As part of its 2016 Budget published yesterday (16 March) (see letsrecycle.com story), the Treasury confirmed that it will be changing the way that the Communities Fund is structured but it will not proceed with a plan to make landfill companies make the 10% required contribution instead of third parties. However, more pressure is to be put on landfill firms to directly support projects backed under the Fund.
The Fund has been an initiative which sees landfill site operators run schemes which use 90% of landfill tax credits to fund projects with the balance usually funded by a third party, typically a local charity or other organisation.
Details published in the wake of the Budget announcement confirm that the Treasury is planning to change the maximum credit that landfill site operators can claim against their annual landfill tax liability when contributing to the scheme, reducing it from 5.7% to 4.2%.
Third party
However, changes had also been set out in the Chancellor’s Autumn Statement which would have removed provisions for third parties to contribute 10% of landfill operators’ contributions to projects (see letsrecycle.com story) and instead require the companies to make up the difference.
This proposal sounded alarm bells within the waste industry, with the Environmental Services Association (ESA) claiming that the cap on third party contributions would have been ‘catastrophic’ for the future of the Fund, and could land site operators with unforeseen costs of several million pounds.
“ESA is pleased that HM Treasury has listened to the industry and chosen to retain the option of using contributing third parties under the Landfill Communities Fund scheme.”
Jacob Hayler
Executive director, ESA
But, after listening to concerns from the industry, the government has backtracked on this proposal and has opted not to proceed with the removal of provisions for third part bodies to contribute to projects.
Instead, HMRC and Entrust, the Landfill Communities Fund’s regulator, are to publish guidance which sets out how the government expects to see landfill operators ‘make a greater contribution’ to the Fund.
Future
ESA’s Executive Director, Jacob Hayler welcomed the change in tack from the government on third party contributions, which he claimed has safeguarded the future of the Fund.
He said: “ESA is pleased that HM Treasury has listened to the industry and chosen to retain the option of using contributing third parties under the Landfill Communities Fund scheme.
“Removal of this option would have stung landfill operators with a sudden and unforeseen £4 million burden, which would have left them with no option but to cease contributing to the fund. This would have been a crying shame for local community and biodiversity projects which rely on this source of funding in an otherwise challenging climate for fund raising, and also for the environmental bodies administering the scheme which would have been forced to wind down and lay off jobs.
“Today’s announcement that Entrust will instead publish guidance for landfill operators to increase their contributions to the fund is a preferable and more flexible alternative which means that communities will continue to benefit from this invaluable scheme going forward.”
Interest
Other changes to the Landfill Tax Regulations, which will come into effect from 1 April, include removal of a provision that allows landfill operators to stipulate that funds must be invested for the purpose of generating interest, as well as removing provisions permitting administration services to be provided by one environmental body to another.
According to the Treasury, these changes will improve the flow of funds to communities by removing barriers that prevent funds reaching projects and ensure value for money for the taxpayer, in response to the failure of the sector to reduce the value of unspent funds generated through the scheme.
The changes will also restrict the length of time that records need to be retained to six years, aimed at simplifying the record keeping requirements for businesses.
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