Landfill Tax (Scotland) Bill: Stage 2
Good morning and welcome to the 29th meeting of the Scottish Parliament’s Finance Committee in 2013. I remind everyone present to turn off any electronic devices such as mobile phones.
Our first item of business is stage 2 of the Landfill Tax (Scotland) Bill. We are joined by the Cabinet Secretary for Finance, Employment and Sustainable Growth and his officials. Members should note that the officials cannot speak on the record at stage 2 and that all questions should be directed to the cabinet secretary.
I also welcome to the committee Bruce Crawford MSP and members of the public.
Members have copies of the marshalled list of amendments, and the groupings. We will take each amendment on the marshalled list in turn.
Sections 1 to 10 agreed to.
Section 11—Taxable disposals: power to vary
Amendment 8, in the name of Bruce Crawford, is in a group on its own.
I will explain some of the background to amendment 8.
About 18 months ago, I was contacted by constituents from Blanefield about contaminated land in part of the village that had been built on the site of a former calico print works that closed in 1898. It was found that the houses, which were built in the late 1950s and early 1960s, were situated on land that had been contaminated with lead and arsenic. After testing and retesting, it was found that 13 properties remained in need of remediation due to the levels of contamination.
The residents of Blanefield and Stirling Council have come together to work to find the best possible solution to the matter and the many challenges and obstacles that they face. The cost of remediation to Stirling Council—it is the appropriate authority because there is no other body left that could pay for it—and my constituents is extremely high, which is partly due to the cost of the landfill tax. Initial estimates suggest that the cost of decontaminating the land is likely to be well over £500,000, of which a large proportion—about £250,000—would be the cost of landfill tax.
The circumstances are unusual—if not unique. The residents all bought their houses without any knowledge that the land is contaminated, and the developer is long out of business. However, the residents now face huge costs that they cannot possibly meet. My constituents have worked closely with Stirling Council officials over the past 18 months. The council has agreed to provide £125,000 towards the cost of remediation, and it plans to use its in-house contractors to have the land decontaminated through a best-value process. Unfortunately, the landfill tax element of the projected costs will not all be met by the council, which will leave a significant burden on the 13 householders.
I have written to the Westminster Government about the matter and have been told that it is not feasible to grant landfill tax exemptions for such specific circumstances under the current legislative framework. It is entirely possible that the matter will not be fully resolved until the Scottish Parliament takes on responsibility for the landfill tax, which is why I thought it necessary to lodge amendment 8, which would amend section 11 of the bill, and is designed to allow for exemptions to be given by certificate when costs fall on
“persons whom the Tax Authority considers were not responsible for the land becoming contaminated.”
Would that exemption be very wide? The words
“were not responsible for the land becoming contaminated”
could cover the situation that Bruce Crawford described, for which I have sympathy, as well as a very wide range of people who could claim that they did not know about that.
You must have known exactly the point that I was about to come to, Mr Mason. I am about to address that matter.
Amendment 8 would not solve all the problems that my constituents face, but it would provide them with the comfort of knowing that it would result in a significant reduction in the overall costs that they face individually. That said, I acknowledge the shortcomings of the amendment, which could open the door to a developer purchasing land, finding it to be contaminated and not going through the proper due diligence process, and then seeking to find an exemption through a certificate. Mr Mason’s point is therefore correct. Such a result is not my intention, so I ask the committee to view the amendment as a probing amendment. I also ask the Government to consider lodging an amendment at stage 3 that would assist and aid my constituents in dealing with the unique circumstances at Blanefield, but which would also avoid opening the door to any unintended consequences.
I move amendment 8.
I have a huge amount of sympathy for the people who are affected. I do not know whether they contacted all members of the committee, but I remember that they certainly contacted me, way back.
I very much welcome the fact that amendment 8 is to be viewed as a probing amendment, because it may be worded a little too widely. I know that Bruce Crawford accepts that, so my remarks are directed more at the Government for its further consideration. The amendment is not worded as it would need to be in order to address the intention that the appropriate circumstances should be those in which persons have been unaware of contamination. It is important that any new amendment that is lodged be worded in such a way. The amendment talks about responsibility rather than awareness of the land’s contamination. That will need to be factored in, as well.
