The clause increases the rate of landfill tax by a further £8 from 1 April 2012, which continues the previous Government’s policy of increasing landfill tax by £8 per year until 2014 and establishing a minimum level of £80 for the future.
I want to ask the Minister about avoidance of the tax. Since the increase to £56 per tonne this year, there have already been reports of increased evasion activity by businesses that are illegally dumping waste in the wrong sites. Swindon council, for example, has recognised that problem, and it has had to impose a crackdown this year. As landfill tax is a green tax, avoidance of the tax should be encouraged, while evasion must be stopped. What assessment has the Treasury made of the increased likelihood of evasion of landfill tax, following the increase proposed for 2012? What measures has the Minister taken to prevent that?
As I have mentioned, the landfill communities fund is an essential part of the landfill tax. It ensures that, in effect, a proportion of the revenues raised from the tax are diverted directly into environmental projects, which strengthens the ability of the landfill tax to achieve its environmental goals. In 2010, the previous Government increased the value of the landfill communities fund in line with inflation, and the current Government have done the same in this year’s Budget. However, they have said that future decisions on the fund’s value will be dependent on the level of unspent funds held by environmental bodies. What assessment have the Government made of the level of unspent funds held by such bodies? What representations has the Minister had from them since the announcement of her decision? Finally, does she not agree that if the Government increase landfill tax according to the previous Government’s plans, but then increase the landfill communities fund by a lesser amount, the tax risks being seen as merely revenue raising, rather than as a tax with genuine environmental objectives?
Clause 25 increases the standard rate of landfill tax from £56 a tonne to £64 a tonne with effect from 1 April 2012. The landfill tax has been immensely successful in reducing the amount of waste sent to landfill. Since 1996, when the tax was introduced, the amount of waste sent to landfill has more than halved; it has gone from 95.8 million tonnes to 43.9 million tonnes. The benefits of that reduction are twofold. First, the economy benefits from our making better use of valuable resources, rather than simply tipping them into a hole in the ground. Secondly, greenhouse gas emissions from decomposing waste are reduced. Due to the reduction in waste sent to landfill, direct emissions from waste in 2011 are projected to be 2.6 million tonnes of carbon dioxide equivalent lower than they would have been if there had been no change. Furthermore, the UK is within the targets for the reduction of municipal waste sent to landfill set out in the landfill directive, meaning that there is little risk of incurring the substantial penalties that would be triggered if we fell short of the targets.
Has the Minister considered whether the decision of the Secretary of State for Communities and Local Government to do away with penalties for people who misuse the recycling and refuse collection systems in their streets will have a detrimental impact down the line on the Government’s targets on landfill? I know that domestic waste constitutes only 8% of waste that goes to landfill, but the decision potentially sends a negative message to the public about the importance of recycling.
If we want to influence the public’s behaviour, one key aspect is often getting some sort of buy-in. It is probably fair to say that on balance many communities felt that the approach the hon. Gentleman mentions was disproportionate.
The hon. Member for Bristol East talked about fly-tipping, and we all recognise that it is a huge antisocial problem that affects communities, landowners and regulators. We aim to reduce fly-tipping through better prevention, detection and risk-based enforcement. Local authorities in England reported an 18.7% decrease in reports of fly-tipping incidents in 2009-10 compared with the previous year. In the same period, they carried out 2,460 prosecutions against suspected waste offenders, 97% of which were successful.
The Minister draws attention to an incredibly important point, which was highlighted only this week on the Robert Burns estate in my constituency, because dumping has become far more prevalent in Edinburgh since the council took away the free uplift service for household items. It now charges £45, which means that people are dumping their goods rather than having them uplifted. Part of this is about whether there is enough support for local government to put in place measures to ensure that the landfill tax does not become a burden, and whether there are systems in place to enable them to allow residents to recycle and reuse goods.
As a London MP in a borough that, I think, charges substantially less for that service, I cannot comment directly on the case that the hon. Gentleman has raised. Whether the service is value for money is a matter for his local community. I can assure him that the Government will continue to tackle fly-tipping vigorously, wherever it is found. Local authorities and the Environment Agency now have powers to seize vehicles suspected of involvement, but clearly local authorities need to work with communities to ensure that they make common cause on bearing down on fly-tipping. I have no doubt that successful approaches will vary from community to community across the country.
The issue is important, because if waste is not sent to landfill, it must go somewhere else. To provide certainty for the waste management industry, so that it can invest in infrastructure for alternative means of waste disposal, the Government announced in the Budget last year that the standard rate of landfill tax would increase by £8 a tonne each year until 2014. That landfill tax escalator will help the Government in their goal to reduce the amount of waste sent to landfill, and in working towards a zero-waste economy where all resources are fully valued, both financially and environmentally.
