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Authors:
Alison Holmes
James Fulford
Clare Pitts-Tucker
February 2014
Investigating the Impact of
Recycling Incentive Schemes
Summary Report
This piece of work was commissioned by Serco for our customers and colleagues in
Local Government. It is testament to their thirst for knowledge, professionalism and
commitment that we decided to embark on this journey over 12 months ago.
The current financial climate for Local Government is challenging. And within this backdrop Local
Government both wants and needs the information and evidence base to make good decisions.
With their £2m investment in the Reward and Recognition (R&R) fund the Government has provided
funding for those authorities seeking to invest in and make the case for recycling incentives.
There has to date been no proper examination or scrutiny of their performance, nor debate as to
their ability to contribute towards our local and national recycling goals.
Serco has no vested interests in the incentive schemes debate. We are not pro or anti and nor
do we seek to support, judge or criticise government policy.
As a waste and streetscene services partner we share a common optimism with and support Local
Authorities up and down the country who are investing in recycling incentives as a means to drive
up recycling rates.
With the academic rigour and analysis of Eunomia and support from both CIWM and Defra in this
report we seek to make sense of a complex picture in an objective, honest and transparent way.
This work sets out to answer some very simple questions. For the first time combining the
evaluation of scheme impacts with public opinion data from Serco’s own public consultation
programmes. The work also goes beyond these shores drawing on a broader body of learning
and evidence about what does and doesn’t work elsewhere.
With this new report we are taking important ‘first steps’ in understanding the impacts of UK
recycling incentive schemes.
We very much hope it is useful to all those in Local Government with whom we work and share a
common commitment to furthering our collective knowledge and to making better and more
informed decisions.
Mike Boult Robin Davies
Managing Director Development Director
Serco Direct Services Serco Direct Services
About Serco
Serco is a UK owned and based FTSE250 company. We work as a
service partner and provider to Local Government delivering high
performing public services helping them to improve efficiency,
lower costs and deliver transformational change.
About Eunomia
Eunomia is an influential UK-based environmental consultancy
with a focus on waste and energy issues. We provide advice and
support to public and private sector clients, including helping local
authorities to design, commission and manage high-performing
waste collection services.
Acknowledgements
This research relied on time and data from officers from Local
Authorities and key individuals from Private Sector Organisations.
Thank you for your assistance with this research.
Disclaimer
Eunomia Research & Consulting has taken due care in the
preparation of this report to ensure that all facts and analysis
presented are as accurate as possible within the scope of the
project. However no guarantee is provided in respect of the
information presented, and Eunomia Research & Consulting is not
responsible for decisions or actions taken on the basis of the
content of this report.
Our Journey
Investigating the Impact of
Recycling Incentive Schemes
Summary Report
Contents
Foreword 5
01 Introduction 6
02 Scope 7
03 Key Questions 8
04 Bringing it all together 17
4
As pressures build on Local Government to deliver ever more demanding targets against a backdrop of
reducing budgets and austerity agendas this work will provide a valuable contribution to the discussion of
opportunities to meet those two demands.
Government are looking for Councils to develop and implement incentives to encourage behaviour change
particularly in the waste and recycling sectors. There are good examples and case studies of how this can be
achieved, many of which are reviewed in this document.
In order to implement such initiatives Local Authorities need to understand the cost, impacts and benefits of
incentives. The evaluation, analysis and results contained here will make a valuable contribution to the debate
and go a long way to filling the information vacuum.
There is much for us to learn about incentives in this sector and at present we are only scratching the surface.
We need objective reports like this to inform decision makers so that they can see the options and decide what
is right for their residents and their particular circumstances.
I look forward to this piece of work having a significant effect on how we view and implement incentives in the
future.
Chris Murphy
Deputy Chief Executive
Chartered Institution of Wastes Management
Foreword
Investigating the Impact of Recycling Incentive Schemes
5
CIWM welcomes this
piece of research
commissioned by Serco
and undertaken
by Eunomia, it is both
timely and topical.
Eunomia Research and
Consulting is pleased to have
been given the opportunity by
Serco to undertake new and
detailed research looking at the
costs and benefits of recycling
incentive schemes with a view
to presenting the most
comprehensive possible set
of evidence regarding their
efficacy. This report
summarises the findings of
that detailed work.
We have over the last decade undertaken a number
of studies, both at home and abroad, examining the
impacts of policy options including both positive and
negative incentives – rewards and charges – on
landfill diversion and recycling performance. Other
organisations have also contributed good work in this
area. For this study we have built on this body of work
and hope to make an important contribution in
moving forward the incentives debate.
This important research could not come at a more
critical time for UK Local Government which has seen
deep cuts to its budget over successive Spending
Rounds and UK recycling rates starting to plateau
after a decade of consistent rises.
Now more than ever local government needs access
to good information and evidence about the potential
options available.
This work looks at:
■ The cost and benefits of the schemes that
have been compared and evaluated;
■ The impacts of recycling incentives
benchmarked against ‘Nearest Neighbours’1
to better understand whether the observed
changes are attributable to the incentive
scheme itself; and
■ Detailed and extensive resident preference
and attitudinal data regarding incentives.
01 Introduction
Investigating the Impact of Recycling Incentive Schemes
6
1 The Chartered Institute of Public Finance and Accountancy (CIPFA) produce a ‘Nearest Neighbour’ model to “aid local
authorities in comparative and benchmarking exercises” (http://www.cipfastats.net/resources/nearestneighbours/)
The work draws on evidence obtained
from over 30 different recycling incentives
schemes operated by UK Local Authorities.
These represent all UK schemes of which
we are aware and which are not funded
under Defra’s Recognition and Reward
programme. Defra have separately
commissioned Brook Lyndhurst to review
the impacts of its own Reward and
Recognition Fund. The interim report from
that study was published on in December
2013 with the final report due in 2015.2
This work has adopted a similar evaluation framework
as used by Brook Lyndhurst so that between the two
reports, we have a comprehensive picture of the
impact of incentive schemes and we believe the right
evidence to allow local authorities to make more
informed decisions and to consider the potential
impacts of incentives alongside alternative policy
options.
The schemes which we have reviewed include both
those developed and operated by a number of
external partners and providers as well as schemes
developed by local authorities themselves.
The schemes vary in complexity from the very simple
in which residents’ participation is automatic with
tonnages aggregated and rewards shared across a
given ward or neighbourhood, through to more
complex schemes which involve active participation
in registration and opting-in and where residents can
earn points or vouchers.
