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Circular Economy

Volume 769: debated on Thursday 3 March 2016

Question for Short Debate

Asked by

To ask Her Majesty’s Government what steps they are taking to promote the principles of the circular economy, based on the re-use, repair, refurbishment and recycling of existing materials and products, to protect the environment, give new growth opportunities and avoid waste.

My Lords, I am very grateful to noble Lords who have put their names down in such numbers to join in this debate today. It reinforces an increasing view that this is a concept whose time has come. I am also very grateful to organisations such as the Ellen MacArthur Foundation, WRAP and the Green Alliance, who have taken the seed of an idea and fertilised it into a fully-grown, evidence-based new business model.

It starts from a simple principle. Current consumption is linear. Companies use raw materials to make products which are sold to consumers who then discard them when they are no longer valued or useful. The circular economy replaces that model with a virtuous circle, replacing the concept of waste with the concept of disassembly and reuse, so that materials are used again and again. It is a simple principle, but one which could transform industrial and service processes for the future.

Why is this transformation so necessary? At a global level, the challenge of providing food, clothing and shelter for a growing population is becoming ever more pressing. The global population is set to increase from 7 billion to 9 billion by 2050, many of whom will be joining the new middle classes, with new levels of consumption. In the next 20 years we will need 40% more energy and water, and three times more material resources. In 2010 some 65 billion tonnes of raw materials entered the economic system globally. This is expected to rise to about 82 billion tonnes by 2020.

Meanwhile, scarce supply and increased demand are driving up prices. As the Green Alliance has said:

“Over the past decade world food prices have doubled, metal prices have trebled and energy prices have quadrupled”.

Yet at the same time as that is happening the UN estimates that, for example, electronic waste, globally, is increasing by 2 million tonnes a year, with less than 16% of it diverted from landfill. This results, globally, in landfill mountains of potentially recyclable materials worth some £34 billion. This includes huge quantities of precious metals and rare earths which are really needed for future production.

Clearly, this is not sustainable because we are running out of resources and because the extraction and use of those scarce resources is having a major detrimental effect on climate change. This is a global problem to which businesses, environmentalists and politicians are finally waking up. It is a global problem which the circular economy can help to resolve.

It also has unique and specific applications in the UK. We currently recycle less than 50% of our waste and are in danger of missing our EU recycling targets for 2020. This is exacerbated by complex and inefficient collection systems, with more than 300 different systems across the UK, which even the Minister, Rory Stewart, has described as absurd.

At the same time, we have failed to develop robust markets for recyclable materials, so they do not achieve their true market value. For example, a couple of years ago, I was excited to visit a new factory in Redcar which was taking recycled plastic bottles and creating new plastic materials from them. However, that factory subsequently folded because it could not guarantee a regular-quality waste stream of plastic bottles and it could not compete on price with virgin materials. That clearly does not make sense. Recycled glass and paper businesses suffer the same challenges of maintaining quality and markets.

Yet, at the same time as that is happening, manufacturers are being rocked by the fluctuating price volatility of raw materials, making profitability and growth projections difficult. This is why there is a growing realisation of the opportunities that the circular economy can deliver. It flows from necessity but also heralds innovation, creativity and the potential for competitive advantage.

What does that mean in practice? The businesses in the forefront of this revolution realise that they have to design products differently. There is much talk about designing out waste completely. New products will be designed for a longer life, with easily available spare parts and repair. For example, I recently heard a Samsung executive setting out its plans to strengthen its product repair offer to consumers, training a new generation of service engineers and delivering a local and responsive service to them. New products might be leased rather than sold, with the advantage that the raw materials go straight back to the original manufacturer for stripping out and reuse rather than via any third parties. New products might consist of innovative new materials that are less environmentally damaging. For example, Jaguar Land Rover recently reported that it is experimenting with sustainable flax and cashew nuts as a replacement for plastics in some of their fittings. New products might be designed with reuse in mind. For example, IKEA now claims that 98% of its home furnishings can be recycled and it has established a take back service for used mattresses. New business models are often product sharing rather than purchasing. I say this as a contented member of the City Car Club, a car-sharing scheme in Brighton which is now expanding nationwide.

I give these examples not to suggest that the problem has been solved or that a sea change has taken place but as an indication of some of the radical new thinking which is now occurring. However, these developments and opportunities need to be nurtured and championed, and I look forward to hearing from the Minister as to how the UK Government intend to do this.

