- The Presiding Officer (Tricia Marwick):
The next item of business is a debate on motion S4M-08040, in the name of John Swinney, on the Landfill Tax (Scotland) Bill. I will give the cabinet secretary a couple of seconds to catch his breath.
I call John Swinney to speak to and move the motion. Mr Swinney, you have 14 minutes.
- The Cabinet Secretary for Finance, Employment and Sustainable Growth (John Swinney):
As members know, the Landfill Tax (Scotland) Bill is the second bill to establish devolved taxes under the limited powers in the Scotland Act 2012. It follows the successful conclusion of the Land and Buildings Transaction Tax (Scotland) Act 2013, which Parliament passed in June and which received royal assent at the end of July.
The bill sets out the provisions and rules for a Scottish landfill tax, which will replace the United Kingdom system of landfill tax in Scotland from April 2015. I am delighted that the bill has reached the milestone of the stage 1 debate.
I thank the Finance Committee’s members for their work to prepare their stage 1 report, and I welcome their support for the bill’s general principles. Yesterday, I responded to a number of the recommendations and issues that the committee raised as part of its scrutiny of the bill.
Both devolved taxes—the land and buildings transaction tax and the Scottish landfill tax—will be administered under powers that are set out in a third bill. That is the revenue Scotland and tax powers bill, which is scheduled to be introduced in Parliament before the end of this calendar year.
I explained in a statement to the chamber in June 2012 that we will establish revenue Scotland to assess and collect devolved taxes. Revenue Scotland will work with the Scottish Environment Protection Agency to administer the Scottish landfill tax. Revenue Scotland will serve the needs of the people of Scotland at a lower cost than would be possible if Her Majesty’s Revenue and Customs administered the taxes, and we will deliver a better system that is more in line with Scotland’s needs.
In my statement in June last year, I set out the approach that the Government is taking to taxation. The proposals are firmly founded on principles that Adam Smith set out in 1776 in “An Inquiry into the Nature and Causes of the Wealth of Nations”. Our approach is based on four maxims that he set out—that the burden should be proportionate to the ability to pay and that there should be certainty, convenience and efficiency of collection. Those principles provide the foundation for a system that will meet the needs of 21st century Scotland, along with the Government’s core purpose of delivering sustainable economic growth for Scotland.
The Government intends to use its responsibility for taxation to ensure that no one is asked to pay more than they can legitimately afford. Landfill tax is quite different in nature from other types of tax such as the land and buildings transaction tax, and it acts as an encouragement to find other means of waste disposal. I have made clear to the Finance Committee my intention that the landfill tax rates will be set at an appropriate level that will be no lower than that for the rest of the UK.
Providing certainty about when and how much tax is due is an important guiding principle that underpins our approach. The consultation process for the landfill tax bill has been extremely helpful and productive, and we will continue to engage with taxpayers and professionals as our proposals develop in order to ensure that tax changes are properly discussed and communicated before they are introduced.
I have noted the desire of those within industry for as much certainty as possible with regard to the setting of tax rates. I have indicated to the Finance Committee that I am minded to make the proposed tax rates for the landfill tax known in the budget of 2014, a number of months before the introduction of the tax in April 2015.
One of the opportunities that we have with the devolution of these tax responsibilities is to create a simple and administratively efficient tax collection system. Revenue Scotland is working with the Scottish Environment Protection Agency on proposals to develop appropriate systems that are as straightforward and accessible as they can be in order to ensure that the approach to collecting Scottish landfill tax meets the needs of taxpayers and the tax authority.
It is essential that our tax system should be efficient, and it is clear that tax revenues must be devoted to paying for public services rather than being consumed in tax administration. The need for efficiency in the tax system is at the heart of our approach, and we will ensure that administration costs are kept to a minimum.
Turning to the bill itself, I want to place resource efficiency at the heart of our economy. The zero waste agenda in Scotland is thinking about moving resources from the margins to the mainstream, and our priorities for the future are supporting innovation and new ways of doing business as we move towards the creation of a circular economy.
The actions that we are already taking are helping businesses to save money and are creating jobs and delivering economic growth. Landfill tax is a cornerstone of our zero waste plan, as it encourages the prevention, reuse and recycling of materials and helps to keep valuable resources circulating in the Scottish economy.
Why is putting the value of resources at the heart of our economy so important? Very simply, it is because we live in a changing world that is placing new pressures on how we manage resources.
The world economy is changing, with new major economic powers emerging in places such as Brazil, India, Indonesia and Korea. The climate is changing: globally, we are set to release another 0.5 trillion tonnes of carbon emissions in the next few decades, and no part of our world will remain untouched by the impacts of climate change.
The population is changing, and the global population is due to increase to 10.5 billion by 2075. That population is becoming more affluent and increasingly urban—so much so that developing countries will need to build the equivalent of a city the size of Glasgow every five days from now to 2050.
All of that means that our demands for resources are changing. Globally, we are expected by 2030 to need 41 per cent more water, 80 per cent more steel and 33 per cent more energy. For some rare earth metals that are used in wind turbines, demand is expected to grow by up to 2,600 per cent. It is no longer acceptable to throw those valuable resources into the ground where their value is lost for ever. A Scottish landfill tax is essential in helping to drive those materials out of landfill and back into the economy.
Landfill tax can be viewed as the first and most successful of the green taxes, and it continues to change waste management practices. Alongside our zero waste plan and waste regulations, the tax will help us to deliver an economy in which materials are reprocessed and remanufactured, which will help in achieving our aim of sustainable economic growth.
The Scottish Government has carefully considered proposals for a landfill tax. Those proposals broadly reflect the existing UK landfill tax provisions, which are well understood by the waste industry and appear to work reasonably well.
The public consultation on our proposals ran from October last year to January 2013, and we asked consultees about two key changes to landfill tax. The first is a proposed enhancement to the tax credit arrangements under which the landfill communities fund operates.
The fund, which operates at a UK level, supports good causes in the vicinity of landfill sites in response to bids from relevant organisations. The Landfill Tax (Scotland) Bill allows us to create a communities fund, and the detail of the fund will be set out in regulations and guidance. However, I want to cover where my thinking has reached on it. I stress that ministers have not reached a conclusion about the details of the communities fund so I look forward to hearing the views that will be expressed by members today before formulating the Government’s proposals.
I recognise that the landfill communities fund has been successful in managing to lever in match funding and help communities that are affected by landfill. I intend to set up a Scottish fund to replace the UK system. The Scottish fund will maintain its private funding status and will therefore be a useful and strong asset for securing match funding. That will mean that the Scottish fund will continue the good work of harnessing money for good-quality projects and helping the communities that are most affected by landfill, while, crucially, leveraging in resources from other sources to add to the resources that have been created by the tax credit arising from the landfill tax.
- John Mason (Glasgow Shettleston) (SNP):
There has been some criticism that the cost of administering the UK system is quite high. Does the cabinet secretary think that administrative costs can be lower in Scotland?
- John Swinney:
I thank Mr Mason for his intervention, and I acknowledge and agree with the concerns that have been expressed about the UK communities fund’s cumbersome management arrangement. I have therefore decided to set up a Scottish fund. An explicit requirement of that fund will be to significantly reduce the administrative costs that are involved in the process.
That is important for two reasons, the first of which relates to the legitimate issues that Mr Mason and others have raised. Secondly—and I will come on to speak about this in due course—the level of landfill tax proceeds will decline over time so it is vitally important that we ensure that we have a much more efficient and cost-effective management mechanism for the landfill communities fund, which will diminish in the years to come.
The UK fund gives taxpayers the opportunity to earn tax credits by making contributions to the fund. At present, they are capped at 6.8 per cent of total tax liabilities in a year. As I explained to the Finance Committee, we propose to increase by 10 per cent to 7.48 per cent an operator’s tax liability that will be offset by contributions to a separate Scottish fund. That was widely welcomed by those who responded to the consultation.
We have also undertaken a further consultation with stakeholders about how the fund can be administered. As I said to Mr Mason, as we landfill less, less money will become available to the fund during the next decade. Increases in the credit cap will not offset the inevitable decline in the role that landfill has to play in future waste management practices.
I recognise that the current UK landfill communities fund gives priority to community and biodiversity projects on the principle that those who are most affected by landfill should benefit most from the fund.
I also recognise that landfill contributes a sizeable part of Scotland’s greenhouse gas emissions and has climate change impacts. In 2011, landfill emitted 600,000 tonnes of CO2 equivalent gases into the atmosphere. Furthermore, landfill encourages the production and transportation of new goods through the extraction and processing of virgin raw materials. That is an unsustainable and damaging production model. I am keen to hear members’ views about the funding objectives of a Scottish landfill communities fund and how we can secure the best outcomes.
Current arrangements are predicated on the principle that a 10-mile radius is applied to existing or redundant landfill sites, and the fund is deployed on projects that are contained within that 10-mile radius. There has been much debate of that issue in the Finance Committee and within the consultation.
On the one hand, I understand that community groups in places that are most affected by landfill want the 10-mile radius rule to apply to a Scottish fund so that they benefit the most from it. I have also heard from environmental groups that have an interest in biodiversity projects that the reach of the fund could be extended and the rule should be lifted for biodiversity projects. I am keen to hear the views that will be expressed during today’s debate about how we might proceed on that point. As the bill goes through Parliament, I will confirm the Government’s thinking on the question.
The second main change that we propose for the fund is the taxation of the illegal disposal of waste. We have several reasons for making that proposal. First, illegal dumping is a problem that has significant environmental impacts. It is an environmental crime and it is rightly pursued and prosecuted as such. The additional penalty of a tax charge on illegal disposals should act as a powerful disincentive and help to prevent dumping.
Secondly, illegal dumping undermines legitimate waste operators, including landfill operators. Our proposals will support and encourage the industry to operate responsibly.
Thirdly, by clamping down on tax evasion in this way there is an opportunity to gather additional revenue without increasing the tax burden. Again, this proposal has been welcomed.
I want to make two further points in the remaining time that is available to me. We propose that key elements of the landfill tax will be set out in secondary legislation—for example, tax rates, detailed arrangements for tax credits and the operation of the landfill communities fund, and the list of wastes that fall into the higher and lower tax bands.
Taking that approach will enable the Scottish Government to consult properly on lists of waste materials and on the operation and administration of the tax. It will also provide flexibility to vary rates and to make other changes without the need for primary legislation. The Delegated Powers and Law Reform Committee has commented on our proposals and is broadly content with them.
The second issue is to do with the overall effect of landfill tax on the Scottish budget. As the committee is aware, the impact on the budget of the devolved taxes depends on tax receipts offset by the amount of the block grant adjustment. As I mentioned earlier, I am minded to set the tax rate for the Scottish landfill tax at a level no lower than that for the rest of the UK to maintain stability and to provide certainty to companies operating in the sector. However, as our zero waste policies continue to take effect, we expect to see tonnages to landfill decline further and so tax receipts will also begin to fall. The Office for Budget Responsibility’s forecasts do not yet reflect that expected decline.
One immediate challenge is to secure agreement to a block grant adjustment method that reflects the expected decline. That remains an unresolved issue with the UK Government, as the Scottish Parliament information centre briefing, which the Finance Committee has, makes clear.
I met the Chief Secretary to the Treasury recently before his appearance at the Finance Committee and he agrees that we need to find a resolution to the issue. Members will not be surprised to hear me say that I will continue to be closely involved in resolving the matter.