They include personal incentive schemes where a
householder directly benefits from their recycling
behaviours and communal schemes where the benefits
are pooled for wider community benefits or use.
We evaluated schemes across a wide ranging
spectrum of costs from those costing less than £1.00
per participating household per annum to those
costing in excess of £3.00 per household per annum.
The data available for the fullest analysis is limited for
various reasons. A relatively small number of
authorities offer incentives. In some cases where
incentive schemes have been introduced,
the authority will have also made other changes to the
waste and recycling service which means the effects
of the scheme cannot be isolated from the effects of
the service change, further limiting the sample size.
In addition good comparator authorities need to be
identified which haven’t introduced an incentive
scheme but which have similar services (which have
also not changed during the study period) and similar
demographics. The authority running the trial will
need to have invested some considerable effort in
scheme or trial design and data collection.
For these reasons only five of the authorities we
looked at have generated data which is sufficiently
reliable to support proper analysis. The Defra/Brook
Lyndhurst interim study focussed on eight schemes
for the same reason. All of these issues mean that the
analysis presented here is necessarily indicative
rather than conclusive. Given that caveat, this
analysis taken alongside the Defra analysis presents
the most comprehensive possible picture of recycling
reward scheme performance and summary of their
likely value and impacts. The literature review
presented in the full report tends also to support the
picture that emerges from the data.
02 Scope
Investigating the Impact of Recycling Incentive Schemes
7
2 Brook Lyndhurst (2013); EV0530 Evaluation of the Waste Reward and Recognition Scheme: Emerging findings; Interim report
to Defra, December 2013; https://www.gov.uk/household-reward-and-recognition-scheme-guidance-for-local-authorities
This research sets out to answer some the most
important questions in relation to incentives
schemes. These are:
1 What’s the likely impact on landfill
diversion and recycling tonnage?
2 What do residents think about
reward schemes?
3 Which types of scheme are most
effective?
4 Are there other ways to achieve a
more significant impact?
5 Do reward schemes provide good
value for money?
Our findings in respect of each question are set
out in the following sections.
1 What’s the likely impact of reward
schemes on landfill diversion and
recycling tonnage?
Across the incentive schemes for which detailed
information was available we found:
■ Authorities with recycling incentive schemes
recorded a very wide range of different outcomes
with recycling yields rising by as much as 32% for
one authority but falling by 15% for another at the
opposite extreme. Within this wide variation there
was on average an 8% increase in recycling
performance.
■ Similarly wide ranges were seen in the change in
tonnages of residual waste with an average
3% reduction.
■ There was wide variability in the performance of
different schemes. Two of five schemes showed
both increased recycling and reduced landfill.
The large variability in scheme performance is in
keeping with previous work we have undertaken,
which is discussed in more detail in the literature
review presented in the full report. In some cases
authorities recorded results which were contrary to
the intention of the reward scheme, for example there
are cases where authorities have seen both an
increase in recycling and an increase in landfilled
waste.
These possibly counter-intuitive outcomes underline
that there are a large number of non-scheme related
factors which affect the results of the study. Whilst we
have attempted to account for these, for instance by
working with data from authorities where services
didn’t change when the reward scheme was
introduced, background variation in waste data is
still evident.
03 Key Questions
Investigating the Impact of Recycling Incentive Schemes
8
Investigating the Impact of Recycling Incentive Schemes
9
To better understand the extent to which changes in
recycling and waste arisings related to the reward
scheme, we benchmarked the performance of
authorities with schemes against the performance of
‘Nearest Neighbour’ authorities without reward
schemes.
This drew into the research a further 27 authorities for
which national waste data was analysed to establish
disposal and recycling trends.
The authorities which were used for benchmarking
had qualifying characteristics such as similar
demographic profiles, similar services and had not
significantly changed their collection arrangements in
a way that might affect the results.
Based on the nearest neighbour analysis it is not
possible to directly attribute the recorded results to
the impact of the incentive schemes, in that;
■ Nearest neighbour analysis demonstrated that
similar changes in recycling performance and
landfill diversion were seen in 66% of the
nearest neighbour areas.
This means that the results recorded in the incentive
scheme areas were also being recorded in adjacent
areas where no schemes were operating. This leads
us to conclude;
■ Other external factors aside from the incentive
schemes themselves are likely to contribute to the
evaluated impact of the schemes.
■ It is not possible to build a reliable case for
investment in recycling incentives schemes
‘alone’ as a route to achieve the results we have
recorded.
Identifying these other external factors and their
relative significance would require more research.
These factors might include socio-economic trends,
resident attitudes relating to purchasing and recycling
and the spend weight and frequency of local
authority communications.
These results support and underpin the rationale for
this important piece of work and demonstrate that
Local Authorities will want to very carefully consider
the cost of the scheme versus the financial impact it
is likely to achieve by developing a business case for
investment.
Clearly, the case for investment in recycling incentives
can only be made where the scheme costs are
commensurate with the likely benefits. As discussed
below, we have looked at schemes on the basis split
into cost bands to identify where cost recovery is
most likely.
Similar changes in recycling performance
and landfill diversion were experienced in
66% nearest neighbour areas.
Investigating the Impact of Recycling Incentive Schemes
10
The attitudinal research shows that recycling
incentives are likely to directly appeal to a
relatively small proportion of the population.
2 What do residents think about reward
schemes?
Supporting the evaluation of the impacts of recycling
incentive schemes on arisings, we have used
customer attitudinal data provided by Serco from its
unique Citizen First public consultation programme.
This provides useful insights into how residents
regard their own recycling behaviours and the likely
impacts on those behaviours as a result of incentive
schemes.
Survey data from a different group of five local
authorities across a statistically robust sample of
residents was analysed in relation to the likely
impacts of incentive schemes. This showed:
■ 25% of residents say that recycling incentives
would encourage them to recycle more with
75% suggesting they are already recycling as
much as they can.
Clearly the attitudinal research shows that recycling
incentives are likely to directly appeal to a relatively
small proportion of the population, and as such, this
may go some way to explaining the positive impacts
and results where these have been achieved.
What is consistently clear from attitudinal work is that
the UK as a nation has come a very long way in
embracing recycling and that this journey has seen a
significant improvement in UK’s recycling
performance relative to its European neighbours over
the last decade.
