Waste Industry: Criminality and Regulation

Debate between Dan Poulter and Aaron Bell

Tuesday 1st February 2022 Westminster Hall

[Aaron Bell (Newcastle-under-Lyme) (Con)]

I beg to move,

That this House has considered criminality within and regulation of the waste industry.

It is a pleasure to serve under your chairmanship, Sir Gary. I thank the many Members attending today for their time and engagement on this important topic. I have a lot to say, but will try to leave space for everybody else. I also welcome the Minister to her place. I welcome the engagement we have had since she took up her role late last year. I thank her Department for supporting that engagement. Her recent visit was incredibly well received in Newcastle; I am grateful that she took the time to understand the nature of the problem I have in Walleys Quarry, and to hear personally from affected members of the community, including schoolchildren.

The key point I am here to make is that the current nature and scale of waste crime in this country is beyond the capacity of the Environment Agency as a regulator. The regulatory regime is no longer fit for purpose for two main reasons: the changing nature of the crimes being committed and the failure of the Environment Agency to keep pace and act with sufficient robustness and force against them. It has sadly become a regulator that is no longer feared, but is mocked, with criminals able to carry out offences under its nose.

Let us be clear: waste crime is not victimless. It threatens the environment and human health, and undermines investment, growth and jobs within the legal waste and resources sector. For the 2018-19 financial year, the Environmental Services Association estimated the cost of waste crime to be £924 million in England, and it will be more than £1 billion by now. Waste crime significantly reduces the viability and competitive advantage of legitimate businesses, which are being undercut by criminals. That creates unfair competition and ultimately burdens the taxpayer or the landowner who has to step in when criminals walk away leaving abandoned and toxic sites.

As the House knows, I have repeatedly raised the issue of Walleys Quarry. We have an infamous smelly problem on our doorstep in Newcastle-under-Lyme. It has made it all the way to the Court of Appeal—and perhaps even to the Supreme Court—in the case of Richards v. Environment Agency, which you referred to, Sir Gary, in your precursory statement. I do not wish to rehash the full story again. It is on the record and the Minister knows it well by now.

I will briefly mention that, since the last time I spoke about this matter in the House, the hydrogen sulphide emissions have this year risen back up to levels not seen since May of last year, when they were at their peak. Residents are reporting—I have smelled it myself—that the stink is well and truly back, and very much present in their day-to-day lives. It is an ongoing problem, making some vulnerable people ill, affecting people’s mental health, and making thousands miserable and affecting their quality of life.

The borough council is now concerned that the Posi-Shell capping, which was mandated last year, has failed and there are now increasing fugitive emissions from the site. Together with the county council, it believes that the EA’s normal regulatory approach has run out of road and is seeking a new approach. I believe that the Minister should have on her desk a letter from Councillor Alan White, the leader of Staffordshire County Council, making exactly that point and asking to meet her to discuss the matter. I hope she will be able to accommodate that.

I want to focus on how Walleys Quarry shows the flaws in the current regulatory environment. As a precursor, I will briefly tell hon. Members the story of a company called Atlantic Waste. Over the winter of 2003-04, the Environment Agency received many complaints from local residents about odour coming from King’s Cliffe, a waste site near Peterborough run by Atlantic Waste. The agency was concerned about inappropriate deposits and treatment at the site, and decided to investigate. That investigation revealed that several hundred thousand tonnes of waste had been deposited above agreed levels, and the height of the waste threatened to make the landfill unstable.

Instead of complying with that investigation, Atlantic Waste’s chief executive, Adrian Kirby, and its marketing director, Adam Share, did some investigating of their own. They hired a detective agency, Active Investigation Services, under the guise of concerns about break-ins. That detective agency accepted Atlantic’s proposal to tap phones and hack into computers. It hacked into residents’ computers by sending them emails with attachments purporting to contain the results of tests undertaken on the landfill.

