The Chancellor also revealed that the tax would then not fall below £80 after that point; a move which he said would provide “certainty for business investment”.
Elsewhere, he unveiled plans to establish a Green Investment Bank which will aim to invest £2 billion in low-carbon infrastructure, with energy identified as a key sector for investment, alongside transport.
And, he outlined proposals to launch a consultation on 'grandfathering' for biomass facilities, a change which would mean plants would be guaranteed a minimum level of support under the Renewables Obligation subsidy – something that is expected to provide certainty for potential investors in biomass developments.
The extension of the landfill tax escalator for a further year and the provision of a floor on the tax – which resembles Conservative proposals for the levy (see letsrecycle.com story) – are likely to be welcomed by the waste sector in terms of providing certainty for future investment.
However, there had been calls in the lead-up to the Chancellor's speech for the escalator to be outlined until 2020 (see letsrecycle.com story).
Outlining the reasons for the increase, the Budget documents state that: “Budget 2010 announces an increase of £8 per tonne in the standard rate of landfill tax on 1 April 2014, and a freeze in the lower rate in 2011-12.
“The Government confirms that the standard rate will not fall below £80 per tonne in future, to provide certainty for business investment. The increase in the standard rate will divert an additional 600,000 tonnes of waste, and result in carbon savings,” it adds.
However, there was less certainty in terms of the Treasury's reform of landfill tax, unveiled as part of last year's Budget (see letsrecycle.com story), with no confirmation yet on whether materials such as bottom ash from incineration, which is currently classed as a lower rate material under the tax, could instead move to the higher rate.
Instead, the Budget revealed that: “The list of wastes that qualify for the lower rate of landfill tax will remain broadly the same as at present.”
“The Government will publish a new set of qualifying criteria later this year to provide a clearer environmental rationale for the lower rating of wastes,” it said, adding that “the Government does not plan to proceed with changes to the way that waste disposal is defined in the legislation for tax purposes, as originally set out in the consultation.”
Communities fund
The Chancellor also confirmed that the landfill communities fund, which involves a portion of the tax paid by waste management companies being earmarked for community projects near landfill sites, would increase, despite some industry fears that the government would cut the proportion of money that was allowed to be diverted to the fund.
It said: “To ensure the fund continues to benefit local communities, Budget 2010 announces that the fund will increase in line with inflation to £74 million in 2010-11.”
The Budget also announced that the aggregates levy, which had been frozen at £2 per tonne in 2010/11, as a result of the downturn in the construction market, would increase by “just above inflation” to £2.10 a tonne on April 1 2011.
Green Investment Bank
As expected, the Chancellor outlined plans for a Green Investment Bank, which will aim to address gaps in finance for infrastructure projects.
He explained in his speech that: “It will control £2 billion worth of equity. Half will come from the asset sales, including the Channel Tunnel rail link, with the rest matched by private investment. This equity will unlock billions more of finance from the private sector.”
But, while he detailed transport and “sustainable energy” as the initial areas of focus for the fund, the only specific technology mentioned was offshore wind.
Biomass
The Budget documents stress the important role that biomass from sources such as waste have to play in the UK's renewable energy sector, describing it as “a potentially significant source for renewable energy, subject to sustainability standards”.
However, there have been concerns aired that a lack of certainty over the amount of support from the Renewables Obligation available to biomass facilities once they are up and running could hamper investment in the sector.
And, the Budget seeks to address this, explaining that: “The government intends to grandfather a minimum level of Renewables Obligation support for biomass installations at the point of accreditation, subject to consultation.”
It added: “The Government will also consult later in the year on sustainability criteria for biomass used for heat and power.”
Infrastructure
Alongside the Budget, Infrastructure UK – a body established in December's Pre-Budget Report to provide a steer on the development of economical critical infrastructure in the UK – published an assessment of current and future infrastructure needs in the UK.
The assessment, entitled 'Strategy for National Infrastructure', looked at energy, communications, water, waste and transport needs and achievements since 2005. Of the £150 billion spent between 2005 and 2010, it explained that £2 billion, or around 1%, of government investment had gone into the development of waste infrastructure through the PFI system. This was compared to £54 billion being spent on transport and £35 billion on communications in the same period.
However, analysing future needs – such as meeting European environmental targets – the need to develop further waste treatment is acknowledged in the report. It said this is set to see government expenditure in the waste sector rise to £8 billion, out of a total of £195 billion on infrastructure development across a range of industries between 2010 and 2015.
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