- Stewart Stevenson (Banffshire and Buchan Coast) (SNP):
Does the cabinet secretary recognise that in Catalonia, for example, from 2004 to 2009 there was a reduction of approximately 20 per cent in their equivalent tax, which shows what can be done and what we might expect as we focus on reducing landfill?
- John Swinney:
The evidence speaks for itself on the effectiveness of the zero waste strategy in reducing the amount and the volume of waste that is going to landfill. It is literally an arithmetic calculation—which, of course, my dear friend Mr Stevenson would be adept at performing on behalf of us all—that that will be the pattern of revenues in the years to come, which will have to be reflected in the block grant adjustment mechanism.
I am confident that we will have the legal and administrative systems in place in good time to collect a fair and robust landfill tax in Scotland from April 2015. I have covered the approach that the Government is taking to the formation of the legislation and the issues that have been raised in the Finance Committee. I look forward to considering the points that are raised by members of Parliament today as a consequence of the debate and to engaging further to resolve the issues that I have indicated still require resolution.
It is with pleasure that I move,
That the Parliament agrees to the general principles of the Landfill Tax (Scotland) Bill.
- The Deputy Presiding Officer (John Scott):
Many thanks, cabinet secretary.
I call Kenneth Gibson to speak on behalf of the Finance Committee. Mr Gibson, you have 10 minutes or thereby.
- Kenneth Gibson (Cunninghame North) (SNP):
I am pleased to debate the Landfill Tax (Scotland) Bill and to highlight some key areas that the Finance Committee considered during its stage 1 scrutiny of the bill.
The Scotland Act 2012 devolved a range of taxation and borrowing measures—the ability to borrow money for capital projects and to set a Scottish rate of income tax to replace a 10p in the pound reduction in income tax for Scottish taxpayers across all tax bands, as well as powers to set taxes on land and buildings transactions and on disposals of waste to landfill.
Our report identifies issues and themes that emerged from the evidence that we considered. I will highlight some of those, starting with the tax framework.
The Scottish Government has said that landfill tax will not be set at lower rates than the UK equivalents, and Mr Swinney just confirmed that. Scottish rates will mirror UK rates in 2015-16, meaning £80 per tonne for active materials and £2.50 per tonne for inert materials. The rates are not specified in the bill, which allows the Government the flexibility to change the rates in future without the need for primary legislation.
The cabinet secretary mentioned certainty, but a number of witnesses raised concerns about the impact of uncertainty in relation to taxation rates on their financial planning. The submission from the Convention of Scottish Local Authorities said:
“It is essential that certainty exists and where it does not that the financial risk to local authorities is appropriately mitigated by Scottish Government.”
Similarly, the Scottish Environmental Services Association stated:
“We represent an industry that is looking to make investment decisions for alternative non-landfill infrastructure, the viability of which will depend on what landfill tax will be, so it would have been nice to have an indication of what that tax will be.”—[Official Report, Finance Committee, 12 June 2013; c 2776.]
We heard from the cabinet secretary that, although he had yet to make a final decision on the timing of his announcement of landfill tax rates, he was considering doing so around the same time as publication of the draft budget in September 2014. He has reaffirmed that again today. We have invited the Government to clarify why there is a need to wait until then. We would also welcome confirmation of the duration that the rates will apply for and whether there will be an escalator.
One issue linked to rate setting is waste tourism, whereby waste might be transported across the border—in either direction—in order to take advantage of more favourable rates. The RSPB Scotland submission explained:
“Altering rates may encourage the cross-border transfer of waste. Depending on how the rates were set, this would either lead to a loss of revenue from Scotland or an increase in the amount of landfill waste within Scotland.”
The committee recognises the potential for such impacts, should there be significant changes to the rates and structure of landfill tax. Therefore, we have invited the Government to outline what discussions it has had with the UK Environment Agency on the issue and to confirm whether it has commissioned any research or analysis.
As with the land and buildings transaction tax, the Government reserves the power to make future changes to landfill taxation rates via subordinate legislation. The bill provides that the first order to set tax rates will be subject to the affirmative procedure and any future orders will be subject to the “provisional affirmative procedure”, which would allow rate changes to come into force immediately.
The committee welcomes the fact that changes to taxation rates will be subject to a form of affirmative procedure and recognises that there may be times when it is necessary for changes to have immediate effect—for example, in response to dramatic changes in market conditions—but it is not clear to us why the standard affirmative procedure should not be used to set future rates in normal circumstances. For that reason, we ask the Government for the rationale behind using the provisional affirmative procedure other than when speed is of the essence.
The bill also enables the Government to introduce additional rates of taxation for certain types of waste via secondary legislation. The evidence was generally in favour of that power. The committee recommends that the introduction of any additional rate be made subject to the affirmative procedure.
Similarly, while there will initially be an identical set of exemptions to those under the existing UK tax regime, the Government reserves the right to add certain categories of waste to, or to remove them from, the exemptions list. We heard suggestions that hazardous materials, such as asbestos, should be made exempt in order to encourage safe disposal and to reduce illegal dumping. The bill provides for any additions to the list of exemptions to be subject to the negative procedure, but, given the potential for waste tourism, the committee recommends that any adjustment to the list of exemptions be made subject to the affirmative procedure.
Evidence was heard about the dangers of illegal landfill sites, which Mr Swinney also touched on. Such sites not only damage the environment but are invariably controlled by tax-dodging criminals. Even when such illegal sites are discovered, the court fines are often less than the tax evaded. The fact that the financial risks of getting caught are outweighed by the benefits makes such activity profitable and attractive to the unscrupulous.
If criminals were required to pay landfill tax, the fines would be much higher. Renfrewshire Council noted in its submission that the proposals will
“ensure that the punishment is more expensive than the savings made from continuing to commit environmental crime.”
The committee therefore welcomes the taxing of unauthorised disposals to landfill.
Nevertheless, although respondents were supportive of the imposition of a tax on illegal landfill sites, some suggested that regulatory and enforcement bodies such as SEPA need additional resources to help identify such sites. The Scottish Environmental Services Association stated that the problem required
“strong leadership and resources sufficient to create a climate where the fear of being caught is high.”
We seek clarification as to whether the resources allocated to revenue Scotland for compliance activity include additional resources for SEPA to identify illegal sites. We also ask whether any additional revenues collected as a result of the new power might be used to identify further illegal landfill sites.
Revenue Scotland—a body that will be formally created by the revenue Scotland and tax powers bill, which we expect to scrutinise next year—will administer the new landfill tax and work with SEPA in a similar way to that in which it will work with Registers of Scotland on the LBTT. Witnesses agreed that such an approach seems sensible. For example, RSPB Scotland stated that it supports the proposal,
“given the expertise and information that SEPA currently hold with regard to landfill in Scotland.”
However, we also heard concerns relating to a “potential skills gap” at SEPA. For example, the North Ayrshire Council submission stated that SEPA is
“an experienced environmental regulator rather than a tax assessor”.
The Chartered Institution of Wastes Management questioned whether SEPA has the expertise to undertake
“a tax-policing and revenue-raising role.”—[Official Report, Finance Committee, 12 June 2013; c 2780.]
SEPA acknowledged that staff require training and guidance to fulfil its new role and confirmed that funding is in place to provide that. SEPA is confident that any skills gap will disappear by April 2015. The Delegated Powers and Law Reform Committee noted that the bill allows the tax authority to delegate functions to SEPA. Although that committee agreed that the provision is “sensible”, it “strongly recommends” that publication of any delegation should be required. The Finance Committee supports that and welcomes the cabinet secretary’s commitment to “look very carefully” at the issue and to respond to questions in the Delegated Powers and Law Reform Committee’s report.
A clear division of responsibilities between revenue Scotland and SEPA is important. We welcome the confirmation that the position will be defined, and the committee will scrutinise that. Nevertheless, although we recognise that the tax will not be implemented until April 2015, the committee seeks further clarification about the respective roles of revenue Scotland and SEPA.
As with the LBTT, the committee will monitor and scrutinise the implementation and delivery of the Scottish landfill tax. We have invited revenue Scotland and SEPA to report on a six-monthly basis. We will receive the first progress report from revenue Scotland and Registers of Scotland on the implementation of the LBTT at tomorrow’s Finance Committee meeting.
The cabinet secretary spent some time on the landfill communities fund. At present, landfill operators can give up to 6.8 per cent of their UK tax liabilities to fund community or environmental projects near landfill sites. As the cabinet secretary said, the bill makes provision for the creation of a similar Scottish fund and for a 10 per cent increase in the credit cap.
We are pleased that the Government will introduce a new Scottish cap of 7.48 per cent. Concerns were raised about the regulation of the existing fund, with the Scottish Wildlife Trust suggesting that it is “expensive”, that it “duplicates information gathering” and that it is “over-regulated”. The Scottish landfill communities fund forum agreed that current regulatory requirements are
“extremely onerous and time consuming”.—[Official Report, Finance Committee, 12 June 2013; c 2796.]
The committee is therefore pleased that the Government will consider how to administer the fund more efficiently.
At present, to receive funding, a site should be no more than 10 miles from a landfill site. Some witnesses suggested that, as the number of active sites declines, that should be reconsidered, perhaps to consider disruption and pollution that are caused by the transportation of waste through communities en route to sites. Others pointed out that the fund is relatively small and that retention of the 10-mile criterion is important and indeed crucial.
The committee noted the arguments for and against and is conscious that local factors vary from place to place. Although 10 miles might seem a considerable distance in Glasgow, it might not in rural and sparsely populated areas. Considering those views, the committee endorsed the principle that those who are most affected by landfill sites should benefit the most.
For that reason, we welcome the bill team’s suggestion that we might need something “a little more sophisticated”, and I hope that it will attract the match funding that the cabinet secretary mentioned. We asked the Government to update us on progress on that and we look forward to considering proposals via secondary legislation in advance of the bill’s implementation. We recommend that such secondary legislation should be subject to the affirmative procedure.
Members will know that the OBR is responsible for forecasting Scottish tax receipts for the Scottish rate of income tax, the LBTT and the landfill tax. It provided three forecasts for Scottish receipts from landfill tax from 2011-12 to 2017-18, with the second and third much lower than the first. Although the OBR anticipates that landfill tax revenues will remain broadly level from 2015, the Scottish Government expects significant decline, partly due to its environmental policies. It predicts that receipts will fall from £107 million in 2015-16 to about £40.5 million in 2025. As the block grant will be subject to a one-off reduction, the committee believes that it is important that any reduction in tax receipts does not penalise Scotland.
- Stewart Stevenson:
Will the member take an intervention?
- Kenneth Gibson:
I am in my last minute but, if I am able to, I am happy to take an intervention.
- The Deputy Presiding Officer:
- Stewart Stevenson:
Is the member aware that, in Sweden, between 2000 and 2009 the tax take dropped to one fifth of the original figure because of success in the programmes to tackle waste and that, if Scotland’s ambitions are also realised, we will be in a similar position?
- Kenneth Gibson:
It appears that the Scottish Government’s policies are fairly conservative, as it envisages only a 60 per cent reduction. Clearly, from what the member says, it is important that we have effective negotiations with the UK Government and that forecasting is accurate so that Scotland does not lose out in the way that I indicated.
The committee recently published its report on implementing the Scotland Act 2012’s financial powers. Among other things, the report emphasised the importance of forecast methodology and data being published, transparent and open to scrutiny. We ask whether the proposed new independent forecasting body will be established in time to predict landfill tax receipts in advance of the 2015-16 draft budget and, if not, which forecasts would be used to inform the document.
