"We can't fund waste strategy by user charges alone"

Saturday 04 June 2022

The States' Assembly will soon be asked to scrap its policy direction for the island's waste strategy to be funded by user charges alone.

The average household is facing an annual increase of around 8% in the States' component of its waste bill. This is after the States' committee responsible for waste disposal - the States' Trading Supervisory Board - announced it was putting up charges from 1 July.

But the Board says it is fighting a losing battle to fund the waste strategy from its flat household waste charge and black bag sticker charges because the roaring success of recycling means households are putting out so much less waste.

"The waste strategy is currently running at a significant loss and thereby running up a very large overdraft," said Deputy Peter Roffey, the President of the Board, pictured top.

"The Board inherited a situation whereby the States set out to fund its waste strategy by user charges alone. It has become increasingly obvious to objective observers that such a policy is unachievable. At least not without very high charges indeed, which in all likelihood would drive perverse behaviour."

Pictured: Most food waste which previously ended up in landfill is now collected as kerbside recycling rather than in black bag general waste.

Deputy Roffey said his Board hopes to publish a policy letter in the next six weeks which will propose changes to the policy on waste funding for debate by the States' Assembly in the autumn.

"I am not going to go into the details of that policy letter but it will surprise no one that the Board will be asking the States to recognise that it is not practical to fully fund the waste strategy by user charges alone and that it requires a blend of funding from service users and general revenue," said Deputy Roffey.

"Clearly, if the States do not accept this, much higher increases than those just approved by the Board are going to be required. Such increases would make the current 22p rise in bag stickers look very modest indeed. That would not only be very harsh on low income households but could well drive unfortunate behaviour.

"However, even if the States do agree to move away from a pure user pays approach, the Board feels the best way to achieve a breakeven situation is by a combination of taxpayer support and somewhat higher charges. 

"How much should come from each? The Board will be proposing its suggested split in the forthcoming policy letter, but exactly where the goldilocks point is in respect to that joint funding approach will ultimately be a decision for the States."

Pictured: Deputies Gavin St Pier (left) and Lyndon Trott want the States to defer proposed increases in waste user charges while household budgets are under particular strain as inflation in the island hits 15-year highs. 

From 1 July, the Board will increase the charge for a standard waste bag to £2.92, and its annual flat waste charge will go from £90 a year to £97.97 per household.

The increases are the second since the current charging arrangements were introduced in 2019 and the first for 18 months.

Earlier this week, Deputy Gavin St Pier said that he and Deputy Lyndon Trott would lay a motion to annul the increases when they are laid before the States at their meeting which starts on 13 July.

"The Policy & Resources Committee should undertake to use general revenue to underpin the increased deficit in Guernsey Waste if the waste charges do not increase on 1 July. It is already doing this anyway for most of the deficit on the waste account," said Deputy St Pier.

Deputy St Pier said he did not blame the Board for raising charges because they were following the States' policy directions. But he said the Policy & Resources Committee "needs to step up and take the lead - and quickly" to prevent price rises by States-owned utilities from heaping further financial pressure on family budgets already hit by rising inflation and a growing cost of living crisis.

Express contacted the Policy & Resources Committee on Wednesday but it has not yet provided any comments on Deputy St Pier's proposal.

Pictured: The less the waste strategy is funded from charges on waste disposal, the more it will need to be funded from States' general revenue, which would add further pressure to the deficit in public finances which Treasury Lead Deputy Mark Helyar and his colleagues on the Policy & Resources Committee forecast could reach £85million a year in a few years' time.

Deputy Roffey disagrees with Deputy St Pier's proposal to annul the increase in waste charges.

"I note that Deputy St Pier has called for a freeze on any increases until the Board has reported back to the States on the wider funding of the waste strategy. That policy letter has effectively been ready to go for some time but it was important to liaise properly with both the Committee for the Environment & Infrastructure and the Policy & Resources Committee before submitting it. I am hopeful the policy letter will be in the public arena before the debate on the motion to annul to help inform that debate," said Deputy Roffey.

"Whatever the outcome, it seems vanishingly unlikely that the States will decide to reduce user charges in real terms, which is exactly what this motion to annul would do. 

"With this in mind, I would urge Deputy St Pier to hold his horses and seek to amend the policy letter if he doesn’t like what is proposed. That is a far more effective tool than a motion to annul where it has to be all or nothing."

Pictured: Guernsey's high recycling rates have resulted in less income from black bag charges than was projected when the waste strategy was agreed by the States.

Deputy Roffey said that his Board's plans to increase charges from 1 July would only partially address the annual deficit in the operations of Guernsey Waste and that the States need to change their 'user pays' funding policy to address the problem.

"We felt it would be very irresponsible not to apply an increase, given that the waste strategy is currently running at a significant loss, and thereby running up a very large overdraft. The increases will simply mitigate those losses and will not bring Guernsey Waste anywhere near a breakeven situation," said Deputy Roffey.

"The impact of [Deputy St Pier's] motion to annul would be to increase those loses by an additional £368,000 per year.

"We are not being overly critical of previous States' Assemblies. When they introduced the current waste strategy, they had to make some very big assumptions on scant evidence. With hindsight, they grossly under-estimated the rapid transition away from the generation of general waste and thereby over-estimated the likely income stream from bin stickers.

"From the wider policy point of view, this was a great result and we welcome it. This is being sustained with the level of recycling in Guernsey topping 70% again last year.

"However, from the financial point of view, it left a big hole in the projected finances. While it has allowed some reduction in the variable costs of the strategy, the fixed costs remain unaltered. It is telling that, even after the current increases, the average household spend on waste disposal will remain below that which was estimated when the strategy was first adopted.

"It falls to the current Board to address this conundrum. It is a thankless task with no popular answers. But we will not shy away from it. The latest increases in the standing charge and in the cost of bag stickers are a part of that process."

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