The volume of UK waste arising has largely stagnated in recent years, with moderate annual fluctuations evident. Between 2011 and 2013, waste arisings reduced by 2% to 199.8 million tonnes. This is believed to have been followed by a 1% increase in 2014 and marginal growth in 2015. The increase in the latter two years is largely due to a rise in construction and demolition waste amid more buoyant construction activity. Construction and demolition waste accounts for around half of total UK waste arisings. The more sustained economic recovery has also contributed to increased waste arising in the household, commercial and industrial sectors.

A stronger increase in waste arising has been avoided largely due to people and businesses changing the way they manage waste, with the acknowledgement that it affects the environment. This change in mindset has been aided by EU and other domestic waste regulations and initiatives, which have set waste reduction and reuse targets.

Figure 1: Waste Arisings in the UK, by Source, 2011-15, (% of Total)

Source: MBD analysis of Defra, EA, SEPA, WAG and NIEA and MBD estimates

Between 2010/11 and 2013/14, the volume of collected household waste in England fell by almost 7% to 10.3 million tonnes. This was followed by a moderate 0.8% increase in 2014/15 amid a stronger economic performance and increased consumer spending. The amount of household recycling collected increased during most years between 2010/11 and 2014/15, rising overall by 4%. In 2014/15, recycling accounted for 43.7% of household waste collected, up from 41.5% in 2010/11.

Figure 2: Household Waste in England, by Collection Method, 2010/11 and 2014/15, (000 Tonnes)

Source: MBD analysis of Defra data

At the end of 2014, around 513 million cubic metres of landfill capacity was available in England and Wales, of which 26% was for inert waste, 68% for non-inert waste, and the remainder for restricted users. Total capacity has reduced from 602 million cubic metres in 2010 to 513 million cubic metres in 2014, representing a decline of 31%. Only inert waste experienced an overall increase in landfill capacity over the review period. The decline in capacity is in line with the government’s waste policy, which aims to reduce the amount of municipal waste directed to landfill.

Figure 3: Landfill Capacity in England and Wales, 2010-14, (Million Cubic Metres)

Source: MBD analysis of Environment Agency and Natural Resources Wales data

In 2014/15, recycling rates in England increased marginally to 43.7% from 43.5% in 2013/14. However, fairly large disparities were recorded by region. London has by far the lowest recycling rate at 33.1% in 2014/15. The North East, West Midlands and Yorkshire & The Humber also recorded below average recycling rates in 2014/15. The East of England has the highest recycling rate of 49.3%, followed by the South West (47.6%) and the North West (46.5%).

The final Circular Economy package was adopted by the European Commission on 2 December 2015, including legislative proposals on waste, and an EU Action Plan for a Circular Economy, setting out proposals for further waste reduction measures to be developed.

The proposed legislation contains a provision for the gradual limitation of the landfilling of municipal waste to 10% by 2030 and a ban on landfilling separately collected waste. This will significantly impact landfilling, with the diversion of material from landfill remaining a high priority. Financial drivers will also be used to drive waste away from landfill under the EU’s proposals, with the cost of landfilling waste expected to continue to rise.

Other proposed measures include a 65% municipal waste recycling target by 2030, and a recycling target for all packaging waste of 75% by 2030 - with specific targets for packaging materials such as plastic, wood, glass, paper and cardboard. It also contains proposals for the separate collection of biowaste where it is technically, environmentally and economically practicable and appropriate, including biodegradable garden and park waste, food and kitchen waste from households, restaurants, caterers and retail premises. However, action on food waste is to be progressed under the Action Plan, with no draft legislation set out at this stage.

The legislative package is now being considered by the European Council and parliament, with a view to negotiating and agreeing the different elements. The UK government has stated that this process may take between one and three years, with the new directives also needing to be transposed into UK law.

The UK will now not be required to implement the EU Circular Economy Package after voting to leave the EU in June 2016, creating increased uncertainties about the future direction of UK waste policy. MBD expects that the UK government will continue to follow a similar direction to the EU, at least in the short to medium term, as it prioritises negotiating trade agreements, with a slow approach to any possible reforms to waste and environmental policies. A future waste policy is expected to continue to centre around the gradual limitation of landfilling of municipal waste and a further move towards recycling and recovery.

All UK government legislation is centred on shifting focus away from waste disposal to recycling, reuse and energy recovery, with an ambition towards a “circular economy”. This has resulted in significant investment in waste treatment infrastructure. Going forward, investment in new waste treatment infrastructure is expected to slow as requirements for municipal residual processing infrastructure are close to being met. The government is, in fact, not planning to fund any new waste infrastructure projects beyond those already in the pipeline.

