Business

Concern over lack of long-term vision for Landfill Tax

Members of the waste and resources industry have voiced disappointment with the Budget 2014’s lack of long-term plans for Landfill Tax.

Chief Executive of the Resource Association Ray Georgeson said: “We are relieved to see a clear statement that Landfill Tax will in the short-term increase in line with RPI and not be eroded in real terms. We still believe there is scope for significant future increases in Landfill Tax to further drive on towards recycling targets and complete the switch in emphasis in the UK on how we dispose of resources. 

“We hope that the government will consult widely when considering how it will provide further long term certainty about future Landfill Tax rates, and we acknowledge the recognition from government that this certainty is needed by all stakeholders in the waste and resources sector.

The Environmental Services Association (ESA), a trade association that represents almost half of the UK’s materials recovery facilities, also voiced ‘disappointment’ on the lack of long-term clarity, with ESA’s Economist Jacob Hayler saying: “It is disappointing that the Chancellor has failed to take this opportunity to provide the industry with the long term clarity on Landfill Tax it needs.

“Some solace though is provided by confirmation that an objective testing regime for classifying material as lower rate will be introduced. The industry is also pleased to hear that there will be an increase in funding for waste crime enforcement. Hopefully this will go some way towards addressing the estimated £800 million annual cost to the UK economy.

“These are both things the industry has been calling for and are welcomed.”

However, Steve Lee, Chief Executive of the Chartered Institution of Wastes Management (CIWM), described the Budget as 'pragmatic' in terms of waste and resources.

He said: “Increasing Landfill Tax in line with inflation is the outcome we expected and is a pragmatic approach for the medium term.

“While it is important that this valuable mechanism continues to be effective in driving resources out of landfill and back into economically and environmentally beneficial use, there is not the evidence base to support further significant increases at this time. However, CIWM would urge the Treasury and Defra to keep this under review and undertake further work to map out the future role of Landfill Tax to underpin progress on resource efficiency."

He added that while the Budget was "weak on the wider resource efficiency front, as expected", CIWM welcomed the "clarity" on the lower rate of tax with regard to fines from waste transfer stations and other processing facilities, and also the £5 million grant in aid from the Landfill Communities Fund.

Lee concluded: "This fund has and will continue to do a lot of good work, but we welcome allocation of a proportion of these funds to tackle this serious problem. The industry has been united in calling on government to recognise the growing impact of waste crime and we have seen the scale of the problem quantified by recent research from the ESA Education Trust. We are pleased that these calls have been recognised and it is essential that this money is put to effective use to build the case for further funding in the future."

Georgeson also welcomed the funds for fighting waste crime, saying: “We welcome the additional support of £5 million offered to further tackle the scourge of waste crime as a useful boost. Clearly much more could be done, and the recent report from ESAET and Eunomia showed the real value to the economy of additional spending in this area. If this additional money can be targeted and proven to have real positive economic impact in reducing waste crime and increasing Treasury revenues then we hope it will lead to greater investment in future years.”

He concluded: “The measures highlighted that we have welcomed do not add up to a coherent green economy package – they never do under this Chancellor, and we didn’t expect they would in this Budget either. They do, however, provide very welcome nuggets of value that will provide a positive boost for UK recyclers and reprocessors. But it certainly wasn’t a Budget to get excited about from a broader green economy perspective.”

‘Moving the goalposts for investors in green energy’

Looking to the announcement made by Osborne earlier today (19 March) that he will be giving tax breaks to heavy industry, the Renewable Energy Association (REA) warned that he ‘risks undermining investment in renewables by freezing the Carbon Price Floor’.

REA Chief Executive Dr Nina Skorupska said: “We welcome the Chancellor’s acknowledgement that the way to bring down energy costs over the long-term is to invest in home-grown energy sources, including renewables, as well as energy efficiency… But the new, short-term measures announced today in the energy sector do not reflect this ambition – and there is much more in this Budget to please fossil fuel companies than the green economy.

“By freezing the Carbon Price Floor, the Chancellor is rowing back on his own policy and once again moving the goalposts for investors in green energy. Government must explain in black and white how investment in renewables is protected from the freeze, or risk undermining the investment required to replace ageing coal power stations with technologies that can keep the lights on without damaging the climate.”

Economics Campaigner at Friends of the Earth David Powell agreed, stating: “Despite George Osborne’s pledge last month to tackle climate change, it’s dirty business as usual in this year’s Budget…

“Freezing the carbon price floor is simply code for letting polluters pollute, while clean industries suffer ever more stifling restrictions. The money raised by this tax should be used to help homes and businesses become much more energy efficient – and bring down bills for good…

“Mr Osborne says he wants to make our economy ‘resilient’, but Britons face paying a hefty price for his failure to confront the reality of climate change.”

However, somewhat unsurprisingly, members of heavy industry have welcomed the energy proposals, with Director of the Energy Intensive Users Group, Jeremy Nicholson, stating: "These reforms will ease the pressure on Britain’s energy intensive industries. Unilateral measures like the Carbon Price Floor simply damage competitiveness for no environmental benefit. Compensation for the impact of the Renewables Obligation will help level the playing field for British industries with respect to their European competitors. Unfortunately, climate policies have already caused lasting damage in terms of investment in Britain’s energy intensive industries, and even after these reforms electricity prices will continue to be inflated by a carbon price four times as expensive than in the rest of Europe."

Gareth Stace, the Head of Climate & Environment Policy at manufacturers’ organsation EEF, added: "The Chancellor has backed his words on the importance of manufacturing in rebalancing the economy and tackling climate change in a cost-effective manner with concrete action. This sends a clear signal that government recognises the serious competitiveness issues at stake from rising energy prices.

"The freezing of the Carbon Price Floor will translate into greater clarity for manufacturers’ energy bills through to 2020 and provide much needed investment certainty. The Renewables Obligation compensation for energy-intensive industries will also help to level the…playing field these companies need to compete effectively with others around the globe and keep production here in the UK."

Read more about the Budget 2014.