I welcome the fact that Bruce Crawford lodged amendment 8. The issue is important, and we need to take it on board and consider it.
Perhaps the cabinet secretary will address my particular point in his response.
I wonder whether the action that Bruce Crawford wishes for could, in fact, be carried out under section 11. I presume that that may be the case, and I also presume that there is no equivalent provision in United Kingdom legislation. I am entirely sympathetic to amendment 8, but I wonder whether it would make a substantive difference in practice, because both the section and the amendment use the word “may”. I presume that the Scottish ministers would have the power under section 11 to carry out the exemption and to waive the tax, as Bruce Crawford seeks, and that the amendment therefore merely illustrates one of the circumstances that could lead to the section 11 power being triggered.
First, I thank Mr Crawford for lodging amendment 8 and for the opportunity to consider what is clearly a very important issue for his constituents. Amendment 8 sets out a particular circumstance in which ministers could apply an exemption under the powers in section 11 of the bill. I quite understand the significance of the issue that Mr Crawford has raised, and that remediation of contaminated land can have serious financial consequences for individual householders.
The key point that I want to make to the committee is that the proposal in amendment 8—this was also Mr Hepburn’s point—would go significantly wider than individual householders who we would all accept might inadvertently find themselves in such situations. I have great sympathy for the householders of Blanefield who have found themselves in a situation that is not of their making.
However, my understanding of how the issue has been handled and the approach that Stirling Council has taken is that the issue might have to be addressed before the bill would come into effect. I understand that Stirling Council might be moving to invitation to tender, so some of the work might have to be done sooner than the legislation’s coming into effect in April 2015. The bill therefore might not provide a practical solution to the specific circumstances that Mr Crawford has raised on behalf of his constituents.
The general point is that householders might inadvertently find themselves in such circumstances in other cases. Obviously, the committee must consider whether making specific provision for that on the face of the bill would be appropriate.
My office has advised Mr Crawford that under the existing terms of the United Kingdom landfill communities fund some remediation financial support might be available, through a grant application by the Blanefield residents. Although the UK legislation does not provide specifically for such circumstances, I think that there is an opportunity to discuss with those who operate the UK landfill communities fund whether it is possible to identify a practical way to get financial support that would enable the householders to contribute to remediation without it coming from their own resources. I hope that that opportunity can be pursued.
On the specifics of amendment 8, my first concern is that it is a technical amendment. The amendment would not extend the powers in the bill, because the proposed exemption could already be provided by regulations under the current wording of section 11, so Mr Chisholm is absolutely correct in that respect.
My second concern reflects Mr Hepburn’s point and is on the scope of amendment 8. Extension of the exemption as is proposed would be a way out of tax for anyone who owned contaminated land. A person might have bought contaminated land with the intention of undertaking remedial work to realise the full value of the land; amendment 8 would relieve them of having to pay landfill tax in such circumstances. I am anxious not to provide for such a result.
I propose that supporting land remediation projects ought to be one of the objectives of the landfill communities fund when the Scottish landfill tax is introduced in April 2015. In essence, that would provide practical arrangements for dealing with remediation and would offer the opportunity of support for members of the public who find themselves in situations such as Mr Crawford’s constituents have found themselves in. Further thought will be required in order to set out the details of that in regulations, in due course.
I hope that my remarks have provided assurance to the committee on the Government’s thinking on the issue. I am happy to provide what assistance I can to Mr Crawford in the short term to try to ensure that the landfill communities fund can engage constructively with him on the issue.
Thank you. Bruce Crawford will wind up and say whether he wishes to press or withdraw amendment 8.
09:45
A number of interesting points have been made. I do not want to go back over the ground that Mr Mason and Mr Hepburn have covered, except to say that their comments were germane and correct.