When the police began investigating that agency, they found a complex web of staff, associates and clients involved in illegal activities. That detective agency had fitted devices to telegraph poles and roadside junction boxes all over the UK, and listened in to more than 1,000 calls. Following that investigation, Adam Share and Adrian Kirby were arrested. Each pleaded guilty to conspiracy to cause modification of computer equipment and conspiracy to intercept communications unlawfully. Adrian Kirby received six months in jail; Adam Share received three.

A handful of years later, Adam Share, now a convicted criminal, was appointed to RED Industries Ltd. Under Mr Share’s control, RED Industries took over Walleys Quarry landfill, in Silverdale in my constituency, the very same landfill I have brought to the attention of the House over and over again. It is incomprehensible that a man with that history would ever be allowed to operate a waste site, yet that is the bizarre and troubling world in which we find ourselves. That would not be allowed in the football business, where there is a decent, fit and proper person test. Yet in the waste industry, it seems that nothing could be done to prevent a man with a proven disregard for the law, for the regulator and for residents from assuming responsibility for an environmental permit.

In a letter to me dated 6 May 2021, Sir James Bevan, chief executive of the EA, confirmed that, in the case of an application to transfer the permit, the regulations require that the EA consider

“whether the prospective new owner is likely to comply with the permit conditions”.

In considering that, it may take into account management systems, technical competence, compliance history, financial competence and any “relevant” convictions, which they are allowed to take into account. That does not include spent convictions but, even if Mr Share’s conviction had not been at that point spent, it was not apparently relevant, despite the EA itself being a victim of his previous crime.

We must have a better fit and proper person test if we are to avoid criminals entering the waste industry. The rehabilitation of offenders is a noble goal, but it cannot override good sense and the public interest. People with a track record of disregarding the regulator cannot be allowed to simply bide their time and re-enter the industry a few years on.

Walleys Quarry has also taught me a lesson about the problem of perverse incentives in the current regulatory regime. Landfill tax was introduced very successfully by the Conservative Government in 1996 to disincentivise landfill and encourage the switch to more sustainable waste management. It has worked: the amount of waste going to landfill has decreased by over 50%, and household recycling has increased by over 70%. However, the consequence of the incentives that the landfill tax creates has been to increase the attractiveness of the waste industry to organised crime, and we know that there are very few barriers to entry in that business.

Landfill tax fraud often consists of falsifying paperwork relating to the classification of waste in order to pay less or zero tax—for example, labelling active waste as inactive, or hazardous waste as non-hazardous. Organised crime groups and repeat offenders can deliberately and routinely evade significant amounts of landfill tax by misdescribing waste. To illustrate the problem, from April 2021, the rate for inactive waste is only £3.10 per tonne and the standard rate is £96.70 per tonne. That differential of nearly £100 per tonne results in enormous profits for the businesses involved. Businesses that routinely mislabel waste can rack up millions of pounds of illegitimate profits, robbing Her Majesty’s Revenue and Customs of an estimated £120 million a year. The regulatory regime is inadequate in the face of such incentives.

Compounding the problem, there appears to be insufficient scrutiny applied to the operations and accounts of those companies that regularly declare high levels of inert—that is, the £3.10 a tonne—landfilling. This is not really an economic crime: fraudulent misdescription can have significant impacts on the environment, wildlife and communities. Major air quality incidents can be caused by misdescribed waste containing plasterboard or other high-sulphate waste entering landfills that lack the specialist measures required. Hazardous waste that is misdescribed as non-hazardous could have a very significant impact on the health of people and the local environment.

That has a direct bearing on the situation at Walleys Quarry. In evidence presented as part of the recent Court of Appeal case Richards v. the Environment Agency, a representative of the EA explained that the increased level of hydrogen sulphide—the eggy smell—coming from Walleys Quarry landfill was most likely the result of gypsum-containing high-sulphate waste being deposited in that landfill, contrary to the permit. That can have occurred only as a result of some part of the waste chain mislabelling that waste, or the waste not being properly separated from other waste. There is either fraud or negligence somewhere in the chain.

