Official Report 762KB pdf
Scottish Landfill Tax (Standard Rate and Lower Rate) Order 2025 (SSI 2025/41)
The next agenda item is an evidence session with the Minister for Public Finance on the Scottish Landfill Tax (Standard Rate and Lower Rate) Order 2025. The minister is joined today by Jonathan Waite, the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill team leader at the Scottish Government. I welcome them both and invite the minister to make a short opening statement.
The Scottish Landfill Tax (Standard Rate and Lower Rate) Order 2025 specifies the standard and lower rates for the Scottish landfill tax, which will apply from 1 April 2025 and are consistent with the rates set out in the Scottish budget for 2025-26, as published on 4 December last year. The order sets out that the standard rate will increase from £103.70 to £126.15 per tonne and that the lower rate, which applies to less polluting, inert materials, will increase from £3.30 to £4.05 per tonne. Members may wish to note that those rates match the United Kingdom landfill tax rates for the 2025-26 financial year, as confirmed in the October 2024 UK budget.
The Scottish Government has continued acting to avoid any potential for what is referred to as “waste tourism” emerging as a result of material differences between tax rates north and south of the border. The increased rates are intended to provide appropriate financial incentives to support the delivery of the Scottish Government’s circular economy, climate and sustainable resource goals.
I am happy to answer any questions.
Thank you for that opening statement. Do you really think that, if you were to put the tax on inert waste up by £1 you would have vast numbers of lorries charging over the border in order to avoid tax? Given what it costs to ship such material, including the cost of fuel, payment for the driver and depreciation of the value of the lorry, that is kind of nonsense, is it not? I can understand the argument about non-inert waste, but it seems a bit bizarre that this tax has been devolved for umpteen years without there being a penny differential and that we still get a ludicrous statement every year about inert waste tourism. Surely we can think up our own tax for that. If it cost a fiver, we could make an extra few bob for the Scottish Government and there would not be a queue of trucks at Berwick trying to dump waste in Northumberland.
I take your point. It is my understanding that the Welsh Government has done that by increasing the lower tax rate to £6.30.
To be fair, it has always been bolder than us.
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We will look at how the Welsh policy operates. If there were potential for waste tourism, that would be geographically easier to do from Wales into England than from Scotland into England. We will see how that works, take a sense of it and consider it in our deliberations on the tax for the next year.
We have had the landfill tax for a while now, as have Wales and England. Why has the Scottish Government not looked into the potential for a differential rate before this point?
The principle has always been that we do not want to get into an environment where we would be concerned about waste tourism—if you want to call it that. The whole intention is to drive behavioural change through the tax and other policy measures. The trends are clearly moving in a downward direction for both inert and non-inert waste. That is the primary policy intention.
However, there is scope for us to look at what differential rates could do. We need to assess how much additional income that would raise. In the context of the revenue that is being raised reducing significantly anyway as a consequence of the behavioural change that the tax is driving, I am not sure that any increase would make a significant difference.
I would certainly welcome that additional work happening. It seems that the single deciding factor in setting the rate in Scotland is the rate in England. However, we have our own climate targets and waste reduction targets. What regard has been given to the impact that setting the landfill tax rate at an equivalent level to the English rate would have on the targets that we have set in Scotland?
On all those targets—climate emissions, waste reduction, circular economy and so on—our targets are either more ambitious than England’s or we have targets in areas that they simply do not have. It seems that there is a dichotomy, because the tax is one of the key drivers for meeting those targets. The rate that we have set it at does not seem to be based on what we would need to do to hit those targets; it seems to be based entirely on the rate that the UK Government has set in England.
You would need to have an evidential base for doing something differently. I suppose that we are working in three dimensions. We are first looking at—as the convener said—how much money an increase would raise. I am looking at the data that is in front of me. Officials will correct me if I am wrong, but there seems to be about 110,000 tonnes at the lower rate, so a £1 increase would bring in an extra £100,000. That would be welcome, but it would not shift the dial on the budget.
