Exclusive: Average household paying £30 a year in landfill tax

Councils will pay central government £1.8bn in landfill tax over the three years up to 2011, equating to £30 of the average household's annual council tax bill, according to new figures from the Local Government Association (LGA).

The LGA is now calling on the government to return the landfill tax revenue to councils to allow them to invest in additional waste-reduction initiatives and increased recycling capacity.

Paul Bettison, chairman of the LGA's environment board, said the association was lobbying the Treasury to ring-fence the money so that it is spent only on recycling and waste-reduction efforts as part of next month's budget.

"What we have at the moment is a tax within a tax," he said. "We want to see that money come back to the councils, if necessary ring-fenced so then money can only go on recycling machines and anaerobic digestors."

Revenue from landfill tax was previously ring-fenced for spending on waste-reduction initiatives, but the government scrapped that condition last year, prompting criticism from many business groups which accused the government of reneging on its commitment to ensure the tax was only used to fund environmental initiatives.

Bettison said councils wanted to stop sending waste to landfill, but were often forced to by an absence of appropriate recycling facilities.

"There are lots of councils that would love to stop sending food waste to landfill altogether," he said. "They know it produces greenhouse gas in the form of methane and they know anaerobic digestion systems work, but they also know these types of technologies are expensive and they are not in a position to find the money."

Bettison's comments follow a National Audit Office report earlier this year, which warned that a shortfall in UK recycling and waste-to-energy capacity could result in recyclable waste being sent to landfill. It concluded that a lack of investment in domestic recycling capacity meant the UK was at risk of missing an EU target to halve the amount of biodegradable municipal waste being sent to landfill by 2013.

A spokesman for the LGA said council recycling budgets were likely to face further pressure from April when landfill taxes increase by £8 to £40 a tonne under the government's landfill tax accelerator.

The government maintains that the accelerator provides councils with an incentive to invest in expanding recycling capacity, but privately some councillors believe that despite the threat of unlimited fines from EU if it fails to meet landfill targets, the Treasury is reluctant to support measures that would lead to a reduction in the landfill tax revenues.

A spokesman for the Treasury said the chancellor was aware of the calls for the tax to be ring-fenced, but refused to be drawn on whether or not any changes to the tax would be included in next month's budget. "Government engages with industry on a regular basis, particularly in the build-up to the budget," he said. "The chancellor is aware of this issue, but tax is an issue for the budget."