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12.30 pm

Mr. Boris Johnson (Henley): I am glad to be able to hold this debate in Westminster Hall. I have applied for it many times. My purpose is to ensure the preservation of a tax credit scheme that has been responsible for improving the lives of people in my constituency in south Oxfordshire in all sorts of unexpected and unsuspected ways and has acted with great sensitivity to local needs and interests. I see that the Annunciator says that Mr. Alan Johnson is speaking. I take no offence. For the purposes of this debate, Mr. Winterton, I am Alan Johnson. You may call me Alan, if you so choose. [Interruption.] Oh, there I am now.

The wonderful landfill tax credit scheme dates back to 1996 and those halcyon days when the Conservatives were in power. They set up the scheme, which works broadly as follows: people dumping huge quantities of waste in holes in the ground in Oxfordshire pay £12 per tonne of waste dumped, rising to £15 per tonne in 2004 for what is called putrescible or household waste. The dumper can recover 20 per cent. of that money if it is spent on various worthy environmental projects. There has been a wide interpretation of the schemes that may be so funded.

The Trust for Oxfordshire's Environment has been able to scatter plenty o'er a smiling land. Lychgates have been repaired; a Norman church in Crowmarsh Gifford has had its roof fixed; two magnificent play parks have been constructed in Berinsfield; a bridge has been built at an accident black spot; disabled access has been supplied at Sonning Common village hall and at several other village halls. Sometimes the sums involved can be considerable, such as the £50,000 that went to the fabled watercress beds at Ewelme; sometimes it is just a few hundred pounds. In all, TOE has spent £1.2 million in south Oxfordshire on more than 100 projects during the past four years.

It is a testimony to the popularity of the scheme in my constituency and in Oxfordshire generally, and the value that local people attach to it, that my constituents have been alarmed to hear that it might be under threat. I have received a great many letters asking whether TOE can continue to scatter its plenty. That is the question that I should like the Minister to answer.

The Government, I am told, would like 65 per cent. of this money to go towards recycling projects. There is great merit in that. We in Britain have a poor record on recycling. We lag far behind our European friends and partners. We tend to dump far more into tips and holes than them, and some of the statistics are terrifying. Whatever hon. Members may think of the newspapers, which I sometimes write for, they may not know that it takes 50 years for a newspaper to rot away in a landfill site. It takes 500 years for a disposable nappy to disintegrate completely. That statistic is particularly bloodcurdling, when one considers that 4 per cent. of household waste is nappies.

We all support the proposition that the country should recycle much more than it does, but we cannot meet our obligations under the EU landfill directive by plundering the landfill tax credit scheme. Ernst & Young calculates that we would need £7 billion of capital

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infrastructure investment in new, sophisticated incinerators to cope with the national waste strategies. The landfill tax credit scheme was worth only £109 million last year. There is no reason why 65 per cent. of the scheme's money should not go towards waste management and recycling, given that the total income of the scheme is likely to increase with the increase in the amount of money taken in landfill tax.

I have spoken briefly, but I hope that others will want to speak on this important subject. I hope that the lychgates and water meadows of my Oxfordshire constituency and others will not be sacrificed for the sake of compliance with some European directive—not that I have anything against its being European; perhaps I should refer rather to some bureaucratic desire to comply with the terms of a recycling measure.

The Trust for Oxfordshire's Environment has done a good job, as representations from all over my constituency confirm. It would be a great shame if its functions were taken over and subsumed by local authorities; I fear that in that case the money would not be truly additional and that schemes that benefit local people and greatly please many of my constituents would cease to be funded as they have been in the past.

My message to the Minister is, "Do not get rid of the Trust for Oxfordshire's Environment." In other words, "Don't step on TOE," if I may feebly go for a soundbite.

Several hon. Members rose—

Mr. Nicholas Winterton (in the Chair): Order. Before I call the hon. Member for Huddersfield (Mr. Sheerman) I inform hon. Members that the ownership of the debate lies with the hon. Member for Henley (Mr. Johnson). Ownership is normally exchanged between the hon. Member who secured the debate and the Minister. It is the custom of the House that if other hon. Members wish to take part in the debate they clear it with the hon. Member concerned, with the Minister and with the occupant of the Chair. I shall call the hon. Member for Huddersfield because he has done so.

I may use my discretion to call the other hon. Gentlemen who are seeking to catch my eye, but it is important that the Minister should have adequate time to reply. He will let me know in the next moment or two how long he would like to reply, and whether he is happy for hon. Members who have not cleared it with him to participate in the debate.