It is not only business opportunities we need to recognise but the enormous consumer benefits which can accrue from more sustainable business practices. For example, a recent report estimated that this has the potential to create somewhere between 200,000 and half a million new jobs depending on the rate of expansion. In addition, business would need to develop longer relationships with their customers and provide a higher quality of service. The practice of building in premature obsolescence would end, bringing down costs. Trends in consumer behaviour through leasing or sharing products rather than purchasing them would provide more customer choice. Of course, the ultimate consumer prize is that we would all live on a healthier and more sustainable planet.

However, consumers also need help to think about consumption in different ways, to value goods because of their function rather than because of any fashion or brand support and to reject a throwaway economy. Governments can play a role in this and I look forward to hearing from the noble Lord how he thinks his department might help.

What else can the UK Government do to facilitate these changes? First, at UK level, we recently mentioned in a previous debate the excellent work that WRAP has done on food waste, but it is also creating ground-breaking voluntary agreements with manufacturers and retailers in electronics and textiles through the electricals sustainable action plan and the Sustainable Clothing Action Plan. I commend the Government for continuing to fund these initiatives, although, as the Minister will know, their funding has been considerably reduced, which means that the sectors in which they can work are limited.

Secondly, as the Minister will be aware, the EU has produced its revised circular economy package which, when adopted, can provide crucial leadership and leverage for ongoing work. I am sure we could entertain ourselves at the expense of the EU leave campaigners by pointing out how reliant on the EU we are to drive forward the UK waste and resource efficiency agenda, but I am taking it as read that, certainly among noble Lords joining in this debate, we can all agree on that matter.

The EU circular economy package is a great step forward. It provides vision, an action plan and proposals on eco-design which will build in repairs, durability and recyclability. It also calls for economic incentives for greener products and signposts additional funding from the Horizon 2020 and structural funds. It specifically builds in EU targets for recycling 65% of municipal waste and 75% of packaging waste, and sets a maximum of 10% of goods going to landfill by 2030.

Perhaps I may ask the Minister for an update on the UK Government’s response to the EU draft. How will the Government’s emphasis on less regulation and greater subsidiarity affect our implementation of that package? Do we welcome the specific targets in the package? Are we confident that the UK Government would meet them?

I am pleased that the noble Lord, Lord Gardiner, is replying to this debate because I know that he shares many of our ideals. However, to be successful, the principles have to be embraced across government, particularly in BIS and the Treasury. I hope that he can reassure us that the Government are embracing these issues across government and are serious about adopting them. I look forward to his response.

My Lords, I am grateful to the noble Baroness, Lady Jones, for introducing the debate and for setting out so clearly the background, the challenges and the opportunities. The noble Baroness was my predecessor on the board of WRAP and I look forward to the day when I know as much about this subject as she does. She described accessibly the way in which we look at the circular economy. However, for many people the term is confusing and most of them will prefer to look at it as a make-do-and-mend principle, particularly in their own homes.

In the short time allotted to us today I am not going to talk about the European Commission’s circular economy package; about the waste industry, which is examining its business in the light of the new models; or about big business, which is studying opportunities and challenges.

I hope that, as in the previous debate on food waste, we might hear from the noble Lord, Lord Young, with some tips about how he and Lady Young promote the circular economy in their own home. Ways of doing things which may come naturally to us need to be shared with a new generation, which finds it easier to chuck than to reuse. When I was a girl growing up, before tights were invented, we were taught to darn our own stockings—that is the circular economy. I now use laddered tights—clean ones—to filter through the pith and pips when making marmalade and recycle the residue into my compost bin. Again, it is my own personal, household circular economy. I had a beautiful pink hat which I bought in a charity shop. I wore and wore it until eventually I thought, “I cannot wear that pink hat anymore because they will all think that I’ve got only the one hat”; so, at a reception at a constituency event, when a lady came to me and said, “I so admire your pink hat”, there was no one happier than me to give it to her knowing that it would be loved and reused. That is the personal circular economy.

The circular economy is about valuing our products differently and creating a more robust economy in the process. By assessing how we design, make, sell, reuse and recycle products we can work out how to get the maximum value from them, both when they are in use and at the end of their life. So, what does this mean in practical terms? As a company, how do you move to more circular models? Where are the new business opportunities? Like the noble Baroness, I strongly recommend a good look at the WRAP website for tips and advice about helping to access the business benefits of a circular economy. As a resource for understanding the closed-loop economy it cannot be bettered.

A cursory google shows how many innovative social enterprises and businesses are being launched. The Restart Project, for example, is a social enterprise which encourages people to repair their broken electronics to extend their lifespan and prevent electronic waste. It hosts restart parties in London where you can bring your gadgets and find out how to fix them, together with their repair coaches. So far, these events have prevented over 43 tonnes of carbon dioxide in London alone. I wish there were time for more examples.

