Local authorities have had five years since the government first announced that Landfill Tax rates would increase significantly
Hilary Benn
In a letter sent last week to LGA chairman Sir Simon Milton, Mr Benn pointed out that grants made available to councils were increased at a level that reflected the rises in Landfill Tax.
“In the latest spending review, the government looked at the overall pressure on waste management services, including the increase in landfill tax, along with the extent to which those pressures can be mitigated,” he said.
“The average annual increase in overall government grant of 1.5% in real terms up to 2010-11 allows local authorities to deliver effective services including in the area of waste management,” he added.
The Minister said that the grant increase, which is part of the Comprehensive Spending Review 2007, “takes into account local government's landfill tax liability, including the increased costs resulting from the rise in the standard tax escalator from 2008-09,” while also referring to the support offered by PFI funding for councils to develop “alternatives to landfill”.
He explained that to date, the Government had already committed over £1.3 billion in PFI credits to support 27 waste PFI projects – and there would be more than £2 billion in PFI credits available over the next three years.
His comments come in response to a letter sent by Sir Simon on June 27 (see letsrecycle.com story), which accompanied the LGA's critical report on Landfill Tax.
The association had claimed that the Landfill Tax Escalator system would have a “punitive” effect on councils, hitting both waste and non-waste services and preventing them from building new recycling facilities (see letsrecycle.com story).
The £8 escalator was introduced in April 2008, increasing the tax from £24 to £32 per tonne of waste sent to landfill, and will rise to £48 by 2010-11.
Revenues
In his response, Mr Benn also took issue with the LGA's long-standing call for revenues from Landfill Tax to be returned to councils (see letsrecycle.com story).
He highlighted that the Spending Review 2004 “included the return of revenues from the Landfill Tax Escalator to local authorities, fulfilling the Chancellor's commitment to keep Landfill Tax increases revenue-neutral to local authorities overall.
“The totals announced in SR04 for 2006-07 and 2007-08 included recycled revenues from increases in Landfill Tax. Recycling of Landfill Tax revenues in 2005-06 were carried out as part of the local government revenue settlement, where an additional £58 million was added into the settlement for 2005-06,” he added.
Notice
The LGA had also criticised the amount of notice councils were given about the plans to increase Landfill Tax, claiming that it failed to give them enough time to develop the recycling facilities which would reduce the financial burden they faced for landfilling.
But, Mr Benn questioned the justification for their criticism, and said: “We are in agreement on your point that changes in policies, such as the Landfill Tax, that are designed to encourage behavioural change should be adequately trailed.”
“That is why the government has consistently pre-announced future increases.”
He added: “Local authorities have had five years since the government first announced that Landfill Tax rates would increase significantly, with the announcement of the £3 per tonne escalator.
“We signalled that the Government would consider the need for the rate to increase more steeply at the pre-budget report in 2006, announcing that the rate would increase by £8/t each year from 1 April 2007 until at least 2010-11 at Budget 2007.
“Continuing this record the government has already announced in Budget 2008 that it expects the rate of Landfill Tax to increase beyond 2010-11.
“We expect to maintain our existing policy of pre-announcing any further increases in order to encourage behavioural change and provide an opportunity for behavioural change before the text increase,” he concluded.
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