The committee reflected carefully on the evidence and supports the general principles of the bill. I look forward to hearing from other members and the cabinet secretary when he winds up the debate.
- Iain Gray (East Lothian) (Lab):
I support the general principles of the Landfill Tax (Scotland) Bill. Those who consider it to be a rather dry and dull piece of revenue legislation, perhaps of more interest to accountants than to agitators, miss the point on several counts because it is, of course, the latest instalment in the greatest devolution of power to the Parliament since it was created in 1999.
As the cabinet secretary briefly mentioned, the bill comes before us as a direct result of the Scotland Act 2012, which itself is the legacy of the Calman commission. That was an agitation worthy of the name: the Parliament audaciously seized power from the then minority Administration and simply bypassed the executive arm of the Scottish Government to deliver the commission and its wide-ranging recommendations and then successfully negotiate their implementation with the UK Government and the Westminster Parliament.
We should remember that that was not the first shift in power between the Parliaments. Indeed, that process has been a constant feature of devolution, with the most significant example prior to 2012 perhaps being the shifting of responsibility for rail infrastructure along with several hundreds of millions of pounds every year—I think that it was £300 million at the time.
- John Mason:
I agree with Iain Gray: we welcome the new powers. Does he agree that the rate at which powers have come to the Parliament has been disappointingly slow?
- Iain Gray:
Actually, I do not. Indeed, my next point rather contradicts Mr Mason’s point. An examination of the years of devolution would show that powers have shifted almost daily. One example is responsibility for regulation of offshore wind as that industry developed and became more mature. The most recent example is the devolution of council tax benefit and crisis loans—parts of the benefits system—within the past year or so.
Devolution of powers has happened as and when the circumstances have demanded it. That flexibility is what Rhodri Morgan—for it was he—meant when he called devolution a process not an event. However, the Calman changes are qualitatively different, in that they begin substantially to address what the commission identified as the greatest weakness of the Scotland Act 1998: the fact that, by international comparisons, that act devolved a remarkable degree of legislative power to the Parliament but much less fiscal power than in other examples of devolution around the world. The changes in the Scotland Act 2012 are intended to redress that imbalance. That is a shift of principle, not just a shift of administrative convenience.
The commission identified landfill tax as ripe for devolution for two reasons. First, it is a tax based on place—specifically, where the landfill is sited—and, therefore, it is immobile and defined by geography. Secondly, it is a tax the purpose of which is fundamentally related to policy areas that were already within the purview of the Parliament, in the form of pursuing sustainability, reducing environmental damage, achieving greater efficiency in the management of waste and playing our part in addressing climate change—a global challenge, as the cabinet secretary observed in his opening speech. The tax is a crucial lever in the drive to increase recycling and the reuse of our resources and to cut the emissions that damage the planet on which we live.
The bill may read like something less than epic verse, but it nonetheless exemplifies a powerful argument that we should exercise this power and that our devolution settlement is flexible enough to ensure that we do so.
That is of course an argument that the Scottish Government sometimes finds inconvenient for its ambitions and thus it resisted it to the last gasp. However, in the spirit of working on common ground, I will say that I am happy that it has embraced it and that we have reached this landmark today. I commend the Government’s efforts to get the bill in place so that we are ready for April 2015, when the UK landfill tax will be switched off.
The bill leaves many questions begged. It is framework legislation, with little or no detail as to how ministers plan to deploy the new tax. Most obviously, beyond indicating, as he did again today, that the rates will be set at levels no lower than the UK rates at the time of transfer, the cabinet secretary has said only that September 2014 is the earliest that we will know what the opening rate for the tax will be. Both business and local government have sought an earlier indication and, given that this is a new tax—a change—that would seem to me not unreasonable and could help significantly by providing some reassurance. I understand that taxes can change at any time in the future, but perhaps given the circumstances the cabinet secretary might reconsider whether an earlier indication would be possible.
This is one of those curious taxes that if successful will deliver less and less income to Government. The Government’s forecasts reflect that properly. However, we have seen figures today that show that only nine councils have met their recycling targets and that some recycled less last year than the year before, not more. We have to consider how the tax will work. The tax is our key lever to transform that situation, so it would be a little more convincing if ministers were a little less cautious and more imaginative in explaining now how they intend to use their new power to use the tax differently, and to set new and different rates, to do exactly that. After all, that would be no more than the cabinet secretary did in introducing the land and buildings transaction tax, when he took the opportunity to create a more progressive regime than the one that he inherited, which is something that we supported.
One very welcome change to the landfill tax is the power referred to by the cabinet secretary to tax as well as fine illegal landfill sites. Once again, there is a lot of detail still to hear about how that will be enforced and what additional resources SEPA might have at its disposal to pursue that additional revenue. We look forward to hearing more about that during the passage of the bill.
There are many outstanding questions about the landfill community fund, too. I welcome the fact that the cabinet secretary today indicated an open-mindedness about how we might change and reform that aspect of landfill taxation. Certainly, the increase to 7.34 per cent of tax liability for the fund is welcome. For constituencies such as mine where landfill takes place, those credits can be a very important source of support for local communities. In East Lothian, they fund very diverse activities from the Hi His at Haddington Athletic Football Club to the probably higher-flying puffins of the Scottish Seabird Centre, which is fighting back against tree mallow on the islands of Craigleith and Fidra.
The 10-mile limit is just that—a limit. Kenny Gibson was right to say that, particularly in rural Scotland, 10 miles is not really a very great distance. It seems to me that we could relax the limit without losing altogether the principle that the communities affected are the ones that benefit. For example, we could extend eligibility to the whole of the local authority area where landfill takes place, which would take some account of transportation of the waste to the landfill site.
We are very pleased to see the bill move forward, although we have some concerns about the many questions that its drafting still begs. I accept that primary legislation can suffer from too much as well as too little detail. The Finance Committee made a point about that, too. The committee’s resolution was the right one, which was to say that in its view changes in the orders regarding new rates, for example, should be subject to the affirmative procedure, which would ensure proper and appropriate scrutiny when they come forward. The Finance Committee made that point effectively during the passage of the Land and Buildings Transaction Tax (Scotland) Bill. Ministers accepted the point in that case and agreed with the argument, and they should do so in this case, as well.
As with much of our legislation, the dullness is in the detail, but in agreeing to the principles of the bill—I am sure that we shall do so—we should not lose sight of the fact that it is but the latest indication that our devolution settlement is a powerful, flexible and dynamic democratic model that is worth fighting to keep.
- Gavin Brown (Lothian) (Con):
Working on the bill in the Finance Committee has been pretty interesting and rewarding at times. At this stage, the Scottish Government’s overall direction of travel is right. It is broadly attempting to replicate the existing UK-wide landfill tax, but with some tweaks to improve areas in which that tax is not working quite as effectively as it might have done.
I want to focus on some areas that the committee has highlighted in which there are policy decisions to be made by the Government and the Parliament as a whole, and areas in which further information from the Government is required in order to allow Parliament and, indeed, the committee to make decisions about the best way to implement the bill and to look more widely at the secondary legislation that will follow what is a framework bill.
My first remarks relate to tax rates. With any tax, the tax rates gather a lot of comment. Views are put forward by practitioners on all sides, of course, but I wonder whether the Scottish Government can answer one question at this early stage, because the public statements leave open the possibility of confusion.
The Scottish Government bill team’s official position in giving evidence was that tax rates would not be set lower than those that are in place for the UK landfill tax. I think that that is pretty close to what the cabinet secretary said. However, the bill’s financial memorandum says that
“the Scottish tax rates will mirror UK rates in 2015-16”.
Those two things may be exactly the same; equally, they may not be. Saying that the rates will be no lower could mean that they will be the same or higher, whereas the word “mirror” suggests that the rates will be identical. Can the cabinet secretary say at this early stage, either in his closing speech or fairly soon, whether the Government means that the rates will literally mirror the UK rates in 2015-16 or may well be higher? That is not 100 per cent clear to me at this stage.
- John Mason:
I wonder whether the member is making a bit more of that issue than should be the case. My reading of the matter at face value was that the rate would not be any lower, so that is a commitment, and that mirroring means that the rates will perhaps be not exactly the same, but will be very close. That gives me quite a lot of clarity about where we are going.
- Gavin Brown:
That may give Mr Mason comfort. I merely put it on the public record that it would be helpful if we got just a bit more clarity from the Scottish Government, if clarity is indeed available.
It would also be helpful to know something else from the Scottish Government. We have heard that the initial rates or initial information will be given in the autumn of 2014, in advance of the setting of the 2015-16 budget. Does the cabinet secretary have a view at this stage on the period of time for which rates will be set? In its submission to the committee, COSLA said that it
“would suggest that five years in advance would be most appropriate.”
I think that North Ayrshire Council suggested three years. Does the Scottish Government intend to set rates for several years or for single-year periods? Its response to the committee, which came out either yesterday or today, suggested that the matter would be looked at specifically year on year. Will the Government tell us whether the rates will be set for several years or only for one year?
Waste tourism is a critical issue that quite rightly attracted comment throughout the committee’s consideration of the bill. There are, of course, differences between Scotland and the rest of the UK that can lead to waste being taken from one part of the UK to another. We were told that the committee would be surprised at how small the differential in tax rates would have to be for it to be cost effective to move waste. It would be interesting to know—the committee has called for this information—what specific work the Scottish Government has done in that regard and whether it will publish that so that the committee and, indeed, Parliament, can have clarity on how many pounds per tonne the difference needs to be before it starts to make an impact where the rate is higher in one part of the United Kingdom than in another. That will make an impact on a range of matters—the rates that we set as a whole; the number of rates and whether those are ultimately changed; the materials included under each rate; and the exemptions applied to rates.
- Stewart Stevenson:
Is the member aware of article 11 of Council directive 1999/31/EC?
- Kenneth Gibson:
- Stewart Stevenson:
I am sure that Gavin Brown will have read it intensely. Article 11 specifically addresses the issue of differences between regimes, not just in Europe but worldwide. In effect, article 11 suggests that it would be perfectly proper to legislate to prevent such movements from a regime with tighter environmental controls to one with less tight environmental controls. Would the member support the Scottish Parliament having the appropriate powers to do that?
- Gavin Brown:
The member is on fire today—he has told us about Catalonia and Sweden and now we are hearing about some old directives, too. In all seriousness, it would be helpful to have a 2013 analysis of what the Scottish Government believes the position to be, so that, as we finalise the legislation and the secondary legislation underneath it, we get a clear picture on how waste tourism might be affected by differential rates.
Like other members, I welcome the move to allow unauthorised disposals to be taxed. That, of course, makes the operation less attractive, and it could have an impact on unauthorised sites. I think everybody—all stakeholders across the spectrum—would be against such sites. There is a serious question for the Government to answer—the answer has not quite come out in its response to the Finance Committee. Is the policy objective simply to give SEPA the power to go after and collect tax from unauthorised sites, rather than merely fine them, which is the current position? Is SEPA expected to visit the same number of sites that it currently visits, with additional revenue being gained as a result? Is the policy objective to intensify the regime and increase the number of sites that SEPA can visit and the amount of work that it can do at those sites, so that we collect additional tax not just from existing sites but potentially from many more? If it is the latter, it would be interesting to hear about the resources that are required to do that.
I will leave it there for now. Suffice it to say that we support the bill at stage 1.
