Clause 16
Finance Bill
1:30 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
It may benefit the Committee if I declare at the outset that it was expected that it was expected that my hon. Friend the Member for Putney, who has done a great deal of work on the clauses that we are debating this afternoon, would speak on behalf of the Opposition and that the Exchequer Secretary would respond. On behalf of myself and the Economic Secretary, I would like to say that we are to some extent performing the role of stand-ins. I know that a successful performance by the understudy in a theatrical performance or opera tends to result in standing ovations. I suspect that we will not receive them today—at least, not in response to my performance. I am grateful for the work of my hon. Friend the Member for Putney on the clauses.
I shall graze one or two matters regarding the landfill levy, which we are considering in relation to clause 16. There is an increase in the level of the landfill levy to £32 this year, which is the biggest jump in landfill tax from year to year since it was introduced in 1996. The levy was the UK’s first environmental tax, and it was introduced by the previous Government. It has been announced that in the following year, it will increase to £40 and the year after that, to £48. I would be grateful if the Minister explained why, given that it is an annual levy, it is necessary to make announcements in advance. I would be grateful for that clarification.
There are two points that I would particularly like to raise with the Minister. First, there has been a reduction in landfill during the years in which the landfill tax had been in place. No doubt, the landfill tax has played a part in incentivising industries, local authorities and individuals to be more efficient, but is the Minister concerned that one reason why there has been a reduction in landfill is fly-tipping? One of the unintended consequences of the significant increase in landfill tax may well be an increase in fly-tipping, which is of concern to all of us. I would grateful for the Minister’s views on that, and if she could tell us what steps will be taken to ensure that that does not happen.
My second concern is that to a large extent the big payers of the landfill tax will be local authorities and the public sector. Essentially, money will be circulated from local authorities, who will be paying more in landfill tax. That will, of course, need to be funded one way or the other—perhaps by increased council tax. The increase in landfill tax will place financial strains on local authorities. The Local Government Association has said that local authorities will face an equivalent of a £1 million rise to cover increased costs in 2008-09. Councils expect total landfill tax costs to be in the region of £2.3 billion over the next three years. That is a substantial additional cost, which will place a strain on local authorities. In my constituency, an attempt to find savings in recycling has resulted in an unpopular proposal to close the Tring recycling centre, which causes alarm to those who know the area well including, I think, the Economic Secretary—although I do not know whether she is aware of that particular issue.
There are concerns that these proposals may result in money being moved around different parts of the public sector and going from local councils to central Government. Local councils may find themselves paying an additional amount as a consequence of the proposals. There has also been a substantial increase in the revenue raised, although originally it was envisaged that it would be a neutral tax and additional environmental tax credits would be used in the circumstances. However, that does not seem comparable in any way with the amount raised in revenue. Is the landfill tax supposed to be revenue neutral? We return to the question, which has been raised a number of times, of whether landfill tax has two motivations: to raise revenue, and to change behaviour. Is it another way of raising revenue, or is it seen as revenue neutral?