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Same mistake gets recycled

market forces

My teenage daughter now has a Saturday job at a major coffee chain. She won’t let me say which one, but it’s named after a character from Moby Dick. I go in occa­sionally, and every time I am astonished by how they freely give away cinnamon and powdered chocolate.

The reason for my incredulity is because, until the past 200 years, these were both enor­mously valuable commodities, yet we now live in an age where big US corporations give them away for free. To put their astonishing largesse into perspective, in Roman times, a pound of cinnamon used to cost about a year’s wages for a labourer.

I was thinking of this sea change in attitudes to spices when I read that the UK recycles only about 45% of its domestic waste and either buries or sets fire to the rest. This percentage has flatlined in recent years and some councils recycle as little as 20% of their waste collection.

A good proportion of the 80% they are burn­ing or burying still has intrinsic value. So we have the perverse situation of cash-strapped councils laying off frontline care workers while daily destroying things they know have value. If the public sector was running a chain of cof­fee shops, they wouldn’t give away cinnamon – they would pay somebody to take it away and bury it in a big hole.

So why does this happen? I think the lan­guage councils use to talk about waste betrays their view of the issue. In the main, they describe it as a public health issue, with ‘waste’ needing to be collected and disposed of. I think this paradigm understandably persists because, at a fundamental level, councils are not in the business of dealing with materials.

Nobody in a council makes anything. They do not usually employ designers or process engineers – they employ teachers and social workers. It is not in anybody’s job description to see the potential in stuff, to see how material A can be transformed into product B and sold in shop C.

I recently had a good insight into the alter­native when I visited a waste wood processor. Councils pay the company to take away waste wood in the form of old Ikea furniture and suchlike and it turns the materials into bedding for gerbils and hamsters. Because of the weak value of the pound, sales of products for little pets are going through the roof. The point here is that the clever people who ran the wood plant lived and breathed the process of transforming materials. They did not see wood as a waste product, they just saw it as a product.

They thought constantly about how they could turn the wood they received from coun­cils back into something useful. Their problem is that the way councils collect the wood has a huge impact on their ability to recycle it. But, like most recyclers, they have little to no influence over the collection process and very limited scope to contract with the house­holder.

“Nobody in a council makes anything. It is not in anybody’s job description to see the potential in stuff, to see how material A can be transformed into product B and sold in shop C.”

So my big idea is to break up the public sec­tor monopoly on the collection of household waste. Carve out the cost of waste collection and disposal from council tax and give the money back to householders to spend with whom they choose. Back this up by introducing more pay-by-weight schemes, which are com­monplace in Europe. But, most importantly, do what all the other utilities do and give the householder a choice about who collects their rubbish, in what form and at what cost.

Now the most common objection to con­sumer choice about waste collection paid for by weight is that it encourages fly-tipping. But you could construct the same argument to say that charging people for rail tickets encourages fare dodging. I don’t think that, as a society, we should shy away from good ideas just because they encourage criminality at the very margins.

My argument is that the way councils think about waste hinders recycling. The public sec­tor is not in the business of transforming materials into products, and still regards waste as a question of transportation rather than trans­formation. This paradigm stifles the recycling market.

At its cultural heart, the public sector does not think about waste as potentially valuable stuff that can be turned into products; it thinks about it as a problem. This understandable but outdated thinking is the problem in itself.

Michael Ware is corporate finance and renewable energy partner at BDO London


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