- Jamie Hepburn (Cumbernauld and Kilsyth) (SNP):
In welcoming the debate, I congratulate the cabinet secretary on managing to finagle a mention of Adam Smith into his speech. As someone who studied Adam Smith’s works as a student at the University of the Glasgow, I never imagined that I would hear his name mentioned in a debate on waste management in the Scottish Parliament. That is surely the ultimate triumph of the cabinet secretary’s opening remarks.
When we debated the Land and Buildings Transaction Tax (Scotland) Bill, we spoke about the historic nature of the debate because it was the first time that we had discussed a new Scottish tax in this Parliament—we said that it was a new chapter in the story of devolution. We cannot quite describe the Landfill Tax (Scotland) Bill in the same historic terms—it has managed to be the runner-up in the posterity stakes—but, for the reasons that have been set out thus far, it is still important as part of the general sweep of the devolution of new taxation powers.
I will focus on a few points that arose during stage 1 consideration of the bill by the Finance Committee, of which I am a member. First, it makes a lot of sense to devolve the tax. We can align our approach with our climate change ambitions—the Scottish Parliament’s ambitious climate change legislation has been well remarked on, and encouraging more recycling is surely part of the effort in that regard. The core aim of the landfill tax is to transfer waste from landfill, so that it is recycled instead. It therefore makes sense for the Scottish Parliament to have control over landfill taxation.
I welcome the cabinet secretary’s announcement during stage 1, which he reiterated today, that he will ensure that the act that we pass does not encourage waste tourism, by setting the rate of landfill tax at an appropriate level. If the tax is to be a mechanism to secure environmental improvement, transporting waste across jurisdictions would be counterproductive and would make no sense.
I also welcome the provision for a disincentive in relation to illegal dumping, which is and will remain a criminal offence whose perpetrators are subject to a fine. Under the current arrangements, there is no mechanism for levying tax in such circumstances and a fine might be less than the tax that should have been paid. The bill will ensure that anyone who dumps waste illegally will have to pay the tax as well as any fine that results from criminal proceedings. It seems strange that the UK Government has not taken that sensible step and it is good that the Scottish Government is doing so.
The landfill communities fund will continue to be important, which is also welcome. I think that all members are aware that many local organisations, including organisations in my area, have benefited from the fund, which is probably the most visible element of landfill tax in many localities. There is debate about how near to landfill activity an organisation must be before it can apply for funding, and Michael McMahon, who is a member of the Finance Committee, has been assiduous in pursuing the issue at stage 1, given the landfill activity that takes place in his constituency. A degree of flexibility is sensible, but it is right that areas that are affected by landfill should be the primary beneficiaries of the fund.
The cabinet secretary told the Finance Committee that although Scotland’s share of the total UK landfill tax take since 1996-97 has been 9.2 per cent we have received only 7 per cent of the UK Government’s landfill communities fund for projects in Scotland. There is therefore clearly an opportunity for organisations in Scotland to benefit from the devolution of the tax.
John Mason’s point about the need for more cost-effective administration of the fund was sensible, and the cabinet secretary’s response was the right one. That relates to the issue of an audit of fund holders, which was raised in evidence to the committee by the people who administer the fund. If the administration of the fund is more effective, there will surely be the potential for more funds to be released to organisations. I look forward to hearing the Scottish Government’s suggestions in that regard.
I do not have much time left, but I briefly mention the block grant adjustment for landfill tax, which will be crucial. The Chief Secretary to the Treasury told the committee that he wants the adjustment to be based on forecasts. I gently say that the OBR has been unable to provide a coherent and sensible forecast in relation to landfill taxation. I hope that the UK Government will agree to a fair mechanism and I look forward to seeing what emerges.
I look forward to considering the bill at stage 2.
- Malcolm Chisholm (Edinburgh Northern and Leith) (Lab):
The landfill tax has been a fairly successful environmental tax at a UK level, with a 30 per cent reduction in the amount of waste sent to landfill since 1997. That reduction has to a significant extent been driven by the tax escalator, which I hope will also become a feature of the Scottish landfill tax.
Unfortunately, however, we do not know anything about the escalator; indeed, we do not know very much at all about landfill tax rates, except that they will be no lower than those under the UK system. As the committee convener Kenny Gibson has reminded the chamber, that uncertainty was criticised at committee by a range of bodies, including COSLA and the Scottish Environmental Services Association, which argued that it made investment difficult. The cabinet secretary told the committee that rates do not drive investment, but I put it gently to him that rates are not entirely irrelevant in that respect. I hope that he will take on board the committee’s recommendations with regard to his clarifying why he will not make an announcement before December and that he will say something before then on whether he will adopt an escalator and on the period for which he will announce tax rates.
That is not the only uncertainty on this issue; there is also uncertainty about the amount of landfill tax revenue that is currently raised in Scotland. We certainly cannot blame the cabinet secretary for that. There are no directly available data on the Scottish share of landfill tax and the figure of 9.2 per cent of UK revenues that has been bandied about in the committee and elsewhere is derived solely from SEPA-collected data on the quantity of waste sent to landfill in Scotland. The OBR uses that 9.2 per cent estimate for its own estimates on landfill tax revenues; in other words, it estimates UK landfill tax revenues and then takes 9.2 per cent of that for Scotland. However, as we have heard, there is a degree of concern particularly about the OBR’s initial projections for the next two or three years, which were not only wildly out but unbelievable. Although the OBR has now adjusted those figures, this is clearly an important issue for the block grant adjustment and I hope that the OBR will look seriously at the Scottish Government’s projection of a reduction in revenues to £40 million by 2025, which seems credible—even conservative, as Kenny Gibson has suggested. We had better ensure that we do not take that remark out of context as a description of Scottish Government policy. In any case, I would support the Scottish Government in urging the smallest possible block grant reduction; after all, the whole point of the tax is to drive down revenues, which might seem paradoxical from a Treasury point of view but is entirely sensible from an environmental point of view.
Speaking from an environmental point of view, I think that our instinct would be to drive hard on this tax in order to reduce waste as quickly as possible. However, there are two constraints in that respect: first, we have to be mindful not to encourage illegal dumping; and, secondly, we must remember the issue of waste tourism. Those constraints have to be taken into account in considering whether to have different rates, bands or exceptions from the UK. For example, if we set a different rate that is too high, we might collect less revenue because people would start to take their waste to England. On having different bands, SEPA has recommended that incinerator bottom ash be at the top level. Although that seems like a good suggestion, it might result in people taking all their ash to England. Finally, on having different exceptions, although there is a lot of merit in setting no rate for asbestos—after all, we do not want to encourage illegal dumping—the problem is that, if we have no such rate, we might also get all of England’s asbestos. Such matters have to be weighed up very carefully and I certainly support the committee’s recommendation that, given their difficulty and complexity, any legislation to decide additional rates or the removal of exceptions be taken under the affirmative procedure.
One thing we know is that there will be a tax as well as a fine on illegal dumping. Like the committee, I strongly welcome such a move but I wonder whether the cabinet secretary will clarify what additional revenues will be available to SEPA if it has the enforcement function in that respect. In response to a question that I think I asked in committee, SEPA said that the £300,000 that it had would not cover any enforcement activity. Indeed, in general we need some clarification of the respective roles of SEPA and revenue Scotland on this matter. I am glad that they are working together, but they need to work out exactly where the demarcation lines are.
One means of mitigating the impact of landfill at a local level is the Scottish landfill communities fund, which the cabinet secretary described in some detail in his speech. I am pleased that the current system of providing landfill operators with tax credits in exchange for a percentage of tax liability will be followed and that the 6.8 per cent of liabilities under the current system will be boosted by 10 per cent by the Scottish Government. That is certainly welcome. However, evidence to the committee from the Scottish landfill communities fund forum and others suggested that many areas that could benefit from such support are put off by an overcomplicated application process. Therefore, if the fund is to be properly benefited from under the new regime, we should look to simplify the system. For example, SEPA said that the regulation is top heavy and could be streamlined. I welcome the fact that the cabinet secretary has listened to SEPA and has made an announcement about that today.
On the eligibility radius, there is some tension between looking for more creative ways to reduce environmental impacts throughout Scotland and compensating communities that are closer and, therefore, more directly adversely impacted by the consequences of landfill. I would err on the side of caution and suggest that, for the sake of environmental justice, any finite funding should be distributed among those communities. That is consistent with the committee’s recommendation supporting the principle of those most affected benefiting the most.
- John Mason (Glasgow Shettleston) (SNP):
Yesterday, one of my staff told somebody that I was the only MSP who was interested in the landfill tax, but that was a bit unfair. The Finance Committee has been quite enthusiastic about it, as have Malcolm Chisholm—although he sometimes hides the fact—Gavin Brown and John Swinney. We should not underestimate the significance of the Parliament’s gaining tax-raising powers, albeit that the vast majority of taxes are still controlled by Westminster. Whatever happens in 2014, 2015 and 2016, the Parliament is not satisfied with the powers that it has, will not be satisfied with the powers that it has been promised and will press for the people in Scotland to make more decisions for Scotland.
Although, in the scheme of things, this is a relatively small tax, it is an important one because it brings together environmental policy, revenue raising and support for local communities. As with any tax in Scotland, we need to be aware of what our neighbours, especially England, are doing. As Malcolm Chisholm pointed out, a higher landfill tax is good for the environment, but there is little point in it if it only shifts waste across the border and we suffer a loss of revenue. The evidence at committee was that even small differences in rates could lead to waste tourism, which we need to guard against both on a cross-border basis and between the mainland and the islands within Scotland. The answer to the challenges that the islands face is to have different exemptions for them and perhaps slightly less strict standards in some cases, rather than to have different rates for different parts of the country. Therefore, the statement that the Scottish rate will mirror the UK rate and that the rate will be no lower than the UK rate in 2015 is pretty fair.
- Stewart Stevenson:
Is the member aware that article 2 of the EC landfill directive of 1999 specifically makes provision for communities that have
“no more than 500 inhabitants per municipality”
or that are more than 50km from an appropriate place where waste may be deposited? I wonder whether we are doing as much as we may be permitted under the directive.
- John Mason:
The member would have to ask people who are better placed than I am whether we are doing as much as we could. I still think that the direction that the bill takes, and the present situation whereby there are slightly different standards for islands and remote communities, is fair.
There have been calls for greater certainty about rates and so on, a lot of which is crying wolf. Neither in the UK nor in Scotland can there be complete certainty about the future. One of the key aims of both Governments is to reduce waste by reducing, reusing and recycling, but that is notoriously hard to predict. The tenements in my constituency recently received grey recycling bins for food but it takes some time for people to get used to recycling.
- Gavin Brown:
Will the member give way?
- John Mason:
Let me just finish the point. In some cases, I have seen the little waste receptacles being used as mini-buckets to store mops in, which is not what they were intended for. There is always a degree of resistance to such changes.
- Gavin Brown:
The member used the phrase “crying wolf”. I wonder whether he was on the committee when it signed up to statements such as
“The Committee notes the concerns of witnesses ... and invites the Government to clarify the reasons”
for delay, and
“The Committee ... asks the Government to provide greater clarity”
on rates. Did he think that people were crying wolf when he signed up to the committee’s report?
- John Mason:
I have been thinking about the report every day since we wrote it, as I am sure Mr Brown has.
The point is that of course we would all be happy to have more clarity, if that were possible, but there needs to be a bit of realism. On the landfill tax, as in other areas, we do not have facts about the future. We can make projections and estimates and we can have a vision, but we do not know all the facts about the future. We must be realistic about that.
