Sunday, 7 October 2012

NEF talking rubbish about rubbish...

View from the top of the restored Manywells landfill, Cullingworth
A consultant to the New Economics Foundation writes about Biffa's problems. And manages to entirely miss the point - or demonstrate having done any research into the company.

Biffa, the waste disposal company that carries out much local authority work, is profitable, admired by the unions that represent much of its 6,000-strong workforce, praised by local authorities like south Oxfordshire district council as innovative and efficient, and responsible over the years for developing a lot of the improvements that have spruced up UK rubbish collection and recycling.

Lets get some things clear about Biffa. For sure it does a lot of local authority work - outsourced contracts of one sort or another up and down the land. But this isn't where it has made its money - it makes that from filling up holes in the ground with rubbish not from collecting said rubbish from your doorstep. And while I applaud left-wing (so-called) economists when they enthuse about outsourcing, they really should check the facts first.

The cause of the problem? Here's a clue from a Telegraph report:

Biffa is more exposed to industrial waste, which makes up 80pc of its business, than municipal waste. The shift away from landfill and towards recycling has compounded its problems.

Trading has been made more difficult, too, thanks to a Government tax hike on companies still reliant on landfill, and the trend for big companies, such as Tesco, to deal with their own waste.

Last week HMRC closed a Landfill Tax loophole, which is expected to add extra strain on the company. 

Far from the company's problems being a consequence of evil capitalists, they are largely down to the ongoing landfill tax escalator - a rising charge on landfill intended to shift disposal away from holes in the ground and promote recycling. I'm sure NEF approves!

The NEF consultant wants "us" (I guess she means the government using taxpayers' money) to protect Biffa from these awful capitalists. We should have a plan (quite what it is the writer is unclear about). And we should learn:

The Biffa case study shouldn't be wasted. It is an object lesson in how we have let the market run our real economy – rather than, as it should be, the other way round.

Read this sentence a few times. It is a straightforward argument for "us" (the state, I guess) organising the "market". It is utter rubbish - Biffa's problems are a consequence of bad management (borrowing too much against future earnings) and government policy (making it uneconomic to stick rubbish in holes rather than burning it or recycling it). Nothing at all to do with "the market". Nothing.


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