Budget confirms £32 per tonne Landfill Tax from April
12 March 2008
Alistair Darling today confirmed that the Landfill Tax will rise by £8 per tonne each year from next month, as part of his first Budget as Chancellor.
Mr Darling said within a Budget, which was given a green tint thanks to a pledge on plastic bags, that the Landfill Tax will, as expected, be £32 per tonne from April 1, 2008.
The lower rate of Landfill Tax - for inactive material like bricks and stones - will be £2.50 per tonne.
The tax - working with other measures - has been successful with overall quantities of waste recorded at landfill sites registered for the tax falling by around 26%
The rise represents the biggest jump in the Landfill Tax from year to year since it was introduced in 1996 as the UK's very first environmental tax.
Her Majesty's Revenue and Customs states that the aim of the tax is to "encourage the disposal of less waste; to recover more value from waste through recycling and composting, and to stimulate moves to more environmentally friendly waste management methods".
It is seen as the key driver of the UK's move away from using landfill disposal - and the main hope of meeting European waste targets under the Landfill Directive in 2010, 2013 and 2020.
The Budget commented: "Landfill tax increases the price of waste sent to landfill, encouraging more sustainable ways of managing waste. The tax - working with other measures - has been successful with overall quantities of waste recorded at landfill sites registered for the tax falling by around 26%. The UK is on track to meet its 2010 targets under the Landfill Directive."
Indications from the government are that it will continue increasing the Landfill Tax by £8 per tonne each year - what is known as the Landfill Tax "escalator" - up to a level of at least £48 per tonne. However, the lower rate of tax for inactive waste will be frozen at £2.50 per tonne up to 2009/10.
There will be some reform on the Landfill Tax in relation to cleaning up brownfield sites, with the Treasury stating that it will remove the exemption from landfill tax for waste arising from the clearance of contaminated land. The revenue derived from removing this exemption will be used to extend land remediation relief. The exemption will be phased out by 1 April 2012.
The government also today announced that the value of the Landfill Communities Fund - revenue from the Landfill Tax used for local improvement projects - will be increased by £5 million to £70 million for 2008-09.
Elsewhere in the budget, the Chancellor confirmed that the Climate Change Levy rates would increase in line with inflation from April 1, "in order to maintain the environmental incentive effect", while the Aggregates Levy will increase from £1.95 per tonne to £2.00 per tonne from 1 April 2009, "to maintain its environmental impact". And, a fuel duty rise of 2p per litre is being postponed to October 2008.
Efforts to help small and medium sized companies to win a larger share of public sector work were announced by the Chancellor. Details of what the proposals mean are still to be spelt out but the move could be significant for the recycling and waste sector.
In the past, smaller recycling businesses have complained that large long-term local authority contracts have prevented them from bidding for council and other public sector work.
The Chancellor said: "There is more I can do to ensure that small and medium firms win more business from the public sector. So we will take immediate steps to give firms better access to Government contracts, and to help them with their cashflow. And I am asking Anne Glover, chief executive of Amadeus Capital Partners, to look into what other barriers we can remove and the practicality of setting a goal for Small and Medium Enterprises to win 30 per cent of all public sector business in the next five years.
"I believe that this could help promote enterprise in one of our most innovative and dynamic areas of the economy," Mr Darling added.
Recyclers and waste management companies hailed the rise in the Landfill Tax as driving the diversion of material from disposal sites.
The annual £8 per tonne rise has exceeded many industry expectations in what the government might allow.
Rick Wilcox, secretary of the Wood Recyclers' Association, said: "Any increase in the Landfill Tax as far as the wood recycling sector is concerned has to be good thing. A lot of wood is going to landfill and it needs to be diverted to feed growing demand from board mills, biomass, animal bedding and potential demand for woodchip from overseas."
Steve Lee, chief executive at the Chartered Institution of Wastes Management, said: "Raising the tax by £8 per tonne per year to £48 by 2010 for 'active' waste will make a whole range of waste treatment technologies financially viable - for all wastes, not just municipal. The three-year plan for the escalator is good, too. Businesses need time to change and even the anticipation of a £48 per tonne tax - plus steadily increasing landfill gate fees - will be enough to influence many waste and resource management decisions."
Mr Lee, whose organisation represents waste management professionals, also warned that there were some downsides to the rise in the Landfill Tax, including a possible increase in fly-tipping and illegal waste management.
He also pointed out that the Landfill Tax rise came at a time when Defra is cutting services available to help businesses reduce their waste impacts (see letsrecycle.com story). "Cutting support to important resource efficiency programmes under BREW has come at a bad time - just as the drive towards better resources management is gaining some momentum," he said.
Community sector recyclers also welcomed the Landfill Tax rise, but claimed that there were doubts as to the "true cost" of landfill. They want to see a more transparent system of "carbon accounting" to drive a more efficient use of resources.
Matthew Thomson, chief executive of the London Community Recycling Network, said: "We welcome the increase in Landfill Tax, but are tempering our excitement with the fact that the true cost of landfill can not be priced. An inspirational Budget would move towards carbon accounting, a budget which puts the value on the real cost of our use of resources."