September 2016

Industrial Thriftiness Could Add Billions to UK Economy

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A Eunomia report for SUEZ, launched today at RWM, shows that more than £9 billion could be added to the UK economy by integrating circular economy principles into the country’s emerging industrial strategy.

It is the first comprehensive assessment of the long-term direction of travel for the recycling and waste management industry, following the EU membership referendum earlier this year. In particular, the report proposes a series of policy measures aimed at the newly-formed Department for Business, Energy and Industrial Strategy (BEIS) as it considers how to reinvigorate the UK’s industrial fortunes.

An uplift of £9bn to the UK’s economy by 2030 could be realised if the Government adopts an ambitious path of policy and legislative measures aimed at integrating resource conservation into its industrial strategy – which in turn would underpin significant investment in recycling and re-use activities, as well as generate improved profits for companies cutting down on their raw material usage.

A Resourceful Future calls on BEIS to encourage greater use of secondary raw materials in products manufactured in the UK, thereby stimulating a domestic recycling and reprocessing industry focussed on delivering quality secondary materials to UK-based manufacturers – helping to re-shore a significant percentage of the 14 million tonnes the UK exports each year, which in turn could generate around £650 million each year for the economy.

Value to the economy is measured by GVA (Gross Value Added), as calculated by the production of goods and services, together with the wealth created by the profits they generate; payments made to employees from those businesses; and all related taxes that flow back to Treasury.

The report focuses on the importance of creating a coherent strategy and policies to allow for the greater recycling, re-use and repair of primary materials used, in particular, within the textiles, furniture, and electrical and electronic equipment sectors. The greatest level of economic uplift would arise from a positive transition towards a 70% recycling level achieved across the UK by 2030, which in turn would also result in significant reductions in UK carbon emissions, falls of up to four million tonnes in green-house gas emissions per year – 27 million tonnes by 2030 – equivalent to 3.4% of the UK’s 1990 emissions.

It also calls on BEIS to work with Treasury and Defra to bring about a system of incentives and taxation to stimulate industrial behavioural change towards the use and reuse of materials, including:

  • Legislation on extended warranties – obligating manufacturers to offer longer term warranties and thereby influencing the durability or repairability of goods
  • Obligations on public procurement to include percentages of reused or recycled materials in specific goods supplied to public sector organisations
  • Enhanced producer responsibility where producers of a wider range of goods are obliged to pay the cost of recovering and recycling products and product packaging
  • Differentiation on tax regimes e.g. VAT for recycled materials v primary, with more flexibility on tax differentiation if the UK leaves the EU
  • R&D tax breaks for novel processing techniques

David Palmer-Jones, CEO of SUEZ recycling and recovery UK, said:

“It is time for a home-grown, forward-looking strategic framework for the UK waste and resource management industry and our report, the first of its kind since the vote on Brexit, should provide the newly created Department for Business, Energy and Industrial Strategy (BEIS) with a way forward to capture some of the £9 billion of value that can be unlocked and put back into the UK domestic economy.

“We asked Eunomia to report back on how, and to what extent, the UK might benefit if we used the waste and resources industry as a source of renewed economic prosperity. Our report offers a vision of an industrial strategy informed by circular economy principles that will be suitable both for the UK’s current membership of the EU and, importantly, one that is sustainable both through any Brexit negotiation period and beyond for an independent UK.”

Dominic Hogg, founder and chairman of Eunomia Research & Consulting, said:

“As we extract more valuable materials from the waste stream, then the obvious question arises as to how we make best use of those materials here in the UK. An environmentally-informed industrial strategy would not only look at how we might use these materials within industry, but would look to the waste and resources sector to see how industries could be supplied with the materials they need. There’s a real opportunity to develop a symbiotic relationship between the waste and resources sector, and other industrial sectors, and in doing so, to support the growth of the economy. The word ‘waste’ should become a redundant one in our vocabulary.”