12.37 pm

Mr. Barry Sheerman (Huddersfield): Thank you, Mr. Winterton. I congratulate the hon. Member for Henley (Mr. Johnson) on securing such an interesting debate and I thank him and the Minister for giving me permission to contribute to it.

I declare an interest. I chair an organisation called Urban Minds, which is one of the largest not-for-profit environmental groups in the United Kingdom. We carry out larger projects than those concerned with church roofs, lychgates and the other excellent work that is done with some of the money from the landfill tax credit scheme. We received £500,000 from the scheme for an innovative investigation into how brownfield land can be reused for other purposes. An expert team spent two

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years finding out how to reclassify brownfield land for reuse, which is an important step in helping the Government and others who want that land to be brought back into use.

Urban Minds also creates new, profit-making businesses in the private sector that use waste as a raw material. Instead of regarding waste as rubbish, Urban Minds sees it as a new raw material that flows from our towns and cities, which should be used as a raw material, rather than digging holes in the earth's crust and using virgin material.

In terms of the history, I have been around from the very beginning. I saw what they called the Brown-Gummer plot, which was used to introduce this taxation. It was a break with the tradition of great hostility in the Treasury to hypothecating taxation. It was innovative, new, creative and very exciting. I agree with the hon. Member for Henley that it would be a great shame if it came to an end. It would in fact be the end of a bold and innovative experiment.

The tax has had enormous positive effects; for example, many community organisations have done wonderful things to enhance the beauty of the environment. As a result of the tax, many new wetland areas for wildfowl and birds have been established, as well as some high-class research and development partnerships with universities. The tax, and the way in which it is distributed, have resulted in people building partnerships. Universities, local authorities, the private sector, and community groups have done so many creative, small and very bold things.

The tax is not only innovative; it is tough. As with all innovative and new things, mistakes have been made and there have been problems. Some landfill operators and landfill tax credit distributors have done the wrong thing—there is no doubt about that. That is true of all legislation and regulation, however. We can learn from those mistakes. I certainly see a strong case for modifying the present administration system—improving it, but not abolishing it.

If we are going to meet the strict EU targets and the Government's statutory targets on local authorities, this tax has to be used wisely and well. It has to be used to help local authorities to meet those targets. I have no objection to having 60 or 65 per cent. targets for recycling—that is good—but I urge the Minister not to put his faith in local authorities. They are notoriously poor at delivering in these innovative areas. Many of the groups that I am talking about today have been at the cutting edge of the innovative work that local authorities have dragged behind in.

We know of the Minister's reputation for being innovative, but we want this tax to be built on. If 20 per cent. of the landfill tax is good enough to be put into environmental purposes, why not have another 20 per cent. go to local authorities, another 20 to research and development for universities and other research institutes, and another 20 to starting up environmental businesses? That would be a bold way of saying that this is a radical Administration and that it is more radical than its predecessor. I believe that that is the way the Government should go.

The crucial point about the landfill tax credit scheme is that if £10,000 is given to my organisation—or any organisation—it becomes £100,000 through landfill tax

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credit; it is a wonderful accumulator. If one can then get a European resource, the amount can be doubled to £200,000. Through the landfill tax credit, some people can make that original £10,000 into £400,000 or £750,000. That is the accumulator working for the environment.

If the funds available from the scheme become Government money, they cannot be used for such funding. I ask the Minister to think carefully before he makes changes. I ask him to realise that the universal demand from environmentalists, from the waste management companies, and from everyone else, is that he must face the real fact that landfill tax is half of what it should be. It should be boldly and rapidly put up to a decent level that is comparable to that charged by our European neighbours.

Several hon. Members rose—

Mr. Nicholas Winterton (in the Chair): Order. I will call all three of the hon. Members who are seeking to catch my eye. They must limit themselves to two minutes.

12.43 pm

Mr. David Cameron (Witney): Thank you, Mr. Winterton. I congratulate my hon. Friend the Member for Henley (Mr. Johnson) on securing the debate.

I support the landfill tax credit scheme, which has been a great success in my constituency. It has supported the Wychwood way, which is a walk around Wychwood forest, the Rollright stones and countless woodland and other projects. I have been inundated with letters asking me to lobby the Minister, which I have done on countless occasions through letters, to keep the scheme. Like my hon. Friend the Member for Henley, I support recycling, not least because I live next to a tip, around which I want to reduce the traffic.

