APPENDIX 5
Memorandum from Renew Trust
CHANGES TO
LANDFILL TAX
CREDIT SCHEME
THREATEN RENEW
Renew Trust
Renew Trust is a not-for-profit organisation
which refurbishes white goods donated by Comet plc and others,
so reducing the amount of waste going to landfill. Currently we
are diverting 3,500 tonnes of domestic electrical waste away from
landfill each year.
Renew provides reasonably priced electrical
equipment for those on low incomes, often provided in a package
for those setting up home combining a cooker, fridge and a washing
machine. Renew also provides meaningful training and employment
opportunities to people in the servicing and refurbishment of
electrical equipment. The projects are based around Comet's distribution
depots and currently operate in Gateshead (currently training
25 long-term unemployed people) and Leeds (where it works with
Remploy to train 22 people with disabilities). We have advanced
plans to extend the projects to other Comet distribution points
in Plymouth, West Bromwich, Chorley, Chepstow, Barking & Dagenham,
Birkenhead, Nottingham, Woolwich and Eastleigh.
By the end of 2004, we had hoped to provide
training places for 600 unemployed and disabled people that would
underpin full-time employment for more than 150 around the country.
The programme would have been reprocessing 488,000 white goods
pa with around 20% being refurbished for sales to the community,
housing associations and social services.
Proposed changes to the Landfill Tax Credit Scheme
(LTCS)
Renew has received money under the LTCS. So
far it has earmarked £260,000, and has been promised £1.4
million overall up until the end of March 2004. There are currently
a number of categories of organisations that can receive money
under this scheme. Renew falls under the following category (under
the Landfill Tax Regulations S.I. 1996/1527):
"(cc) for the purpose of encouraging
the development of products from waste or the development of markets
for recycled waste—(i) research and development; (ii) education;
or (iii) collection and dissemination of information about the
development of products from waste or the development of markets
for recycled waste."
The amount distributed through the LTCS to qualifying
organisations is around £150 million. ln the Pre-Budget Report
(Nov 2002, Cm 5664), the Government announced some changes to
the scheme. From 1 April 2003, approximately one third of this
money—£47 million—will continue to go the qualifying
organisations. The remainder—£100 million—will
pass to the public spending programme to encourage sustainable
waste management. The type of spending will broadly be determined
by the government's waste policy.
As yet, the Government has not published the
details of the changes to the criteria of qualifying organisations,
but an announcement is expected early in the New Year. We understand
that these changes will be implemented by regulation before the
end of March 2003.
The problems with the Government's proposals
Whilst we do not deny that the scheme could
be improved, we do believe that it plays a vital role in encouraging
innovative and imaginative schemes that ultimately help achieve
the Government's targets of reducing waste. We also found that
SITA Environmental Trust scrutinised the application for funding
very carefully both in terms of actual realisable outcomes and
financial probity.
The Scheme also helps the Government develop
the voluntary sector's role in waste minimisation thereby contributing
to their role in pursuing the Neighbourhood Renewal agenda. Using
the voluntary sector for waste minimisation projects is an efficient
and cost effective way of spending money.
— Renew will no longer qualify for
funding: We understand that the Treasury proposes to amend
the regulations specifying the types of organisations that can
receive funding by deleting category (cc) (see above). This means
that Renew may no longer meet the criteria.
— Timescale: We had understood
for some time that the Government was planning to reassess the
LTCS with a view to making changes in April 2004. On that basis,
we had been promised £1.4 million to spend in the period
up until then. This would have enabled Renew to pump-prime 15
new Renew projects in locations around the country, employing
150 and training 600 people. Clearly, if the changes are due to
take place a year earlier, in April 2003, Renew will lose up to
three quarters of this funding which will have serious implications
for its work.
— Inefficient use of LTCS money:
The proposed changes will result in two thirds of the LTCS "pot"
going to public funding. Currently LTCS funding is categorised
as private, so releasing other forms of public funding which require
"matching" with private funds. By putting this amount
into the public `pot' instead, it cannot release anything like
as much money for other waste minimisation projects. Therefore
the overall effect of withdrawing LTCS will be to reduce the amount
of money devoted to waste reduction and recycling. The first Renew
project in Gateshead managed to secure £460,000 of public
money from four different funders. Moreover, none of these funders
would release their portion until £70,000 from the LTCS became
available and it was this money that unlocked the £460,000.
Overall, if the Renew programme is able to proceed
as illustrated above it will levered in more than £10 million
in public and other private cash.
— Consultation: Whilst the Government
carried out a consultation on a range of options for changes to
the LTCS last year, we have not had the opportunity to comment
on these proposals which are radical and abrupt. By taking effect
within months of announcement there is a severe danger that many
groups will be stranded.
RECOMMENDATIONS:
1. It should delay the start of the proposed
changes until April 2004 so that Renew can receive the money it
was promised and that it can readjust its plans to take account
of the changes.
2. The Government should reassess the categories
of organisations that can receive funding under the LTCS to ensure
that organisations that make a significant contribution to minimising
waste and meeting the governments targets—whether it be
refurbishing, recycling or reducing—can benefit. This should
be in line with the Government's targets under the Landfill Directive.
3. The Government should conduct a consultation
exercise on the details of these proposals before implementing
them.
December 2002
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