The Government also confirmed that the standard rate of landfill tax would not fall below £80 per tonne between 2014 and 2020, so businesses can have the confidence to invest in new waste treatment facilities, safe in the knowledge that it will not suddenly become cheaper in the future for waste to be sent to landfill again.
It would be useful for the Committee to get a sense of where the Government think using taxation to affect behaviour works, and where they do not. We had a debate last week about using taxation of high-strength alcohol to tackle problem drinking. My hon. Friend the Member for Edinburgh East mentioned the concerns that many of us have about fly-tipping in our constituencies, yet I note the Minister’s reluctance to look at whether taxation might be used there. It might be useful if she set out the Government’s thinking on where nudge, shove and, perhaps, indifference come in.
The Government are extremely interested in understanding how tax can affect behaviour—far more interested, dare I say, than the previous Government were. I understand that the hon. Lady was not in Parliament then, but I was. One of the problems under the previous Government, particularly in relation to green tax, was their highly controversial plans on road tax. People who had bought a car before 2001 suddenly faced huge rises in their vehicle excise duty, apparently to make them change their behaviour when it was impossible for them do so because they already had the car. That sort of approach really damaged people’s trust in green taxation. I think what the hon. Lady is saying is that we probably need to learn from those issues and, as I would see it, huge mistakes, and realise that if we are to change behaviour, it has to be behaviour that people have not exhibited yet. We cannot change past behaviour. That is a philosophical debate that she may want to have, but for most people that would seem like common sense.
The hon. Gentleman’s question was so vague as to be impossible to answer. I have no doubt that my right hon. Friend the Secretary of State for Education has his own interesting views on the use of the tax system to change behaviour. We have already debated some important clauses on alcohol, which I hope the Committee welcomed, that do just that. We continue to learn, as many Governments across the world do, about the best way to use taxation, among other policy measures, to get the right sort of behaviour and to achieve the right policy objective.
The other complication is that everywhere is different. One of our debates within the EU—I do not want to stray too far from the amendment paper—is that different countries and different communities have a different sense of what is fair and a different propensity to change their behaviour. One of the added complexities is that there may be no consistent approach across countries that we can adopt. It will be up to individual countries to understand their electorate and how they can work with the grain of their electorate’s human nature, using policy to change behaviour. The Conservative party has always understood that, because we have understood that freeing the lowest earners from income tax, for example, means that the link between effort, reward and work is strengthened. Perhaps I should now make some progress on the clause after that interesting interlude.
It is a pleasure to serve under your chairmanship, Mr Gale; I particularly appreciate the fact that you got my name right the first time.
I would like to expand on what the Minister has been saying about the effect on behaviour. My constituents and I would like to know what evidence there is so far that the measure is having an effect on the closure of landfill sites and is changing how we deal with our waste. In Greengairs in my constituency, there is one of the largest landfill sites in Europe, and there is no sign of that winding up its functions anytime soon.
I have outlined to the Committee just what an impact the landfill tax has had. Clearly, we have not got rid of landfill—there is still landfill—but since the measure was introduced in 1996, we have seen a dramatic reduction in the amount of waste going to landfill. There is a broader debate, which we probably should not have now, about people’s carbon footprint and general amounts of waste, as well as what proportion of that waste can be landfilled.
The local government settlement in the recent spending review includes an allocation reflecting the costs of waste disposal for local authorities. I am pleased to report that as the shadow Minister, the hon. Member for Bristol East, mentioned, we have increased the value of the landfill communities fund, in line with inflation, to £78 million. That means that communities in the vicinity of landfill sites, such as that of the hon. Member for Airdrie and Shotts, will continue to benefit from spending on projects that improve the environment in their area.
What we are trying to do with the Budget overall is to achieve the principal objective of tackling the deficit and a secondary objective, similarly vital, of stimulating growth—and we still want to make progress on our ambition of being the greenest Government ever. We are trying to find a balance between those different objectives; they are all ultimately related. We have increased the value of the landfill communities fund in line with inflation, so in real terms it will be able to be as powerful and effective as it has been in the past.
Other changes to the landfill tax are taking place at the moment, and I will update the Committee on those. The Government are in the process of devolving the landfill tax in Scotland and, following the conclusion of proceedings on the Scotland Bill, the landfill tax will be disapplied in Scotland from 2014. The Scottish Government will be given a power to introduce their own tax on waste disposed to landfill and will be able to set the rate or rates of that tax as they wish. I am sure that that will be of interest to Scottish members of the Committee.
The landfill tax has proved extremely successful in reducing the amount of waste sent to landfill in this country. The annual rate increases until 2014 have been welcomed by both industry and environmental groups, and I have to say that it is no mean feat to get a welcome from both of those at the same time.