
The report claimed that it is easy for operators to apply the lower rating of landfill tax to materials that should incur in the standard rate, or to pass hazardous waste as non-hazardous.
As a result, it recommended the government to adopt a legal testing regime to require businesses to prove that material landfilled at the lower rate actually qualifies.
Discussions on the matter are already underway. Skip hire representatives have started collecting data on trommel fines tests to present evidence to Government officials.
Main waste crimes:
- Fly tipping of waste, particularly of construction and demolition waste;
- The deliberate misclassification of waste, e.g.hazardous waste presented as non-hazardous, or material that should abstract the standard rate of Landfill Tax instead being passed off as inert material qualifying for the lower rate;
- A permitted waste site receiving material or undertaking processing that its permit does not cover;
- Sites operating wholly outside the permitting system, including illegal landfilling;
- Storing waste without a permit
- Exporting waste illegally, e.g. exporting hazardous waste, including Waste Electrical and Electronic Equipment (WEEE) and end of life vehicles (ELVs), to non-OECD countries.
- In January MRW reported that organised crime is an increasing threat to the waste sector after the Independent Mills Report assessing waste crime in Northern Ireland asserted that the problem is widespread across the UK, particularly in England and Scotland.
- 2012/13 saw the EA stop illegal activity at a greater number of sites than in any of the previous three years, yet 820 known sites continued to operate as of the end of the year; 21% more than in 2009/10.