This is an agenda with great appeal to young entrepreneurs, especially in the social enterprise space. Knowledge of what is available, both to consumers and to those who wish to innovate in this space, needs to be shared more widely. I urge my noble friend the Minister and others to do what they can to vigorously embrace, communicate and promote this agenda.

My Lords, when economists first started talking about the circular economy some people ridiculed it as a bit of utopianism, as if we were going back to pre-commercial agriculture, when plants seeded themselves and everything was reused. After all, that was a biological circular economy. Once agriculture came to be traded, however, there were always opportunities to dump side costs and waste onto other parts of the economy and onto the environment. The linear economy which has developed since those days has all of those opportunities.

A couple of years ago I was involved in one of your Lordships’ sub-committee’s studies of food waste. We discovered that, 20 years ago, studies indicated that food waste arose in three roughly equal parts: on the production, distribution and consumer sides. We then discovered a considerable improvement in the efficiency at the distribution end. Much of that was for real: there were genuine processing and logistical improvements by supermarkets. However, much of it was simply shifting the cost of waste—and waste itself in some cases—down to the consumer or up to the farmer and small producer. The supermarkets were able to do that as a result of their dominant power. That is what the linear economy ends up doing.

There are standards for dealing with food waste but we have not yet got a situation where the food industry itself has changed the way it operates. The food chain needs to be circular, not linear. That applies to many other sectors as well. There are huge numbers of potential applications of the concept of the circular economy, not just in small and innovative businesses but in many large and complicated ones as well.

In metal-based sectors, we have already seen some large companies designing components so that they can be repaired, reused, refurbished and remanufactured and not, as has been the case for most of the last century, with built-in obsolescence. In the textile and clothing sectors there is a rather older pattern, where discarded clothes are not only reused through the second-hand market—or the “already loved” market, as it is now called—but also as fibre in upholstery, and for near-permanent use in insulation. The latter saves substantially on extraction in the mineral sector.

It can also apply in the energy sector, where decentralised CHP-based networks use genuine biomass waste—waste from local forestry, food and agricultural produce, not waste imported across two oceans—by circulating surplus heat through commercial and domestic district networks. They save twice over through the use of sustainable feedstock and by reducing the need for the extraction and carbon-creating use of fossil fuels.

The waste-management system itself needs to become more circular and rational. The 300 different systems that my noble friend referred to are very evident—my local tip is on the border of two district health systems with different separation and collection systems.

The circular economy is not some hippy utopian dream of a lost Arcadia but a better way of organising our economy with less waste, less costs, less depredation from extraction and fewer greenhouse gas emissions. In adopting it we can save the planet as well.

My Lords, I congratulate the noble Baroness, Lady Jones of Whitchurch, on her excellent introduction, which gave a very good flavour of the opportunities offered by the circular economy. It promises a future with great environmental gains but not having waste will also enrich the entire economy. I can think of no better example of this than anaerobic digestion.

At its best, anaerobic digestion takes local farm waste and turns it into soil conditioner and fertiliser, as well as biogas which can be used as energy to run a farm’s tractors or heating to heat local houses. The problem is that the Government are not measuring the benefits correctly. On anaerobic digestion, for example, they are looking only at energy without appreciating that it is also a very low-carbon process; nor are they considering what can be done for soil by using not artificial fertiliser but waste to recondition it. They need to measure everything within that circle in a ranking system, rather than having silos for measuring energy, the level of carbon emission and waste reduction. It all needs to be measured as a whole.

If that happened, the Government’s attitude to, for example, the renewable heat index would change. This is because the measurements have encouraged the use of bigger plants at the cost of smaller, more local ones. That is inefficient because it requires more transport and for maize to be grown specifically for use in the plants instead of utilising waste. As the noble Baroness, Lady Jones, mentioned, food waste is collected in an inefficient way or not at all at the moment. If the Government’s attitude changed, that problem would disappear.

The start made by the anaerobic digestion community is really good. They have moved from about 40 plants six years ago to 170 now. But that is despite a lot of government obstacles. The Government should be encouraging this industry. It has the ability to provide for up to 30% of domestic electricity or gas consumption and deserves to have their full weight behind it.

My Lords, I, too, am grateful to the noble Baroness, Lady Jones of Whitchurch, for securing this debate on such a critically important subject and also for her support for the All-Party Parliamentary Group on Ethics and Sustainability in Fashion. I would also like to thank colleagues from Julie’s Bicycle, Hubbub and the Centre for Sustainable Fashion, especially Anna Fitzpatrick and Professor Dilys Williams, for their support and excellent briefings.

