Digital Waste Tracking: business regulatory impact assessment

6. Option 1: Baseline

87. This option will not facilitate the commitments made by the four nations to mandate the digital recording of waste movements. The problems that a Waste Tracking service is looking to address will therefore remain present.

88. There are costs associated with the baseline, because the government is already required to introduce digital tracking for hazardous waste and waste containing persistent organic pollutants (POPs). Delivering these commitments necessitates building a new IT system, onboarding affected businesses, including familiarisation and running costs. Therefore, the baseline reflects the minimum cost of compliance with existing requirements, rather than a ‘do nothing’ scenario, which is not an option due to existing requirements for digital tracking for hazardous waste and waste containing persistent organic pollutants . Costs for Options 2 and 3 account for the additional costs to businesses on top of the baseline.

6.1 Costs to Government: IT development and set up costs

89. There will be costs incurred in the baseline scenario associated with building a new IT system; a new Waste Tracking system for Hazardous Waste and POPs waste. The cost of building the Waste Tracking service for hazardous waste and POPs waste is estimated to be a one off CDEL cost of £2.6m and ongoing RDEL cost of £6.1m over the appraisal period, incurred across the UK. This estimate is based on the apportioned costs of building the full Waste Tracking service for all waste – including IT development, system setup and agency integration costs. The total baseline IT development and set up costs are summarised in Table 8.

90. We anticipate the cost of this option to be much lower than the costs for the preferred option since we will be making use of existing platforms such as Gov.UK forms and customising them which would mean a baseline option would cost significantly less than the preferred option. Based on conversations with service delivery team, the expected cost of this option to be 20% of the cost of DWT, including contingency spend.

91. An optimism bias of 15% has been applied to cost estimates in the baseline. This is to reflect uncertainty about delivery costs, and to account for overestimation. This is consistent and applied across the whole impact assessment.

6.2 Cost to Business: Transition costs

92. The baseline service would require hazardous waste consignors to submit additional information in their hazardous waste and POP returns through an updated IT service. The costs will be lower than those of the preferred option and have been taken based on an estimate of 20% of the sites in scope of the preferred option.

93. We have broken the transition costs for business into familiarisation costs and a transition cost to implement the new reporting method and software (see Table 9). Familiarisation over a two-year period (2026-2027) is predicted to cost £0.5m and transition cost is £5.8m (2026-2030).

6.3 Cost to Business: IT service running and management costs

94. Businesses will have to take on maintenance and running costs of the new IT Service to allow them to record hazardous and POPs waste. This totals £19.73m over the appraisal period (£15.4m discounted) across the UK.

6.4 Benefits

95. The requirement to implement digital tracking for hazardous waste and POPs waste has meant that the baseline scenario of this impact assessment is different to the current situation (‘do nothing’ scenario). It is therefore important that the benefits associated with implementing hazardous waste and POPs waste tracking are understood before presenting the additional benefits associated with implementing a Waste Tracking system for all waste.

96. Option 1 (digital tracking for hazardous and POPs waste only) shares some high level mechanisms with Option 2 and 3, but benefits under Option 1 cannot be treated as a proportionate subset of those estimated for wider waste tracking.

97. This is because the monetised benefits in Option 3 are driven primarily by end-to-end visibility across the whole waste chain and across all waste types, which enables systematic reductions in waste crime (misdescription, illegal sites, fly-tipping and illegal exports). These effects rely on linking data from producers, carriers, brokers, dealers and receivers, allowing regulators to detect anomalies, trace non-compliance, and deter waste crime at multiple points in the chain.

98. In contrast, hazardous and POPs waste represent a small subset of total waste, where baseline compliance is already relatively high and enforcement activity is already targeted (in comparison with all waste). Introducing digital tracking for this subset alone does not generate the same disruption to waste crime and other factors leading to the benefits seen in Option 3.

99. Hazardous and POPs waste tracking does not provide visibility over non-hazardous waste flows, where the majority of misdescription, fly-tipping and illegal activity occurs. Any effects on waste crime or compliance are expected to be small, limited to specific cases, and not widespread across the waste system.

100. There is no robust empirical evidence basis for scaling down the Option 3 benefits to represent Option 1. Applying a simple proportion would risk overstating benefits and would not be a representative figure. There are currently insufficient data on (e.g. the volume of) hazardous and POPs waste, and on how operators and regulators will change their behaviour once digital tracking for this waste is introduced. Without this evidence, it is not possible to reliably quantify benefits listed below. Assumptions used to estimate Option 3 benefits use a stronger evidence base and research looking into intervention on all waste. Therefore, Option 1 benefits remain qualitative due to high uncertainty.

101. Implementing a digital tracking service for hazardous waste and POPs waste alone will result in:

• Increased income for regulators. The mandatory digital tracking of hazardous waste and POPs waste will result in increased compliance with the hazardous waste regime and hence an increase in income through fees^[39]. This is not a transfer from business to regulators as it is a cost which businesses are currently not having to pay despite requirements to have measures for digital tracking. As per Green Book guidance, bringing activity into compliance should not be a monetised economic cost.
• Increased landfill tax receipts. Misclassification of waste is typically carried out to describe waste as being non-hazardous, rather than hazardous, in order to benefit from paying the lower rate of landfill tax at £3/tonne, rather than £94.15/tonne^[40]. Digital tracking of hazardous waste will make such misdescription more difficult as changes in the description of waste will be highlighted to the regulators.
• Reduced illegal waste exports. It is illegal to export hazardous waste to non-OECD countries, but illegal exports can be an attractive option for waste operators, as waste disposal in non-OECD countries tends to be cheaper due to less stringent environmental regulations. Digital tracking of hazardous waste will likely deter illegal exports of waste as regulators will more easily be able to identify operators involved in such criminal activity.
• Improved knowledge of material flows. It is expected that hazardous waste treatment operators will have to digitally record valuable secondary materials created during hazardous waste treatment. This would enable the information held to be more accessible to regulators and businesses. In addition, regulators will have improved access to data for cross-border material flows.
• Improved compliance monitoring. The new hazardous waste and POPs Waste Tracking service will help regulators to have more streamlined record keeping of hazardous waste and POPs waste which will facilitate easier referencing, operational research and investigations of activities. This will also allow for greater visibility and transparency on operators’ activities with regards to hazardous waste and POPs waste. Improved record keeping could reduce waste crime, improve efficiency, fill data gaps, and improve information on the availability of underutilised waste materials. This will lead to improved use of public money.
• IT cost savings to the regulators. The regulators operate several IT services to manage Hazardous Waste data and returns. It is expected that the Waste Tracking service for Hazardous and POPs waste will supersede these services and therefore there will be savings associated with no longer paying for the running and maintenance of such services.
• Reduced administration costs for regulators. There may be time savings to regulators from having a central database of hazardous waste returns, rather than reviewing emails and spreadsheets which can be time-consuming.
• Improved data for policy decision making. Collecting data will allow government to implement better targeted policies and report on progress against specific targets.