Why our waste services are rubbish for small businesses
A weak economy, access to finance and the high tax burden are issues that are consistently
raised by small businesses day-in day-out. No surprise there. But what if I was to say that waste was an issue raised just as a commonly by small businesses as any of the above?
Yup, it’s a huge issue for members of the Federation of Small Business. Why? Because small businesses find it extremely difficult to access suitable waste and recycling services.
Local authorities
Around half of all local authorities do not offer a business waste collection service leaving firms to turn to the private waste/recycling sector. However, small businesses are often seen as commercially unattractive by the private waste/recycling sector due to the small quantities of waste they produce. Indeed, the FSB is becoming increasingly concerned that many of our members who do not have their waste collected by a local authority often can only attract the services of one private waste/recycling company and are initially offered a competitive price but are then subject to regular uncompetitive price increases.
Landfill targets
Yet even small businesses whose local authority does offer business waste collection services have a tough time due to the UK’s strict landfill divergence targets. Under the Landfill Allowance Trading Scheme (LATS) councils face tough allowances for the amount of Biodegradable Municipal Waste (BMW) they are able to send to landfill and even tougher penalties for not meeting these targets. Waste collected from small businesses by a local authority is classed as BMW and counts towards its LATS allowance.
Since local authorities face severe financial penalties if they exceed their LATS allowance the scheme acts a strong incentive not to offer business waste collection services or to offer such a service at a price that is deliberately uncompetitive.
Disincentive
Not only does LATS act as a disincentive for local authorities to offer waste collection services to SMEs, it distorts the market price for waste collection services by private companies. If local authorities are not offering business waste collection services, or if they do so at inflated prices, it allows private waste companies to charge higher than market prices for the service they provide.
Small businesses want to play their part in the move to a zero waste economy. Indeed, resource efficiency will only grow in importance for business owners in the coming years. However, the potential of the small business sector to play their part in a world without waste is being severely restricted by the lack of suitable waste/recycling infrastructure.
Waste policy review
The Government is due to announce its findings of its review of waste policy in the next month or two and it must not waste this opportunity to allow small businesses to play their part in a resource efficient economy.
What is your experience? Are you restricted by the number of waste collection services you can turn to? Are you being charged too much? If so, please share your thoughts with us?
A view from Across the Pond: In the US, we watch UK’s LATS (Landfill Allowance Trading Scheme) with interest, wondering how we can implement restrictions on landfilling of organics without unduely burdening any one sector.
The US facts: we continue to send post-recycling residue for land disposal that consists of about 60 per cent organic material. Your regulatory pressures appear to be forcing small businesses to act as members of their local communities, to coordinate recycling and recovery. The rapid increase in UK programs for waste vegetable oil and food waste collection for anaerobic digestion and production of biomethane seem to be postive examples for both rural and urban constituents. The Obvious Solution is seldom as easy as it would appear, but what barriers are there for small businesses to organise local recycling and recovery programs among themselves?
I’ve been thinking about this issue lately, prompted in part by an article by Phillip Ward http://www.isonomia.co.uk/?p=210, and I’m glad I happened across this positing.
For me, the big barrier for business is that the costs associated with changing how you deal with waste and finding the best supplier to offer a greener collection are perceived to outweigh the financial benefits. The landfill tax escalator ought to be having more of an impact than it is, but it makes me wonder whether a gradual increase in disposal costs is doing enough to make this a prominent issue for small businesses – it remains a fairly small cost to them over all.
It will be interesting to see what impact, if any, the abolition of LATS and the confirmation of local government’s VAT advantage over private collection firms may have – for forward looking authorities, trade waste collection could be a fantastic new income stream, which also helps them improve the environmental performance of businesses in their area.