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Budget receives mixed response

Budget receives mixed response
Chancellor George Osborne has today (March 18) revealed his pre-election budget

The Chancellors Budget has received a mixed response from the waste and recycling industry, with opinion divided over the announcement that landfill tax is to increase in line with the inflation from April next year.

The Chancellor's Budget included an announcement that landfill tax would increase with inflation from April 2015
The Chancellor’s Budget included an announcement that landfill tax would increase with inflation from April 2015
The Chartered Institution of Wastes Management (CIWM) described the landfill tax announcement as a pragmatic approach for the medium term, although the Environmental Services Association (ESA) said it was disappointed that the Budget did not provide longer-term clarity over the rate of landfill tax.

In the Chancellors Budget for 2014/15 earlier today (March 19), George Osborne announced that the standard and lower rates of landfill tax will rise in line with inflation from April 2015, with longer term clarity expected after a consultation on trommel fines later this year (see letsrecycle.com story).

With future landfill tax rises related to the Retail Price Index (RPI), this would in effect see the higher rate set at 82.60 and the lower rate at 2.60 from April 2015.

Elsewhere, HM Treasury has also revealed that the value of the landfill communities fund for 2014-15 will be reduced to 71 million, with the saving used to fund an equivalent one-off increase in funding to tackle waste crime.

Ernst & Young

‘I think it is a half-way house really because the industry in the past has been calling for greater clarity over what the tax is actually going to be. We knew where we were going until April 2015 and we now know where we will be after that.’

Julian Bowden-Williams, tax partner at Ernst & Young

Speaking to letsrecycle.com about the Budget, tax partner at Ernst & Young, Julian Bowden-Williams, said that while there may be disagreement over the level that landfill tax should be set at, he thought the waste industry would be glad to have some certainty on the issue for the coming years.

Mr Bowden-Williams said: I think it is a half-way house really because the industry in the past has been calling for greater clarity over what the tax is actually going to be. We knew where we were going until April 2015 and we now know where we will be after that.

He added: In effect it is a freeze at the rate of inflation, which does give certainty in the short term.

You will have differing views across the industry between multi-nationals and one-man-bands on whether tax should increase and by how much. I think that is why the consultation will be very useful. At the moment there is certainty and the tax is not being eroded in real terms. Lets see what the consultation brings.

SITA UK

Waste management firm SITA UK said that the steep landfill tax escalator had served its purpose and that the governments decision to increase it in line with inflations was sensible.

But, chief executive of SITA UK, David Palmer-Jones, said that industry still needed long term direction over landfill tax price rises if we are able to plan for the next generation of treatment infrastructure, adding that the emphasis should now be on generating power through residual waste.

In addition, he welcomed the extra 5 million to tackle waste crime as excellent news as well as the Chancellors announcement that combined heat and power (CHP) would be exempt from carbon tax, which he said was the right route to make.

Mr Palmer-Jones said: For too long Britain has obsessed with heavily subsidising other forms of renewables which can risk inefficiencies, while ignoring the ready-made fuel on our doorsteps – the residual waste that can power a CHP scheme to support cities and factories. CHP plants are a green way to deal with our residual waste while helping to address energy security.

‘It is disappointing that the Chancellor has failed to take this opportunity to provide the industry with the long term clarity on landfill tax it needs.’

Jacob Hayler, economist at the ESA

ESA

However, sounding a note of caution, the Environmental Services Association said: It is disappointing that the Chancellor has failed to take this opportunity to provide the industry with the long term clarity on landfill tax it needs.

But, Jacob Hayler, economist at the ESA was more positive with regards to announcements on the LOI testing regime and waste crime funding, which he said were both things the industry has been calling for and are welcomed.

CIWM

Chief executive of CIWM, Steve Lee, described the Budget as pragmatic in terms of waste and resources and welcomed the funding for waste crime and the landfill communities fund.
He said: Increasing landfill tax in line with inflation is the outcome we expected and is a pragmatic approach for the medium term.

Mr Lee added that there is not the evidence base to support further significant increases at this time but urged the Treasury and Defra to keep this under review and undertake further work to map out the future role of Landfill Tax to underpin progress on resource efficiency.

He also welcomed the clarity on the lower rate of landfill tax on fines from processing facilities, adding that he would expect the forthcoming consultation to propose a staged introduction to give the industry time to put the necessary procedures in place.

However, Mr Lee said: Disappointingly, there is no news on the borrowing powers of the Green Investment Bank and the Budget is weak on the wider resource efficiency front, as expected. However, we are pleased that the government has acted on a number of important issues for our sector.

‘We still believe there is scope for significant future increases in Landfill Tax to further drive on towards recycling targets and complete the switch in emphasis in the UK on how we dispose of resources.’

Ray Georgeson, chief executive of the Resource Association

Resource Association

Ray Georgeson, chief executive of the Resource Association, the trade body representing the UKs recycling industry, expressed relief that the landfill tax rates had not be eroded in real terms but said that the organisation would be keen to see further increases to drive increased recycling.

He said: We are relieved to see a clear statement that landfill tax will in the short-term increase in line with RPI and not be eroded in real terms. We still believe there is scope for significant future increases in Landfill Tax to further drive on towards recycling targets and complete the switch in emphasis in the UK on how we dispose of resources.

We hope that the government will consult widely when considering how it will provide further long term certainty about future Landfill Tax rates, and we acknowledge the recognition from government that this certainty is needed by all stakeholders in the waste and resources sector.

Taylor

David Williams, chief executive of bin manufacturer Taylor also welcomed increased lending to export businesses announced by the Chancellor.

He said: Im confident that Im not alone in welcoming the Chancellors decision to double the amount of lending available to businesses to 3 billion. There can be a significant premium attached to the Made in Britain label and as a business that is now exporting throughout the world we fully realise just how powerful this is.

Local Government Association

The Local Government Association (LGA), which has been regularly calling for a freeze in the rate of landfill tax from 2015 onwards, welcomed the governments Budget announcement today.

Cllr Mike Jones, chairman of the LGAs environment and housing board, said: By freezing the rate of landfill tax for 2015 government has recognised the significant work by local authorities and residents to radically reduce waste sent to landfill by nearly 40 per cent in the last five years.

The landfill tax has achieved its goal of diverting waste from landfill and should be subject to a long-term freeze. It stands to raise the Treasury over 600 million from tax payers in 2014/15. This money should be returned to local taxpayers to be invested back into recycling and waste projects that will support local jobs and growth, rather than being used to boost government funds.

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