If you start to increase that rate by too much and the differential grows, is there the potential for waste tourism? That is the last thing we want, because it makes everything more difficult.
Then there is the question how the current rates are driving behavioural change. With the numbers coming down year on year, it looks as though the tax is having the intended policy impact of driving such behavioural change. However, I would be happy to look at the evidence and to do some modelling as best we can with the information that we have to see what making some changes in future years might deliver.
I would certainly welcome that. I entirely understand the risk of waste tourism—none of us wants to see that. My concern is that, as is so often the case, we are not hitting the targets that have been set in legislation by the Parliament in relation to emissions reduction, waste reduction, recycling and so on. It seems that one of our key levers is not based on the targets that have been set by the Parliament; it is based on a very risk-averse response to what the UK Government’s policy making is for England. I would certainly welcome that work being done ahead of the next budget.
Sorry, convener—I just want to correct the record, I have just noticed in my notes that there were about 600,000 tonnes at the lower rate, and 110,000 tonnes of that was soil. There was other material in that figure as well, so it is more significant, although not in the big scheme of things.
If the figure were to be 600,000 tonnes and you put the tax rate up by a fiver, there would be an additional £3 million in revenue for the Scottish Government. Folk will not drive across the border from Motherwell or Aberdeen to save a fiver per tonne—they just will not. It seems sensible to be somewhat bolder on this, and I hope that the Government will look at the rate next year.
Indeed, we shall.
Agenda item 3 is formal consideration of motion S6M-16546. I invite the minister to speak to and move the motion.
Motion moved,
That the Finance and Public Administration Committee recommends that the Scottish Landfill Tax (Standard Rate and Lower Rate) Order 2025 (SSI 2025/41) be approved.—[Ivan McKee]
Motion agreed to.
The committee will publish a short report setting out our decision on the instrument following the meeting. I briefly suspend the meeting to allow officials to change position.
11:05 Meeting suspended.Public Services Reform (Scotland) Act 2010 (Part 2 Further Extension) Order 2025 [Draft]
The next item on our agenda is evidence from the Minister for Public Finance on the draft Public Services Reform (Scotland) Act 2010 (Part 2 Further Extension) Order 2025. The minister is joined by Angus Macleod, head of the public bodies support unit for the Scottish Government. I invite the minister to make a short opening statement.
Public service reform is a huge challenge, but a proper and appropriate use of the correct levers can directly support the Government’s priority of delivering effective and sustainable public services. In turn, strong public services are better placed to deliver our key priorities of growing the economy, eradicating child poverty and tackling the climate crisis. The powers that are contained in the order are one such lever. They offer important tools to drive public service reform and can be used to adjust the configuration of the public bodies landscape in order to release funds for front-line services and better meet future needs. In some cases, they can also be used to unlock barriers to reform. At a time when resources are stretched and demands on public services are increasing, public sector bodies need to ensure that services remain affordable and sustainable in the longer term, while continuing to support better outcomes for people across Scotland. In many cases, that will require reform and changes to the way that public sector bodies operate.
The order-making powers will enable small-scale changes to be made in a more proportionate and flexible way than would be possible if we had to find a place in the parliamentary legislative programme to introduce and progress primary legislation. I stress that the use of the orders is restricted to two situations: first, to improve the effectiveness, efficiency and economy of public service functions—for example, by establishing the Poverty and Inequality Commission as a statutory public body—and, secondly, to reduce or remove burdens on any public or private sector organisation. Section 17 of the 2010 act has been used to reduce burdens on businesses. For example, orders have been used to amend requirements relating to agricultural tenancies and to streamline and simplify the planning system. Those powers are subject to safeguards in the 2010 act, under which any proposed changes to primary legislation through the order-making powers are subject to rigorous examination and scrutiny. A strict super-affirmative procedure applies to any order that is made using those powers. The responsibility remains with public bodies to address and to try to resolve any issues by other means before turning to the order-making powers.
