Going undercover

Evidence suggests that external storage of inflammable material represents a risk of fires, especially in dry periods. Indoor storage of waste could cut the number of fires at recycling plants.

And, safety considerations, along with increasing difficulties in obtaining insurance coverage for large scale external waste storage, could drive a shift towards more indoor storage. But indoor storage is expensive and enclosed facilities incur a higher taxation in the form of business rates.

Doing the right thing is rarely the cheapest option, especially in terms of the investment needed for new buildings and plant. However, when it comes to waste management facilities, theres more than just asset and construction costs to consider. While the Government is advocating modern, undercover facilities, theres a massive disincentive to do so in the form of increased business rates for undercover facilities.

‘One size fits all’

As a company that has both an undercover and an open site, Bywaters is well placed to consider the effects of the one-size fits all business rates structure. And it is clear from our own experience that this huge variation in annual charges is quite simply putting a brake on the progression of our industry. After all, its an understandably difficult decision to commit to an annual rates charge when an uncovered alternative can cost considerably less.

The best illustration of this inequity is our own sites. Both are in densely populated areas of East London, close to the source of commercial and industrial waste generation and with a very real need to be a good neighbour. Our newest facility in Bow is an 187,000ft covered materials recycling facility (MRF) situated on a 9.2-acre site. Opened in 2008 and regularly referred to as Londons most progressive MRF, from the outside you wouldnt be able to differentiate it from any other industrial building. It could be a warehouse or a pharmaceutical manufacturer instead it has a capacity to handle 250,000 tonnes of waste a year, diverting at least 95% away from landfill, the vast majority going to UK reprocessors.

Environmentally it ticks all the boxes in terms of noise, odour, dust prevention, vermin control and litter as everything is carried out inside. But its more than ticking boxes since becoming operational we havent had a single complaint from any of our neighbours. The annual cost of being so compliant in terms of business rates is in excess of 650,000.

By comparison, our uncovered 8.4-acre site in Leyton has an annual rates bill of just over 160,000. Ideally, wed like to cover this site too, but the rise in annual costs is a very real consideration.

Rightly, the Government advocates that where possible waste management and treatment facilities in urban areas should be covered. However, its becoming increasingly apparent that doing so puts companies at financial disadvantage. Im certain that this is a major disincentive and needs changing to ensure that progress towards covered facilities does not stall.

One solution would be to consider a five-year period where these business rate anomalies are re-aligned. Business rates for open air sites could be increased while those operating or developing covered sites could benefit from a five-year reduced rate to encourage the development of the new infrastructure so needed.

On completion of the five-year incentivised period, business rates for covered facilities would then return to the normal level. Rates for uncovered facilities would remain at the same higher level, so putting both on an equal footing. After all, this is not a plea for waste treatment facilities to enjoy reduced business rates ad infinitum simply a move to incentivise infrastructure development.

The current position means that uncovered facilities can have reduced running costs of around 10 per tonne, a saving which can be passed on to the customer making the less environmental option more attractive in terms of the bottom line.

Business rates are part of the waste management industry in the 19th Century. Many organisations have the technical ability and desire to provide 21st Century solutions but cannot do so because they simply cant compete on price. Its time for a re-think.