Recyclers call for Landfill Tax Credit Scheme to contribute to operating costs

The Landfill Tax Credit Scheme (LTCS) must provide more start-up and operations money for sustainable waste management projects if it is to help the UK Government reach its recycling and waste recovery targets.

This was the view expressed by delegates at Entrust’s Annual Achievements Roadshow.

The UK Government aims to recover 45% of municipal waste and to recycle or compost 30% of household waste by 2010. The LTCS was set up to help the UK meet these targets by distributing private sector funding for sustainable waste management practices.

The LTCS enables Landfill Operators (LOs) to redirect up to 20% of their Landfill Tax bill to fund environmental projects. The Government’s Landfill Tax regulations stipulate the sort of projects that can be funded under the Scheme. These ‘approved objects’ include land reclamation; prevention of land pollution; R&D for sustainable waste management projects; public amenities such as parks and cycle routes, the restoration of notable public buildings; and the administration of Environmental Bodies. The ‘approved objects’ do not include the setting up or operation of sustainable waste management schemes.

Entrust is the private sector company set up to regulate the LTCS. Around 50 organisations enrol as Environmental Bodies every month with Entrust, in the hope of receiving a portion of the £90 million available in 1999 for socially and environmentally funds under the LTCS.

Speakers at Entrust’s Annual Achievements agreed that the contributions made by LOs to the Scheme – now standing at 91% of the theoretical maximum – have outstripped expectations. A total of £49M was spent by Environmental Bodies on projects – £44.4M plus £4.7M on administration – in 1999, or more than £4M per month on different projects.

“The credit scheme has been very successful in generating funding for environmental projects. This supports one of the Government’s main objectives: to encourage the maximum private sector involvement in environmental protection,” Chris Mullin, Under Secretary of State for the Environment, told the Roadshow. “Since the Scheme started, contributions have totalled more than £230 million. Last year, the figure was £90 million out of a possible maximum of just under £100 million. That is the highest proportion of reclaimed credits that we have seen in one year.

Some delegates argued that the Scheme must make more money available to local authorities and to private recycling and waste minimisation companies in order to meet the growing public demand for recycling services. One delegate, for instance, asked whether there was any chance of the percentage of the Landfill Tax available to the LTCS being raised from 20 percent to 80 or even 100 percent. Others urged the Government to allow the Scheme to cover the operating costs of sustainable waste management schemes.

Mullin said he was sympathetic to calls for more money, but pointed out that central Government should not compete with privately-run LOs . “One of the fundamental objections we meet is from the industry itself – that it’s a competition issue and that by funding local authorities they will be unfairly competing with the private sector – that’s one of the arguments and we haven’t yet resolved it. The other way to fund [such schemes] is through the budget given to local authorities directly. But I agree, it would be very good if we could get some of this money out of research and into operations.”

Mullin added that he was “cautiously optimistic” about whether the Scheme’s share of the Landfill Tax could increase beyond the 20 percent mark. “Any increase in the percentage is a question for the Chancellor of the Exchequer,” Mullin said, “but I do think green taxation is the way of the future and the Treasury has got that message too.”

As it is, only a third of contributions under the LTCS go into R&D for sustainable waste management projects. In 1999, £17,800,000 (36%) of contributions was spent on such projects. On the other hand, 48 percent – £23,700,000 – was spent on Public Parks and amenities.

The Government is keen to increase the Scheme’s emphasis on sustainable waste management, urging what Mullin calls “a step change in behaviour and practice.” Mullin called on his listeners to use the credit scheme to identify further projects that will promote and develop more sustainable waste management practices.

The Government last year amended the Landfill Tax regulations, adding recycling and development of markets for recycled materials as eligible objects of the scheme, plus a new category to support research into developing markets for recycled products. Mullins called this “a small change, but a significant one” saying that the lack of markets for recycled materials is often cited as the main barrier to increased recycling.

The House of Commons’ Environment Transport and the Regions Select Committee have also called for guidelines requiring more spending on sustainable waste management. The Committee scrutinised the LTCS as part of its review of the operation of the Landfill Tax (see related story). Mullin said the Government will discuss with industry how to set such guidelines.

Mullin pointed out that annual increases in the rate of the Landfill Tax, peaking at a maximum of £15 per tonne, will give further scope for an increase in contributions. He urged all LOs to use the Scheme, saying that not all credits are being reclaimed. “There are still millions of pounds which could be used by environmental bodies, but instead go straight to Treasury. It was in fact about £10 million last year. Not to take advantage of this money when it is available is a wasted opportunity,” Mullin said.

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