Budget: Government guarantees £1.1 billion EPR revenue for local authorities next year
New Government’s first budget confirms existing commitments to managing waste resources, as well as investment in carbon capture storage.
Chancellor of the Exchequer, Rachel Reeves, has today (30 October) reaffirmed the government’s existing fiscal commitments to managing waste resources, though offered no new investment to address stagnating recycling rates.
In the Budget stated, the Treasury states that local authorities can expect to receive approximately ‘£1.1 billion in new funding’ via the packaging Extended Producer Responsibility Scheme, representing approximately an additional 1.6 per cent increase in funding for councils.
Although the statement says that Central Government will guarantee this additional funding, for 2025-25 regardless of the of receipts from the first year of the scheme, recognising the importance for local authorities to ‘effectively plan their budgets’, in all likelihood the implications is that the Treasury will be retaining a significant proportion of the estimated £1.8 billion in receipts from the scheme for spending elsewhere.
The Plastic Packaging Tax rate for 2025-26 is also set to increase in line with inflation, to ‘incentivise businesses to use recycled instead of new plastic in packaging’. While the current rate is £217.85 per tonne, the Budget does not specify what the actual rate will be.
The previously announced adjustments to the Landfill Tax from 1 April 2025, which applies to all waste disposed of by landfill, were confirmed. In May, the HM Treasury announced that the standard rate will increase to £126.15, up by £22.45 from 2024’s rate of £103.70. The Lower rate for inert waste will also rise from £3.30 to £4.05.
Recognising inflationary pressures, future rate changes will be determined closer to each fiscal event, with the 2026 rate announcement expected in Budget 2025. This approach aims to reflect market and economic conditions, maintaining the real-terms value of the tax as a regulatory measure and potentially keeping room up the Chancellor’s sleeve for additional tax gains.
Additionally, the Budget confirms further investment in its net zero and clean energy goals, including £3.9 billion of funding in 2025-26 for carbon capture, usage and storage (CCUS) projects. This follows the £21.7 billion of funding that was announced earlier this month for projects in Teesside and Merseyside.
Industry Responses
Reacting to the Budget announcement, Chief Executive of the Association for Renewable Energy and Clean Technology, Trevor Hutchings, said: “The confirmation of policies like the Carbon Border Adjustment Mechanism, the Warm Homes Plan, and GB Energy funding, along with continued support for electric vehicles and increased funding for the Boiler Upgrade Scheme, all represent positive leaps forward.”
Dr Adam Read MBE, Chief External Affairs and Sustainability Officer at SUEZ Recycling and Recovery UK, added: “We welcome the Government’s plan to increase public and private investment in infrastructure, including funding for carbon capture and green hydrogen, and funding for industrial decarbonisation and skills.”
However, not all expectations for the Budget were met. Campaigners from environmental organisations, including Nature 2030, Keep Wales Tidy, and Keep Scotland Beautiful called for the Chancellor to deliver more ambitious projects, such as the Deposit Return Scheme, which is not mentioned in the Autumn Budget.
Hutchings added: “Yet, there are missed opportunities to drive more ambitious outcomes, such as increasing the Fuel Duty rate and Carbon Floor Price, which could accelerate our transition to net zero.”
Sian Sutherland, Co-Founder of A Plastic Planet & Plastic Health Council, shared concerns on the focus on carbon capture technology: “The government's investment in carbon capture technology is nothing more than a fig leaf to the oil giants.
“Our government needs to decide who it is elected to protect - the profits of the fossil fuel giants or the healthy future of their citizens.”
Further concern about the lack of action on the plastic crisis was outlined by Jane Martin, CEO of City to Sea: “If the government wants to save money it could look to end fossil fuel subsidies rather than stall progress on plastic pollution. The cost of the plastic problem should make Reeve’s eyes water- for a product that is used once, councils pay millions in collection, sorting, and waste management, plus the £1 billion spent per year dealing with littering.”
Dr Read added: “The opportunity to inject some real momentum behind the Government’s commitment to a zero-waste economy – and all the benefits that can bring for growth, communities and the environment – has been missed.”