Attitudinal data continues to show that the vast
majority of people now claim they are intrinsically
motivated to do the right thing with regards to
recycling without the need for financial rewards and
incentives. This does not detract from the need for
good and regular communications to encourage,
prompt and remind residents to recycle, a point
consistently reiterated by the majority of participants
in this evaluation study.
This is supported by similar work undertaken by
Serco with commercial waste customers which also
shows that the majority of business customers are
also generally prepared to recycle without cost
reductions or discounts because put simply “it’s the
right thing to do” and assuming it’s easy for them to
do so and they have the space available at their
premises.
This said recycling incentives may provide the
necessary key to unlock a stubborn minority that are
apathetic to environmental issues, are not motivated
to recycle and who need some additional extrinsic
motivation or reward to change their behaviours.
Investigating the Impact of Recycling Incentive Schemes
11
There was a broadly balanced picture of
preference regarding individual and
communal incentive schemes.
3 Which scheme types are most
effective?
There are a variety of different types of reward
schemes available to Local Authorities. Our analysis
considered which of these were most likely to have
positive impacts and found:
■ There was little difference in the overall
preference between personal and communal
incentive schemes with personal incentives
being consistently marginally favoured as their
preferred option.
■ Comprehensive range of marketing
communication channels were used in all of the
reviewed schemes and seem likely to be a
pre-requisite for any scheme to be successful.
The attitudinal research showed that typically there
was a broadly balanced picture of preference
regarding individual and communal incentive
schemes.
Given this result the additional investment required
for some of the more expensive schemes needs to
be carefully evaluated as part of a business case,
and specifically, where this involves major sunk
investment in ICT, vehicle modification, chipping and
bin weighing infrastructure.
As already mentioned, further work was undertaken
to explore where any other factors were involved in
the success of the different schemes we studied.
Whilst the report does not set out to test the
effectiveness of different marketing strategies and
approaches we were pleased to see that all of the
schemes we looked at were reliably supported by a
comprehensive multi-channel marketing campaign.
From interviews we conducted, a number of local
authority officers felt that reward schemes create a
good opportunity for LAs to engage residents and to
promote their services in a new and interesting way
and that this wider promotional opportunity appears
to exist regardless of the type of scheme being used.
Given these findings, LAs should carefully consider
the level and availability of funding for marketing and
the longevity of marketing communications work as
part of their business case for recycling incentives.
Figure 1 With which type of incentive scheme are
you likely to recycle more? (base: 1,000)
Personal
46%
Don’t know
12%
Communal
42%
Investigating the Impact of Recycling Incentive Schemes
12
Residents report a number of other service
changes that they believe will have a greater
impact on their recycling behaviours.
4 Are there other ways to achieve a more
significant impact?
This study sets out to evaluate incentive schemes alongside a number of
different policy options and service changes that LAs may seek to consider.
Whilst a comprehensive analysis of alternative options is outside the scope of
this work we have sought to at least consider the relative impacts of incentives
as set against some other options that are commonly used across the UK.
Our work looked at two separate analyses. The first of these was resident’s
stated preference for certain types of service changes as reported in Serco’s
extensive resident survey work. The second looks at the impacts of constraining
the provision of residual waste capacity: a specific area that data analysis
demonstrates is likely to have a significant impact.
Serco’s consultation programmes regularly test resident preference and the
likely impacts of recycling incentives set against a number of different service
changes and policy options that a local authority may consider.
Whilst survey responses need to be treated cautiously, residents report a
number of other services changes that they believe will have a greater impact
on their recycling behaviours.
■ Residents report that commingled recycling and wheeled bins will increase
their willingness to recycle (where these don’t exist).
■ Better Marketing Communications and Incentives rank as less likely to
encourage residents to recycle more with 9% and 5% respectively.
Figure 2 Which of the following would make you recycle more? (base: 700)
0
10
20
30
40
50
42% 41%
9%
5%
3%
Commingled
recycling
Wheeled bins Incentives OtherClearer Info on
what can be
recycled
Investigating the Impact of Recycling Incentive Schemes
13
We have looked at the impact on recycling tonnages where
authorities have introduced ‘residual squeeze’ tonnages
and show the generally very positive impacts.
-15.0
0.5
16.0
31.5
47.0
62.5
78.0
93.5
109.0
124.5
140.0
It is not our intention to discuss the relative merits of
different collection systems which has been done
extensively elsewhere, only to illustrate residents’
expectations regarding the likely impact of incentive
schemes on changing their behaviour, relative to
other service changes and promotional measures.
As well as looking at what service users say will affect
their recycling behaviour, we are also able to look at
the data to see how residents actually respond.
A number of authorities have limited or ‘squeezed’ the
volume of waste which they collect from residents.
This has been achieved either by shifting from larger
to smaller wheeled bins or by limiting the number of
sacks that will be collected. There are also cases
where an authority moves from a sack-based system
to providing a small wheeled bin. In this case, the
attitudinal evidence above suggests that this may be
popular with a significant proportion of the population.
We have looked at the impact on recycling tonnages
where authorities have introduced ‘residual squeeze’
tonnages and show below the generally very positive
impacts this policy has alongside the performance
increase seen where incentives are introduced.
Figure 3 Impact of Different Initiatives on Recycling Tonnages
139%
-7%
30%
52%
127%
56%
10%8%
32%
5%
8%
-15%
-2%
75%
87%
20%
59%
AverageAverage
IncentiveSchemeImpact
‘ResidualSqueeze’Impact
Investigating the Impact of Recycling Incentive Schemes
14
Reward Schemes are not a panacea and must be
considered within the context of a wider range of
recycling policy options available to LAs.
Clearly some of the changes discussed here have
wider implications and will be more difficult for a
Local Authority to introduce than an incentive
scheme. Considerations around waste policy and
strategy, political acceptability, demography, sunk
costs and infrastructure and investment implications
must all be accounted for.
■ Incentives can represent a relatively quick, low risk
and low cost option available to LAs but by the
same token are unlikely to achieve the extent of
changes in behaviour and recycling performance
as other potential policy options.
Pulling these two sets of analysis together, it is clear
that Reward Schemes are not a panacea and must
be considered within the context of a wider range of
recycling policy options available to LAs.
5 Do reward schemes provide good
value for money?
One of the most important questions we set out to
answer was whether incentive schemes justify their
cost in terms of return on investment.
