The future of the Landfill Communities Fund scheme, where landfill operators contribute to community and environmental projects near landfill is looking uncertain.
And the waste management sector trade body, the Environmental Services Association, has expressed its “deep concern”.
In the wake of changes to the regulations governing the funding of the projects which were announced in the Chancellor’s Autumn Statement, landfill companies could face extra costs to support the scheme of as much as £500,000 a year.
To date a 10% shortfall in landfill tax payments to community projects under the scheme has usually been compensated for by using third party contributions and this will not be allowed from April 2016.
In documents alongside the Autumn Statement, a guide to Landfill Communities Fund changes, available on the website of the scheme Regulator, Entrust, poses a question to explain, in the answer, the government’s view.
Q4. With the removal of the contributing third party, who will pay the 10% difference between the donation and tax credit?
The landfill operator will be able to claim a tax credit on 90% of their donation to an environmental body. The additional 10% will no longer be able to be funded by anyone other than the landfill operator. If funds are contributed by a third party, this will reduce the amount of tax credit the landfill operator is able to claim.
The Landfill Communities Fund operates as a tax credit scheme, and says Entrust, it is “considered against other priorities taking into account value for money”.
The size of the fund has been reduced explains the guidance, and it adds that where there is funding agreement in place, there should be no problem with the funding continuing. But, “the reduction in the size of the fund means that there will be less money available for future projects. However, it is up to individual environmental bodies to decide their funding priorities.”
The ESA said today that last week’s Spending Review and Autumn Statement were accompanied by the publication of the government’s response to the Landfill Communities Fund consultation from earlier in the year. “This included a previously unforeseen, and potentially damaging, proposal to remove landfill operators’ ability to use third party contributors to make up the 10% shortfall in landfill tax payments to community projects under the scheme, which will cost the industry around £4 million each year.”
ESA’s executive director, Jacob Hayler said: “The Landfill Communities Fund has supported over 50,000 community and environmental projects across the UK, with funds totalling £1.2 billion. The government’s proposed change is likely to jeopardise the future of the scheme, thereby removing this vital funding source for local projects whilst also leading to job losses at the Environmental Bodies.
“A mere four months’ notice provides landfill operators with little time to budget, particularly when their planning timescales tend to be around five years in advance, and when some individual operators are facing unforeseen annual costs of over £500,000.”
There have been concerns for many years that one day the Treasury would look to clawback money from the LCF. Back in 2008, then Veolia Environmental Trust Board trustee John Kutner warned off the Treasury from “trying to take control of landfill tax credits funds”.
Paul Taylor, current executive director of the Veolia Environmental Trust, Paul Taylor, said: “The drop in the diversion rate is unfortunate. It means less money for projects at a time when there is an increasing amount of applications. We will contribute to consultation, due to start soon, that will determine how the LCF will look in the future.”
A meeting of the Association of Distributive Environmental Bodies is likely to take place soon. This will include representatives from companies such as Biffa, FCC Environment, Suez, Veolia and Viridor.
More details about the changes can be found on the Entrust website.