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Britain needs to radically rethink the way it manages its resources. The country needs to depart from the linear approach, whereby we take resources such as food and metals from the natural environment, turn them into products, use them, and then dispose of what is left as ‘waste’.1 Our approach to resources should be circular: one in which non-biological resources like metals are reused again and again, while biological resources such as food are reused as fully as possible before being returned to the Earth’s ecosystem – for example, by composting the material rather than burning it.

Executive summary

This briefing paper is about that transition towards a better approach to resources. In it, we identify three strategic goals that policy must support, and set out recommendations for how we can move towards achieving those goals, which are:

  • a better understanding among business and government of how the UK’s resources are used
  • a cultural and behavioural shift throughout society in favour of reusing materials
  • an end to inefficient and polluting treatment of reusable and recyclable (or ‘secondary’) materials.

The drivers and benefits of better resource management

Since 2000, commodity prices have risen sharply and become more volatile. The average standard deviation of monthly metal, food and fuel prices from their annual price average was 4.1 per cent between 1980 and 2005, and exceeded 10 per cent on only four occasions. Between 2005 and 2012, that average standard deviation was 15.1 per cent. Many factors have caused this, including global population growth and a reduction in global poverty. Research by Chatham House concludes that prices will continue to escalate. Even if they do not, however, making better use of our resources is still a win-win for businesses and consumers, because it brings down costs.

Resource scarcity and rising prices are causing high levels of concern among businesses that are already looking to reuse secondary materials where possible. H&M are offering customers vouchers in exchange for old clothes; Heinz and Ford are looking to collaborate by making car parts out of tomatoes.

This transition towards improved resource productivity could bring a number of benefits to the UK. It has been estimated that it could increase UK manufacturing profits by 12 per cent a year (£10 billion per annum), and create 314,000 new manufacturing jobs.

To fully capture these benefits, consumers must participate. One way of securing this greater participation would be to cut down on unnecessary demand for materials. This could mean, for example, reducing the public’s expenditure on food that it doesn’t eat: in 2012 we discarded £12.5 billion of edible food. A reduction in food ‘waste’ generation could reduce local authorities’ expenditure on ‘waste’ management: in 2011/12, local authorities spent £3.2 billion collecting discarded materials. The transition will also bring environmental benefits. To take one example, the process of mining platinum emits 14,500kg of CO2 per kilogram of material, whereas preparing platinum for reuse emits just 750kg of CO2 per kilogram – 95 per cent less.

However, the market is unlikely to achieve this transition alone, and will need government to play a facilitating role in making the UK a circular economy. To give one illustration of the scale of the challenge, the electronic goods sent to landfill annually contain about £24 million worth of gold. That gold is spread throughout the UK. Currently, neither business nor government has the information necessary to begin extracting the economic value of that gold on any scale. Although of value to the market, collaboration between companies to capture this value potentially falls foul of competition rules, whereas government is not restricted by this problem.

Resource management and ‘waste’ policy

This paper is primarily concerned with analysing Britain’s ‘waste’ policy to date, which has been a significant driver of cultural change in the UK. Despite early scepticism of this policy agenda, ‘waste’ sent to landfill fell by 61 per cent, and recycling of municipal ‘waste’ increased by 306 per cent, in England between 2000/01 and 2012/13. Scotland and Wales have been similarly successful. This suggests that we can be optimistic, and that further cultural change is possible.

Since the Coalition came to power, however, ‘waste’ policy in the UK has stalled. The landfill tax escalator has been abolished. All English targets have been abolished, and work on English ‘waste’ policy relating to construction, demolition, commercial and industrial ‘waste’ has stopped – as has work on policy relating to energy from ‘waste’ in England. The Department for Business, Innovation and Skills and the Department for Environment, Food and Rural Affairs (Defra) are currently developing a resource management policy, but it lacks ambition, seeking only to meet minimum EU landfill targets and leaving voluntary initiatives to cover everything else. Meanwhile other countries such as the US, China, Japan and Germany have significantly more developed resource management policies.

We still send large amounts of secondary materials to landfill and incineration, which is a waste of valuable resources and has negative environmental consequences. Getting policy right in this area will require a full re-evaluation of the basic philosophy behind ‘waste’, so that secondary materials are no longer regarded as a burden, but rather are seen as crucial to the UK’s economic development.

We must therefore support policy development by improving the data, which is woefully lacking, on how materials ‘flow’ around the UK. Without that evidence, a comprehensive resource management policy cannot be developed, and the market cannot bring about and benefit from the circular economy. The government must also take initial steps to encourage behaviour change, and end inefficient and polluting treatments of secondary materials.

Policy recommendations

Our first recommendation is the establishment of an Office for Resource Management (ORM) within Defra. This office should be staffed by secondees from industry and other government departments, and should be tasked with increasing our understanding of how resources are used in the UK, and facilitating a cultural change in their use and reuse.

Since everyone has to eat, initial steps to encourage behaviour change should begin with our food ‘waste’. EU law requires most foods to carry an indication stamped on its label of how long it will be of optimal quality: the ‘best before’ date. Too often, this is mistaken as an indication that this food is unfit for consumption beyond that date, which leads to unnecessary wastage. We therefore recommend that Defra and the new ORM should work with other EU member states and the European Commission to ease regulation over food labelling. The requirement for foods to be labelled ‘best before’ should be scrapped, which would mean that the only mandated label would be ‘use by’, necessary for food safety reasons. Meanwhile, following thorough cost–benefit analyses and a formal consultation, Defra could require English food businesses to take all reasonable steps to separate food from other discarded materials. As is common in many areas of regulation, what is ‘reasonable’ would be determined by the business in conjunction with the enforcement officer. Defra should also consider banning the use of macerators to dispose of food in public sewers.

Our interviewees stated that the landfill tax escalator was abolished in order to support business, but complained that it meant they no longer had long-term certainty of policy. HM Treasury says it needs time to consult on how to better enforce the tax. However, there remains a need to discourage the inefficient and polluting disposal of valuable secondary materials. With recycling rates slowing and the economy recovering from the longest recession in the UK’s history, there is a case for reinstating policy certainty. The Treasury should consider gradually increasing the financial penalties for sending ‘waste’ to landfill in the next parliament, once a balanced economic recovery has been established.

Finally, policy should start to consider some incineration as analogous to landfill. Fears that it would be impossible to encourage recycling have proven unfounded. Therefore, the Treasury should launch a consultation to find the most effective means of reducing incineration which imposes the lowest burden on business and local authorities. Its terms of reference should include an examination of the costs and benefits of introducing a fiscal incentive to reduce incineration, of introducing regulations to ban specific materials to incineration, and of doing nothing.

Conclusion

The consensus view is that resources will become increasingly scarce, expensive and volatile. Yet even if that does not transpire, making better use of our resources is a win-win for businesses and consumers. Government has already succeeded in delivering one cultural change in the form of huge increases in recycling over the last 15 years.

Another culture change is now needed. We must encourage reuse as well as recycling in order to drive down incineration and landfill, and ultimately ensure that ‘waste’ is seen as a resource with an economic value rather than merely as something to be disposed of.

1 Under EU law, ‘waste’ means ‘any substance or object which the holder discards or intends or is required to discard’ (article 3 of directive 2008/98/EC [EU 2008]). This focuses on action, intent or mandate by the last owner, not on the economic value of the material disposed of. This definition runs counter to this paper’s central argument: that ‘waste’ is an opportunity, not a problem. We have therefore used the term in quotation marks in this paper, as its legal definition is not fit for purpose.