Chancellors 2011 Budget Opens To Welcome Response
24 March 2011
Chancellor George Osborne introduced some key changes impacting the waste industry in the budget that he unveiled on 23 March 2011, which include "streamlining" the planning system and launching the Green Investment Bank (GIB), with a total government capital of £3 billion to fund new waste infrastructure, contrary to the previously announced amount of £1 billion.
In view of the current planning procedure posing as a "chronic obstacle" to the growth and development of waste infrastructure in the UK, the Chancellor has proposed a major overhaul of the planning system by introducing a 12 month limit on the processing of all planning applications and appeals, to avoid planning delays. The proposal to "streamline the planning applications and related consents regimes removing bureaucracy from the system and speeding it up" will be bolstered by measures the government promises to undertake, although it doesn't specify what these steps entail. Affirming the coalition government's dedication towards "sustainable development", he further added: "We will introduce a new presumption in favour of sustainable development, so that the default answer to development is 'yes'."
Meanwhile, the establishment of The Green Investment Bank is being considered one of the principal instruments of the government policy for achieving low carbon society. Speaking on the nature of projects the Green Investment Bank intends to support, Mr. Osborne said: "The bank will support low-carbon investment where the returns are too long term or too risky for the market." The GIB will begin operation in 2012-13, a year earlier than previously anticipated. The Chancellor also confirmed that the bank is seeking to raise a further £18 billion through private sector investment and government injections into the capital to fund green infrastructure. However, there are restrictions with regard to GIB's power to borrow, which will be lifted only in 2015.
Furthermore, the budget brings into play a carbon floor price for the power sector, which is set at £16 per tonne from 2013, with plans of an increase to £30 per tonne by 2020. The government is optimistic that this will encourage additional investment in low carbon power generation by providing greater support and certainty to carbon price. However, with the impending caps on emissions in the European Union there is a possibility of these prices rising beyond the minimum levels set in the budget.
Similarly, the government is legislating for an increase in the standard rate of landfill tax by £8 per tonne to £64 per tonne by 1 April 2012, and will continue to freeze the lower rate of landfill tax at £2.50 per tonne in 2012-2013.
The budget drew very positive response from the waste industry, which welcomed the proposed changes as a step in the right direction. However, organisations like CIWM also expressed concerns and a note of caution on the implementation of these plans.
The Chartered Institution of Wastes Management applauded the government's intention to deliver growth and said it is "looking forward to working with the government to ensure that sustainable waste and resource management is plugged into all the right areas of government policy."
However, commenting on the proposed increase in the GIB capital to £3 billion it further added: "We welcome the extra funding for the Green Investment Bank and the power, albeit delayed, for the bank to borrow. However, this still feels like a Government tinkering around the edges of genuine green economic growth. Supporting low carbon investment is essential and while a carbon price floor for energy generation sends out a positive signal, we are still a long way from having a robust and integrated framework for the future. We are keen to see more detailed thinking in the proposed Green Economy Roadmap due out later this year."
The organisation reiterated the need for a clearly defined "sustainable development" and said: "The Chancellor's measures to speed up planning are very welcome, as this is an area that many in the industry identify as a major obstacle to developing the necessary infrastructure to derive value from our waste in the future. Likewise, the presumption in favour of sustainable development is a helpful step, but only if accompanied by a robust and detailed definition of 'sustainable development that takes full account of our resource use and shuts the door on potential abuse of this loophole.''
Responding to the budget, the Environmental Services Association's director of policy, Matthew Farrow, said: "It's good the Government has recognised that the planning system is a real barrier to business investment. Prioritising and streamlining planning applications that result in growth and jobs should help the waste industry, which is ideally placed to deliver green growth and needs to invest £20bn in new facilities over the coming years. However, the details will matter and we will be looking at them closely."
"Additional funding and future borrowing powers for the Green Investment Bank are welcome as we see a potential role for the Bank in enabling some difficult to fund waste projects to go ahead" he added.
Colin Drummond, chief executive, Viridor, in his statement on the new budget also mentioned paying attention to detail saying: "The budget statement gives positive signs regarding planning, encouraging growth and green investment, all of which could help our industry deliver essential infrastructure. We look forward to examining the detail."
Defra hailed the budget as one "that wants to move beyond economic rescue, to economic reform, greater stability, and jobs." Environment secretary, Caroline Spelman, said: "It sets out a simple, efficient and cost-effective framework to provide support for our rural communities, help ease pressure on our precious resources across the country, and deliver on our environmental objectives."
Krishna Buddhiraju
