Budget relief for land clean-ups and renewed pesticides tax threat

01 Nov 2000

A package of tax breaks to encourage urban regeneration and the clean-up of contaminated land featured in the pre-Budget report in November. Ministers also renewed the threat of a pesticides tax if the agrochemicals industry fails to come up with acceptable proposals for reducing its impact.

The fuel protests in September ensured that attention was focused on Chancellor Gordon Brown's proposals on vehicle and fuel taxation (see pp 4-5 ), but the pre-Budget report also contained a raft of other measures with environmental implications.

  • Contaminated land: From April 2001, the Government will offer accelerated tax credits on the costs of cleaning up contaminated land. Investors will be able to claim immediate tax relief, rather than waiting until after property is sold. Details of the scheme have yet to be announced but the Treasury says it will cost £30 million in the first year, rising to £55 million in the second.

  • Inner cities: The Government floated the idea of reducing stamp duty on brownfield land redevelopment in the last Budget. Following consultation, Mr Brown has decided on an exemption from stamp duty for all property transactions in the most run-down inner city wards from April 2001. The areas to benefit have yet to be decided, but the Treasury expects it to cost around £100 million a year.

    Mr Brown stopped short of offering an equalisation of the VAT position on greenfield and brownfield land, but his speech contained a number of other tax measures designed to encourage redevelopment. These include 100% tax relief on renovating flats above shops; cutting VAT to 5% on residential conversions; and removing VAT altogether on properties that have been empty for ten years or more.

  • Aggregates tax: The Chancellor announced that £35 million per annum will be channelled into the new "sustainability fund" which will work alongside the new aggregates tax from April 2002 (ENDS Report 308, pp 38-39 ). The £1.60 per tonne levy is forecast to raise £380 million a year, most of which will be used to cut employers' national insurance.

  • Pesticides tax: The idea of a tax on pesticides has been bandied about since 1997 - a 30% levy has been estimated to raise between £85-£130 million and cut pesticide use by 8%-21%. Earlier this year, the Crop Protection Association (CPA) moved to avert a tax with an alternative 20-point plan, but this was dismissed as inadequate by water firms and environmental organisations (ENDS Report 307, pp 10-11 ). The Government also asked the CPA to strengthen its measures.

    The CPA submitted revised proposals on 30 October. 1 It extended the proposed voluntary agreement from three to five years; boosted the training programme for agronomists; and promised to work on measures to protect water supplies. In addition it put forward proposals to draw up crop protection management plans for individual farms; improve the training of pesticide advisors; improve information available to farmers to encourage them to increase biodiversity; and promised a code of practice for the use of insecticides.

    The CPA also responded to criticisms that the original proposals failed to contain quantified objectives and indicators by putting forward five new indicators measuring water quality, cereal field margins, the adoption of new technologies, training of agronomists and training of operators. But the CPA failed to set any targets for these indicators, nor did it make commitments to reduce pesticide applications

    The proposals also fell down in that there was no commitment to phase out older, more harmful pesticides. The CPA put the cost of the revised proposals at £10 million - or £2 million a year, around the same as its original proposal. But farmers' costs have rocketed from £1.5 million a year under the old proposals to around £11.5 million.

    The Government was not impressed. It threw out the CPA's offer just nine days after its submission. Environment Minister Michael Meacher said that the Government remained keen to get a voluntary agreement from the CPA: "We are pressing the CPA to come up with effective measures," he said. But "a pesticides tax is specifically not ruled out."

    Despite the rhetoric, however, the recent fuel protests and the state of the farming industry mean that a pesticides tax is politically difficult.

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