This question is even more important given the
results of our work which shows that recycling
incentives demonstrate wide ranging variability in
cost and in the level of benefits they are likely to
achieve.
As part of this analysis we have banded the cost of
the different incentive schemes being evaluated into
three cost bands low, medium and high in
accordance with the scheme costs of operation per
participating household. We did not secure good
cost or arisings change data for schemes which cost
less than £1/household/annum (the low cost
category).
■ For medium cost schemes, costing
£1.00-£2.00
per participating household, the costs of
introducing such schemes come closest to being
justified and recouped in diversion savings and
recycling income.
■ For high cost schemes, costing >£2.00
per participating household the investment in
incentives schemes is unlikely to be recouped in
diversion schemes and recycling income.
In all cases the business case for investment
assumes that the benefits are proportionate to
tonnage impacts and the LA implementing the
scheme can directly benefit from both diversion and
recycling benefits. In reality this will not always be the
case and collection authorities may not benefit
financially from reduced residual arisings.
Investigating the Impact of Recycling Incentive Schemes
15
Whilst for the cheapest schemes it may be possible to develop a
business case for investment, for schemes costing more than this amount
and based on the impacts of this study no such case can be made.
Cost/Saving
Scheme
cost
>£2
Scheme
cost
£1–£2
Figure 4 Costs and Savings ranges of Reward Schemes, grouped by cost band
0 £1 £2 £3 £4 £5
Cost per household
Cost per household
Saving per household
Saving per household
The chart to the right shows the range of costs and
savings for schemes which fall into each of two
bands: those which cost more than £2/household/
annum; and those which cost £1-£2/household/
annum.
Whilst we did not secure good cost or arisings
change data for schemes which cost less than
£1/household/annum we are of the view that these
schemes, particularly towards the cheaper end may
offer some prospect of being cost justified. Whilst for
the cheapest schemes it may be possible to develop
a business case for investment, for schemes costing
more than this amount and based on the impacts of
this study no such case can be made.
Within the body of the full report we provide further
details on how the costs and benefits of the different
schemes have been calculated. Costs and benefits
will vary by area and region (depending on costs of
disposal for example). Our analysis assumes average
costs and savings based on WRAP’s annual gate fee
survey and the Materials Pricing Report.
Investigating the Impact of Recycling Incentive Schemes
16
There is strong evidence and a clear consensus
that DRS schemes have very positive impacts
on both recycling rates and levels of litter.
Other Incentive Schemes
The full report also looks in some detail at the
evidence for various types of incentive scheme other
than recycling rewards.
Deposit Refund Schemes (DRS) involve end
consumers paying a small deposit at the point of
purchase (for example on a beverage container).
This deposit is refundable when the can or bottle
(in this example) is returned to a collection point.
There is strong evidence and a clear consensus that
DRS schemes have very positive impacts on both
recycling rates and levels of litter. A good case can
be made that such schemes are cost justified
although this continues to be widely debated.
Pay As You Throw schemes (PAYT) charge waste
producers, be they businesses or individual
householders, for the costs of waste collection in
proportion to either the volume or the weight of the
rubbish that they produce or the frequency with which
it is collected.
There is strong and reliable evidence for the efficacy
of PAYT schemes at dramatically increasing recycling
rates from various countries. PAYT also has
demonstrably positive financial and environmental
impacts.
Introduction of fully functional DRS or PAYT would
require strong political support and no major UK
party has shown sufficient appetite for these
potentially controversial and easily mis-represented
schemes. There seems little prospect in the short
term of any such scheme being introduced in
England. In Scotland, however, pilot schemes aiming
to test the impact of DRS have been run and the
Scottish Environment Secretary has indicated that he
finds the idea interesting.
Investigating the Impact of Recycling Incentive Schemes
17
Eunomia and Serco hope that this work is
able to ‘move on’ the debate regarding
recycling incentives schemes, the extent
to which they work and their financial
costs and benefits.
Reflecting on key findings
Whilst the evidence base is not sufficiently large to be
treated as conclusive, this report, read alongside the
interim Brook Lyndhurst study for Defra, presents the
best possible assessment of the available evidence
to date. As part of this evaluation study we have
analysed all non-Defra funded schemes, to the
greatest possible extent based on the available data,
to determine the likely impacts of these schemes on
landfill diversion and on recycling performance.
We have found that whilst reward schemes in some
cases appear to be making a positive contribution to
recycling performance, the results achieved are
highly variable. Nearest Neighbour analysis shows
that some of the apparent performance gains
achieved in reward scheme areas are not attributable
to the impact of the scheme but relate to other
factors such as potentially changing patterns of
consumption and disposal. The underlying drivers of
patterns of waste and recycling arisings remain
complicated and this continues to be an area which
merits good and detailed research.
We have also looked at how incentives perform
relative to other changes that Local Authorities might
make either to their services or to the promotion of
their services. We have found that these schemes
should not be considered to be a panacea and
where used should be used to augment and
contribute towards the other policy and service
options that are likely to deliver more significant
impacts.
Finally, the available evidence appears to indicate
that low cost schemes offer the best prospect of
demonstrating a business case with scheme costs
offset by the landfill savings and recycling benefits
that the scheme creates.
04 Bringing it all together
Investigating the Impact of Recycling Incentive Schemes
18
It is now critical that the industry and Government engage in
an open and honest debate on the best way to re-establish
our positive momentum and direction towards 2020.
Where Next
The work we present here builds on over ten years
work in this area. As is clear to the authors and
sponsors of this report, England appears to have lost
its way in relation to national waste strategy and
waste policy. The plateau in national recycling rates,
after years of steady improvements, confirms the
need for serious and radical policy solutions which
will put England firmly back on course for 2020.
This view is shared by waste industry professionals,
and the CIWM have sought to highlight and address
this in their annual reports in both 2013 and again in
2014.
From Eunomia’s wide ranging expertise and body of
work in this area drawn from both UK and abroad we
believe it is now critical that the industry and
Government engage in an open and honest debate
on the best way to re-establish our positive
momentum and direction towards 2020.
Within the scope of this debate needs to be policy
options which rightly allocate the fair and true cost of
waste disposal and treatment based on the amount
of waste generated by households, institutions and
businesses.
Our full report presents more detailed analysis
regarding the costs and benefits of weight based
residual charge systems, used more widely around
the world. The results and the impacts of landfill
diversion and recycling are clear, unambiguous and
compelling.