The public consultation on the powers went live on 16 December last year and ran until 10 February this year. It received 21 responses, mainly from organisations. Sixteen of those responses agreed to extend the powers by a further five years, four opposed the extension and one was neutral. Reasons that were given in favour of the extension included supporting more effective and efficient operations and providing the flexibility to effect change. The small number of responses that opposed the extension of the powers mainly focused on the potential for abuse of the powers or the potential for the Government to reduce the authority of public bodies. I believe that those concerns are addressed by the safeguards in the 2010 act.
I conclude by reminding the committee that, unless the Parliament renews the order-making powers every five years, they are lost forever. The Parliament last renewed the powers in June 2020, so they must be signed off by the Parliament by 2 May this year if they are to continue from June 2025. I look forward to answering the committee’s questions.
They will be “lost forever”? You are saying that there is no pressure on the committee, then.
One thing that is said under your policy objectives is that the order will make things
“more streamlined and flexible than primary legislation”.
Has the Scottish Government considered at any point trying to make the process of primary legislation more streamlined and flexible?
That is a good question. I am sure that my colleague the Minister for Parliamentary Business would be delighted to come to the committee and comment on that. However, I will say that we are always striving to make processes within Government more effective and efficient. I am sure that any thoughts on how we can do that in the legislative process would be very welcome.
It is interesting that, in point 3 of the letter from the finance and resilience directorate of the Scottish Parliamentary Corporate Body, there is a thing called “Ministerial salary sacrifice”. You look reasonably comfortable, despite your hair shirt today, minister. You will be glad to know that the committee had a whip-round for you before you arrived this morning, given the 15-year voluntary—I would put “voluntary” in inverted commas—freeze on ministerial salaries. The letter also says that there is no intention of changing that freeze. In my view, it is hard to see how the public will continue to value the work of ministers if they do not seem to value it themselves.
That is a matter for the First Minister, and I do not want to say any more on that.
Are you suggesting that I should put that directly to the First Minister when he comes to the Conveners Group in a week or two?
I would not want to make any such suggestions. I am sure that the committee will make up its own mind on what matters it wants to put forward. I would say that it is genuinely a privilege to serve as a minister in the Scottish Government, regardless of any issues around salary sacrifice.
Indeed. I call Liz Smith.
Minister, I do not have any issues with the order that you have set out. However, it raises issues that we have been wrestling with in the committee for a long time, and our predecessor committee—the Finance and Constitution Committee—in the previous session of Parliament was doing exactly the same. We are all struggling to get a handle on what the criteria are for measuring public sector reform.
I have heard you and Shona Robison say in the chamber several times that there has been quite a lot of improvement in the efficiency of public services. It is not easy to see that, and I think that you would probably agree. Do you have any way of helping the committee to know what criteria we should be looking for to see how well we are advancing with public sector reform?
That is a good question. Because it is a complex system, it is not simply a case of one policy intervention making one difference that you can then measure.
We talked earlier about the landfill tax, and there you have a much cleaner line of sight when we make an intervention: we can see the behavioural change, the tax numbers and how that flows through. On the more general policy ambition, it is the nature of public service reform to have to deal with many interlocking bodies, policies and objectives at different levels.
There is a measure in the amount of money that we can demonstrably save by driving more efficiency across the system. That is one hard measure, and we are focused on measuring savings. There are also measures around what you might call the top line or the ultimate priorities of the Government’s agenda, of reducing poverty, growing the economy and tackling the climate crisis. We have top-line measures, but, as I said, there are clearly many different policy objectives that drive into and can influence those.
I suppose that it is a question of looking for more intermediate measures, many of which are covered in the national performance framework. Again, when it comes to a clear line of sight, many policies and bodies will be impacting that. In some places, it is clearer—for example, in the health service, there is throughput and the number of operations or procedures that are carried out and so on. In other areas, there is a lengthier process before we get feedback on policy interventions. In other areas, it might be easier to measure productivity—within Social Security Scotland, for example.
There is a range of different measures, and we are very open to quantifying some of those if it helps the committee and us to understand them.