On unauthorised disposals, it is welcome that, in future, tax and fines will have to be paid. SEPA has a key role to play in that regard. We see small and large-scale dumping throughout the country, which we all agree needs to be clamped down on. SEPA’s resources must be kept under review, as that is an area of major concern for all our constituents. I welcome the Government’s response, which says:
“Funding will take account of a range of factors, including compliance activity.”
The block grant adjustment is one of the trickiest areas when it comes to the introduction of the landfill tax. Logically, the revenue that is received should fall, but the OBR has predicted that cash income will stay level. The Scottish Government response that receipts could fall by 74 per cent between 2015-16 and 2024-25 is pretty dramatic, and I certainly hope that that can be achieved, but the block grant adjustment must take account of that.
All three block grant adjustments are the subject of negotiation between the Scottish and UK Governments. Although it would be my preference to have a distinct, transparent solution for each of the three taxes, I accept that the landfill tax is smaller, relatively, and that the Scottish Government may want to trade off a poorer settlement on one tax for a better settlement on another.
I think that the 10-mile radius is probably too narrow in a rural area, but it is almost certainly too wide in an urban area. The bill team’s statement that
“something a little more sophisticated”—[Official Report, Finance Committee, 5 June 2013; c 2743.]
was needed, which is referred to in paragraph 105 of the committee’s report, is very welcome.
The Landfill Tax (Scotland) Bill is the second of the proposed tax bills under the Scotland Act 2012. I very much welcome more control coming to Scotland. We must accept that we have limited room for manoeuvre on landfill tax, but we need to tackle the huge problem of waste that we face, and I believe that the bill gives us the opportunity to do so.
- Hanzala Malik (Glasgow) (Lab):
I welcome the opportunity to speak about the landfill tax and its implications for Scotland’s long-term future.
Taxation and waste are not issues that capture the public’s imagination, but Tesco’s recent publication of the amount of food that it wastes—as part of which it was revealed that more than two thirds of bagged salads are thrown away—has shocked many people. I use the example of Tesco, as a substantial part of such waste occurs in the processing of food. For waste to be reduced, processes will need to change. We must take steps to reduce that element of waste.
For many companies, the reduction of waste is a matter of medium-term planning. In addition, the financial investment that is required for waste companies to develop an alternative strategy will involve positive long-term decision making. That is why the uncertainty over exactly what the landfill tax rate will be beyond 2015 is an issue that we need to grapple with. When the cabinet secretary was questioned by the Finance Committee, he said that such decisions were independent of the landfill tax rate and were to do with whether the Scottish people throw away things that those companies can make profit from.
My understanding is that both things are important for companies to make long-term financial projections and plan investments such as alternatives to landfill. It is much easier for the Scottish Government to increase certainty by setting the landfill tax rates three years in advance; whether we need a crystal ball to estimate what Scots will chuck away is another issue.
On another note, the consultation responses show widespread support for the landfill communities fund—the LCF—which is funded by landfill tax. The fund allows managers of landfill sites to give money for environmental, community and built heritage projects within a 10-mile radius of landfill sites or operational depots. I believe that the 10-mile radius rule should be more flexible to enable a wider group of community organisations to access the funds and make good use of them. One or two colleagues have suggested that the radius should be extended particularly in rural areas, but I think that we would benefit from it being done right across Scotland.
The bill will allow us to develop a clear management structure, and there should be regular updates on the fund’s administration to avoid the current duplication. The tax tariff on landfill should be flexible, which would allow realistic taxation that would encourage industry to participate and invest, and allow alternative use of landfill sites so that we can have a better future for not only our industry but our citizens.
Last but not least, it is important that we recognise that the amount of waste in Scotland places an unnecessary burden on the nation’s resources. It is therefore important that we continue to ensure that we play a serious role so that industry does not carry all the burden. The Government has a responsibility to share its views and aspirations with industry and to work hand in glove with it to ensure that we take full and proper advantage of reducing our waste; the current landfill sites; the taxation levels that will be in place; and the prediction that the landfill taxes will reduce in the future. That is a good sign, but it will affect the funding of community groups, so we will need to see how they can continue to be supported in the future.
- Rob Gibson (Caithness, Sutherland and Ross) (SNP):
From my point of view as convener of the Rural Affairs, Climate Change and Environment Committee, the bill will help Scotland to meet its world-leading climate change targets by aligning tax with environmental policy. I cannot put it any better than the Scottish Wildlife Trust did in its briefing when it said:
“while waste disposal by landfill is still carried out in Scotland, the Trust is in favour of having a tax fund which goes some way to compensate for the environmental “harm” which arises from landfill and which is used to fund biodiversity projects that help to restore ecosystems to health and amenity projects which improve access to wildlife for communities.”
That is a tall order for a small amount of money but, remarkably, major projects have taken place that have allowed those principles to be carried out.
The bill will help to ensure that we establish a tax system that supports the use of taxes and charges in environmental policy. Indeed, RSPB Scotland suggested that it
“is a good working example of a hypothecated or ‘ring-fenced’ tax - it has compensated for an environmentally damaging activity by funding projects which improve the environment for the benefit of biodiversity and the communities who live near landfill sites.”
That said, it is important that we look at how the tax will relate to the zero waste plan, which allows us to think about promoting high levels of recycling and about diverting materials and resources from landfill into more sustainable uses or treatment.
- Jenny Marra (North East Scotland) (Lab):
I agree with Rob Gibson that the landfill tax is an important part of helping Scotland to achieve its ambitions in the report on proposals and policies, but does he agree that it is a small part of that project and that a lot more focus, direction and commitment are needed from the Scottish Government in a range of policies, including those on transport and housing, to get anywhere near the targets to which the Government has committed itself?
- Rob Gibson:
I disagree, because we are talking about specific projects—of which I will give examples—that allow private money to be applied in a fashion that produces a public good. The money that we are talking about does not come directly from the public purse.
I suggest that we think about how we align the tax with the zero waste plan, whose aim is to help people to reduce waste. In my constituency, communities are often 70 or 80 miles from a landfill site—the site might be in Perthshire and not in the Highland area. People must be encouraged to reduce and recycle but, if they must use landfill, huge journeys are required to dispose of material at a landfill site.
We must recognise the need to ask where material comes from when we decide where money from the landfill communities fund should be spent. I have examples from my constituency. Some years ago, I was at the opening of the Scottish Wildlife Trust’s path improvement project at Ben Mor Coigach, which is near Achiltibuie. That small community produces very little material for landfill—I hope that any materials that are taken down from old houses are used for the foundations of new houses and never end up in landfill.
There are many such examples around the country that we could point out. Another SWT project was to improve the peat bog habitat at Commonhead moss. Many such sites are far from areas with landfill, so we must ask whether the eligibility radius of 10 miles should be reviewed for areas such as mine.
The RSPB has made the major point that it feels that there must be flexibility. I am glad that the cabinet secretary indicated that he would take that into account before the bill’s final stages.
From my committee’s point of view, we need to think about taking measures that are as practical and simple as possible to allow the transfer of moneys. We should take into account the geographical breadth of ecosystems to which projects apply. If that is done, we will need to think in the Highlands about a much larger area than we have talked about.
I would like us to apply the system. I am glad that we will reduce costs and therefore increase investment. I am aware that the income will reduce over the years, but we will have other powers to encourage people to make the best use of materials that arise for landfill. I am happy to support the bill.
- Michael McMahon (Uddingston and Bellshill) (Lab):
As is evident from the 59 per cent decrease in the amount of waste that was sent to landfill between 2000 and 2010, the UK landfill tax has been effective in helping the environment and moving us towards a zero waste Scotland. I am confident that the Scottish landfill tax will do the same. I therefore welcome and support the overall Scottish landfill tax scheme.
However, concerns were raised during scrutiny of the bill about the fact that many aspects of the tax are to be dealt with through subordinate legislation. That has created a lack of clarity and of certainty—as some members have outlined—with regard to issues such as the rates of tax and the power to change the materials that are taxed. The bill is a framework that leaves the specifics to subordinate legislation, and the Scottish Parliament must ensure that future action on the Scottish landfill tax is open to debate and further scrutiny.
A specific area in which details will be set out in subordinate legislation is the landfill communities fund. I support continuation of that fund, which was created to benefit places that are blighted by close proximity to landfill sites. The fund works by providing benefits to such communities from the taxes that are raised from those sites.
In Scotland, the idea that communities should have access to environmental justice is spreading, which is welcome. That has led the Government to take a dual approach to environmental justice, by stating first that
“deprived communities, which may be ... vulnerable to the pressures of poor environmental conditions, should not bear a disproportionate burden of negative environmental impacts”—
which is absolutely right—and secondly by stating correctly that
“communities should have access to the information and to the means to participate in decisions which affect the quality of their local environment.”
I represent an area in which there are four landfill sites in close proximity to each other, and my community has been disproportionately burdened by the negative effects of those sites. However, in the past, the landfill communities fund has helped my community by funding local projects to mitigate the effects of living near the sites.
In that way, the landfill communities fund has helped to move Scotland towards fulfilling the principles of environmental justice. However, it has now been suggested that the scope of the fund should be reviewed, which leaves me with some concerns. Organisations such as SEPA and COSLA have suggested that money from the fund could be used for funding wider environmental objectives that are not specific to any one location, instead of being used exclusively for communities that lie within a 10-mile radius of landfill sites.
I take on board the points that have been made by members such as Rob Gibson—for example, that for rural communities a 10-mile radius may be too restrictive because communities beyond that limit may be affected by a landfill site. However, we are talking about specific projects that may be Scotland-wide and have nothing to do with landfill at its location, so we must be concerned if that is to be the case. A change in the current scope of the landfill communities fund would be fundamentally unfair, and would violate the principles of environmental justice that those who are interested in the subject have sought to uphold.
It is widely known that communities that lie near landfill sites face much greater environmental injustice than those that do not. Those living near landfills have to deal not only with the emissions that pollute the air, water and soil, but with the burden of costs to address the local nuisances including odour, dust, litter, noise, vermin and visual intrusion that result from living in close proximity to a landfill.
Landfills not only affect the quality of life in a community, but present an actual cost as exemplified in house prices; in Scotland, homes that are in close proximity to landfill sites are valued at 40 per cent less than similar homes that are not. To change the current scope of the fund would leave communities with less money to mitigate the effects of landfills.
It is estimated that the landfill tax will generate £107 million in the first year of implementation, but it is also estimated that the fund will fall to £40.5 million in 2025. To open the fund to broader environmental objectives—coupled with the projection that landfill returns will dissipate—could in the long run leave the communities that are most affected by landfill with less funding.
Although the amount of waste that is dumped in landfills is projected to decrease as a result of the landfill tax, communities in the vicinity of landfills will continue to need funding. Landfill sites will, even if they are closed, continue to affect communities negatively for years to come, and those communities will need access to the funds long after the sites have closed. Communities that are dumping grounds for the rest of Scotland should receive all the benefits that result from taxation of landfills, and should be the only ones that have a say in how those funds are used. At the end of the day, that money is being raised at the expense of communities that are near landfills, so it should be dedicated to those communities.
As was said earlier, it has been suggested that the bill, like other bills that have been introduced as a result of the Scotland Act 2012, would be dry and detailed. I have, however, found the context of the debates around those bills to be interesting, and I look forward to hearing how the cabinet secretary will, as we move forward to stage 2, address the points that have been raised this afternoon and in the committee’s report.