I agree with the Trust for Oxfordshire's Environment in that, although I accept that 65 per cent. of funding should be directed to projects that deliver sustainable waste management, I am anxious to see the remaining 35 per cent. remain as a source of funding for good-quality projects that improve the local environment and address wider sustainability issues.

I caution the Minister against replacing the landfill tax credit scheme with, as some have suggested, a public spending scheme. The beauty of the scheme is that it is multi-point to multi-point, which means that lots of people are handing out money and lots of people are applying for it. If it became a public spending scheme, it would become one body and one person's decision, and we would lose, to mix my metaphors, the thousand points of light, which would be a mistake. Again, I congratulate my hon. Friend the Member for Henley on raising the matter, and I look forward to hearing the Minister's response.

12.46 pm

Tony Baldry (Banbury): Thank you, Mr. Winterton. I agree with everything that has been said so far.

The landfill tax credit scheme is excellent, and it should be simplified, not scrapped. The Government should consider two issues. First, they should entrust the

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scheme's regulator with the task of ensuring that sufficient funds are allocated to waste management. If the scheme were abolished, the cost of financing projects by other means would be too high for most volunteers.

Secondly, the Government should consider whether their aspiration to divert 65 per cent. of resources to waste management will ultimately remain an aspiration. As the Environmental Services Association has observed, the landfill tax credit scheme makes a positive contribution, but it will never be large enough to pay for the £7 billion of new infrastructure needed to deliver compliance with the national waste strategy, or to bring the £1.5 billion annually spent on British municipal waste management services up to the £3 billion spent in France, an EU member state with an economy and population similar to the UK's.

I strongly suggest that a new scheme—I echo the remarks made by the hon. Member for Huddersfield (Mr. Sheerman)—is needed to aspire to waste management, but we should keep the current landfill tax credit scheme so that other environmental initiatives can be encouraged in the community. As we have heard from my hon. Friends, many valuable environmental schemes will disappear if the landfill tax credit scheme is scrapped.

12.47 pm

Mr. Jonathan Sayeed (Mid-Bedfordshire): Thank you, Mr. Winterton. I shall be extremely brief because I want to allow the Minister time to respond.

The first priority must always be not creating waste in the first place. The second must be to recycle the waste that is created. The last thing that one wants to do with rubbish—I say this as the Member of Parliament for Mid-Bedfordshire, where there are many holes in the ground that are filled with lots of rubbish, including London's rubbish—is to dump it in a hole in the ground or to burn it. The priority for any environmental scheme must be not to create waste in the first place and to recycle what is produced. Historically, we have a poor record on recycling. Much more of the money that is collected by the landfill tax credit scheme should go on recycling because that would be better both for my constituency and for the country as a whole.

12.48 pm

The Financial Secretary to the Treasury (Mr. Paul Boateng): I congratulate the hon. Member for Henley (Mr. Johnson) on an excellent and well-subscribed debate. He gave us a tour de force in which he shared the delights of watercress beds and church halls in his constituency. He also shared with us the startling fact that it takes 50 years for a newspaper to become biodegradable, while it takes 500 years for a baby's nappy to achieve the same state. That begs the question how long it would take for a newspaper graced by a column from the hon. Gentleman to biodegrade? Would it be 75 years, 100, 450 or maybe even 10? Nevertheless, he has shared with us real knowledge of and sympathy for the organisations that benefit from the landfill tax credit scheme, as have the hon. Members for Witney (Mr. Cameron), for Banbury (Mr. Baldry) and for Mid-Bedfordshire (Mr. Sayeed) and my hon. Friend the

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Member for Huddersfield (Mr. Sheerman), who has a long-standing knowledge of this subject, and whose contributions to debates and Question Times in the House are eagerly looked forward to by myself and my colleagues.

We need to recognise the importance of this scheme to local communities. It dates back, as was said, to 1996. It represents the outcome and the product of a tax that forms a key part of this Government's strategy to reduce the environmental costs of landfill and encourage waste producers to consider more environmentally friendly alternatives such as minimalisation, reuse and recycling. The hon. Member for Mid-Bedfordshire is right to stress the primary importance of the first of those. We all share a belief that reuse and recycling have an important role to play.

One consequence of the arrangements put in place for the landfill tax credit scheme is that the contributions count as tax forgone, so they do not count towards public sector spending. The scheme can therefore support projects that improve local communities around landfill sites, reclaim contaminated land or support research and education into more sustainable waste management.

