Future of the Scottish Landfill Communities Fund: consultation analysis

1. Executive Summary

Overview

Scottish Landfill Tax (SLfT) is a devolved tax on the disposal of waste to landfill that has been in place since 2015. It underpins the Scottish Government’s efforts to find economical alternatives to landfill that will minimise waste and help to create a more circular economy.

By making landfill a relatively expensive option, SLfT encourages the prevention, reuse and recycling of waste and helps keep valuable resources circulating in the Scottish economy.

The Scottish Landfill Communities Fund (SLCF) was introduced alongside SLfT, modelled on the then Landfill Communities Fund previously operating across the UK. This fund provides funding for community or environmental projects in recognition of the dis-amenity of landfill activity.

The continued reduction in landfilled waste in Scotland means that SLfT revenue is declining. The Scottish Environment Protection Agency (SEPA) reported that 1.8 million tonnes of waste was landfilled in 2023, a reduction from 4.2 million tonnes when SLfT was introduced in 2015. As a result, SLfT revenues have declined from £149 million in 2015-16 to £68 million in 2023-24. This long-term trend of decreasing SLfT revenues reflects the success of efforts to encourage diversion of waste from landfill, driven by factors such as the SLfT and the introduction of the ban on the landfilling of biodegradable municipal waste from the end of 2025.

However, as SLfT revenues are directly linked to the SLCF, this has also led to a funding reduction for the SLCF. Contributions to the SLCF have more than halved since 2015 and the Scottish Fiscal Commission (SFC) forecast that contributions will drop to around £1.4 million in 2026-27.

The arrangements for the operation and administration of the SLCF are set out in legislation. The associated costs of administering the fund in future years will breach the legally permitted limits, as a result of the declining contributions. This will leave the SLCF operationally unviable from 2026-27 onwards.

Consultation and Engagement

In response to the issues set out above the Scottish Government consulted on the future of the SLCF. The public consultation ran from 14 March 2025 to 6 June 2025 and can be found here.

During the consultation process, the Scottish Government also held an engagement event with Approved Bodies along with SEPA (the regulator of the fund) and Revenue Scotland on 27 March 2025, to explain the context of the consultation and encourage Approved Bodies to formally respond to the consultation.

This report provides an analysis of the responses submitted to the public consultation.

Summary of Views

The Scottish Government received views from a range of individuals and organisations, including representatives from the waste industry and its representative bodies, third sector organisations, local authorities and Approved Bodies.

There were a number of themes which emerged from the consultation, these have been categorised into the following two key themes: were:

(i) Concern about the impacts of closure:

• Concern over loss of community funding and local investment if the SLCF is closed.
• Concern over Scotland’s climate and biodiversity goals due to reduced funding for environmental initiatives.
• Concern about increased inequality and reduced access to amenities in socio-economically disadvantaged areas.
• Views that there is a disproportionate impact on rural and island communities, with emphasis on higher costs and fewer alternatives to SLCF support.
• Calls for a successor or transitional fund to maintain support for environmental and social projects.

(ii) Suggestions to keep the SLCF open and viable, including:

• Support for increasing the diversion rate and tax credit percentage to sustain the SLCF’s viability.
• Proposals to broaden the scope of taxation to include incineration and other waste streams.
• Support for centralising administration to reduce costs and improve efficiency.
• Emphasis on simplifying application and reporting processes.
• Support for evolving funding objectives to better reflect circular economy and carbon reduction priorities.

It should be noted that although there was a strong degree of support for some form of fund continuing, there was not a consensus on what that fund might look like and how it might operate.

Next Steps

The views gathered through the consultation and engagement will inform future policy decisions about the future of the SLCF which will be taken by Ministers and announced as part of the Scottish Budget.