After COP 21, we cannot fail to be aware of how much intellectual and practical energy and commitment we need to bring to bear on the huge environmental challenges we face. I want to make three brief points. First, the clothing and textile industries and we, their consumers, have a big problem. Secondly, there are a range of strategies developing to mitigate the environmental impact of the sector, including circular economy solutions. We should note that, on the upside, fashion can make a really positive, creative intervention in debates about action on the environment.

Thirdly, and perhaps most importantly, circular or closed-loop initiatives are just one part of the picture. We need a fundamental rethink of current business models. Two compelling fashion facts from WRAP: approximately £140 million worth of clothing goes into landfill every year in the UK alone; and we send 700,000 tonnes of clothes to be reused or recycled every year. This is not just an issue for high street fast-fashion outlets. More expensive clothes are regularly discarded after little wear and workplace uniforms are another area of great concern.

Four fundamental design models in the circular economy apply to fashion and many other goods. One is designing for longevity, where clothing is designed and made to last and valued for that quality. The second is designing for leasing, where digital platforms enable consumers to lease or rent clothes. The third is designing for reuse in manufacturing, where clothes are returned to the maker for a range of purposes. The fourth is the type of design that recaptures materials, transforming them into newly recycled, raw material. The emphasis is in designing in circularity from the start rather than trying to bolt it on top of existing design paradigms. Initiatives such as the Sustainable Clothing Action Plan and the Sustainable Apparel Coalition have proved useful mechanisms for bringing together some of the significant players in fashion to address these key issues.

On the role of government, whenever we have held APPG meetings on the subject, we hear two main pleas of relevance here. The first is for clarification of existing regulatory frameworks, regarding, for example, landfill taxes and their use, penalties for pollution and so on. The other is a request for government-backed incentives, particularly for fashion SMEs that will invest in and encourage the research and development of more sustainable practices in the clothing sector. We should not be too gloomy, I guess, as there is evidence that progress is being made, some of which has already been mentioned—for example, repair, recycling, leasing and so on.

I finish by reiterating an earlier point on how these issues represent for me just one major aspect of a much broader set of issues that encompass poverty, inequality, social injustice as well as environmental degradation. We cannot expect to be able to buy our way out of the problems we face.

My Lords, my thanks also go to the noble Baroness, Lady Jones of Whitchurch, for this important debate on the circular economy.

I want to spend just a few moments highlighting the economic and environmental impact of planned obsolescence—this has already been referred to —particularly in technological goods, which we know is used by companies to drive growth and ensure a steady supply of return customers. It is a business model that relies on technological products needing to be upgraded and/or replaced at regular intervals, whether because they go out of fashion, have a limited lifespan, or are difficult or expensive to repair.

The model of consumption of regular upgrading and replacing is so deeply ingrained within our national consciousness that nowadays we hardly even question it. We toss out the old and bring in the new at an alarming rate, and, of course, at great cost to the individual customer and, indeed to the environment. Not only that but it is incredibly wasteful. It is estimated that there are probably 125 million old mobile phones languishing in the top drawers of British households, many of which contain metals that are becoming increasingly scarce in the natural world. From every angle, whether economic or environmental, this approach to consumption is simply not sustainable in the long term, not least when we look at population projections and the way in which other communities and nations are expected to modernise and therefore need modern technology.

What we ultimately need is a fundamental shift in manufacturing and design, so that products are once again designed for longevity, and where upgrades and repairs can be done without needing to buy replacement goods. This, of course, will come about only with pressure from consumers. Therefore, it is encouraging to see a number of green shoots emerging in this regard. I have previously highlighted in this Chamber the work of the Dutch social enterprise, Fairphone. However, there are surely ways in which government can incentivise manufacturers to move in this direction. I know there are movements in this regard at both domestic and European level. I was particularly interested to read of French laws that require manufacturers in France to inform consumers how long products will last and guarantee them for two years. Can the Minister inform the house whether this is something that Her Majesty’s Government have looked at and whether we might learn from that, and build upon it, as we seek to address this crucial area?

I thank the noble Baroness for securing this debate. This is an issue of great salience today, when the growth opportunities of tomorrow lie in the circular economy, and in a society that produces less waste and pollution than the current one. It is clear that bold thinking will be required from many spheres of civil society, not just public spheres. The Government have made some good strides towards making sure that renewable technology can achieve the necessary levels of efficiency for it properly to replace fossil fuels in the future.

