Councils that invested early in diverting waste from landfill have spoken of their disappointment that landfill allowance values remain "virtually worthless" in the third year of the LATS scheme.

LATS - the Landfill Allowance Trading Scheme - is the government's flagship initiative for forcing waste disposal authorities to cut the amount of biodegradable waste they send to landfill each year.

But the financial incentives on which the system is based have not emerged yet, despite the scheme starting back in the financial year 2005/06.

Local authorities have reported that surplus allowances for landfilling biodegradable waste are being put up for sale at £5 per tonne or under. Some councils have been unable to sell their allowances at all.

Disappointment

Kent county council's lead member for finance, Cllr Nick Chard, said he was "extremely disappointed" with LATS. His county had hoped to sell permits for up to £70 to generate revenue for service improvements but this had not happened, he said.

Cllr Chard said: "Some local authorities would be facing hefty fines under LATS but the government is very reluctant to enforce this, perhaps from a political viewpoint. If the government doesn't seem to be enforcing fines, there doesn't seem to be any reason to buy LATS, so there are no markets."

Westminster City council's waste strategy manager Mark Banks said that since LATS began, they had sold around 100,000 permits at an average price of £18. He explained that the council had sold as many permits as possible but any surplus permits were now "virtually worthless".

He said when the scheme started, permits had been selling for around £20, which was lower than the £50 plus that had been expected. Mr Banks put this down to the fact that the "drivers" to reduce landfilling were more advanced than first thought before LATS was introduced.

LATS

Under LATS, Defra allocated waste disposal authorities with annual allocations for the amount of biodegradable waste they can send to landfill for the years 2005/06 to 2019/20.

Any authorities that find themselves unable to keep to their set amount can purchase extra allowances from authorities which have a surplus. The scheme imposes a £150 fine for each tonne landfilled above the local authority's allocation.

Speaking to letsrecycle.com, waste officers said they expected the market for landfill allowances to slow right down until 2009/10, when the first target of European Landfill Directive must be met.

After this, a resurgence in trading is expected, with the 2013 Landfill Directive target to cut biodegradable municipal landfill to 50% of the levels in 1995 seen as particularly challenging.

During Landfill Directive target years, councils cannot use landfill allowances saved up from other years' allocations. As a result, local authority officers believe allowances could sell for between £35 to about £100 per tonne.

Cambridgeshire county council's waste policy manager, Mark Shelton, said that while landfill figures for 2006/07 were not yet available, early indications were that all local authorities in England had kept to their allocated allowance in the second year of LATS.

Assurances

He said Cambridgeshire had been given written assurances from Defra, following a letter it sent to former environment minister Ben Bradshaw last year, that any councils exceeding their landfill allowance would be fined.

Mr Shelton said the county had written to the government because "Cambridgeshire invested a considerable amount of money in MBT to make sure we hit the targets", and therefore wanted to make sure the system was working effectively.

He added that Mr Bradshaw also told delegates at a LARAC (Local Authority Recycling Advisory Committee) conference last October that councils missing targets would be fined but there should be no reason for this to happen because extra permits could be purchased from other local authorities.

However, Mr Shelton said that despite efforts to sell permits, his council had been "unsuccessful", most likely because the market was flooded, but he said he had not expected to see the price drop to £6.

Mr Shelton said: "We don't feel we want to rip off other councils by charging high amounts of money, but we do feel we ought to get some return on our investment."