Several people have contacted me to make specific allegations about illegal activities at Walleys Quarry landfill. I will, of course, keep them all anonymous, and I am aware that we need to follow due process because there is an ongoing criminal investigation into the allegations. However, I am keen to put on the record some of the longest-standing, best-evidenced allegations, some of which I and the Environment Agency have been aware of for nearly 12 months. The EA informs me that any investigation might take multiple years, and I feel that my constituents deserve to know the true scale and nature of the problems that have been reported to me.

In February last year, I was contacted by an anonymous individual who alleged that the current operator was using the site to bury hazardous waste outside its agreed permit. I was told that that activity increased dramatically during lockdown, a period during which the EA ceased many of its normal activities. Employees who would have been involved in this activity were named, but I will not name them here. According to the anonymous source, the order to bury that hazardous waste came directly from Mr Adam Share, who is the company’s chairman and owner; from Mr Nigel Bowen, the company’s CEO; and from Mr Jon Clewes, the technical operations director. There have been other, less specific allegations from multiple other sources. Many whistleblowers have come to me. I have passed all the allegations on to the Environment Agency.

The House may be aware that on 20 January this year, I raised concerns about so-called lawfare in a debate in the Chamber led by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). I referred to attempts by The Guardian to publish an article about Walleys Quarry. I have been aware since November 2021 that it has been attempting to publish a story about the true scale of the issues at Walleys Quarry in my constituency, based on insider testimony from whistleblowers and backed up by emails from within the company. It has thus far been prevented from publishing by legal threats made by RED Industries against the newspaper.

With the permission of Rachel Salvidge, a journalist who has had the courage to pursue the story in the public interest, I will read the allegations that she has been seeking to publish:

“Hazardous waste, including arsenic, rat poison and zinc, has been tipped at a Newcastle-under-Lyme landfill, which is now a subject of a criminal investigation.

The Guardian has seen internal emails discussing the practice at Red Industries, the operator of Walleys Quarry Landfill. A whistleblower, a former senior executive at Red, has alleged widespread illegal behaviour at the firm, and has accused the regulator, the Environment Agency, of being ‘asleep at the wheel’.”

She continues:

“the whistleblower has provided the Guardian with emails which appear to show that hazardous material is routinely dumped at Walleys to save the company money.

In October 2019 Red’s compliance officer emailed colleagues about a shipment of cavity wax from a car manufacturer: ‘Is this for ATM or do we have another route in mind?’ This cavity wax is hazardous and organic, and should be shipped overseas to a company called ATM in Holland, which breaks it down into safer waste, but this process is expensive. In the emails, Red’s group commercial manager replies ‘Walleys TFS’.

According to the whistleblower, this is an internal code for sending hazardous waste to Walleys that should be safely shipped overseas. As a result, the former senior executive said the cavity wax was secretly dumped at the landfill. Another email refers to ‘everyone’s favourite Walleys TFS route’ for the cavity wax.

The manufacturer of this cavity wax warns the material is ‘toxic in contact with skin’ and ‘toxic if inhaled’. Dr Cecilia MacLeod, an expert in contaminated land from the University of Greenwich, said exposure to components in the wax ‘can cause issues with development and can also cause dermatitis and breathing difficulties’.”

The article continues:

“In July 2020 the group commercial manager emailed colleagues about a waste shipment of spent bullets containing hazardous levels of arsenic and zinc. ‘What do you reckon to this shit show of a material—sounds like a wash and Walleys TFS to me’—again, the whistleblower says, using the internal code ‘Walleys TFS’ to divert the hazardous waste to Walleys landfill.

Another email chain discusses a large shipment of rat poison. A Red employee asked ‘Are you able to accept this to landfill, or would it not be suitable?’ Their manager responded ‘Work your majik’, and the shipment was sent to Walleys landfill, the former senior executive said. The rodenticide is highly toxic as it can be fatal if swallowed, breathed in or if it comes into contact with skin.”