- Mark McDonald (Aberdeen Donside) (SNP):
Members have covered how we got to where we are with the landfill tax being devolved to the Scottish Parliament, which emphasises the fact that we in Scotland and in the Scottish Parliament are able to administer taxation and deal with the responsibilities that come with that.
I want to focus on some of the issues that have been highlighted during the debate, the first of which is the block grant adjustment. As I was not party to the committee evidence sessions, I have listened closely to what has been said in the debate about the notion that the block grant adjustment would be based on OBR projections, and I have some concerns because the OBR projections and forecasts on things like economic growth and oil revenues generally tend not to be recognised as being realistic.
In March 2012, the OBR estimated that in 2014-15, landfill tax income would be £145 million, in 2015-16 it would be £151 million, and in 2016-17 it would be £157 million. By December of the same year, the OBR had reduced the figures to £105 million, £107 million and £107 million respectively. By March 2013, just 12 months after the first figures were published, the OBR reduced them again to £104 million, £105 million and £105 million. Those are quite significant adjustments to be made in 12 months. If it turned out that the projections did not match up to reality and it transpired that the OBR had underestimated or overestimated the figures at any stage, that would have implications for the block grant adjustment and potential future clawback. It is therefore important to ensure that the sums add up, so I would welcome the cabinet secretary’s views on how he sees the role of the OBR projections and whether there is a better way of looking at those in future years.
The bill is important not just because of its revenue implications but because it is a tax that is clearly linked to environmental sustainability. It is, essentially, designed as a deterrent to landfill and an encouragement to consider alternative means of waste disposal that will reduce the landfill tax burden on public bodies and organisations. We should not be afraid to administer the landfill tax in that way, which is why I was interested in Gavin Brown’s point about the rate at which the tax is to be levied. I caution against entering into any kind of taxation competition over the rate at which landfill tax is levied.
I also do not buy the argument about waste tourism. Rob Gibson summed up the point appropriately when he said that, even within Scotland, many authorities have significant distances to travel to dispose of waste to landfill, so the notion that local authorities or organisations will send trucks across the border to dispose of waste to landfill for a marginal saving on the tax, which would soon be gobbled up by the associated transportation costs, does not really bear scrutiny.
- Gavin Brown:
Will Mark McDonald give way on that point?
- Mark McDonald:
Mr Brown has that twinkle in his eye, so he clearly has a clever point to make. I will allow him to make it.
- Gavin Brown:
I have a direct quotation from the bill team:
“The committee would be surprised at how small the differential in tax rates would be for it to be cost effective to move waste.”—[Official Report, Finance Committee, 5 June 2013; c 2728.]
That is what the bill team, along with the cabinet secretary, told the committee.
- Mark McDonald:
I do not think that that argument would stand up to scrutiny based on what Mr Gibson has said. If you were simply going from one part of the border to another part of the border, I do not think that that would be an economic way in which to dispose of waste. We will agree to disagree on that.
On the landfill communities fund, prior to being elected to Parliament in 2011, I served as the chair of an organisation called Aberdeen Greenspace Trust Ltd, which administered landfill community funding through grant aid and delivery of environmental projects.
I welcome the fact that, in his evidence to the Finance Committee on 19 June, the cabinet secretary stated that at present, Scotland gets less in terms of landfill tax receipts than would be expected—landfill tax receipts from Scotland make up 9.2 per cent of the total UK pot, but only 7 per cent of landfill communities fund spending has been contributed to projects in Scotland. The administering of a landfill communities fund in Scotland gives us the opportunity to address that imbalance.
It is interesting as well to consider, when we come to the establishment of a landfill communities fund in Scotland, the need to ensure that although it will be done through subordinate legislation, organisations such as Aberdeen Greenspace in my constituency could feed in their thoughts on how the fund might operate and how it might operate differently from the way in which the current UK fund is administered through Entrust. I would welcome an opportunity to have that dialogue outside the debate.
On the 10-mile radius, I take on board Michael McMahon’s point. My experience, through working with Aberdeen Greenspace, was slightly different, in that there were often opportunities to expand the work that was being done through the landfill communities fund to which the 10-mile radius proved to be a barrier. We have to accept and recognise that environmental sustainability does not always have to be geographically constrained. The broadening out of the ability to use the money for other projects would perhaps have a knock-on effect on landfill and so might indirectly benefit communities that find themselves adjacent to landfill. Some such communities are just on the border of my constituency as well, so I think that the 10-mile radius needs to be examined because there are opportunities that would be restricted if we were to retain it.
- Claudia Beamish (South Scotland) (Lab):
I am pleased to have the opportunity to speak in the debate on the Landfill Tax (Scotland) Bill. Not being a member of the Finance Committee, I want to take a step back to say something about zero waste and climate change to help set the context of the bill, building on the cabinet secretary’s broader remarks, and how the bill fits in with other policies.
My starting point is, of course, where we want to get to—zero waste. In the interim, landfill sites must be excellently managed for the sake of the communities near them, and it is right that affected communities receive some benefit for the disruption and inconvenience that is caused. The Rural Affairs, Climate Change and Environment Committee spent a lot of time taking evidence on new zero waste regulations, which are now in force.
A wide range of Scottish society, from public bodies, local authorities, communities, households and individuals are now expected to contribute, with clear timescales and guidelines. A range of measures will come in incrementally over the next few years. For instance, there will be a ban on any metal, glass, paper, card or food that is collected separately for recycling going to incineration or landfill from January of the coming year. There is also a range of support through Zero Waste Scotland and others to match the policies, including the resource efficient Scotland newspaper campaign to highlight changes for businesses.
Food waste is, in my view—as well as in the view of my colleague Hanzala Malik and others—a particular challenge, not just for businesses but for supermarkets, public bodies and, indeed, for us, too, in our families.
How we change is also a learning process for politicians and policymakers. The RACCE Committee heard from Professor Walter Stahel earlier this month about the circular economy, in which the responsibility of the manufacturers is no longer cradle to grave, but cradle to cradle. Zero Waste Scotland is—and I quote—actively encouraging and supporting investment in “innovative resource management technologies”.
All that must be seen in the context of the climate change targets, to which an altered waste culture can make a significant difference. The Institute for European Environmental Policy report, which was recently commissioned by Scottish non-governmental environment organisations, is reported as having concluded that
“on climate the Scottish government had relied heavily on policies which did not put pressure on voters to change their lifestyles. That weakness made it more likely that it would fail to hit the 2020 target.”
The robustness of the new climate change behaviours framework will be of fundamental importance in changing our culture.
However, although we have come a long way in changing cultural attitudes since 2002-03, when we had a deplorable recycling rate of under 6 per cent—the rate in Scotland is now 42 per cent—there is still a need to decrease landfill, and the landfill tax is an appropriate lever. I understand that the cabinet secretary has reassured the Finance Committee that the bill will be in keeping with the Scottish Government’s zero waste strategy and carbon emissions targets.
On the administration arrangements for the landfill communities fund, I hope that providing a local perspective from South Scotland region might make a useful contribution to how the tax is to be distributed under the new devolved arrangements. As a rural primary teacher and eco-schools co-ordinator, I was over several years involved in the Levenseat Trust acorn awards for local schools. The projects included a local food production research project for primary school children and a three-dimensional mural made out of recycled materials. The impact was practical and positive. The trust has asked me to highlight on its behalf a few points, which I also support.
Levenseat Trust’s administrators suggest that the new fund should still be distributed very much at local level and that local people should have more say in its guidelines than they have had in the past. They also ask for the criteria to be reviewed, as
“restrictions make it difficult to apply for funding”
for school projects, for instance. They highlight that, due to the restrictions, it is, frankly, sometimes difficult to distribute funds. They ask that any residue of distributable funds, such as the trust has had, should not go back to the Scottish Government at changeover time, but should instead be distributed by appropriate local distributors. Finally, the trust requests that the administration of the funding should not become more challenging; the cabinet secretary has given an assurance that things will be simplified.
I also stress how valuable the landfill communities fund is in supporting biodiversity projects. During the debate I have—unusually—somewhat changed my view on the 10-mile radius. The Scottish Wildlife Trust has highlighted wide-ranging projects, including a peat bog habitat improvement project and a project for saving Scotland’s red squirrels—to cite just two of many—and Rob Gibson made an important point about the needs of wider remote rural areas. However, Malcolm Chisholm is right that the issue is about environmental justice, and Michael McMahon’s clear description of communities that are affected by landfill must be respected.
Some members may have followed BBC Radio 4’s excellent programme earlier this month “Costing the Earth”, which focused on an interesting development in Belgium, where old landfill sites are being “mined”—for want of a better word—for valuable materials that have been dumped in earlier decades. I raise that point to ask whether, given that there are 5,000 million tonnes of landfill buried in Europe spread across 0.5 million sites, the cabinet secretary has considered looking at that idea from a Scottish Government point of view.
The Scottish Government’s low-carbon behaviours framework highlights 10 key behaviour areas and the Government states:
“The most sustainable option is to prevent waste being produced in the first place”.
In my view, that is the most important behaviour. In the meantime, I welcome the principles of the bill.
- Jean Urquhart (Highlands and Islands) (Ind):
I am delighted to have the opportunity to speak on the Landfill Tax (Scotland) Bill and I welcome its stage 1 completion. I thank fellow members of the Finance Committee for their commitment, interest and dedication in scrutinising the general principles of this important bill. I also thank the Government for its feedback on the committee’s report, which has made the Government’s position clear on a number of the committee’s concerns.
As a result of the bill, the Scottish ministers will become the tax authority for the purposes of the Scottish landfill tax. That is a great step forward. I have confidence in the ability of the Scottish ministers and their staff to take responsibility for the Scottish landfill tax as well as for other important taxes such as the Scottish rate of income tax. The bill enables ministers to make an order to designate another tax authority, and I welcome the move by the Cabinet Secretary for Finance, Employment and Sustainable Growth to set up a new body, revenue Scotland, as Scotland’s tax authority for devolved taxation. Revenue Scotland already exists as an administrative function within the Government, and the Government has been consulting on provisions to establish it on a statutory footing.
The Government has indicated that it intends that the administration and collection of the Scottish landfill tax should be undertaken by the Scottish Environment Protection Agency on behalf of revenue Scotland. Landfill tax administration and collection would become a new function for SEPA, which already visits and inspects landfill sites as part of its environmental regulation duties. That would offer significant advantages for the Government. The existing knowledge and considerable expertise in SEPA will create opportunities for significant efficiencies and other operational benefits in relation to the administration and collection of the Scottish landfill tax. I therefore support the Scottish Government’s intention to have SEPA in charge of the administration and collection of the tax.
Although I give full support to the general principles of the bill, I draw the Parliament’s attention to two areas of concern. First, I believe that one further waste exemption could be considered. Part IIA of the Environmental Protection Act 1990 states:
“If no person has, after reasonable inquiry, been found who is by virtue of subsection (2) above an appropriate person to bear responsibility for the things which are to be done by way of remediation, the owner or occupier for the time being of the contaminated land in question is an appropriate person.”
That means—I think—that individual property owners might end up footing the bill for contaminated land remediation through no fault of their own. There are live examples of individual householders who have been charged vast sums for the remediation of contaminated land.