It is a big question, because we are responsible for scrutinising public money. If aspects of public sector reform are working particularly well in saving public money and delivering better outcomes, it is important to the Parliament and the committee to demonstrate that. I am interested in how Scottish ministers or civil servants can provide some of the data that we need to scrutinise that a bit more, because, if we could do that, it could go a long way towards improving how the Parliament works and giving the public some confidence that public sector reform is working.
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If we take those harder efficiency measures, we published data on what public bodies spend and the back-office cuts last year, and we will update it this year. That gives us numbers on the total spend on estates in the public sector, on maintenance of those estates, on procurement, on corporate finance, human resources functions, and so on. That data is now available for the first time across the public body landscape.
In parallel with that, we regularly publish data on how much money we are saving in the estates, and that number is £36 million up to now.
When is that data—
It is already available. It was published last November.
You said that an update was coming.
We are working on that now. We are going back out to public bodies at the moment to get data for their 2025-26 budgets. We are working with public sector leaders to understand the best time to do that, but it will be in the next few weeks. We will go out for the next trawl of data, and it will be published towards the middle of this year.
It will be published later this year.
Yes, absolutely. Last year, we did it on historical data, and we are now doing it on budgeted data. We are getting ahead of the curve and we will establish an efficient process. We do not want collection of another big load of data to be put on public bodies. We will update that.
The 2022-23 data is available, and the savings that we have delivered on estates and procurement and other aspects of the hard savings are already there.
Convener, that might be something that we want to scrutinise.
Yes, why not? That is something that we should look at.
We would welcome that.
The act that we are looking at dates from 2010, so this is the third extension to it. I accept that we need to do something, as having some process is better than having no process, so can you give us some assurance to convince us that this is not just a holy grail and that we are not going to keep renewing it while seeing no material change?
In 2011, the Christie report said:
“It is estimated that as much as 40 per cent of all spending on public services is accounted for by interventions that could have been avoided by prioritising a preventative approach.”
You are now talking again about the need for a preventative approach when the Christie report, which was commissioned by John Swinney, came to that estimate of 40 per cent back in 2011. Roll forward 14 years, do you have any basis on which to assess what that percentage is now? Have you made any positive impact in relation to that?
It would be difficult to do a true like-for-like comparison, in the sense that a lot of things will have changed in the nature of public services that we are providing and how we provide them. It would be a difficult comparison, because you are comparing the world as it is now with what it was back then in terms of the range and nature of public services that we provide or, indeed, the demand on them. I am happy to look at and assess the process that was gone through to arrive at that 40 per cent and see whether there is any way that we can update that.
I remember that exact wording in Christie’s report. It referred to a previous piece of work that was done—I cannot recall by who—and “up to” 40 per cent was the terminology that they used. I do not think that it was a hard and fast number, but it certainly gives an indication of the scale of the opportunity.
Given that we are again talking about preventative spending, it would probably be good to see on what basis it was assessed and whether any progress has been made.
Jumping forward to last autumn, Audit Scotland took up a similar position, in which it said that there is still
“no evidence of large-scale change on the ground”
and that the Government
“does not know what additional funding is required to support reform”.
You have put £30 million in the budget this year for invest to save. Can you give the Auditor General some assurance that you are working towards getting an actual figure that you will work towards to leverage in the reforms that ultimately might meet the initial objectives of the act?
A number of things are happening there. The invest to save fund is one lever, the orders are another and we have other levers on-going. We have talked about the estates programme, the procurement frameworks, digitisation and the automation programme that has already saved a significant amount of money, and those programmes continue. The invest to save fund is targeted specifically at the harder-to-crack challenges, such as the cross-portfolio co-operation that is required, and there are improvements that might take a period of time to generate savings.
To directly answer your question on the invest to save fund, that process has opened. We have already received the first trawl back of those submissions. Officials are looking at those now, and I will see them in the next week or two. Then, before the end of this month, we will identify the projects that we are taking forward with regard to investment of that £30 million.
Those projects will identify how much investment they want, what savings they will deliver as a consequence and in what timescale. As we select those projects and aggregate them, we will be able to answer the question directly and monitor how they are delivered.
