Select Committee on Environment, Food and Rural Affairs Appendices to the Minutes of Evidence


Memorandum submitted by 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 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 SI 1996/1527):

    "(cc) for the purpose of encourage 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. In 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 government 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.

Renew Trust

December 2002


 
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