One such example is the recently privatised Green Investment Bank. I believe that the progression of this concept provides a useful road map to the future of the circular economy. The bank started off as an idea in the Commons Climate Change Committee, and became an eponymous banking identity in the last Parliament. While being more of a fund than a bank, it has shown itself capable of making significant investments, such as an £11 million biomass plant in Port Talbot, among others. Crucially, it is profitable, as of the last financial year. This is important because encouraging the circular economy must be done in a way that does not put extremely high burdens on taxpayers, and it must be liable to market forces in order to fulfil that. The Business Secretary has put forward plans to part-privatise the bank in the future, and I look forward to this, as it will be able to access more capital and international investment, and continue its good work on a much larger scale.

We can see from this example that it is very possible for a commercially viable project—rather than the Government—to lead the future. Of course, the third sector and government will play a role, but I expect that businesses will drive the change. As in this case, government should play a nurturing and supportive role. This can be done in a variety of ways, possibly with a wider range of subsidies or grants to incentivise research and development in renewables.

As a businessman myself, I know that the private sector will want to have the biggest possible role in the growth markets of tomorrow, and so I encourage the Government to look at more ways of supporting businesses in their endeavours to create more sustainable technologies.

My Lords, I had a pink hat once but I struggle to relate it to the circular economy.

The idea of the circular economy was first mooted by the economist Kenneth Boulding in the 1960s. Nature, Boulding pointed out, is an endless recycling machine, in which nothing is ever wasted. Why not develop an economic model on this basis? So far the notion has made little impact on industrial civilisation as it spreads voraciously across the face of the earth. That civilisation is based largely on a sort of mindless consumerism and profound environmental pollution. A step change of global proportions is needed. The circular economy could play a fundamental part in such a step change if it could be rapidly generalised. The idea has recently been endorsed by no lesser authorities than Meryl Streep and Susan Sarandon and—almost as important—the EU and the Chinese Government, as well as by the mainstream of economic orthodoxy in the shape of the World Economic Forum.

The only major economy to have made significant advances so far is Japan, where it has been driven mainly by immediate self-interest rather than by environmental considerations, since the country is so short of indigenous mineral resources. Japan recycles fully twice as many of the materials used in its industrial production as Britain does. Many of these, significantly, are used in making the same product that they were derived from, hence meeting the technical definition of the circular economy. The fact that positive environmental outcomes can be achieved through self-interest, however, is precisely one of the reasons why the circular economy could have wide appeal. It has direct implications for business at a time when widespread economic stagnation is prompting a rethink of existing business models. I have spent much of the past two years studying the digital revolution, which could help create huge advances in circular economic production that need not be confined to the richer countries. The digital revolution, unlike any previous fundamental advances, has gone straight to the poorer countries of the world. Their processes of industrialisation could in principle be far more sustainable than those of the industrial revolution.

I have two questions for the Minister: first, does the idea of the circular economy have any traction in economic thinking in this country and is anyone in the Treasury interested, because that is where it counts? Secondly, what is the Government’s response to the work of the Ellen MacArthur Foundation, which has been far and away the global pioneer on this issue?

My Lords, I add my thanks to the noble Baroness, Lady Jones, for introducing this debate and I also acclaim the inspiration of Ellen MacArthur in pushing this subject up the agenda. The goal is of course to conserve resources, to reduce the scale of mining and similar activities, to save energy and, as a by-product, to reduce CO2 emissions.

Dealing with food and organic waste is in principle straightforward. Most can be recycled or burnt for fuel but, better still of course, we should create less of it. Far less tractable, however, is the recycling of plastics. Here, cutting consumption must be the priority. Promoting the reuse of plastic bags is in itself merely a token gesture. Overall plastic debris is a growing problem; if this cannot be addressed as global growth continues, we will end up with as many plastic bottles in the ocean as there are fish. There need to be incentives to ensure not only the greener operation of buildings and consumer products, but greener design as well. Cambridge’s department of engineering has published some interesting ideas on this. To take one example, it points out that, when a building is demolished, some of its elements—steel girders and plastic piping—will hardly have degraded at all and could be routinely reused. Moreover, girders could be more cleverly designed so as to offer the same strength with less weight, thereby saving on steel production.

Advances in technology allow continuing improvements in appliances and vehicles, but these objects should be designed in a more modular way so that they can be readily upgraded by replacing parts, rather than thrown away. To echo the right reverend Prelate the Bishop of St Albans, we need to value long-lasting things and to put pressure on producers and retailers to highlight durability. We need to repair and upgrade rather than replace. Regulations, especially in the EU, are helping but they will not gain full traction unless the public mindset changes. Attitudes to, for instance, smoking and drink-driving have transformed in recent decades. We need a similar change in attitude so that the manifestly wasteful consumption of materials and energy—Chelsea tractors, brightly illuminated houses, slavish following of fast-changing fashions, and the like—become regarded as naff rather than stylish.

