ESA chairman, Peter Gerstrom, looks at the proposed changes to the Landfill Communities Fund, the impact these could have on operators and surmises that the Contributing Third Party system really doesn’t need fixing…
There has been much debate within our sector over the past few months concerning HM Treasury and HMRC’s proposed changes to the Landfill Communities Fund (LCF). To put it in perspective, this is a funding mechanism that in 2015 distributed over £50m into some of the most deprived communities living near landfills as well as into charities that otherwise struggle to raise funds in these days of constrained public finances.
The Government is now reducing the cap on contributions which landfill operators are able to make so that less than £40m will be available next year. There may be good reasons for this, especially when funds are being diverted to clean up waste crime activity such as fly-tipping, a scourge of those communities. Less justifiable however would be the accompanying sudden and unexpected new requirement for landfill operators to fund 10% of the contribution to projects, which could threaten to jeopardise the scheme in its entirety if implemented by the Government.
It is well known that the landfill industry is in decline and that, with extended liabilities over forthcoming decades to manage and restore the sites, many of the businesses have little or no value. It therefore seems unlikely that these same businesses can absorb an unanticipated hit to their 2016 budgets – over £500,000 in some cases – to continue supporting the scheme.
The industry’s concerns about the future viability of the Landfill Communities Fund arise from the Autumn Statement which was accompanied by a proposal to remove landfill operators’ ability to use third party contributors to make up the 10% shortfall in landfill tax payments used to fund community projects. If brought in, the new proposal would kick in from April 2016 and would mean landfill operators would need to fund the shortfall themselves.
Mind The Funding Gap
If this happened, there would not be enough time for budgets to be altered, which would leave many operators unable to fill the unforeseen multi millions funding gap. The changes to the LCF have arisen following responses from award recipients to HMRC’s ‘Reform of the Landfill Communities Fund’ consultation. When asked: “are there any other LCF policy areas that need simplifying or reviewing?”, respondents said that finding a Contributing Third Party (CTP) increased bureaucracy and often led to delays at the start of projects.
These delays, however, do not occur at the Environmental Bodies which distribute the funds – the target of HMRC’s consultation. Had the award recipients been asked the follow-up question of whether having to find 10% of the funding from alternative sources was preferable to the potential alternative of no LCF at all, I suspect that the answer would have been that finding the CTP was preferable.
Furthermore, the recently published project applicant survey from the LCF regulator, ENTRUST found that of the 1,002 responses only 12% of respondents experienced any difficulty in finding a CTP.
ESA flagged up concerns as soon as the proposed changes were announced in November and has since been working tirelessly to try and stop these proposals being introduced by the Government. The outcome of the latest Government consultation on changes to the LCF is due out some time around the start of February.
If the Government decides to press ahead with this change, it would have a very large impact on our many Environmental Trusts which were set up to administer the scheme locally. The fact is that many of these Trusts would close for good. Since its introduction in 1996, the LCF has supported over 50,000 community and environmental projects across the UK with funds totalling £1.2bn. It has created significant environmental and community benefits, generating local jobs and vastly improving communities living near landfill sites. It would be a great shame to lose it.
I believe that it would be in everyone’s best interests for HM Treasury to listen to industry and to use the forthcoming March Budget to announce a halt to these proposed changes. In this way, communities and wildlife projects could be allowed to continue to receive funding from this invaluable source and some of those most in need of support would continue to benefit.