The path down which my hon. Friend the Member for Huddersfield urges the Government—to use 80 per cent. of the tax for environmental schemes—is a radical solution. I shall count it as his contribution to the consultation. He will understand, as will other hon. Members, why I do not intend during this debate to pre-empt the outcome of that consultation. However, I assure all hon. Members, especially the hon. Member for Henley, who put his case passionately, that we do not come to the consultation process with any foregone conclusions. We want to see more environmental bodies supporting more recycling projects. We are looking at ways of improving the performance of the scheme by encouraging contributors to target their funding at more strategic actions.

We are anxious that more of the available money should go into sustainable waste management. Last year we set an indicative target of 65 per cent. of landfill tax credits to be allocated to sustainable waste management projects, with at least a third of those to be allocated to recycling projects. Initial indications are that the industry has made significant progress towards meeting that target, which is warmly to be welcomed.

The scheme has much to commend it. It has raised some £450 million for spending on the environment, which represents a large amount of landfill tax forgone—over £100 million last year. The amount forgone is likely to grow in the coming year, as we are committed to increasing the rate of landfill tax. Therefore, it is right and proper that we should look closely at the way in which the funds are put to use. In the 2001 Budget we announced our intention to replace all or part of the scheme with a public spending programme directing resources towards Government priorities on sustainable waste management. That is a priority. We are seeking to consult widely on how best to achieve it.

The scheme has been successful at directing money to local community improvement projects. A number of them have been described—new church roofs, revamping of parish halls, nature reserves, playgrounds

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and other local amenities. The recipients of the funding are often small local bodies that may have difficulty in accessing other forms of funding. I take to heart the point made by my hon. Friend the Member for Huddersfield about the innovative approach embraced by the local schemes. They add value that would not necessarily be there if local authorities alone were the providers. That is an important point to bear in mind.

Mr. Sayeed : Will the Minister deal with the position of ENTRUST? As he knows, that organisation runs a scheme involving some 11,000 projects with only 26 staff. Does he think that such a large scheme can be managed with so few staff?

Mr. Boateng : I have met people at ENTRUST and shall do so again. I am satisfied that they are up to the job and delivering a quality service.

There are some positive signs that the waste management industry is responding to the Government's challenge to divert more contributions into sustainable waste management projects, and we welcome that. However, there are areas for improvement. The Exchequer forgoes a large amount of revenue each year. It is important that a national strategy for waste management should receive some benefit from the operation of the scheme. We have adjusted the categories of project that may be funded under the scheme. Devolving control over the funds from the tax credit means that judgments about value for money remain in the hands of contributors. That is not a problem for small schemes delivering local benefits, but it can be a problem in terms of delivering the wider strategic vision that has to be in place to develop sustainable waste management.

There are other matters that it would be wrong for hon. Members to neglect. Various Committees of the House have expressed concerns about transparency. Arrangements for funding projects can become extremely complex. Relationships between contributing site operators, environmental bodies, local authorities, any other third party contributors and those who ultimately benefit from the project can be very close. That can be for the good, but it creates issues of

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transparency that must be addressed. I am satisfied that ENTRUST and others recognise the importance of so doing.

We want to make sure that the network of relationships produces the right outcome. Sometimes it does so in a rather convoluted way that requires close and effective regulation, for which ENTRUST is responsible. The goal of delivering a better environment is one that we share with the communities that are most intimately affected by landfill and other means of disposal. I well recall, as will you, Mr. Winterton, the contribution that was made to our consideration of these matters under a Conservative Administration, long before it became fashionable, by the former Member for Hornsey and Wood Green, Sir Hugh Rossi, who chaired the Select Committee on the Environment. I remember visiting some of the sites in mid-Bedfordshire at that time, when we learned a lesson about the importance of making sure that we better protect the environment and, within that, the importance of better regulation and of enabling and empowering local communities to deal with the concerns that most affect them.

The hon. Member for Henley made an important point in describing the strength of feeling among the environmental trusts that serve his constituency and those of several other hon. Members in the Chamber. The great benefit of those trusts is that they are locally based and represent local opinion. The great benefit of schemes and projects such as those described by my hon. Friend the Member for Huddersfield is that they are directly accountable to those who are living with the problem, and provide a framework and context for innovative and imaginative approaches to tackling local needs. That is something that any new scheme must reflect.

This is an open and genuine consultation and I believe that today's debate, although short, has helped to further it. All the points made by my hon. Friend the Member for Huddersfield and other hon. Members will be taken into account in the course of that consultation, in order that we may better protect the environment at the end of it.

Mr. Nicholas Winterton (in the Chair): We all thank the Minister for his reply.

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