Finally, let us remember that the issues in this debate have long-term global resonance. By 2050, the world’s population will have risen to 9 billion. We surely hope that by then there will be a narrower gap between the lifestyle that we in privileged societies enjoy and that available to the rest of the world. This cannot happen if developing countries track our route to industrialisation. They have to leapfrog to a more efficient and less wasteful mode of life. The world’s people will only achieve a sustainable future via a lifestyle that is, for all of us, far less profligate of energy and resources than ours is today. This goal is not anti-technology; its achievement will demand more technology, but differently directed technology and a great deal of innovation. We and the rest of Europe can surely lead in this enterprise, to the benefit not only of ourselves but of the rest of the world.

My Lords, I, too, thank my noble friend for introducing the debate. I will try to rise to the challenge. The noble Baroness, Lady Jenkin, mentioned tights, which we cut up and use as plant ties. Cotton, if it is good quality, gets absorbed into Lady Young’s quilts, one-sided printed paper is always cut up and recycled, and the carcass of the chicken goes into the stock pot for making soup. So there are a few things that we in the Young household do.

Most of the good points about the importance and value of the circular economy have already been made. I would like to put only a couple of other points to the Minister. First, has any thought been given to ensuring that we have a circular economy and industrial strategy operating at a LEP or local authority level, or to introducing the subject into schools and colleges? Lots of ideas come from young people.

I listened carefully to the right reverend Prelate the Bishop of St Albans about technology. I have a bit of a problem; I am replacing good-quality lightbulbs. Why? Because I can buy LED bulbs that have come down in price and that dramatically reduce power consumption. I hate wondering what I am going to do with them—I will not do anything with them because I cannot think of an alternative use. It is a balancing act. I think that the same could be said of a significant number of household appliances; when you think of the power consumption of old-fashioned televisions, washing machines, refrigerators and so on, there is something of a problem there. Though that is not to argue against longevity; the idea of being able to repair items is fundamentally important.

On the recommendations that came from the Environmental Audit Select Committee in the Commons, can the Minister inform us whether the Government intend to adopt those recommendations, which seem to be valid, including the idea of providing incentives to companies to become more efficient and to ensure that the products that they produce have greater longevity? These are obvious things that we have been talking about for years. There is so much variation on mobile phone chargers—or chargers for any bit of equipment—but we still do not seem to have cracked that problem and persuaded manufacturers of the benefit of standardisation, so that every time another phone is introduced, there is not another variation of phone charger. So there are lots of opportunities for us to create a genuinely circular economy. It is a no-brainer in terms of job creation and environmental benefits and I look forward to the Minister’s response.

My Lords, I, too, thank the noble Baroness, Lady Jones, for this debate. She mentioned Jaguar Land Rover and I think that we were both at an event where JLR talked about its new innovations. But what it did not do was to shout about the fact that 70%—this is a well-known statistic—of Land Rovers ever produced are still operating on the roads, not just here but across what was the British Commonwealth and the rest of the world as well. But as the noble Lord, Lord Young, said so well, no doubt many of them from the early days are now extremely energy-inefficient by current standards.

There are two big challenges: population growth, and rising income and consumption expectations within the world. They can be solved in only two fundamental ways. One is the decarbonisation of energy and greater energy efficiency. The other is the circular economy and ensuring that our consumption does not outpace the ability of our planet to replenish those resources. That is why the circular economy is absolutely essential. Within a more international framework, it surprised me how few people have heard of the circular economy, so one of the great imperatives is to get that concept far better understood. It may have been invented in the 1960s but the understanding of it is still very small.

I was absolutely delighted that the European Commission, having junked or disposed of the original circular economy package has come back with another—I hope improved—version of it. Surely if there is something important that Europe can do, and do well, in a single market of half a billion people it is to take this area forward in terms of culture, in the way that industry works and in the competitiveness of the European economy. So with the Government being enthusiastic about Europe and the European Union for the first time in a long while, I challenge the Government and the Minister to take this area forward.

I will make four very quick points to the Minister. First, I believe that in the past Defra has not been that engaged in this area, so will it become far more engaged? Secondly, the noble Baroness, Lady Jones, mentioned eco design. Surely this is an area where British industry could really thrive. Will the Government help it to lead in that area? Thirdly, in negotiating the transatlantic trade treaty—the TTIP—do we need to bring the circular economy into such negotiations, if only to defend our package against other sides? I will very much welcome that agreement if it is made, but do we need to take it into consideration there? Finally, I echo the mention by the noble Lord, Lord Rees, of the marine environment, where pollution by plastics is a major challenge that needs to be resolved.

