Rachel Reeves plans to increase landfill tax, which could slap £24,000 onto the cost of new-build homes, which will have a new impact on struggling first-time buyers.
Industry chiefs fear the Chancellor’s ‘insane’ proposal could see a 36-fold increase to the levy, causing construction costs to soar.
Critics have even claimed the ‘development killer’ scheme could lead to firms either stopping construction of new homes or demanding higher prices from buyers.
Worries over the tax hike come after Labour pledged to build 300,000 homes a year to tackle the nation’s housing problem.
The significantly higher standard levy is what Ms. Reeves wants to replace the lesser landfill fee that was previously applied to debris like topsoil, pebbles, and clay.
Presently, landfill tax is split into two bands, with waste generated by housebuilders – like topsoil – attracting the lowest levy of £4.05 per tonne.
However, the Government is proposing to roll out a singular flat rate by 2030, which would see charges for inert or inactive waste rising from £126.15.
According to waste management firm Business Waste, the plan would see landfill costs per home explode from around £690 to a staggering £24,820.
Other estimates have warned it could be even higher, though, with the Mineral Products Association saying the hikes could see waste disposal costs swell to £28,000 per home.
The hike comes amid years of growing costs for building supplies, which have seen the price of wood increase dramatically since the Covid-19 pandemic.
Graham Matthews, of Business Waste, told the Telegraph: ‘Builders may treat the increase as a permanent cost, which could ultimately be reflected in the prices paid by homebuyers.’
The latest Land Registry figures from April show the average new-build sold for £368,354 – 43 per cent more than an existing property.
Rico Wojtulewicz, of the National Federation of Housebuilders, warned: ‘Builders are just going to be leaving the industry entirely because they can’t make the numbers work.
‘House prices will theoretically increase. I think there is a chance in some regions that developers may absorb some of it, but it’s more likely that development will be made totally unviable.
‘Fewer homes will get built, which means high demand and lower supply, and that causes house prices to rise. It could be a complete and utter development killer – it’s insane.’
Meanwhile, Mark Russell, of the MPA trade association, said the proposal ‘risk[s] shutting down’ much of the aggregates sector, adding that taxing inert materials like chalk, clay or soils at over £125 per tonne ‘is as damaging as it is absurd’.
The tax was first rolled out in 1996 to encourage recycling.
Ministers worry, however, that rogue builders are abusing the reduced cost by unlawfully disposing of rubbish.
In 2022-23, waste crime cost the Treasury about £100 million to deal with.
A consultation on the revamped plan claimed the change would spearhead innovation in recycling, with many of the materials subject to the lower rate – such as rocks and soil – having the potential ‘to be recycled and reused’.
But critics worry the move will not only affect housebuilding but could also harm necessary infrastructure projects like roads and drainage schemes.
For instance, one 619-home plan – which would also see a school being built – could see its landfill bill balloon from £135,448 on the lower end to £4.2million under the new plan.
Mr Wojtulewicz said: ‘This is going to create such a nightmare. It’s more than a 3,015pc uplift on the current price.’
The Treasury defended the plan, with a spokesman saying: ‘We are delivering the biggest boost to social and affordable housing in a generation, backed by £ 39 billion investment and planning reforms, driving UK housebuilding to its highest level in over 40 years as part of our Plan for Change to build 1.5million new homes and end the housing crisis.
‘No decisions have been made on changes to landfill tax, and we remain committed to working with businesses to understand the impact of the proposals.’
I fail to see how this additional tax is a forward-looking move to reach the goal of £300,000 to build new homes each year, or am I missing something?
For whatever reason, they’re asking for the construction of millions of homes while also attempting to drive home builders out of business. Is this woman insane? Sadly, they never think of the long-term consequences.
The worst chancellor in history must be Rachel Reeves. The next government will be left with the highest debt in history by this party. In other words, whoever wins the next election will not recover in a single term but rather across several years.
Watching Reeves is a bit like watching a tree surgeon straddling the end of a long branch, chainsawing the wrong end.
Rayner: We want to build 1.5 million houses. Reeves: Let’s increase costs by 24 grand. Reeves: We want economic growth. Reeves (again): Let’s increase National Insurance to scupper it at the same time. Streeting: We want to improve the NHS. Reeves: Let’s pay 22 per cent increases with no guarantees so they strike again next year. Starmer: We want economic growth. Ed Miliband: Let’s make the UK THE most expensive place to buy energy in the world. Any of you Labour voters getting the picture yet? You’ve backed a bunch of bumbling fools.
Our government is a thief; therefore, it’s not a single plan to increase wealth; rather, it’s a series of schemes to diminish what we already have.
THE MONTHLY MOSQUITO 