In the Cabinet Secretary for Finance, Employment and Sustainable Growth’s statement to Parliament on 7 June 2012, he described four principles that underlie the Government’s approach to taxation and he reiterated them today. They are certainty, convenience, efficiency and that the tax is proportionate to the ability to pay. It is that final principle that I believe is relevant here. My suggestion is that consideration should be given to including in the bill a measure to allow for the costs of contaminated land remediation to be waived if an individual property owner is found to be on contaminated land, has in no way caused the contamination but yet has been unfortunately designated the status of appropriate person because of the lack of someone being found who actually caused the contamination. By putting such a measure in place, the Scottish Government would ensure that its principle of taxation being proportionate to the ability to pay is adhered to.
The second concern relates to the committee’s suggestion that there should be a lower rate of tax on island waste, for materials for which there are never likely to be viable recycling or recovery routes. Although the Government has made its position clear on that, I still believe that a review of the issue could be carried out. In Shetland, Enviroglass provides a local solution for Shetland’s waste glass by recycling all the glass that is collected by the local authority through its bottle banks. That has been essential in minimising the financial and environmental costs that shipping glass to mainland UK for recycling would incur. However, not all island communities are fortunate enough to benefit from such a scheme and a review could help to find alternatives for the islands that lack the means to cheaply recycle waste materials.
A final aspect of the bill that I will speak about relates to the Scottish Government’s zero waste agenda, which is an ambitious programme of change that aims to create an environment in which we make the most of resources and minimise Scotland’s demand on primary resources. That is to be achieved by maximising the reuse, recycling and recovery of resources rather than treating them as waste. The Scottish landfill tax will play an important role in maintaining the economic stimulus that is required to harness those waste management opportunities and in directing the Scottish economy towards a prosperous future with secure access to resources. By doing so, Scotland could follow the great example of its Nordic neighbour Sweden and make productive use of waste that would otherwise build up at landfill sites.
We must ensure that environmental organisations continue to be supported by the landfill communities fund. The Scottish Wildlife Trust, for example, has received £3.6 million to date, which has helped it to develop and manage essential environmental and community projects.
The Landfill Tax (Scotland) Bill is a good and valuable piece of legislation. It does what it is supposed to do: it provides legislative provisions for a Scottish landfill tax to replace the UK landfill tax regime. It provides the Scottish Government with real power to take important decisions on a crucial area of taxation and makes use of the experience and expertise of the Scottish Environment Protection Agency. It is conducive to the Scottish Government’s zero waste agenda as we look to greener energy alternatives. Therefore, I support the general principles of the bill.
- Stewart Stevenson (Banffshire and Buchan Coast) (SNP):
I will certainly not be the only member in the chamber who is grateful to the landfill tax for paying for some community facilities. In particular, within the boundaries of my previous constituency, the proceeds of the tax built a new hall at Longhaven. The boundaries have changed and a certain Mr Salmond now has that hall within his constituency; I no longer do.
It is also interesting to hear that we are talking about something like 600,000 tonnes of CO2 being emitted. That is a substantial figure indeed.
There has been quite a lot of discussion about whether we might have waste tourism. I thought about that before coming to the chamber and looked at a paper that was produced in 2012 for the European Environment Agency by the European topic centre on sustainable consumption and production. It is a big paper—96 pages—and, in essence, considers how the landfill tax in all its multifarious forms works in the countries of the European economic area. There is a wide variation, but the one thing in the paper that is interesting is that there is little suggestion that small differences could promote big tourism, notwithstanding the fact that, as Gavin Brown reminded us, the committee was told that they might. Therefore, we must avoid coming to an early conclusion on that.
In the UK, landfill has gone down to less than half of what it was over the 12 years from 1998 and we expect it to go down further.
- Hanzala Malik:
Will Stewart Stevenson give way?
- Stewart Stevenson:
- Hanzala Malik:
My interventions are usually brief. Stewart Stevenson has talked a lot about the past, which is helpful, but I will take him to the future, in which landfill will be used less and less. I draw his attention to the landfill communities fund. Where will such funding for community groups come from as the proceeds of the landfill tax reduce?
- Stewart Stevenson:
That is a perfectly fair and good question. Arguing from the constitutional position that I do, I find it unfortunate that we are being given a tax that is declining—which we want to decline—without having the full range of taxation powers to do something about that within the overall tax system. I hope that even those who do not travel as far as I do constitutionally might support the idea that the Parliament should be responsible for all the taxes that are applied in Scotland, whatever the future constitutional arrangements might be. Therein lies some of the answer.
I will touch on a few disconnected things. I will go again to the European Council directive 1999/31/EC and, in particular, consider what we charge for landfill. Article 10 of that directive is about the requirement to ensure that landfill site operators charge enough to ensure that they are able to look after the site for 30 years after they have taken waste material. We have recent experience of difficulties in remediation in coal fields, where there have been business failures. I wonder whether, looking to the longer term, it might not be appropriate for Governments to take in that money from operators so that it is certainly around. There appears to be less and less opportunity to get insurance cover. I do not think that we should be looking at that now; it is for the future.
The bottom line is that this is, above all, about recycling. Recycling is not new. During the second world war there was a huge amount of recycling and the world into which I was born immediately after the war was recycling focused: paper, aluminium, jam jars and lots of other things were recycled. The focus on recycling that there was in the 1940s, 50s and perhaps early 60s vanished and I am delighted that we are getting back to it. I hope that we do more of it. In that world, we also used our resources more effectively and our eating habits were much better.
- Jenny Marra:
Will the member give way?
- Stewart Stevenson:
I am sorry, but I do not have time now.
One of the interesting things is that under rationing in the war infant mortality declined and life expectancy increased, even after taking account of war casualties.
I will talk briefly about a couple of wee things. I commend the use of provisional negative instruments so that ministers can act rapidly—immediately, in fact—but, nonetheless, the Parliament can review what is going on, which is good.
I have a genuine question about taxable disposals. We are going to tax disposals of taxable disposals that are made illegally, but if it is not a taxable disposal, can we tax it? There are things disposed of that are not taxable disposals.
I have a tiny point about pet cemeteries, for which Jim Murphy legislated in 2005. The bill currently says that the disposal material has to be entirely of the remains of dead domestic pets. I hope that we might slacken that slightly to allow a container in which the dead domestic pet can be disposed of.
A week ago today Christiana Figueres, who is the executive secretary of the United Nations framework convention on climate change, was moved to tears when she came out to speak to the BBC after a Chatham House event that she attended. She said, in respect of climate change, that we are condemning future generations before they are even born. Landfill is part of an extremely important agenda. If I agree with anybody in the recent past, it is Christiana Figueres.
- The Deputy Presiding Officer (Elaine Smith):
We now turn to the winding-up speeches. I remind members that if they have participated in the debate they should be back in the chamber for the closing speeches.
- Gavin Brown:
I will begin my concluding remarks with an issue that has reared its head many times over the course of the debate: waste tourism. When Mark McDonald says that he does not buy waste tourism, he might be right. When Stewart Stevenson says that we should press the pause button because of the results of a 2012 paper, he might be right. When the Scottish Government bill team says that a tiny difference in landfill tax regimes makes a huge difference to the level of waste tourism, they might be right. However, the important point is that they cannot all be right. That is why the committee did not necessarily take a firm view on waste tourism but said that it noted the Government’s scope to make fewer changes because of the implications of waste tourism and asked whether
“the Government had commissioned any research or conducted any analysis on the likely impact of any changes to the structure and rates of landfill tax in Scotland on waste moving between Scotland and England.”
The important questions remain. What analysis has been conducted and what is the correct conclusion, given the competing claims made over the course of the debate?
- Stewart Stevenson:
I agree with Mr Brown, curiously enough. There is huge uncertainty and research in and of itself will probably not help us resolve it absolutely. We will have to play the ball where it lands.
- Gavin Brown:
Conducting research and looking at the matter in a bit of depth, specifically between Scotland and England, would at least give us a degree of comfort and a better guesstimate than we have. That is important, because our analysis of waste tourism impacts on how we might approach various aspects of the bill and the secondary legislation.
For example, there is the number of tax rates. Some people said in evidence that there ought to be three rates. They said that there ought to be a third rate specifically for stabilised materials. If waste tourism does not really exist, that is fine and that suggestion might be perfectly sensible, but if it does exist, that could have a detrimental impact. It has an impact on the materials that are applied under each rate. Some suggested that material that is close to inert but does not have a route for reuse or recycling ought to have a separate rate. Again, if waste tourism does not exist, that is a perfectly sensible suggestion that we might be able to put into practice fairly swiftly. That is why the matter is so important.
It is critical for the Scottish Government to interact as much as it can from now on with the UK Environment Agency. The committee asked about that, and the response was that there had not been any direct discussion with the UK Environment Agency thus far. I request that the Government take up that matter fairly swiftly so that we can at least get a reasonable guess at what is likely to happen, which will then flow into other decisions.
I am conscious that I did not respond to the cabinet secretary’s initial challenge. He wanted to hear from all parties about the existing 10-mile radius rule for the landfill communities fund. I listened carefully throughout the committee’s deliberations and I have listened carefully again today. I am hugely persuaded by Michael McMahon’s passionate contribution about his constituency and the impact that the fund has had on his constituents. It is difficult to get around what he said, although John Mason made the fair point that 10 miles might be a little bit rigid in a rural area and a little bit too wide for an urban area. Perhaps there is an opportunity to change that slightly. However, the committee agreed on the principle that those who are most affected by landfill should be those who gain. I would be particularly nervous about widening the radius too much, particularly as we know that the size of the fund in question is almost guaranteed to drop year on year to the extent that, if the Scottish Government’s projections are right, by 2025 it will probably be worth around 26 per cent of what it is currently worth. I would find it difficult to favour widening the scope while the fund drops quite dramatically.
I will return to unauthorised disposals. I think that I said at the start that we welcome that part of the bill. What is proposed represents a huge improvement on the current system and the Government ought to be congratulated on that, but I again request that the cabinet secretary returns to the question about the political objective behind it. If it is to get SEPA to do more and go to more unauthorised landfill sites, the Government probably needs to back that up with resources. The Chartered Institution of Wastes Management said to the committee that SEPA would require
“additional resources in order to bring such activities into the tax regime and to apply any criminal sanctions.”
There is a benefit in simply having the law there, because the likelihood is that we will get additional revenue and it will send out a bit of a message to the unauthorised landfill sites fraternity, but perhaps there is more to be gained by making it a policy objective that we will put greater effort into things and that SEPA will tackle proactively even more landfill sites than it currently does so that the criminal element is stopped and more revenue is brought into the Scottish consolidated fund, which allows us to fund our public services.
I am content to leave it there, Presiding Officer.
- Jenny Marra (North East Scotland) (Lab):
The landfill tax is a result of the Scotland Act 2012 and the financial responsibility conferred to the Parliament in one of the biggest transfers of power since the creation of the Parliament, as Iain Gray outlined earlier. It is also important from an environmental perspective, as my colleague Claudia Beamish outlined in her speech.
I read with interest the recent Institute of European Environmental Policy report commissioned by WWF Scotland, RSPB Scotland and the Scottish Wildlife Trust, which found that the Scottish Government has failed to match its ambitions on key environmental policies with the political will and resources to make them work in practice. Stuart Housden, the chief executive of RSPB Scotland, in commenting on the report, noted
“major difficulties or complete failures in delivery caused by poor decisions, mixed messages or the lack of or misdirection of resources.”
The landfill tax will be a key lever not only in meeting the Government’s zero waste strategy, as many members have mentioned, but in meeting the Government’s wider environmental ambitions.