Until this debate starts in earnest Britain’s recycling
performance will continue to stagnate, increasingly
lagging behind the aspirations of our government,
our industry and of the communities served by these
services.
For more information please contact:
UK&E Local & Regional Government
Enterprise House,
11 Bartley Wood Business Park, Bartley
Way, Hook RG27 9XB
Tel: +44 (0)1256 745900
Email: robin.davies@serco.com
www.serco.com
Eunomia Research & Consulting
37 Queen Square,
Bristol, BS1 4QS
Tel: +44 (0)117 917 2250
Email: james.fulford@eunomia.co.uk
www.eunomia.co.uk
Printed on paper from well managed
forests and other controlled sources.

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Serco Incentives Report Final

  • 1. Authors: Alison Holmes James Fulford Clare Pitts-Tucker February 2014 Investigating the Impact of Recycling Incentive Schemes Summary Report
  • 2. This piece of work was commissioned by Serco for our customers and colleagues in Local Government. It is testament to their thirst for knowledge, professionalism and commitment that we decided to embark on this journey over 12 months ago. The current financial climate for Local Government is challenging. And within this backdrop Local Government both wants and needs the information and evidence base to make good decisions. With their £2m investment in the Reward and Recognition (R&R) fund the Government has provided funding for those authorities seeking to invest in and make the case for recycling incentives. There has to date been no proper examination or scrutiny of their performance, nor debate as to their ability to contribute towards our local and national recycling goals. Serco has no vested interests in the incentive schemes debate. We are not pro or anti and nor do we seek to support, judge or criticise government policy. As a waste and streetscene services partner we share a common optimism with and support Local Authorities up and down the country who are investing in recycling incentives as a means to drive up recycling rates. With the academic rigour and analysis of Eunomia and support from both CIWM and Defra in this report we seek to make sense of a complex picture in an objective, honest and transparent way. This work sets out to answer some very simple questions. For the first time combining the evaluation of scheme impacts with public opinion data from Serco’s own public consultation programmes. The work also goes beyond these shores drawing on a broader body of learning and evidence about what does and doesn’t work elsewhere. With this new report we are taking important ‘first steps’ in understanding the impacts of UK recycling incentive schemes. We very much hope it is useful to all those in Local Government with whom we work and share a common commitment to furthering our collective knowledge and to making better and more informed decisions. Mike Boult Robin Davies Managing Director Development Director Serco Direct Services Serco Direct Services About Serco Serco is a UK owned and based FTSE250 company. We work as a service partner and provider to Local Government delivering high performing public services helping them to improve efficiency, lower costs and deliver transformational change. About Eunomia Eunomia is an influential UK-based environmental consultancy with a focus on waste and energy issues. We provide advice and support to public and private sector clients, including helping local authorities to design, commission and manage high-performing waste collection services. Acknowledgements This research relied on time and data from officers from Local Authorities and key individuals from Private Sector Organisations. Thank you for your assistance with this research. Disclaimer Eunomia Research & Consulting has taken due care in the preparation of this report to ensure that all facts and analysis presented are as accurate as possible within the scope of the project. However no guarantee is provided in respect of the information presented, and Eunomia Research & Consulting is not responsible for decisions or actions taken on the basis of the content of this report. Our Journey
  • 3. Investigating the Impact of Recycling Incentive Schemes Summary Report
  • 4. Contents Foreword 5 01 Introduction 6 02 Scope 7 03 Key Questions 8 04 Bringing it all together 17 4
  • 5. As pressures build on Local Government to deliver ever more demanding targets against a backdrop of reducing budgets and austerity agendas this work will provide a valuable contribution to the discussion of opportunities to meet those two demands. Government are looking for Councils to develop and implement incentives to encourage behaviour change particularly in the waste and recycling sectors. There are good examples and case studies of how this can be achieved, many of which are reviewed in this document. In order to implement such initiatives Local Authorities need to understand the cost, impacts and benefits of incentives. The evaluation, analysis and results contained here will make a valuable contribution to the debate and go a long way to filling the information vacuum. There is much for us to learn about incentives in this sector and at present we are only scratching the surface. We need objective reports like this to inform decision makers so that they can see the options and decide what is right for their residents and their particular circumstances. I look forward to this piece of work having a significant effect on how we view and implement incentives in the future. Chris Murphy Deputy Chief Executive Chartered Institution of Wastes Management Foreword Investigating the Impact of Recycling Incentive Schemes 5 CIWM welcomes this piece of research commissioned by Serco and undertaken by Eunomia, it is both timely and topical.