My Lords, I am most grateful to the noble Baroness, Lady Jones of Whitchurch, for securing this debate and introducing it so comprehensively. It is a great privilege to respond to this debate because we all share a common cause; we want Britain to have the best natural environment anywhere and encouraging a more sustainable, circular and efficient approach to resource use must surely help deliver this ambition. The Government consider it essential that we move towards a more circular economy and we are working together with business, industry, civil society and the public to achieve this aim.

The Government have a leadership role in facilitating that transition through better regulation, fiscal incentives such as the landfill tax and supporting innovative approaches—for example, circular business models where customers purchase a service rather than the product itself. The noble Lord, Lord Young of Norwood Green, mentioned schools and colleges. I think that we will increasingly see a lot more young entrepreneurs coming through as designers, with schools and colleges encouraging what will be such a core part of the future UK economy.

In 2013, the Government introduced the waste prevention programme for England, setting out roles and actions to move away from a “make, use and dispose” approach towards a more circular economy where materials are kept in circulation for longer. The noble Lord, Lord Teverson, mentioned the Land Rover and the noble Lord, Lord Rees of Ludlow, rightly emphasised its durability. We can surely say that, over generations, that vehicle has been extremely durable.

Reuse, repair, refurbishment and recycling are all vital elements. Regarding waste prevention and reuse, in the charity sector alone in 2012, organisations generated an estimated £430 million from reuse—so its value to society and the circular economy is considerable. To leverage the value from this, government can provide the leadership, incentives and knowledge to move towards a more circular approach. But everyone has a role to play in making the best use of our materials and resources by preventing waste, recycling efficiently, and dealing with waste properly.

Businesses surely will be the key driver to this. I have mentioned young entrepreneurs but my noble friend Lord Suri mentioned business more generally, which will be engaged in driving this. The Government must provide support but I note the strictures of the noble Baroness, Lady Jones of Whitchurch, and the noble Lord, Lord Giddens, about cross-government engagement. I can assure your Lordships that officials from across government, including from the Treasury and BIS, meet regularly to consider and co-ordinate government action in this area. Defra has obviously had a very considerable amount to deal with but this can be done only if we work across government.

To this end, Defra has started a number of voluntary agreements in conjunction with WRAP to incorporate circular-economy thinking, such as the Courtauld 2025 agreement that WRAP is on the brink of agreeing with industry. The noble Lord, Lord Whitty, comes to this with considerable experience, as was shown in our earlier deliberations about food waste. I am really pleased that we have seen the successor to the Courtauld commitment, which was the beginning of something that is now seen as a no-brainer. It was obvious, so why were we not doing it before? So there have been considerable advances there—but, as in all these cases, we need to do more.

The noble Baroness, Lady Jones of Whitchurch, mentioned the Electrical and Electronic Equipment Sustainability Action Plan and the Sustainable Clothing Action Plan, which bring together manufacturers, retailers and charities from across the electronics and clothing sectors to achieve resource efficiency savings. The noble Baroness, Lady Young of Hornsey, made powerful points about how the fashion world can make such contributions to the circular economy, and she was absolutely right to be positive and suggest the real progress that is being made. There is always more to do but we need to encourage business. We need to ensure that people in the fashion world understand that what they do is tremendously important, not only for their sector but for us all.

We are working, for instance, with the PaintCare initiative to address regulatory barriers to the manufacture of paint. This is going to be an important example. Through such initiatives, we can all aim to reduce the use of virgin materials and instead treat waste as a valuable resource in a more circular approach. My noble friend Lady Jenkin of Kennington leads by her own example, and we all very much look forward to the contribution that she will make to the very important work of WRAP.

We can see the successes of the circular economy already. The resource and waste management sector has grown faster than the wider economy over the past two decades. In the UK, the core waste sector and wider repair, re-use and leasing activity contributed £41 billion gross value added and supported 672,000 jobs in 2013. I noted what the noble Baroness, Lady Miller of Chilthorne Domer, said about anaerobic digestion. I was at a presentation in the other place on AD, as she may have been, and very interesting it was, too. I have had a wonderful visit to the AD plant at the Adnams brewery in Suffolk, which reuses all the residue from the brewery. That is a great example. The Government have provided support for anaerobic digestion and published a strategy for growth in the sector in 2012. More recently, WRAP has published reports on the use of digestate from the process, helping farmers applying this to their land. So, again, there are all sorts of encouraging advances.

