Clause 145
Finance Bill
3:45 pm

Landfill tax credit: withdrawing approval of environmental bodies

Photo of Justine Greening

Justine Greening (Shadow Minister, Treasury; Putney, Conservative)

I beg to move amendment No. 353, in clause 145, page 89, line 21, leave out from ‘substitute’ to end of line 23 and insert ‘“the withdrawal of approval of—

(i) an environmental body by the regulatory body;

(ii) the regulatory body by the Commissioners; and

(iii) an environmental body by the Commissioners on an occasion when the Commissioners have assessed that serious non-compliance has occurred on the part of an environmental body,”’.

The amendment seeks to put some clarification into the Bill that is in the explanatory notes but probably ought to be reflected in the Bill itself. It relates to the fresh HMRC commissioners powers that the clause creates. At the moment, the landfill communities fund is administered by Entrust, which can both give and remove approval for environmental bodies that are part of that fund.

Amendment No. 353, which I have tabled, seeks to ensure that what the explanatory notes set out—that HMRC will remove approval of an environmental body to participate in the landfill communities fund only when there is serious non-compliance—will, in reality, be the only time that HMRC has the use of those powers. My concern is that, at the moment, clause 145 gives HMRC commissioners and the regulatory body, Entrust, the power to remove approval of an environmental body that received contributions, whereas previously Entrust performed that function itself.

We do not really know what non-compliance and serious non-compliance constitute in relation to the landfill communities fund. Can the Minister set out some examples of where serious non-compliance has already occurred, and whether there is a serious issue about that which the Government are seeking to address through involving the HMRC? Does the Treasury have some concerns perhaps that Entrust is not in a position to handle cases of serious non-compliance? Does the Treasury nevertheless still see the process of dealing with that starting with Entrust, which would then refer possible cases to the Treasury, particularly HMRC? Does it see HMRC going through a parallel scrutiny process of those environmental bodies, in order to identify serious non-compliance for its own sake? That would seem to be an obvious duplication of effort.

To some extent, this is a probing amendment, but through it I am seeking to understand better why the Government think that this is an issue, and to make sure that the HMRC powers are proportionate for the occasions on which they will be used. As I alluded to earlier, it would be helpful to hear from the Minister how many times Entrust itself has withdrawn approval from environmental bodies, how many instances have been identified so far of serious non-compliance and what proportion that is of the total number of environmental bodies that are participating in the landfill communities fund. It would be helpful to get an idea of the breadth of the problem that the Treasury is seeking to address with the clause. Can the Minister confirm that the proposals have been brought forward with the consent of Entrust and that Entrust has been fully consulted so that it has a good understanding of how the measure will work practically on a day-to-day basis and how practically it will be in communication with the HMRC as and when occasions of serious non-compliance arise?

Photo of Kitty Ussher

Kitty Ussher (Economic Secretary, HM Treasury; Burnley, Labour)

The hon. Lady raised four points. She asked: what constitutes serious non-compliance? I will explain that shortly. What are the numbers? How many issues have there been in practice, and have we worked with Entrust in understanding how to implement these rules?

If I may take those in turn, the obligations of an approved body are set out in the landfill tax regulations. This change gives the commissioners for HM Revenue  and Customs the power to revoke an approval if the body fails to comply with any of those obligations. In exercising that power, however, they will revoke the approval only if there is evidence of serious non-compliance. Entrust is responsible for identifying and investigating breaches of the regulations so the process is as follows. Where in Entrust’s view the alleged breach is serious, it will report the case to the commissioners for consideration under an agreed process. Each case will be considered by the commissioners on its merits so there are no duplicate processes in this regard. Factors that may be taken into account include the financial sums involved, any previous incidents of non-compliance, the circumstances under which the breach occurred and the potential ramifications of the breach.

Prior to the change before us, the decision on whether to revoke an environmental body’s approval for non-compliance was made by the regulatory body. Entrust used that power on only six occasions between 1996 and 2008. I hope that that answers the hon. Lady’s question about numbers.

Are we working with Entrust? Yes, of course we are. On the specific amendment, it restricts the commissioners’ power to withdraw approval of an environmental body to cases where there is serious non-compliance on the part of the environmental body concerned. It is likely in most cases, as it has been to date, that commissioners will exercise the power to withdraw the approval of an environmental body where they assess that serious non-compliance has occurred. However—this is the crucial point that I need to explain to the hon. Lady—there may be cases that fall outside any interpretation of serious non-compliance but where under the circumstances it will still be reasonable to withdraw the approval of the environmental body concerned, for example, where there is an accumulation of a number of minor incidents of non-compliance. That is why we would urge the hon. Lady to withdraw her amendment because in those cases the Opposition amendment would mean that the commissioners could not withdraw the approval of the environmental body even though there had been serial minor incidents of non-compliance that, added together, were taken as sufficiently serious to warrant action.

Photo of Justine Greening

Justine Greening (Shadow Minister, Treasury; Putney, Conservative)

I am happy to withdraw my amendment. It is helpful to be aware of the latter point about there being that climate of minor non-compliance, adding up over time to an unacceptably poor level of performance. I am pretty sure, however, when I went through the explanatory notes that that point was not included, which is why I tabled my amendment. With that helpful clarification, however, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 145 ordered to stand part of the Bill.