  • 6. Eunomia Research and Consulting is pleased to have been given the opportunity by Serco to undertake new and detailed research looking at the costs and benefits of recycling incentive schemes with a view to presenting the most comprehensive possible set of evidence regarding their efficacy. This report summarises the findings of that detailed work. We have over the last decade undertaken a number of studies, both at home and abroad, examining the impacts of policy options including both positive and negative incentives – rewards and charges – on landfill diversion and recycling performance. Other organisations have also contributed good work in this area. For this study we have built on this body of work and hope to make an important contribution in moving forward the incentives debate. This important research could not come at a more critical time for UK Local Government which has seen deep cuts to its budget over successive Spending Rounds and UK recycling rates starting to plateau after a decade of consistent rises. Now more than ever local government needs access to good information and evidence about the potential options available. This work looks at: ■ The cost and benefits of the schemes that have been compared and evaluated; ■ The impacts of recycling incentives benchmarked against ‘Nearest Neighbours’1 to better understand whether the observed changes are attributable to the incentive scheme itself; and ■ Detailed and extensive resident preference and attitudinal data regarding incentives. 01 Introduction Investigating the Impact of Recycling Incentive Schemes 6 1 The Chartered Institute of Public Finance and Accountancy (CIPFA) produce a ‘Nearest Neighbour’ model to “aid local authorities in comparative and benchmarking exercises” (http://www.cipfastats.net/resources/nearestneighbours/)
  • 7. The work draws on evidence obtained from over 30 different recycling incentives schemes operated by UK Local Authorities. These represent all UK schemes of which we are aware and which are not funded under Defra’s Recognition and Reward programme. Defra have separately commissioned Brook Lyndhurst to review the impacts of its own Reward and Recognition Fund. The interim report from that study was published on in December 2013 with the final report due in 2015.2 This work has adopted a similar evaluation framework as used by Brook Lyndhurst so that between the two reports, we have a comprehensive picture of the impact of incentive schemes and we believe the right evidence to allow local authorities to make more informed decisions and to consider the potential impacts of incentives alongside alternative policy options. The schemes which we have reviewed include both those developed and operated by a number of external partners and providers as well as schemes developed by local authorities themselves. The schemes vary in complexity from the very simple in which residents’ participation is automatic with tonnages aggregated and rewards shared across a given ward or neighbourhood, through to more complex schemes which involve active participation in registration and opting-in and where residents can earn points or vouchers. They include personal incentive schemes where a householder directly benefits from their recycling behaviours and communal schemes where the benefits are pooled for wider community benefits or use. We evaluated schemes across a wide ranging spectrum of costs from those costing less than £1.00 per participating household per annum to those costing in excess of £3.00 per household per annum. The data available for the fullest analysis is limited for various reasons. A relatively small number of authorities offer incentives. In some cases where incentive schemes have been introduced, the authority will have also made other changes to the waste and recycling service which means the effects of the scheme cannot be isolated from the effects of the service change, further limiting the sample size. In addition good comparator authorities need to be identified which haven’t introduced an incentive scheme but which have similar services (which have also not changed during the study period) and similar demographics. The authority running the trial will need to have invested some considerable effort in scheme or trial design and data collection. For these reasons only five of the authorities we looked at have generated data which is sufficiently reliable to support proper analysis. The Defra/Brook Lyndhurst interim study focussed on eight schemes for the same reason. All of these issues mean that the analysis presented here is necessarily indicative rather than conclusive. Given that caveat, this analysis taken alongside the Defra analysis presents the most comprehensive possible picture of recycling reward scheme performance and summary of their likely value and impacts. The literature review presented in the full report tends also to support the picture that emerges from the data. 02 Scope Investigating the Impact of Recycling Incentive Schemes 7 2 Brook Lyndhurst (2013); EV0530 Evaluation of the Waste Reward and Recognition Scheme: Emerging findings; Interim report to Defra, December 2013; https://www.gov.uk/household-reward-and-recognition-scheme-guidance-for-local-authorities
  • 8. This research sets out to answer some the most important questions in relation to incentives schemes. These are: 1 What’s the likely impact on landfill diversion and recycling tonnage? 2 What do residents think about reward schemes? 3 Which types of scheme are most effective? 4 Are there other ways to achieve a more significant impact? 5 Do reward schemes provide good value for money? Our findings in respect of each question are set out in the following sections. 1 What’s the likely impact of reward schemes on landfill diversion and recycling tonnage? Across the incentive schemes for which detailed information was available we found: ■ Authorities with recycling incentive schemes recorded a very wide range of different outcomes with recycling yields rising by as much as 32% for one authority but falling by 15% for another at the opposite extreme. Within this wide variation there was on average an 8% increase in recycling performance. ■ Similarly wide ranges were seen in the change in tonnages of residual waste with an average 3% reduction. ■ There was wide variability in the performance of different schemes. Two of five schemes showed both increased recycling and reduced landfill. The large variability in scheme performance is in keeping with previous work we have undertaken, which is discussed in more detail in the literature review presented in the full report. In some cases authorities recorded results which were contrary to the intention of the reward scheme, for example there are cases where authorities have seen both an increase in recycling and an increase in landfilled waste. These possibly counter-intuitive outcomes underline that there are a large number of non-scheme related factors which affect the results of the study. Whilst we have attempted to account for these, for instance by working with data from authorities where services didn’t change when the reward scheme was introduced, background variation in waste data is still evident. 03 Key Questions Investigating the Impact of Recycling Incentive Schemes 8
  • 9. Investigating the Impact of Recycling Incentive Schemes 9 To better understand the extent to which changes in recycling and waste arisings related to the reward scheme, we benchmarked the performance of authorities with schemes against the performance of ‘Nearest Neighbour’ authorities without reward schemes. This drew into the research a further 27 authorities for which national waste data was analysed to establish disposal and recycling trends. The authorities which were used for benchmarking had qualifying characteristics such as similar demographic profiles, similar services and had not significantly changed their collection arrangements in a way that might affect the results. Based on the nearest neighbour analysis it is not possible to directly attribute the recorded results to the impact of the incentive schemes, in that; ■ Nearest neighbour analysis demonstrated that similar changes in recycling performance and landfill diversion were seen in 66% of the nearest neighbour areas. This means that the results recorded in the incentive scheme areas were also being recorded in adjacent areas where no schemes were operating. This leads us to conclude; ■ Other external factors aside from the incentive schemes themselves are likely to contribute to the evaluated impact of the schemes. ■ It is not possible to build a reliable case for investment in recycling incentives schemes ‘alone’ as a route to achieve the results we have recorded. Identifying these other external factors and their relative significance would require more research. These factors might include socio-economic trends, resident attitudes relating to purchasing and recycling and the spend weight and frequency of local authority communications. These results support and underpin the rationale for this important piece of work and demonstrate that Local Authorities will want to very carefully consider the cost of the scheme versus the financial impact it is likely to achieve by developing a business case for investment. Clearly, the case for investment in recycling incentives can only be made where the scheme costs are commensurate with the likely benefits. As discussed below, we have looked at schemes on the basis split into cost bands to identify where cost recovery is most likely. Similar changes in recycling performance and landfill diversion were experienced in 66% nearest neighbour areas.
  • 10. Investigating the Impact of Recycling Incentive Schemes 10 The attitudinal research shows that recycling incentives are likely to directly appeal to a relatively small proportion of the population. 2 What do residents think about reward schemes? Supporting the evaluation of the impacts of recycling incentive schemes on arisings, we have used customer attitudinal data provided by Serco from its unique Citizen First public consultation programme. This provides useful insights into how residents regard their own recycling behaviours and the likely impacts on those behaviours as a result of incentive schemes. Survey data from a different group of five local authorities across a statistically robust sample of residents was analysed in relation to the likely impacts of incentive schemes. This showed: ■ 25% of residents say that recycling incentives would encourage them to recycle more with 75% suggesting they are already recycling as much as they can. Clearly the attitudinal research shows that recycling incentives are likely to directly appeal to a relatively small proportion of the population, and as such, this may go some way to explaining the positive impacts and results where these have been achieved. What is consistently clear from attitudinal work is that the UK as a nation has come a very long way in embracing recycling and that this journey has seen a significant improvement in UK’s recycling performance relative to its European neighbours over the last decade. Attitudinal data continues to show that the vast majority of people now claim they are intrinsically motivated to do the right thing with regards to recycling without the need for financial rewards and incentives. This does not detract from the need for good and regular communications to encourage, prompt and remind residents to recycle, a point consistently reiterated by the majority of participants in this evaluation study. This is supported by similar work undertaken by Serco with commercial waste customers which also shows that the majority of business customers are also generally prepared to recycle without cost reductions or discounts because put simply “it’s the right thing to do” and assuming it’s easy for them to do so and they have the space available at their premises. This said recycling incentives may provide the necessary key to unlock a stubborn minority that are apathetic to environmental issues, are not motivated to recycle and who need some additional extrinsic motivation or reward to change their behaviours.