The noble Baroness, Lady Jones of Whitchurch, also highlighted the importance of developing new business models. This is something that your Lordships have more generally considered as we move forward. Indeed, the Government are funding a project exploring the sustainability benefits of pushchair rental. Pushchairs can be reconfigured or upgraded as the baby grows, and the used models can be refurbished for further use by a new customer. The Argos national gadget trade-in service, developed with WRAP’s support, incentivised the return of unwanted mobile phones and tablets for reuse in exchange for vouchers. The returned items are refurbished and resold. All these initiatives not only provide businesses with new opportunities and innovation but transform the relationship with consumers. Consumers can therefore benefit from more choice, convenience and better-performing products.

Action is being taken not just domestically. Internationally, we have been working to promote resource efficiency in fora such as the G7, where the UK is recognised for encouraging a circular-economy approach. I was interested particularly in what the noble Lord, Lord Giddens, said in his references to Japan, and I would be interested to hear more.

The noble Lord, Lord Teverson, and the noble Baroness, Lady Jones of Whitchurch, referred to the EU draft circular. We are indeed assessing the commission’s proposals and will be finalising the UK position in discussion with other departments, devolved Administrations and other stakeholders. We want to make sure that we end up with measures that are right for the UK, ensuring that the whole circle is considered and not just the individual parts. I was particularly interested in what the right reverend Prelate said about French regulation. We will certainly be looking at that example, and if I have anything further to report I will get back to him as speedily as I can.

We still generate roughly 200 million tonnes of waste annually across the UK. We must reduce this and do more to ensure that waste that cannot be prevented is reused. The noble Baroness, Lady Jones of Whitchurch, highlighted the challenges in increasing levels of recycling. Currently, we recycle 44.9% of waste from households, and we are committed to meeting the EU target of 50% by 2020. But, of course, we need to go further. The Government continue to work with local authorities, WRAP and businesses to promote best practice. This includes the Recycle Now campaign and industry initiatives such as Pledge4Plastics, promoting plastic recycling by householders. I was very much struck by what the noble Lord, Lord Rees of Ludlow, said about plastics, and I am particularly mindful of what the noble Lord, Lord Teverson, said about marine pollution, which is appalling.

We believe that local authorities are best placed to develop recycling arrangements in their areas. With our support, WRAP works with them to recycle more and to make recycling easier for householders. Clearly, there are opportunities to improve recycling and to reduce confusion for householders through greater consistency and partnership working between authorities. Indeed, my ministerial colleague Rory Stewart has highlighted the benefits that we can obtain from reducing the variety of collection systems so that we have a smaller number of models based on best practice. Surely, the key to success is in making things work for local authorities and also making them easier for the public.

Developing and securing sustainable end markets for recycled materials is key to ensuring that the UK meets its statutory recycling targets. I believe that the UK has come a long way over the past few decades in how we view and handle waste. We must continue to embed a more circular approach in all parts of our economy. As I said at the beginning, I am most grateful to the noble Baroness, Lady Jones of Whitchurch, who has brought to this debate so much of her experience, particularly serving on WRAP, which is key. So many innovative ideas and initiatives have come through WRAP’s work that I would like to take this opportunity to acknowledge and congratulate not only the noble Baroness but all those who worked with her and continue to work now with my noble friend Lady Jenkin of Kennington, because this is going to be tremendously important. It has also given me an opportunity to listen to the many good examples and the experience that your Lordships have brought to the debate in so many ways. I hope also that your Lordships will understand that there are so many exciting economic and environmental solutions on which the Government are leading and on which we need and want to do more.

The circular economy undoubtedly has enormous advantages, opportunities and economic benefits. Indeed, earlier at Question Time—last week, I believe—so many of your Lordships acknowledged the work of the Ellen MacArthur Foundation. I very much welcome the important work of that foundation, which works on rethinking, redesigning and building a positive future for the economy. I am very grateful for the foundation’s valuable input into Defra’s sustainable resource management forum, providing valuable insight into the implementation of the circular economy in our country.

The noble Lord, Lord Teverson, asked about TTIP. Given the enthusiasm we have for the circular economy, we must use any opportunity we have on design. Clearly, what we are doing and need to do on design is essential. There is so much possibility. I was fascinated by what Jaguar Land Rover is doing with cashew nuts: that is the first I had heard of it. So many things will start to come through, and we need to be the catalyst to encourage that to come through.

I can assure your Lordships that the ministerial team at Defra is passionate about this. Much progress has been made and, by working together, we must achieve more in the years to come, because this is for the benefit not only of the people of this country but of our environment and the world environment.