Clause 15

Finance Bill – in a Public Bill Committee at 3:30 pm on 10th May 2007.

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Rates of landfill tax

Question proposed, That the clause stand part of the Bill.

Photo of Julia Goldsworthy Julia Goldsworthy Shadow Chief Secretary To the Treasury, Treasury

We feel that everything possible needs to be done to encourage the diversion of waste from landfill. However, some problems are occurring as a result of the way in which the landfill tax works. In the Red Book, the increase in landfill tax is described as “supporting recycling”. I should like to dwell for a couple of minutes on how my local authorities are able to deal with the issue and the types of pressure that landfill tax puts on them.

Cornwall, like many other areas, has a two-tier authority. We have one authority responsible for collecting waste and another responsible for disposal. It is therefore difficult to transfer the pressures on—to divert waste completely from the principal authority. That creates great difficulties, as there are no direct incentives for recycling. The pressure seems to be towards anything that is a diversion from landfill. That can lock people into more environmentally unfriendly ways of dealing with their waste.

Photo of John Healey John Healey The Financial Secretary to the Treasury

The hon. Lady is right; in certain areas, responsibility for the planning and management of waste disposal, particularly of household waste, is split between collection and disposal authorities, which can cause difficulties. Does she conclude from that thatit would be best to move to unitary and single-tier authorities in her area, or should collection and disposal responsibilities be lodged with one or other level of the authorities in her patch?

Photo of Julia Goldsworthy Julia Goldsworthy Shadow Chief Secretary To the Treasury, Treasury 3:45 pm, 10th May 2007

I agree that it is perverse that the county council has an agreement with the district authority that is based on the weight of rubbish that it collects, so there is no incentive to reduce it. In addition, we end up with several different means of collecting waste and rubbish for recycling in different district authorities.

Photo of Philip Dunne Philip Dunne Conservative, Ludlow

To help the hon. Lady, and with regard to the intervention from the Financial Secretary, in those areas where people think through the issues carefully, it is quite possible for councils of different tiers to co-operate in a waste partnership, such as the Shropshire waste partnership, to form a single entity to collect and dispose of waste, without the need for a unitary authority.

Photo of Julia Goldsworthy Julia Goldsworthy Shadow Chief Secretary To the Treasury, Treasury

I can see advantages in having greater strategic control, not only of waste issues, but on other levels. One reason why we support Cornwall’s bid for unitary status is that it would give the authority greater strategic control over the whole of Cornwall. Unfortunately, Cornwall county council has been locked into having an incinerator, which means that it is difficult to encourage more recycling. Having a strong voice throughout the county may allow the authority the time to explore other alternatives and to press the case for them. Energy from waste is the only option that Cornwall has been given so far, which means that the county will still suffer, although the decision has been taken and the council is doing all that it can to divert from landfill, as the incinerator will not be built for a few years.

Photo of Colin Breed Colin Breed Shadow Minister, Treasury

As my hon. Friend rightly said, Cornwall county council has grasped the rather unfortunate nettle of waste-to-energy, commonly known as incineration. I bring to her attention the neighbouring authority in Plymouth, which last Thursday passed from Labour to Conservative control. I hope that the new administration will reverse the current contractual arrangements, whereby Plymouth city council dumps all its household waste in a landfill site in my constituency.

Photo of Julia Goldsworthy Julia Goldsworthy Shadow Chief Secretary To the Treasury, Treasury

I need say no more. The concern is that the council ends up locked into the decision, which has already been taken, yet the impact of the landfill tax will continue to have an effect and place pressure on council tax. There are difficulties, and I wonder whether the Financial Secretary has considered an alternative, such as a waste tax, which would encourage local authorities not only to divert from landfill, but proactively to encourage recycling. He might also consider measures to deal with packaging at the point of production, rather than work out how to deal with it at the other end. The provisions are useful for dealing with landfill, but there are limitations to what they can achieve. They can be improved, and I hope that the Minister’s mind is open to pursuing those improvements.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

The basic rate of landfill tax is £2 a tonne; the clause will put that up to £2.50 a tonne. Will my hon. Friend the Financial Secretary reconsider that rate and work on classification issues with the Department of the Environment, Food and Rural Affairs and the Environment Agency? If certain things are classified as inactive or inert waste, they will attract the much lower rate of duty and probably be put into landfill, as the cost to the concern of doing so will be less. That would result in loss of revenue as well as environmental consequences. I am sure that DEFRA and the Treasury are already working on that.

I am particularly concerned with fly-ash, notto be confused with fly-tipping, which is produced principally by coal-fired power stations. I am indebted to Thomas Duve, who wrote an article for the “Science in Parliament” magazine in spring this year for the following information. Fly-ash is a glass, silica-rich mineral that is left over when coal is burnt, and a lot of coal contains it to a greater or lesser extent. It is currently classified as inactive waste and is landfilled at £2, which will increase to £2.50 a tonne.

In many other European Union countries fly-ash is recycled for other uses, so because of the classification and tax issue, which at £2 and what will be £2.50 a tonne is rather low, we are not recycling what our European neighbours are. That creates a double negative: we do not use the useful material that will be in heaps outside every coal-fired power station and we are clogging up landfill sites. Will my hon. Friend assure me that he will look at those two issues? First, will he reconsider the rate, even though it is increasing from £2 to £2.50 and it has been announced that it will go up to £3.00 a tonne for inactive waste? Secondly, will he discuss with his colleagues in DEFRA and the Environment Agency whether the classifications for materials such as fly-ash and others are right? If they are not right, we have a double-whammy because there is a loss of revenue and an environmental negative as material is going to landfill that need not do so.

Photo of John Healey John Healey The Financial Secretary to the Treasury

I can give my hon. Friend the assurance he is seeking. I will look at the classification system for inactive waste—particularly the position of fly-ash. We have considered that before, but I am happy to take a fresh look at it.

I am not sure that I can be quite so positive in response to the hon. Member for Falmouth and Camborne. I am unconvinced about the need for a new waste tax, and, in the end, tax is not the only type of policy that needs to play a part in dealing with how we manage and dispose of waste and increase waste recycling. The Government have a number of measures in place and perhaps need to consider other future measures. She may be interested to know that the Secretary of State for Environment, Food and Rural Affairs will shortly publish a renewed waste strategy that pulls together much of the work that we have done across Government on how to raise our game for the future.

Question put and agreed to.

Clause 15 ordered to stand part of the Bill.