Brown pledges rise in landfill tax escalator

March’s Budget included a promise to increase the landfill tax escalator from £3 to £8 per tonne per year from 1 April 2008 until at least 2010-11. But it failed to offer strong support for direct variable charging for household waste to encourage recycling.

The landfill tax was introduced in 1996, with a rate for active wastes of £7 per tonne. In the 2003 Budget, following a waste review the previous year, Chancellor Gordon Brown announced the tax would escalate by at least £3 per tonne per year, on the way to a "medium- to long-term" rate of £35 per tonne.

The new £8 escalator means the tax rate will double from £24 from April 2007 to £48 just three years later. The government hopes this will boost alternative treatment technologies and enable the UK to meet its diversion targets for 2013 and 2020 under the EU landfill Directive. The increase will also help compensate for the fall in the amount of waste sent to landfill.

The tax rate for inert waste, which has remained at £2 per tonne since 1996 and thus fallen in real terms, will be raised to £2.50 per tonne from 1 April 2008.

With an eye to the imminent Planning White Paper, the Confederation of British Industry said the tax escalator’s increase would not lead to more recycling "unless the planning system allows more waste facilities to be built".

Friends of the Earth welcomed the rise but called for a lower rate for waste treated biologically before landfill, because it "is an environmentally sound way to deal with waste that cannot be recycled and composted". It also repeated its call for an incineration tax.

The Local Government Association said "without new powers to encourage recycling and funding to change the way waste is dealt with", councils will be "locked into" landfill and face higher costs and fines for failing to meet their diversion targets.

The LGA hopes the government will grant local authorities the power to introduce direct variable charging for household waste collection to encourage householders to recycle more rubbish. The final report of the Lyons review of local government funding,1 published alongside the Budget, said councils should be given powers to charge for household waste collection to help divert waste from landfill and "help manage pressures on council tax".

But the report did not spell out how variable charging would sit with the council tax, which would continue to cover waste "management". Instead, it said there "would need to be clarity about the purpose of any new charge, and how this interacts with council tax".

The Tories said the proposals amounted to a stealth tax. The report accepted public engagement would be needed to gain support and warned councils to consider such perceptions.

Further budgets details are summarised at Budget 2007: Environmental measures on pp 4-5.