  • 11. Investigating the Impact of Recycling Incentive Schemes 11 There was a broadly balanced picture of preference regarding individual and communal incentive schemes. 3 Which scheme types are most effective? There are a variety of different types of reward schemes available to Local Authorities. Our analysis considered which of these were most likely to have positive impacts and found: ■ There was little difference in the overall preference between personal and communal incentive schemes with personal incentives being consistently marginally favoured as their preferred option. ■ Comprehensive range of marketing communication channels were used in all of the reviewed schemes and seem likely to be a pre-requisite for any scheme to be successful. The attitudinal research showed that typically there was a broadly balanced picture of preference regarding individual and communal incentive schemes. Given this result the additional investment required for some of the more expensive schemes needs to be carefully evaluated as part of a business case, and specifically, where this involves major sunk investment in ICT, vehicle modification, chipping and bin weighing infrastructure. As already mentioned, further work was undertaken to explore where any other factors were involved in the success of the different schemes we studied. Whilst the report does not set out to test the effectiveness of different marketing strategies and approaches we were pleased to see that all of the schemes we looked at were reliably supported by a comprehensive multi-channel marketing campaign. From interviews we conducted, a number of local authority officers felt that reward schemes create a good opportunity for LAs to engage residents and to promote their services in a new and interesting way and that this wider promotional opportunity appears to exist regardless of the type of scheme being used. Given these findings, LAs should carefully consider the level and availability of funding for marketing and the longevity of marketing communications work as part of their business case for recycling incentives. Figure 1 With which type of incentive scheme are you likely to recycle more? (base: 1,000) Personal 46% Don’t know 12% Communal 42%
  • 12. Investigating the Impact of Recycling Incentive Schemes 12 Residents report a number of other service changes that they believe will have a greater impact on their recycling behaviours. 4 Are there other ways to achieve a more significant impact? This study sets out to evaluate incentive schemes alongside a number of different policy options and service changes that LAs may seek to consider. Whilst a comprehensive analysis of alternative options is outside the scope of this work we have sought to at least consider the relative impacts of incentives as set against some other options that are commonly used across the UK. Our work looked at two separate analyses. The first of these was resident’s stated preference for certain types of service changes as reported in Serco’s extensive resident survey work. The second looks at the impacts of constraining the provision of residual waste capacity: a specific area that data analysis demonstrates is likely to have a significant impact. Serco’s consultation programmes regularly test resident preference and the likely impacts of recycling incentives set against a number of different service changes and policy options that a local authority may consider. Whilst survey responses need to be treated cautiously, residents report a number of other services changes that they believe will have a greater impact on their recycling behaviours. ■ Residents report that commingled recycling and wheeled bins will increase their willingness to recycle (where these don’t exist). ■ Better Marketing Communications and Incentives rank as less likely to encourage residents to recycle more with 9% and 5% respectively. Figure 2 Which of the following would make you recycle more? (base: 700) 0 10 20 30 40 50 42% 41% 9% 5% 3% Commingled recycling Wheeled bins Incentives OtherClearer Info on what can be recycled
  • 13. Investigating the Impact of Recycling Incentive Schemes 13 We have looked at the impact on recycling tonnages where authorities have introduced ‘residual squeeze’ tonnages and show the generally very positive impacts. -15.0 0.5 16.0 31.5 47.0 62.5 78.0 93.5 109.0 124.5 140.0 It is not our intention to discuss the relative merits of different collection systems which has been done extensively elsewhere, only to illustrate residents’ expectations regarding the likely impact of incentive schemes on changing their behaviour, relative to other service changes and promotional measures. As well as looking at what service users say will affect their recycling behaviour, we are also able to look at the data to see how residents actually respond. A number of authorities have limited or ‘squeezed’ the volume of waste which they collect from residents. This has been achieved either by shifting from larger to smaller wheeled bins or by limiting the number of sacks that will be collected. There are also cases where an authority moves from a sack-based system to providing a small wheeled bin. In this case, the attitudinal evidence above suggests that this may be popular with a significant proportion of the population. We have looked at the impact on recycling tonnages where authorities have introduced ‘residual squeeze’ tonnages and show below the generally very positive impacts this policy has alongside the performance increase seen where incentives are introduced. Figure 3 Impact of Different Initiatives on Recycling Tonnages 139% -7% 30% 52% 127% 56% 10%8% 32% 5% 8% -15% -2% 75% 87% 20% 59% AverageAverage IncentiveSchemeImpact ‘ResidualSqueeze’Impact
  • 14. Investigating the Impact of Recycling Incentive Schemes 14 Reward Schemes are not a panacea and must be considered within the context of a wider range of recycling policy options available to LAs. Clearly some of the changes discussed here have wider implications and will be more difficult for a Local Authority to introduce than an incentive scheme. Considerations around waste policy and strategy, political acceptability, demography, sunk costs and infrastructure and investment implications must all be accounted for. ■ Incentives can represent a relatively quick, low risk and low cost option available to LAs but by the same token are unlikely to achieve the extent of changes in behaviour and recycling performance as other potential policy options. Pulling these two sets of analysis together, it is clear that Reward Schemes are not a panacea and must be considered within the context of a wider range of recycling policy options available to LAs. 5 Do reward schemes provide good value for money? One of the most important questions we set out to answer was whether incentive schemes justify their cost in terms of return on investment. This question is even more important given the results of our work which shows that recycling incentives demonstrate wide ranging variability in cost and in the level of benefits they are likely to achieve. As part of this analysis we have banded the cost of the different incentive schemes being evaluated into three cost bands low, medium and high in accordance with the scheme costs of operation per participating household. We did not secure good cost or arisings change data for schemes which cost less than £1/household/annum (the low cost category). ■ For medium cost schemes, costing £1.00-£2.00 per participating household, the costs of introducing such schemes come closest to being justified and recouped in diversion savings and recycling income. ■ For high cost schemes, costing >£2.00 per participating household the investment in incentives schemes is unlikely to be recouped in diversion schemes and recycling income. In all cases the business case for investment assumes that the benefits are proportionate to tonnage impacts and the LA implementing the scheme can directly benefit from both diversion and recycling benefits. In reality this will not always be the case and collection authorities may not benefit financially from reduced residual arisings.
