Government

UPDATED: Spring Budget 2017: Landfill tax tweaks and amended packaging targets

Spring Budget 2017: Landfill tax tweaks and amended packaging targets
A possible extension of the landfill tax to punish illegal disposal and new packaging recycling targets for paper, aluminium, steel and wood were included in today’s Budget (8 March), Philip Hammond’s first as Chancellor of the Exchequer.

New packaging recycling targets

Announcement of the packaging targets follows a consultation carried out in November. Defra asked stakeholders in the packaging, recycling and reprocessing sectors to give their views on three proposed sets of target rates for the various materials.

The proposals included: extending the 2017 targets until 2020, setting targets ‘in order to achieve the Circular Economy Package recycling targets for 2025’ and ‘optimal targets based on cost-benefit analysis for each material’.

Targets for this year currently stand at 55 per cent for aluminium, 76 per cent for steel, 69.5 per cent for paper and 22 per cent for wood.

Following the consultation, the second option (setting targets to meet Circular Economy Package goals) was used for paper, steel and wood, while the third option was chosen for aluminium.

Subsequently, targets for overall packaging recycling will increase to 75.4 per cent by 2020, with annual goals of 73.6 per cent for 2018 and 74.5 per cent for 2019. Meanwhile, targets for total recovery will be set at 82.0 per cent in 2020.

 

2018

2019

2020

Paper

71.0 per cent

73.0 per cent

75.0 per cent

Aluminium

58.0 per cent

61.0 per cent

64.0 per cent

Steel

79.0 per cent

82.0 per cent

85.0 per cent

Wood

38.0 per cent

43.0 per cent

48.0 per cent

Commenting on the targets, Chief Executive of the Chartered Institution of Wastes Managment (CIWM) Dr Colin Church said: “We are also encouraged that the government has listened to many of the key stakeholders across the sector and opted for the higher packaging recycling targets for 2018-2020. This sends a clear signal of ambition, which we hope will be reflected across the wider waste and resource policy agenda in Defra’s forthcoming 25-year environment plan and the Industrial Strategy.”

Jacob Hayler, Executive Director of the Environmental Services Association (ESA), also welcomed the change in targets, saying: “We are pleased to see that the 2020 packaging recycling targets in the Budget are aligned with ESA’s suggestions. In the absence of any real reform of the packaging recovery note (PRN) system, higher targets send the right signals to the sector that the country wants to do better and recycle more packaging in the future.”

Robbie Staniforth, Commercial Manager at compliance scheme Ecosurety has also commented, saying: “It’s the first indication that we have received from government that the environment is on the agenda, and we’re pleased to see they’ve opted for a change.

“We’re slightly surprised that they’ve opted for a mix of targets, and our only concern is that big recycling jumps may create artificial spikes in PRN prices. As the years progress, it will be important to ensure these PRN revenues generated are directed to improving recycling in the UK.”

‘Modest revisions’ to the PRN system were among the topics on the Resource Association’s wishlist for today’s Budget, with Chief Executive Ray Georgeson stating that changes could ‘level the playing field in favour of UK reprocessing’.

Scope to extend landfill tax to be investigated

The Treasury has also confirmed landfill tax rates from April 2018 today, setting the rate at £88.95 per tonne for standard rate material and £2.80 per tonne for lower rate material.

These represent increases in line with the Office for National Statistics’ Retail Price Index (RPI) measure of inflation from the current rates, and those that will come into effect on 1 April 2017. Next month, the rate for standard material will be £86.10 per tonne, with the lower rate standing at £2.70.

As well as confirmation of the future rate, the Budget documents also announced, as expected, a consultation into the possibility of imposing landfill tax on the illegal disposals of waste, which has been welcomed by the industry.

The same measure has already been proposed in Wales, where a devolved Landfill Disposals Tax Bill is expected to receive royal assent in the summer. The bill contains a higher third rate for unauthorised disposals to deter illegal waste activity and tackle potential tax evasion. The consultation on the central landfill tax will begin later this month.

In a statement, CIWM said the move would be ‘a useful measure in the fight against waste crime’, adding that it hopes ‘the ongoing drive to tackle tax avoidance will translate into further support for enforcement activity on landfill tax evasion by the authorities’.

Hayler added: “ESA is pleased that HM Treasury has listened to the industry and adopted measures already in place in Scotland and Wales to tax illegal deposits of waste. This will help punish the criminals who undermine legitimate operators in our industry and restrict the option of illegal dumping as a means of avoiding landfill tax.”

