Defra has not estimated the total potential for landfill allowance trading scheme (LATS) liability for all London boroughs.
Waste disposal authorities (WDAs) have a duty to hold sufficient landfill allowances to cover the amount of biodegradable municipal waste (BMW) they landfill in any LATS year. The flexibilities provided by LATS enable WDAs to meet their obligations under the scheme in the most cost effective way. They can do this by reducing the amount of waste landfilled, purchasing additional allowances, borrowing allowances from future scheme years (with restrictions) or a combination of these approaches.
Without financial penalties, there would be no incentive for authorities to keep within the rules of LATS and the trading mechanism would not operate effectively. The penalty for landfilling more BMW than permitted by the number of allowances held in a scheme year is £150 per tonne of BMW.
The landfill allowances scheme regulations provide powers for the Secretary of State to impose supplementary penalties on waste disposal authorities that contribute to any national breach of targets. Any WDAs that failed to meet their obligations under LATS in landfill directive target years would also be liable to a supplementary penalty.
The flexibilities included in the scheme, including the Secretary of State's power to waive or suspend penalties in given circumstances and the reconciliation period at the end of each scheme year, means that no authority should face penalties unless it takes the conscious decision to do so.
If the UK were not to comply with European Union landfill directive targets to reduce the amount of BMW landfilled, it may be liable to fines. An adverse ruling against the UK in the European Court of Justice could result in fines of up to £180 million per year. These would ultimately be paid by council tax payers in those authorities that had failed to meet their landfill obligations. If all London boroughs failed to meet their obligations, the combined liability could be as much as 5 per cent of council tax bills. If a subset of London boroughs were to fail to meet their obligations, the liabilities on those individual boroughs could be higher.