  • 15. Investigating the Impact of Recycling Incentive Schemes 15 Whilst for the cheapest schemes it may be possible to develop a business case for investment, for schemes costing more than this amount and based on the impacts of this study no such case can be made. Cost/Saving Scheme cost >£2 Scheme cost £1–£2 Figure 4 Costs and Savings ranges of Reward Schemes, grouped by cost band 0 £1 £2 £3 £4 £5 Cost per household Cost per household Saving per household Saving per household The chart to the right shows the range of costs and savings for schemes which fall into each of two bands: those which cost more than £2/household/ annum; and those which cost £1-£2/household/ annum. Whilst we did not secure good cost or arisings change data for schemes which cost less than £1/household/annum we are of the view that these schemes, particularly towards the cheaper end may offer some prospect of being cost justified. Whilst for the cheapest schemes it may be possible to develop a business case for investment, for schemes costing more than this amount and based on the impacts of this study no such case can be made. Within the body of the full report we provide further details on how the costs and benefits of the different schemes have been calculated. Costs and benefits will vary by area and region (depending on costs of disposal for example). Our analysis assumes average costs and savings based on WRAP’s annual gate fee survey and the Materials Pricing Report.
  • 16. Investigating the Impact of Recycling Incentive Schemes 16 There is strong evidence and a clear consensus that DRS schemes have very positive impacts on both recycling rates and levels of litter. Other Incentive Schemes The full report also looks in some detail at the evidence for various types of incentive scheme other than recycling rewards. Deposit Refund Schemes (DRS) involve end consumers paying a small deposit at the point of purchase (for example on a beverage container). This deposit is refundable when the can or bottle (in this example) is returned to a collection point. There is strong evidence and a clear consensus that DRS schemes have very positive impacts on both recycling rates and levels of litter. A good case can be made that such schemes are cost justified although this continues to be widely debated. Pay As You Throw schemes (PAYT) charge waste producers, be they businesses or individual householders, for the costs of waste collection in proportion to either the volume or the weight of the rubbish that they produce or the frequency with which it is collected. There is strong and reliable evidence for the efficacy of PAYT schemes at dramatically increasing recycling rates from various countries. PAYT also has demonstrably positive financial and environmental impacts. Introduction of fully functional DRS or PAYT would require strong political support and no major UK party has shown sufficient appetite for these potentially controversial and easily mis-represented schemes. There seems little prospect in the short term of any such scheme being introduced in England. In Scotland, however, pilot schemes aiming to test the impact of DRS have been run and the Scottish Environment Secretary has indicated that he finds the idea interesting.
  • 17. Investigating the Impact of Recycling Incentive Schemes 17 Eunomia and Serco hope that this work is able to ‘move on’ the debate regarding recycling incentives schemes, the extent to which they work and their financial costs and benefits. Reflecting on key findings Whilst the evidence base is not sufficiently large to be treated as conclusive, this report, read alongside the interim Brook Lyndhurst study for Defra, presents the best possible assessment of the available evidence to date. As part of this evaluation study we have analysed all non-Defra funded schemes, to the greatest possible extent based on the available data, to determine the likely impacts of these schemes on landfill diversion and on recycling performance. We have found that whilst reward schemes in some cases appear to be making a positive contribution to recycling performance, the results achieved are highly variable. Nearest Neighbour analysis shows that some of the apparent performance gains achieved in reward scheme areas are not attributable to the impact of the scheme but relate to other factors such as potentially changing patterns of consumption and disposal. The underlying drivers of patterns of waste and recycling arisings remain complicated and this continues to be an area which merits good and detailed research. We have also looked at how incentives perform relative to other changes that Local Authorities might make either to their services or to the promotion of their services. We have found that these schemes should not be considered to be a panacea and where used should be used to augment and contribute towards the other policy and service options that are likely to deliver more significant impacts. Finally, the available evidence appears to indicate that low cost schemes offer the best prospect of demonstrating a business case with scheme costs offset by the landfill savings and recycling benefits that the scheme creates. 04 Bringing it all together
  • 18. Investigating the Impact of Recycling Incentive Schemes 18 It is now critical that the industry and Government engage in an open and honest debate on the best way to re-establish our positive momentum and direction towards 2020. Where Next The work we present here builds on over ten years work in this area. As is clear to the authors and sponsors of this report, England appears to have lost its way in relation to national waste strategy and waste policy. The plateau in national recycling rates, after years of steady improvements, confirms the need for serious and radical policy solutions which will put England firmly back on course for 2020. This view is shared by waste industry professionals, and the CIWM have sought to highlight and address this in their annual reports in both 2013 and again in 2014. From Eunomia’s wide ranging expertise and body of work in this area drawn from both UK and abroad we believe it is now critical that the industry and Government engage in an open and honest debate on the best way to re-establish our positive momentum and direction towards 2020. Within the scope of this debate needs to be policy options which rightly allocate the fair and true cost of waste disposal and treatment based on the amount of waste generated by households, institutions and businesses. Our full report presents more detailed analysis regarding the costs and benefits of weight based residual charge systems, used more widely around the world. The results and the impacts of landfill diversion and recycling are clear, unambiguous and compelling. Until this debate starts in earnest Britain’s recycling performance will continue to stagnate, increasingly lagging behind the aspirations of our government, our industry and of the communities served by these services.
  • 19.
  • 20. For more information please contact: UK&E Local & Regional Government Enterprise House, 11 Bartley Wood Business Park, Bartley Way, Hook RG27 9XB Tel: +44 (0)1256 745900 Email: robin.davies@serco.com www.serco.com Eunomia Research & Consulting 37 Queen Square, Bristol, BS1 4QS Tel: +44 (0)117 917 2250 Email: james.fulford@eunomia.co.uk www.eunomia.co.uk Printed on paper from well managed forests and other controlled sources.