Malcolm Chisholm wondered whether, under the bill, regulations could apply in this case. I will seek to discover from the cabinet secretary whether regulations could be fashioned to deal with the particular and unique circumstances in Blanefield and to provide some assurance for the future. After all, I am not entirely certain that Stirling Council will prosecute the process to the degree that will enable everything to be completed by 2015. The council is going about the matter in a very canny and sensible way, and recognises that if it were to proceed at the moment there is no way that the householders could possibly find the resources.
With regard to resources, I was very grateful to be contacted last week by the cabinet secretary’s office about the landfill communities fund; indeed, I met the fund’s people yesterday. Unfortunately, the structure of the landfill communities fund in Scotland is such that opportunities are limited for the Stirling area to receive much in the way of resources; the fund is very much defined by the activity of a landfill operator in a particular area and any resources that might be available as a result of a landfill site will be identified for the community in the area. It is also not clear whether the fund’s criteria are wide enough to allow the Blanefield situation through the door.
That said, I very much welcome the cabinet secretary’s commitment to working with me and seeing whether there is a way through this issue. I recognise the wide-ranging nature of my amendment and seek to withdraw it; however, given the circumstances, I might have to consider lodging another more tightly drawn amendment at stage 3, if that is required.
Amendment 8, by agreement, withdrawn.
Section 11 agreed to.
Sections 12 to 19 agreed to.
Section 20—Credit: bodies concerned with the environment
Amendment 9, in the name of Michael McMahon, is in a group on its own.
When we received evidence on the consultation on the bill, some suggested that we should look to the landfill communities fund to provide resources for environmental projects outwith the areas affected by landfill sites. I do not know whether people intended to create such an impression, but the proposal immediately rang alarm bells with me. Another argument that was made—and which I completely understand and have no difficulty with—was that the 10-mile-radius criterion in the fund can, in some cases, be too restrictive. For example, a settled community in a rural area might be experiencing exactly the same impacts from air pollution, noise and smell from the lorries going through it as a community that is adjacent to a landfill site, but the site itself might be more than 10 miles away. I am therefore not looking to restrict the use of the landfill communities fund and leave out communities outwith the 10-mile radius that are clearly being impacted on.
Amendment 9 seeks to challenge the thought processes that seemed to come through in evidence that money could be taken from the landfill communities fund for projects that would benefit areas that are not directly impacted by a landfill site. That view concerned me; indeed, after speaking to people about the implications of such a change in the use of the landfill communities fund, I saw that such a move could be only detrimental to the communities that are directly impacted by these sites. By its very nature, the fund is diminishing; however, although the amount that is available from the fund will fall over time, a landfill site’s impact on a community will be felt for longer than it has been used as a practical facility. Given that the amount of money in the fund will fall while the impact remains, I would be concerned by any move to reduce the fund further to provide money for projects that have no connection with a landfill site. That is why I lodged amendment 9.
The word “vicinity” jumped out at me. Could you define that?
As I said, it is not about the impact on the vicinity; it is about there being no impact. During the stage 1 debate, concerns were expressed that there are communities outwith the 10-mile radius, or the vicinity, that will be impacted on as lorries travel through them; that is especially true in rural areas. I totally understand why people do not want there to be a restriction on the criterion, but I want there to be a restriction on the use of the funds where no direct connection can be made between the area that is benefiting from the spend and its being
“in the vicinity of a landfill site”.
The wording was suggested to me by the legal advisers who advise on the drafting of amendments.
Two options were put before me; one was very complex and amendment 9 was the most simplistic. To be fair, it seemed to be the most logical amendment; I am sure that those who have more knowledge of drafting could tell you why there were two possible amendments, of which one was more complicated than the other. I wanted the amendment that would achieve the most basic thing, using a simple set of criteria that surround the landfill communities fund.
I move amendment 9.
I agree entirely with the principle that Mr McMahon has laid out today and during the various committee stages and the stage 1 debate. In many respects, it is a principle to which the committee signed up in its report.
