I’ve always viewed the phrase ‘you can’t manage what you can’t measure’ with a degree of disdain in relation to the waste sector. For anything other than material collected by local authorities, waste data in most of the UK is of terrible quality. Does that really mean we don’t know a thing about how it should be managed?
This is not to say the data is not useful and might not enable better management. Common sense can get you a fair distance even if you are not in possession of all the data. But the data does remain poor – and it’s misleading.
I had the dubious pleasure, in 2011, of trying to update the ‘activity data’ in the model used by the UK to report its landfill methane emissions to the UN Framework Convention on Climate Change. The data on the quantity of waste being sent to landfill was obviously out of date at the time, so I set about correcting it.
One of my biggest headaches was trying to make sense of the different sets of data that were reporting on waste landfilled: one set coming from the Environment Agency’s (EA) site returns and the other coming from Her Majesty’s Revenue & Customs (HMRC) based on landfill tax returns (see tables). The two seemed to be telling such different stories that I wondered whether anyone had attempted to reconcile the two datasets. This was of more than academic interest.
Although there was probably better knowledge about the wastes being reported by HMRC from the perspective of landfill emissions, if the EA’s site return data included information on wastes being landfilled that were capable of generating methane, then they should be included in the model.
I recall interrogating staff from the EA, its Scottish counterpart and HMRC to find out how I could get to the bottom of the difference in the reported figures. Why was there was so much more waste was being reported as landfilled under the site returns data than by HMRC?
I was given a number of reasons, two of them being that not all landfill sites are registered with HMRC (those which accept only wastes not attracting tax) and that site returns data often included waste reported at a site which might include facilities other than landfill – so that some waste reported as being received would not actually be landfilled.
So it was with interest that I read in MRW of EA data indicating that 43.9 million tonnes of waste were landfilled in England in 2015. MRW also reported that the pace at which landfill was falling was slowing and, indeed, had reversed in the most recent year. This meant that, according to the EA, the amount of waste landfilled had barely changed since 2009. Surely this couldn’t be right?
I started rummaging for the HMRC figures based on landfill tax receipts. There was a palpable feeling of deja vu when I looked at the figures. They 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.
Who was going to claim to know what had happened to the 13 million tonnes or so of waste which the EA was reporting as being landfilled but which HMRC simply had no record of? Was HMRC treating landfillers like it treats multinationals when it comes to tax? Or is there some explanation as to why the EA reports this waste as landfilled but HMRC can choose to ignore it?
Into this debate steps HMRC with its analysis of the landfill tax gap, helpfully reported by the Chartered Institution of Wastes Management. HMRC seeks to understand the gap between the revenue which should be collected from the tax and the amount actually collected: for landfill tax, this is around 12% of the total revenue take (£150m in 2014-15), three times the level of the gap estimated in 2009-10.
This does not account for waste being disposed of at illegal sites, and so the main contributing factors are undeclared waste and wastes that are 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 EA figures on waste landfilled. Neither the agency data nor the HMRC data includes consideration of waste deposited illegally.
What does this tell us? For one, it says that, as the tax differential between standard and lower rates has increased, the incentive to mis-describe waste is likely to have increased, widening the tax gap. Second, the lack of meaningful attempts to reconcile such apparently divergent data tells us that there is not much interest in obtaining quality data for the waste management sector – which everyone knew.
Third, the size of the tax gap, at £150m, is now sufficiently large to imagine that new measures could be justified by the extent to which they reduce the gap. This would be especially true if the measures also had some influence on illegal behaviour, recognising that this implies a further loss in tax revenue not accounted for in the tax gap analysis.
The irony is that one such measure might be the implementation of a high-quality, mandatory waste tracking system across the UK, linked to electronic reporting of waste data.
So next time someone tells you that you can’t manage what you can’t measure, they are actually wrong: you can manage what isn’t measured but you probably can’t manage it as well as you would like.
The same applies with waste – and just as well since, if we had waited to measure everything, there would not be much other than disposal happening with some waste streams today. If we had better information, we would be in better shape to invest in the management of waste and to prevent it being generated in the first place.
And as regards HMRC, the gap between what should be collected as tax and what is not would be narrowed. Furthermore, additional tax revenue would be generated from a reduction in illegal activity or the movement of 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 it quickly. 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 payback period would be very rapid indeed.
The utterly bizarre thing about the HMRC and EA data is that they can be interpreted as telling us completely different things.
The HMRC data indicates landfilled quantities are still falling (and quite rapidly), while the EA says that landfilling is not falling at all despite the rise in landfill tax, continued increases in recycling over the period, the addition of millions of tonnes of incineration capacity the export of waste as refuse-derived fuel 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 to highlight that, if they can’t be reconciled, the reasons for that.
Dominic Hogg is the founder and chairman of Eunomia