Finally, the Auditor General said in the same report that the Government
“has not provided enough leadership to help public sector bodies deliver change.”
You had the summit recently, and you are leading the charge, so is your neck on the line in relation to delivering that holy grail?
In terms of providing the leadership, absolutely, but you have to recognise that—this is not an excuse; it is just the reality—public bodies are not subsidiaries of ministers. They are operationally independent to varying degrees. Although we control the amount of funding that we allocate to them, the effectiveness with which they adopt efficiency measures can be variable, frankly. That is why it is important that we continue to work with public sector leaders.
The governance board, which will have its first meeting by the end of this month, will contain public sector leaders and private sector-experienced individuals with experience in the area. We are seeking to roll out more measures for monitoring workforce and recruitment in public bodies. We continue to collect more data on how public bodies choose to spend the money that the Scottish Government allocates to them. All of that is about moving us in the right direction on having better data, more coherent policy and strategy, more engagement and, frankly, more empowerment of public body leaders, so that we can work together to seize those opportunities.
Finally, finally—sorry, convener—you identified the concept of the single authority model in relation to health boards and councils. Is that a lesson that you should roll out through Government more widely, given that you say that it is quite difficult for you as the minister in charge to drive reform? Do you need to consider coherence in relation to the number of public bodies that are out there?
The number of bodies is one thing, but if that was the only objective—we talked earlier about objectives—we could miss the point there. We consolidate public bodies where it makes sense to do so. We have started work to look at the number of public bodies in each portfolio and whether there is scope for them to work more closely together in clusters. We are already organically creating those clusters, and some are further along that road than others in sharing resources.
Where there is a clear case that consolidation of public bodies makes sense because it will deliver a cost-effective solution and better services, that is very much on the cards.
We talked about zero-based budgeting in the committee after our visit to Estonia, where the Government is doing that at a departmental level. Of course, it is done quite a lot in many areas of the private sector. Might you take that approach to some of those public bodies? It seems that some of them are there because they have always been there, but you could look at them and ask what their core activity is and whether it has to be that organisation that delivers that activity. Could you look at public bodies in that way?
Absolutely, but we need to be careful about what we mean by zero-based budgeting.
Indeed.
To flip that, one of the big criticisms that we rightly get from the third sector and many other organisations is that we do not have multiyear funding, and that affects zero-based budgeting. We go back every year with a blank piece of paper and decide who is going to get the money. Rolling that uncertainty out more widely across the public sector could cause more challenges than it solves problems, so we need to be careful about what we mean by zero-based budgeting.
That said, this is about taking a step back to consider the purpose and deliverables of a group of public bodies in a particular part of the landscape and whether the current configuration is the most effective one or whether we should do things differently. At that point, you would start with a blank piece of paper when considering the minimum number of bodies that would be needed to deliver what you wanted and whether it would be cost effective to make a transformation.
That approach would not have to be taken every year, but it would be useful for organisations that have been around for decades.
It would be a multiyear approach, because, by its nature, it would take a longer period. You would not do that wholesale; you would look for the low-hanging fruit. To be honest, we have done that in relation to the police and colleges, and we have cited other, minor examples in which the functions of bodies have been brought together. We will continue to look for ways to do that.
Incidentally, to jump back a bit, I worked out, while we were having this discussion, that the £490,000 that will be saved by ministerial salary sacrifice in the next financial year is less than the money from putting £1 on 600,000 tonnes of inert waste for a year. I just want to provide that perspective.
I will try to get my head around that.
Agenda item 5 involves formal consideration of the motion on the instrument. I invite the minister to move motion S6M-16547.
Motion moved,
That the Finance and Public Administration Committee recommends that the Public Services Reform (Scotland) Act 2010 (Part 2 Further Extension) Order 2025 [draft] be approved.—[Ivan McKee]
Motion agreed to.
I thank the minister and Mr Macleod for their evidence. We will publish a short report that sets out our decision on the draft instrument.
11:27 Meeting continued in private until 11:55.