The new environmental directive on waste equipment will push up the cost of PCs and peripherals and could make life hard for many small independent computer builders.

The European Union Waste Electronic and Electrical Equipment (WEEE) directive aims to tackle the growing problem of this type of waste, much of which is currently sent to landfill sites.

The Department of Trade and Industry is still consulting on certain issues on how best to implement the directive. But when it comes into effect in August 2005, retailers and manufacturers will have to take back these goods on a like-for-like basis when they sell new ones.

They will then have to arrange for disposal or recycling of the equipment in accordance with the WEEE regulations.

Retailers will be able to add a charge on new goods to cover the costs of future disposal at point of sale, but they will not be allowed to charge the consumer for taking back old equipment.

At first this will add around £4 to £5 to cheaper pieces of hardware such as printers. But analysts have predicted that the charges for PCs and peripherals could rise by as much as 15 to 30 per cent over five years.

Having to take back and safely dispose of redundant equipment will hit smaller independent computer builders hard. It is also likely to hit sellers at computer fairs who will be under the same obligation as normal retailers to take back obsolete products.

For what is called 'orphan' waste - where consumers want to get rid of devices from manufacturers or resellers that are no longer in business - local authorities will have to set up amenities for the dumping of such products.

Large manufacturers and retailers are setting up co-operative frameworks to handle the waste. But smaller firms will either have to find and pay for waste disposal or recycling companies, or apply for a waste disposal licence themselves.

"I can see a lot of smaller independent operators unable to meet the WEEE directive and going out of business," said Eva Milory, marketing director of recycling company, Mirac Asset Management.