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Local Government Association urges Treasury to reinvest landfill tax

Revenues from landfill tax should be reinvested in joint local authority and private sector waste projects to generate income for cash-strapped councils, the Local Government Association (LGA) has said.

Councils have been hit with 33% funding cuts over the past three years and further cuts are expected in the next spending round. But the LGA’s review of the waste management industry, ‘Wealth from Waste’, argues the waste and recycling industry could help local authorities generate £1bn by 2020.

The review bemoans the fact that “since 2007 the Treasury has used the landfill levy as a way of generating millions of pounds in additional revenue for its own coffers”, and money raised by increases in the tax have not been passed on to local authorities as promised.

Clyde Loakes, vice chair of the LGA’s Environment and Housing Board, who led the review, said: “By freezing the landfill tax at its current rate and reinvesting the money through joint council and private sector waste projects, the Treasury could help us stimulate growth, create jobs and boost an important revenue stream for local authorities to limit the impact of budget cuts on local taxpayers.”

Dan MacCartney policy advisor for the LGA told MRW that it was seeking the £610m that local authorities pay in landfill tax to the Treasury each year to be re-distributed back to councils from this year. He also said that the commercial revenues from landfill tax should be “ploughed into the Green Investment Bank or local waste and recycling boards - both to underpin the financing of projects”.

The association also said that it was unfair residents should continue to support waste being sent to landfill through their council taxes, especially when they had contributed to a fall in waste being sent to landfill of nearly 40% since 2009/10.

“Continuing to cream off increasing landfill tax receipts to balance the Government’s books is not only unfair to taxpayers, it also misses a genuine opportunity to turn the UK’s waste and recycling sector into a world leader,” Loakes added.

Going beyond the current EU targets and increasing household recycling to an ambitious 70% could generate an extra £3bn for the UK economy and create an estimated 51,000 jobs, according to the LGA.

The association proposes a raft of policy recommendations to help local authorities capitalise on the waste and recycling industry. Many of these suggestions focus on supporting the domestic market for recyclate:

  • MRF code of Practice - Reducing the level of contamination in recyclate by half and increasing the local authority share of its value from 28% to 40% would yield over £1bn by 2019/20. The MRF code of Practice therefore requires full transparency of information and a robust sampling system.
  • Government must remove regulatory advantages to exporting waste and place the domestic reprocessing industry on a level playing field
  • WEEE compliance consultation – Government should use its current review to enable councils to access a greater proportion of value from these materials. The LGA recently told MRW that councils will face a ‘risky’ financial choices under the favoured proposals.
  • Reuse - Develop a reuse standard and introduce tax breaks on reused and refurbished products to generate a bigger market for these goods
  • PRN/PERN reform - in its upcoming review Government must ensure producers are paying a fairer share for compliance and reduce the burden on the taxpayer
  • Residents should be rewarded for recycling
  • Collection types should be decided by local government

Chair of the Resource Association, Andy Doran, welcomed the review and called for the Government to “seriously consider the recommendations outlined… and afford local authorities some of the flexibility they need to realise the potential that exists in every community”.

He said said the LGA’s views on quality and waste policy were in line with the association’s, adding: “We look forward to continued constructive work with the LGA and its member authorities to realise the value within these resources many of which make their first steps back round the circular economy under the management of local authority officers:”




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