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10 pm
Mr. Chris Davies (Littleborough and Saddleworth): Yesterday, in my other capacity as a member of Oldham metropolitan borough council I had to vote for a budget embracing major cuts in public services, including cuts in education and social services that will have a severe effect on the local people whom I represent.
Of those cuts, £360,000 worth are directly due to the introduction of the new landfill tax. That figure is expected almost to double next year. The implications of the new tax were debated when parts of the Finance Bill was considered on the Floor of the House, but only now are the real concerns of local authorities starting to be felt and to be properly expressed.
During the early discussions of the Bill the lobbying of industry was paramount, and most apparent. Local authority treasurers had been led up the garden path and encouraged to believe that the effects would not be as severe as they have proved. So they have not spent the intervening time lobbying their local Members of Parliament. But now the realities are becoming clear, and I am grateful for the opportunity to debate them.
For once the Government had a really good idea--a green tax to benefit the environment, cut household waste and encourage recycling. Rarely, as I am sure the Minister will agree, can an idea have received such a warm welcome from all parties and from such a parade of environmental groups. The proposal was seen as beneficial and sweet, but it has rapidly turned sour.
The tax will cost councils in West Yorkshire, for example, some £3.3 million in the coming year alone. Across the Pennines it will cost councils in Greater Manchester £4 million, and in the country as a whole it will add £77 million to the burden of local authorities.
Instead of that money going to local councils to encourage recycling, it will go straight to the Government for their own purposes. Far from giving a boost to recycling, it will force councils to cut public services to pay for it, and in practice will leave them with even less money for recycling schemes. In summary, the tax is a tragedy--another wasted opportunity for environmental improvement.
I shall take the Minister back to those pleasant days in November 1994 when the Chancellor first announced his plans for a landfill tax. Each year local authorities dispose of about 20 million tonnes of household waste, 85 per cent. of which is tipped into one of Britain's 5,000 landfill sites.
It is widely recognised that that is not a good thing. Everyone who cares about the environment and about maintaining and sustaining the Earth's resources knows that it is not, and knows that we should reduce the amount of waste generated and recycle more of it. At present, I understand that only 5 per cent. of household waste is recycled. I am ashamed to say that in Oldham the figure is just 2.1 per cent., which is appalling.
Society's general throw-away approach results in the increasing use of the earth's finite resources, in the generation of additional road traffic and in heavy lorries
taking waste materials to landfill sites which, in turn, causes disturbance and annoyance to local communities. It also results in the major generation of methane, which is one of the main greenhouse gases contributing to the warming of the planet, the results of which are becoming all too apparent as the conclusions of scientific study after scientific study prove.
The Chancellor's proposal for a landfill tax was therefore given a very warm welcome and a sympathetic hearing. It was thought that it would discourage the disposal of waste and encourage recycling and that it would be the Government's first genuine green tax--a really good move. It was assumed that money would be taken from local authorities on the one hand but given back on the other, in such a way as to create a disincentive to throw away our rubbish and put it in holes in the ground, leading to an increase in recycling facilities. It was to be a transfer of resources that would be revenue neutral but environmentally beneficial.
When the details of the tax were announced last November, we learned that landfill deposits of household waste were to be charged at £7 a tonne. That took local authorities by surprise because it was higher than they had originally anticipated. They were reassured, however, by the Government's response to the consultation paper produced last September. The Government said that the concerns of local government were understood and that
would be addressed
It was only when the details of the settlement were announced that local authorities realised that they had been led up a dark alley and had, in effect, been stabbed in the back by an assailant who was all too familiar. The truth has now become clear: the Government never had any intention of compensating local authorities for the additional burden of the landfill tax. Not a penny of compensation has been earmarked in the standard spending assessments for the coming financial year. The money from the landfill tax is not being recirculated back to local authorities to encourage recycling but is being put directly into central Government coffers for purposes determined by central Government.
I cite two local examples. In the boroughs of Oldham and Rochdale, householders will be paying some £6 each in council tax specifically attributable to the costs of the new landfill tax. I wonder how the Government can attack other parties' tax policies when they behave in such a way, introducing a direct tax on householders in such a discreet manner.
It is true that the money will be used to reduce employer's national insurance contributions from April 1997--a worthy objective that the Liberal Democrats support. But why should that cost be met out of local authority budgets? If the Government were genuinely interested in protecting the environment and making effective use of green taxes, surely they would consider an alternative, such as increasing through the taxation system the price of electricity charged to business and industrial users by an amount equivalent to the reduction of employer's national insurance contributions. That would be revenue neutral and represent a transfer of costs to business, not an increase in their overall costs. It would encourage energy saving and employment--a classic green tax. But no, environmental considerations are not
the Government's priority. How could they be when the effect of the landfill tax, which was hailed as a measure to encourage recycling, will be to discourage it?
Leaving aside the fact that many local authorities are locked into long-term contracts with landfill operators, the financial equation produces a solution that suggests that landfill is still the most economical option for local authorities. The vast majority of metropolitan and county councils are already budgeting at their capping limits, which means that they cannot even pass on the cost of the new tax to householders. They cannot even apply the principle that the polluter--in this case, the householder who generates household waste--pays. Councils' flexibility in such circumstances is minimal. They cannot increase council taxes. The only way in which they can find the money to pay the new taxes, which will go to central Government, is to cut existing services. I had to vote for a budget of severe cuts in the council chamber in Oldham last night. Cuts in spending, schools and social services across the country are the result of the landfill tax.
Given that councils are struggling to provide the services for which they have statutory responsibilities, how are we to find the money to expand recycling schemes, which are not a statutory requirement? How are they going to find money for what will be conceived of as optional extras such as that? The economics of the way in which the tax was introduced do not add up.
How different it could have been if the Government had insisted that the money raised from the landfill tax should instead be devoted to recycling promotion. That would still have been tough on local government services and on the education and social services budgets that I have highlighted, but it would have given a massive boost to recycling. To take the examples of Oldham and Rochdale again, it would have been sufficient to pay for the introduction throughout the borough, over three years, of kerbside collection of pre-sorted waste ready for recycling. That would have put us well on target to increase the amount of recycling from its present abysmally low level to the 25 per cent. target that was, after all, set by the Government and which is low by European standards. In Germany, householders are expected--and provided with the necessary facilities--to sort their waste into seven different categories so that it is ready to recycle, and the amount of waste thrown into tips or thrown away is kept to a minimum.
For local authorities, the dark clouds of the landfill tax have no such silver lining. I regret that the tax is proving bad in every respect. Not only does it damage local services and not only is it a tragic waste of the opportunity that the Government had to demonstrate their commitment to the environment, but it has been turned into an application of hypothecation that makes local authorities subsidise central Government priorities and expenditure. For heaven's sake, how devious can one get? The Conservative party is still supposed to believe in measures to oppose the centralisation of power. Yet, they are placing a tax burden on local authorities to subsidise a central Government commitment.
"the financial impact of the tax on local authorities"
"in the context of the local government finance settlement."
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