She continues:

“A former Red employee told The Guardian ‘We used to take advantage of the fact that the EA were stupid. It’s not difficult. When the EA came to inspect we didn’t worry, we just made sure that all the stickers looked nice. They weren’t chemists, so you could always hide things.’

Only solid waste is permitted at Walleys landfill, but The Guardian has seen evidence that Red has also been tipping hazardous paint. In July 2020 a Red compliance officer emailed colleagues about a ‘paint route’. The shipment was ‘coming as haz and they are priced £200/tonne...we haven’t got the money for any TFS’.

The former senior executive told The Guardian, ‘This material is hazardous so Walleys would not be permitted to accept it, but in reality this is where the paint tins are going.’ The manufacturer of this paint warns: ‘This product is classified as dangerous... Exposure to component solvent vapour concentrations...may result in...respiratory system irritation and adverse effects on the kidneys, liver and central nervous system.’

A former Red subcontractor has also told the Guardian how paint was concealed in other legitimate material: ‘They’d mix it with cement to try and thicken it up...and load it into a skip and tip it like that.’

MacLeod described the pollutants as a ‘horrible cocktail’ and said that Red might think that mixing paint with cement would stabilise and solidify it, ‘but not all the volatile organic compounds get locked up...they’re still there and you will have respiratory problems if you take these things in’.

A former senior executive at Red sent some of these emails to the Environment Agency in May 2021, along with testimony of Red’s alleged lawbreaking. In December, the EA announced a criminal investigation into Red.”

I thank Rachel Salvidge for providing me with that information.

Investigations of the public record show examples of staff at RED Industries demanding that the wording of compliance assessment report forms issued by the EA be changed, and the EA acquiescing. To paraphrase my constituent Dr Michael Salt, a nuclear scientist who has volunteered a significant amount of time to the “Stop the Stink” campaign, “If I said the same to the Office for Nuclear Regulation, they’d have something to say about it.”

The Environment Agency is a regulator with no teeth that inspires no fear and in which I cannot have confidence. There are clearly serious failures here, for which the Environment Agency must account. In the light of these revelations, I must ask that the operator’s permit be suspended while the allegations are fully investigated. The EA’s current approach has not worked if the only explanation it can find for why we are, once again, seeing exceedances of the World Health Organisation odour annoyance limits is the cold weather. If there are such serious issues with its handling of such a sensitive case, how can anyone have confidence that it is handling more routine issues appropriately?

Another area that the Walleys Quarry experience has taught me needs reform is the bonds that permitted operators must hold. They are staggeringly insufficient in the eventuality that an operator walks away from a landfill or goes bust. I am aware that many constituents are joining a class action against Walleys Quarry. If it is successful, it would almost certainly make the company go bust, and there are not sufficient bonds to account for that. Surely, walking away from its responsibilities should not be a “get out of jail free” card. The bonds need to reflect the actual risks involved.

The cost of doing bad business is not high enough. The fines when people are found to have breached the rules are too mild to be a proper deterrent. I refer to some other recent cases as examples. In November 2019, a company director was fined £1,272 for abandoning a Shropshire waste site. Clearing the site cost £45,000. In July 2021, a man was fined £1,000 for dumping waste in south-west London, plus £500 costs and a £100 victim surcharge. The clear-up and associated costs to the landowner totalled in excess of £100,000. Those are simply not sufficient deterrents.

On funding for the regulator, I note the recent articles on the front page of The Guardian, but I have personally been repeatedly assured by the EA that there is no issue relating to costs or resources in the regulation of Walleys Quarry.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I congratulate my hon. Friend on making such a strong case on behalf of his constituents who have been affected by this case. On a broader point, one of the challenges that the Environment Agency faces is being able to collect and collate the right information to bring an effective prosecution or take action against offenders. I can think of a similar case with different circumstances in my constituency, where there have been those kinds of challenges. What would he ask the Minister to do to support the Environment Agency in bringing together the right information in such cases to challenge them?