It is clear from members’ speeches that, although the legislation is largely supported across the chamber, there is a need for much greater clarity on the practical details of the tax, including how it will operate in the medium to long term, and what policies the Government has to underpin the tax that link it to its environmental targets.
The bill is little more than a framework providing for the landfill tax, how it will be collected and, broadly, what waste might be taxable. As the Finance Committee and many of its witnesses have stated, the lack of detail that we have on how the policy will work in practice is impairing a fuller analysis of the bill and its impact. Clarity is needed most notably on what future tax rates will look like. Although the financial memorandum assumes that tax rates will not be lower than current rates at the point of transfer, we must wait until 2014 to know that for sure. Why is that? The Finance Committee report says that that has caused concern among businesses, local authorities and even SEPA, which will be in charge of collecting the tax.
Iain Gray called for an early indication of what level taxes will be set at, how the Government will use the tax rate to reduce landfill, and how to have a more progressive regime to meet the environmental objectives that I have mentioned. Malcolm Chisholm, who sits on the Finance Committee, highlighted COSLA’s criticism of the fact that there was no early indication of the level of taxation to be set. Will the cabinet secretary adopt an escalator? Does he also accept the link—this is a critical issue that many members raised—between an early indication of the tax rate and potential investments to allow businesses to plan? I hope that he will respond to those questions in his closing remarks.
- John Mason:
Does not the member accept that the indications that have been given are strong enough for people to make investment decisions, and that people do not need to know the exact detail down to the penny?
- Jenny Marra:
No, I do not accept that. John Mason has deviated from the consensus across the chamber that an early indication is preferable. Committee members have highlighted that the evidence given to the committee by experts indicates a consensus that an early indication of the tax rate would be desirable.
Like Gavin Brown, I was very much persuaded and impressed by Michael McMahon, whose speech was the best of the afternoon. He raised the important issue of environmental justice for the communities close to landfill sites. There is an argument for more relaxation—but not too much—in local authority boundaries and a more flexible arrangement that is rooted in the communities, as Michael McMahon described. He made a powerful case on the impact on people living near landfill sites from the odour, the dust, the litter, the noise and the visual intrusion, as well as the impact on house prices, which can be reduced by up to 40 per cent. He also made the point that communities will need access to funds long after landfill sites have closed. That relates to Stewart Stevenson’s point about how we will fund such work, which might be a debate for the future.
- Jean Urquhart:
I hear the member’s support for the communities that are nearest to landfill sites. Does she agree that we will recycle more if we send less waste to landfill and that recycling plants can generate the same noise, dust and disruption as is generated by landfill sites?
- Jenny Marra:
I absolutely accept that point. Michael McMahon’s point about environmental justice is just as pertinent to communities such as Jean Urquhart describes as it is to communities that are near landfill sites.
Stewart Stevenson was absolutely right to welcome a return to 1950s recycling, but I draw his attention to figures that are reported in this morning’s The Scotsman, according to which only nine out of our 32 local authorities are meeting their recycling targets. In my city, Dundee, which under a Labour administration was highlighted as a pioneer for recycling in Scotland, recycling has fallen drastically under an SNP administration. A general problem for local authorities is how to increase recycling from tenement properties. That is a cross-party problem that we need to address. I ask the cabinet secretary to address the stagnation or flat-lining of recycling in some local authorities.
This has been a good debate, in which members have raised important points. Labour will support the general principles of the bill at decision time.
- The Deputy Presiding Officer:
Thank you. I call on the cabinet secretary to wind up the debate. Cabinet secretary, you have until 4.49.
- John Swinney:
I have until 4.49? This will be a short speech then. I am sure that that will be warmly welcomed—
- The Deputy Presiding Officer:
Apologies. I should have said 4.59.
- John Swinney:
Thank you. Suddenly I am required to cover more ground.
This has been an interesting debate and I welcome members’ general endorsement of the Government’s approach to the bill and many of its key provisions. I want to address some of the issues that members have raised.
First, on the definition of tax rates and uncertainty in that regard, the Government has made it clear that, for all the new tax powers that we are acquiring, we must consider our approach in the context of our budget for any given financial year. Why do we say that? For the simple reason that there will be a block grant adjustment and resources will be taken out of our settlement, which will have to be replaced by revenue that is generated by the tax. Therefore, this must be considered in the context of the overall budget process that the Government undertakes.
That is not a complicated argument; it is perfectly simple. The Government must take tax decisions that affect our ability to undertake public spending, and if we do not take them in an organised and coherent fashion that relates to the Parliament’s spending provisions, I am not sure how we can undertake the process.
Members talked about uncertainty in relation to tax rates, but no one knows what the level of landfill tax will be in the United Kingdom in 2015. That will be set by the chancellor, not six months before the start of the financial year, when I will set rates, but about three weeks before the start of the financial year. The idea that uncertainty is gripping and unsettling everyone who is involved in the waste industry has been slightly overstated in the debate. I must ensure that I bring forward a public expenditure package that is supported by the ability to raise the money. That is done through a budget process, and that is how we should define the approach and specify the rates that will apply.
- Iain Gray:
The cabinet secretary makes a fair point in saying that there is no certainty about future tax rates, which will be set within the process of setting the budget. That is how things are, and that is right. However, the point here is that this is a new tax. There is a shift or a change from this being controlled by the Treasury to it being controlled by the Scottish Government. If the indication that the cabinet secretary has given is that, in 2015, he will set a rate that is pretty much the same as the UK rate that he inherits, why does he not just say that? That would put an end to that degree of uncertainty, at least.
- John Swinney:
Mr Gray takes us off course again. This is not a new tax. We have the landfill tax now. The only difference, and the one correct thing about what he just said, is that we will decide on it here in Scotland rather than the UK Treasury deciding on it. I do not think that all the other arguments are strong arguments given what I have said about the approach that we will take to setting the level of taxation.
The second point that I want to raise is on waste tourism, which was talked about quite a lot in the debate. Mr Brown asked what research the Government has undertaken on the matter. In 2012, we commissioned Zero Waste Scotland to produce the report “Scotland Landfill Tax Bill 2012: An Economic Assessment”, which can be found on Zero Waste Scotland’s website. That study showed that an increase in the top rate of tax of between zero and £15 would create little movement but increases of more than £15 would see significant amounts of waste flowing to England. I hope that that gives members some sense of the variables that are involved in tax levels that might drive waste tourism.
- Gavin Brown:
I have read the Government’s response to the committee’s report and looked though the report to which the cabinet secretary referred. The difficulty with that report is that the three primary things that were modelled were to maintain the exact status quo, to have the status quo with the non-self-assessment model and to have no landfill tax whatsoever. Those three things seem not to distinguish terribly much between rates. I wonder whether something else could be published on that.
- John Swinney:
I will explore it again, but I have just said to the Parliament that the research that the Government commissioned said that the variability would essentially exist above £15. I am not sure what more information the Parliament would require on that. It is a pretty direct answer to the points that have been raised.
Thirdly, members asked about the OBR estimates on landfill tax. Mr Chisholm—fairly, I think—reflected my observation on the estimates, which I have found inexplicable. The OBR has revised down its estimates for 2016-17 by 33 per cent. Frankly, that estimate is a fat lot of use. I confirm to the Parliament my intention to establish a facility within Scotland to enable us to assess the predictions on the various taxes for which we will be responsible. I am looking carefully at what the Finance Committee considers on the question, and I will take decisions in that respect in advance of setting the tax rates in 2014.
A substantial amount of the debate concentrated on the landfill communities fund. There are three elements to that discussion. First, on the administration, the organisation and the supervisory burden, I have been clear to the Parliament that I think that the existing arrangements are too cumbersome. Whatever we put in place, which will be a Scottish model, will be a great deal more efficient and administratively straightforward.
Secondly, there was a call for there to be wider scrutiny of some of the arrangements that are put in place. I will certainly reflect on that in considering how we take forward the administrative arrangements.
However, the heart of the debate relates to whether the 10-mile radius should be applied or whether there should be a broader reach for proposals. I thought that Jenny Marra’s speech was a bit muddled on the question. She said that she whole-heartedly agreed with Michael McMahon and then argued for flexibility, which made it a little bit difficult to work out exactly where she was going on the point.
- Michael McMahon:
Perhaps I can clarify the matter. There are two distinct aspects to the issue, one of which is the distance. It is clear that, in some instances, the 10-mile radius can be too restrictive. The other aspect is the identified individual projects, which would be Scotland-wide and would take money from the local communities to areas of Scotland that are not impacted by landfill in any way. Jenny Marra and I agree that, although the 10-mile radius could be flexible, we must be very careful if we start to take money from local communities to spread it across the rest of Scotland.
- John Swinney:
I have a question for Mr McMahon. Why does he think that projects that take place in other parts of Scotland do not take place in communities? I do not understand what subtle distinction is being made. I would be happy to give way to Mr McMahon again if he could address how projects that happen in other parts of the country do not happen in communities.
- Michael McMahon:
The distinction is not subtle at all. The projects happen predominantly in the local communities and the 10-mile radius protects the impact on those local communities. If we take money out of those communities to put into Scotland-wide projects, that will reduce the amount of money that is available to the communities that are most affected.
- John Swinney:
With the greatest respect to Mr McMahon, who cares passionately about the issue, that did not sound like a clear distinction to me. I understand—[Interruption.]
- The Deputy Presiding Officer:
- John Swinney:
I understand the issues that are involved and I am keen to come to some agreement about how we can proceed. I will, therefore, open up discussions with Mr McMahon and we can perhaps explore those issues more directly to see how we can address them most effectively. The Government has consulted stakeholders extensively and we have received a range of views on the issues, on which we will reflect carefully.
The final area that I will address is illegal dumping. There has been a broad welcome in Parliament for the approach that the Government is taking and the extra provision that we are putting in place. I want to ensure that SEPA takes an effective approach to tackling the issue. Gavin Brown asked whether we will allocate more resources to SEPA to enable it to undertake that work, but SEPA has a commendable record of having improved and extended its performance without asking the Government for more resources. I applaud SEPA for the way in which it has organised its priorities and its approach to delivering a very efficient and effective assessment mechanism at the local level. I do not think that we should automatically decide that more resources are required to enable organisations to fulfil these functions. Any resources that are generated by the landfill tax will go to the Scottish consolidated fund, from which we allocate resources to different public service priorities.
In closing, I reflect on the constitutional significance of the bill that we are wrestling with today. The bill gives the Parliament wider financial responsibilities, and that is welcome. Iain Gray argued that the Parliament is acquiring more powers as the years go by. I felt that Mr Gray was almost on the verge of expressing support for the Government’s position and that he had come to the view that it was necessary for the Parliament to acquire the full range of financial powers. I did not find particularly compelling his argument that because, since 1999, we have acquired more powers over transport, the Scottish rate of income tax, the landfill tax and the land and buildings transaction tax we should stop acquiring powers. This Government is about acquiring powers to enable us to tackle the issues that matter to the people of our country. If Mr Gray is coming round to our view, we very much welcome him to the strong body of opinion that realises that we need the full range of powers to deal with the issues.
The point that Stewart Stevenson made is absolutely correct: everybody now agrees that the receipts from the landfill tax will decline over time. I have furnished Parliament with my view of the extent of that decline. The challenge for Parliament is to effectively exercise and utilise all our powers to ensure that, while that happens, we are able to sustain investment in public expenditure. For me, that is the simple explanation why we need the full range of financial powers rather than just the limited financial powers that we are acquiring under the bill, which I look forward to supporting at decision time.