Background
The Government consulted on reforms to Landfill Tax in England and Northern Ireland, including proposals to remove the current quarry exemption that allows certain inert waste from construction and quarrying activities to be disposed of at quarry restoration sites without incurring the standard rate of Landfill Tax.
The consultation sought views on how the tax system could be reformed to support environmental objectives, reduce waste and encourage greater reuse and recycling of materials. The proposals would significantly alter the way some construction and excavation waste is managed and disposed of.
The FMB's response focuses on the potential impact of the proposals on small and medium-sized house builders. It highlights concerns that higher waste disposal costs could increase the cost of delivering new homes, further reduce the viability of small housing developments and undermine the Government's ambitions to increase housing supply and diversify the housebuilding market.
Executive summary
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The FMB has serious concerns about proposals to remove the quarry exemption and introduce additional landfill tax costs for construction waste.
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Evidence presented by the British Aggregates Association suggests the reforms could add substantial costs to new housing developments, with particularly significant impacts on smaller sites.
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Any increase in waste disposal costs is likely to be passed through the supply chain, increasing build costs for SME house builders already operating on tight margins.
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The proposals risk exacerbating existing barriers to SME-led housebuilding at a time when small builders are already facing significant challenges.
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SME builders' share of the housing market has fallen dramatically over recent decades, making the UK increasingly reliant on a small number of large developers to deliver new homes.
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Access to finance remains one of the most significant constraints on SME housebuilding, with many small developers reporting increasingly difficult lending conditions.
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Regulatory and compliance costs, including requirements such as Biodiversity Net Gain, are already placing additional financial pressures on small developers.
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Rising material costs continue to affect the viability of housing projects, further reducing the ability of SMEs to absorb new costs.
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Introducing additional landfill tax costs could make some smaller developments financially unviable and reduce the number of homes delivered by SME builders.
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The Government should reconsider the proposed changes and engage further with the construction industry before taking any final decisions.
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HM Treasury should meet with representatives from the Construction Leadership Council and wider industry stakeholders to better understand the likely consequences of the reforms.