Hammond’s Budget also announced that the value of the Landfill Communities Fund (LCF) for 2017/18 will remain unchanged at £39.3 million, with the cap on contributions by landfill operators increased to 5.3 per cent.

ESA had yesterday made clear its hopes that the Treasury would reflect the waste and resources industry’s role in driving economic growth by focusing on extended producer responsibility reform and green public procurement, a topic that the Resource Association also wished to see addressed.

These were not mentioned in the treasury’s Budget report, and neither was Defra’s forthcoming and long-delayed 25-year environmental plan, which promises to establish a long-term strategy for the government on environmental issues.

Reaction from environmental groups

The Environmental Audit Committee, Parliament’s green watchdog, last year criticised the Treasury’s influence over other departments’ sustainability plans, saying it puts short-term priorities over long-term sustainability.

Reacting to today’s Budget, many in the environmental sector have expressed disappointment that the department is still not paying enough attention to environmental issues, with many commentators focusing on air pollution in general.

Steve Lee, Director of waste industry body R&WUK, said: “We expected announcements on the extension of landfill tax to illegal deposits and the packaging targets, and these have already been welcomed by both ESA and CIWM. However, the Chancellor has followed in the footsteps of his predecessor in making no reference to the much broader policy challenges around climate change, the low-carbon economy, and energy and resource efficiency and security. Our sector has a lot to contribute to this agenda – both in economic growth and environmental protection terms – and it is disappointing to have to point to this omission yet again.” Lee went on to say, though, that Brexit and the development of ‘hopefully interlinked’ strategies on industry, infrastructure, the environment and emission reductions provided government with a ‘credible excuse’ for the omission this time.

The Environmental Industries Commission, however, was less forgiving, echoing the EAC’s previous concerns and highlighting the ‘divorce’ between fiscal and environmental governmental policies. Executive Director Matthew Farrow commented: “Today’s Budget contained little positive on the environmental agenda. In part this is symptomatic of the divorce within government between fiscal and environmental policymaking, which is a more significant problem than any individual Budget.”

The Aldersgate Group, meanwhile, an alliance calling for a sustainable economy, called for more ambition when it comes to clean tech, with Nick Molho, Executive Director stating: “[D]espite the fact that some of our key trading partners such as China are investing heavily in renewable energy and other clean technologies, there was no reference to the importance of the low carbon sector to the future competitiveness of the UK economy.

“If the UK is to meet the Chancellor’s ambition of being at the cutting edge of the global economy, the Autumn Budget will need to be much clearer about the UK’s environmental and low carbon ambitions and provide a clear business plan to meet the UK’s policy objectives under its Emissions Reduction Plan and 25 Year Plan for the Environment.”

Friends of the Earth was heavily critical of the Budget, highlighting the Chancellor’s silence on UK air pollution as a ‘scandal’, and criticising his signalling of ‘the UK’s continuing addiction to climate-wrecking fossil fuels’. In response to the twin threats of air pollution and climate change, the organisation called for a government to institute a vehicle scrappage scheme aimed at the most polluting vehicles.

Steve Lee, Director General of R&WUK, added: “We expected announcements on the extension of Landfill Tax to illegal deposits and the packaging targets, and these have already been welcomed by both ESA and CIWM. However, the Chancellor has followed in the footsteps of his predecessor in making no reference to the much broader policy challenges around climate change, the low carbon economy, and energy and resource efficiency and security. Our sector has a lot to contribute to this agenda – both in economic growth and environmental protection terms – and it is disappointing to have to point to this omission yet again.

“That said, the government may have a credible excuse this time. We are going through an unprecedented period both as a result of Brexit and because four major (and hopefully interlinked) policy frameworks are currently under development on national infrastructure, industrial strategy, the environment and emissions reduction. And if we want evidence-based policy making then the evidence has to be gathered and assessed. Once these strategies and plans are live, however, R&WUK will be calling strongly on the Treasury to show that it is firmly behind the plans and objectives set out.”

CIWM CEO Colin Church also pointed out that some of the other measures included in the Budget could have knock-on effects on the industry: “On skills, CIWM is pleased to see the Government’s commitment to new ‘T’ level qualifications that put technical training on an equal footing with academic qualifications. If the UK economy and infrastructure framework is to become more productive and resilient in the future, circular economy and clean tech skills will be essential.

“Stronger signals on resources will be needed moving forward, however. In this Budget the Chancellor focuses on labour productivity; in the future we will all need to increase our efforts to improve resource productivity to support the UK’s transition to a low carbon, resilient and resource efficient economy.”

The full Budget can be found on the government’s website.

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