My concern about amendment 9 was fleshed out in part by John Mason in his intervention; it concerns the word “vicinity”. The strict dictionary definition that includes the word “surrounding” is pretty narrow. It would be quite restrictive and, going by what Mr McMahon has said, it would tighten things up far more than he intends. If we agree to the amendment and the word “vicinity” goes into the bill, it will be much more difficult for the committee and Parliament to define the distinction between rural and urban under the 10-mile rule. The principle is right, but if we agree to amendment 9, particularly considering its use of the word “vicinity”, it could become unduly restrictive and we might have problems when we try to flesh out exactly what we intend to achieve.
I want to expand slightly my point on the word “vicinity”, which Mr McMahon and Mr Brown have mentioned. The assumption has sometimes been made that 10 miles might be too little and that we might need to look at a wider area, whereas in the city 10 miles might be too broad. I have a landfill site in my constituency and all parts of Glasgow would probably be within 10 miles of it. On Mr McMahon’s argument, which I agree with, places on the far side of Glasgow are in no way disadvantaged by that landfill site, so I like the idea that the benefits should go primarily to those who are most severely affected.
I am not entirely convinced by amendment 9, but I hope that the regulations will reflect some of the debate that we had at the committee about how we get a balance. The distance should not just be a fixed distance.
I too have sympathy with amendment 9, especially given what we have done with our rubbish in the past. Times are changing and many landfill sites are closing down or being finished and treated, and the whole idea is that we will not take stuff to landfill in the future. It occurs to me that, instead of trundling to landfill, the lorries will trundle to the recycling depot and other areas, so we need a different way of thinking. If the money that is being raised is for environmental projects that are related to the recycling industry, it would be a great shame, particularly in the area that I represent, to have a 10-mile radius. It would be a nonsense.
We should look much more widely at the issue and I think that in a year or two we will see it quite differently. I do not support amendment 9.
Michael McMahon’s amendment 9 would insert a condition that money from the tax credit scheme or landfill communities fund should be spent within
“the vicinity of a landfill site”.
The argument on that was advanced at stage 1.
In addressing amendment 9, I would like to highlight the issues that are under debate on this question. The presence of a landfill site has, in essence, two main effects. The first is the disamenity that a landfill site causes the community in its vicinity and the second is the detrimental effect that the site has on the wider environment. The first of those—the disamenity on the surrounding community—is crystal clear, but the detrimental effect that the site has on the wider environment is more difficult to define. Michael McMahon has highlighted that lorries will travel through communities to reach a landfill site, which may create a disamenity, and that disamenity may be created by the emissions that emerge from a landfill site, which may have a wide impact on the environment over a large geography.
It is on those questions that we are searching for a conclusion. The debate on those questions has informed a lot of the evidence that has come to the committee, which has clearly caused some concern to Mr McMahon, and I have some sympathy with the position that he has expressed to the committee on this point.
As I indicated in my response to the Finance Committee’s stage 1 report, I agree with the principle that the communities that are most affected by a landfill should benefit from the money available through the fund. The fund that will be established as an integral part of the tax, under sections 18 and 20, will, I am sure, be of significant benefit to the communities in the vicinity of a landfill site, but it should not be available to communities further afield that suffer no disamenity from having a landfill site nearby.
The question that arises out of that is on the extent to which the fund should apply to reflect the impact that landfill sites have on the wider environment. We have already considered the potential for the fund to support land remediation projects, such as the one on Blanefield that Bruce Crawford has brought to the committee’s attention, and the fund could support other environmental and other types of projects.
In the consultation prior to the bill’s introduction, a majority of respondents supported the view that funding for environmental and biodiversity projects should be available through the Scottish landfill tax communities fund, on the basis that landfill sites contribute to climate change and are responsible for a sizable element of Scotland’s greenhouse gas emissions. We need to consider that issue and come to a conclusion on the terminology that will be put in place around the scheme. As a matter of course, I would prefer to see that in regulation rather than on the face of the bill.