As of March 2016, there were 10 capital projects with a combined value of £500 million in the waste sector’s infrastructure pipeline. Future UK waste infrastructure requirements are expected to become clearer once the government implements a new waste policy. With the UK voting for Brexit in June 2016, there are now increased uncertainties regarding the timing and direction of a future waste policy, as the country will not be obliged to adopt the EU Circular Economy Package.

In 2014/15, 43.7% of household waste was recycled, up marginally from 43.5% in the previous year, according to Defra. Growth has been slowing since its peak in 2005, with only marginal annual increases recorded since 2012, suggesting that recycling rates have plateaued. This indicates that authorities have now exploited the easiest measures to boost recycling rates and are increasingly facing challenges in changing behaviour and identifying new areas and efficiencies in waste services. The EU’s recycling target of 50% by 2020 suggests that local authorities need to step up their efforts to increase recycling, especially in England, where recycling rates trail behind Wales and Scotland. Despite the Brexit vote, the UK government is expected to remain committed to achieving the 2020 EU target, not least to avoid a green backlash.

Mintel commissioned consumer research for this report to assess peoples’ attitudes towards household waste and waste collection. Research was carried out by Lightspeed GMI among 2,000 internet users aged 16+ in April 2016.

44% of respondents indicated that their non-recyclable household waste was collected every fortnight, while 42% have weekly collections. Moreover, 51% of respondents said they are provided with a separate food waste collection scheme.

43% of respondents with weekly residual waste collections said they sometimes put recyclable rubbish in the non-recyclable bin, though this drops to 35% among respondents with fortnightly collections. Moreover 41% of people with weekly residual waste collections sometimes put food waste in the non-recyclable bin, while a lower 36% of respondents with fortnightly collections sometimes did so. This suggests that less frequent residual bin collections are encouraging householders to recycle more, with less recyclables and food waste ending up in the non-recyclable bin.

The largest operators in the UK waste management sector include Veolia Environmental Services UK, Biffa Group, Viridor, SUEZ, FCC UK and Cory Environmental. The market has been characterised by a relatively high level of acquisitions during recent years, with major players expanding ahead of smaller operators.

According to research by Grant Thornton, the volume of M&A activity rose year-on-year between 2012 and 2014, from 39 to 45 deals, reaching close to the peak of 48 deals in 2011. This reflects increased consolidation as the industry responded to difficult trading conditions. 2015 was a relatively quiet year for M&A activity, with much of recent acquisition activity in the form of smaller infl. acquisitions. There also continue to be acquisitional appetite in more specialist sectors, such as reprocessing, WEEE and hazardous waste.

Waste arisings have traditionally been linked to economic performance as around half are accounted for by construction and demolition. However, the threat of climate change and the depletion of spare landfill capacity over recent years has encouraged the government and public to change their behaviour and perception of waste, with a focus on waste reduction. A considerable increase in waste arising is therefore unlikely in the future. In 2016 and 2017, total waste arisings are expected to rise modestly, partly reflecting more buoyant construction activity. This is anticipated to be followed by moderate annual declines between 2018 and 2020, following the implementation of a new waste policy. Despite the Brexit vote, MBD expects the UK’s future waste policy to remain in line with EU polices at least in the short to medium term. Waste policy is expected to continue to centre around more municipal waste entering the recycling and recovery stream and being directed away from landfill.

Financial restrictions will remain in place in all LAs for the foreseeable future so many are still trying to find ways of cutting costs, including waste management services. For example, a number of councils have recently introduced three-weekly bin collections to cut costs and boost recycling rates.

Figure 5: UK Waste Arisings Forecast, 2016-20, (Million Tonnes)

Source: MBD forecasts

The UK has made considerable progress in setting out waste management infrastructure through the collection and treatment of waste, but is still behind most European countries in reaching its envisaged recycling target by 2020. The recycling rate has increased considerably over the last decade to almost 45% by 2014, but has stagnated since 2012. The UK therefore needs to see a step change in its approach to recycling if it is to meet the EU’s 50% recycling target by 2020 . Efforts need to be particularly improved in England, where recycling rates trail behind Wales and Scotland. Despite the Brexit vote in June 2016, the UK government is expected to remain committed to the 2020 recycling targets, not least to avoid creating a green backlash.