The exchange between John Mason and Michael McMahon highlighted the difficulties. I have every sympathy with Mr McMahon on the question of trying to pin down this point and I have no criticism of the ability to get the issue to a fine point. It comes down to the point about vicinity. For me, “the vicinity of a landfill site” is quite a tight term, which may not serve the purposes on which we are all trying to agree.
During stage 1, I indicated that I would be happy to discuss the approach to the issue with Mr McMahon. I welcome the opportunity to hold that discussion and I would be very happy to do that informally with other committee members before stage 3 if that would help, to provide colleagues with the opportunity to reflect on the issues that are at stake.
There is no disagreement that communities that suffer disamenity from a landfill site should have access to the fund; that is agreed absolutely. The question is, if we are going beyond that impact and disamenity, how far are we going and on what basis?
10:00
I am mindful that, predominantly, the consultation responses argued for a position that appears to me to be slightly broader than that for which Mr McMahon has argued today. I will be anxious to consider that evidence in dialogue with members in advance of stage 3, so that we can either come to an agreement on the best way forward or, alternatively, leave space for members to be able to exercise their proper and due right to advance issues at the final stage of the bill. I will be happy to facilitate those discussions and to do so timeously before stage 3.
I very much welcome the cabinet secretary’s comments. For clarity, I should say that I seek a direct link between the impact of the landfill site and the communities that may benefit from the funding from the landfill communities fund. I get the general point that landfill sites contribute to climate change, but everything appears to contribute to climate change, so where do we stop with that? Some communities suffer a direct impact—or, in the terminology, a disamenity—whereas other communities do not suffer disamenity for which there is a direct linkage to the landfill site.
I very much welcome the opportunity to discuss the issue further with the cabinet secretary. On that basis, I will not press my amendment today.
Amendment 9, by agreement, withdrawn.
Section 20 agreed to.
Sections 21 to 40 agreed to.
Section 41—Subordinate legislation
Amendment 1, in the name of the cabinet secretary, is grouped with amendments 2 to 7.
Amendments 1 to 7 deal with setting out which procedure should apply to certain order-making powers. The amendments are in response to recommendations from both the Finance Committee and the Delegated Powers and Law Reform Committee following the stage 1 process.
Amendments 1, 3 and 7 relate to section 17, “Liability of controllers of landfill sites.” They follow on from a recommendation in the Delegated Powers and Law Reform Committee’s stage 1 report, which identified that regulations made under section 17 could increase the scope of the tax. The amendments will mean that regulations made under section 17 that would change the liability of landfill site controllers will be subject to the affirmative procedure.
Amendments 2, 4 and 6 relate to section 11, “Taxable disposals: power to vary.” I note the Finance Committee’s recommendations that the power should be subject to the affirmative procedure. Creating an exemption may prove suitably controversial to merit further scrutiny. Therefore, the amendments will make all orders under section 11 subject to the affirmative procedure.
Amendment 5 relates to section 13(4), which provides for the setting of additional rates of tax. The amendment will make all orders under section 13(4) subject to the provisional affirmative procedure. I note the Finance Committee’s recommendation that the power should be subject to the affirmative procedure. However, to stop contractors and operators taking advantage of any change and perhaps rushing materials to landfill, amendment 5 seeks to apply the provisional affirmative procedure in order that any change can take immediate effect.
I move amendment 1.
I think that there are no further comments from committee members. Cabinet secretary, do you have anything to add?
I have nothing to add.
Amendment 1 agreed to.
Amendments 2 to 7 moved—[John Swinney]—and agreed to.
Section 41, as amended, agreed to.
Sections 42 to 44 agreed to.
Long title agreed to.
That ends stage 2 consideration of the bill. Members should note that the bill will now be reprinted as amended and will be available tomorrow morning. The Parliament has not yet determined when stage 3 proceedings will take place, but members may now lodge stage 3 amendments with the legislation team. Members will be informed of the deadline for amendments once it has been determined.
I thank the cabinet secretary for his attendance today. I call a brief recess to allow the cabinet secretary and his officials to leave and to allow a changeover of witnesses. There will be a five-minute break.
10:04
Meeting suspended.
10:09
On resuming—