A controversial treasury proposal to dramatically increase landfill taxes on construction waste threatens to derail the government’s ambitious housebuilding targets and add tens of thousands of pounds to the cost of new homes.
Ministers plan to raise the levy on disposing of soil and rock from building sites from £4.05 per tonne to over £126 per tonne within five years—a staggering 3,000% increase. The move would align construction waste disposal costs with household waste rates and could generate at least £1 billion by decade’s end.
Impact on housing targets
The proposal has created internal government tensions, with the housing department reportedly “blindsided” by the treasury plan and actively seeking to block it. Officials worry the tax hike fundamentally undermines the government’s commitment to deliver 1.5 million new homes by 2030.
Research by the Home Builders Federation (HBF) analysing over 8,300 homes currently under construction found the new charges would add an average £15,000 per property. Sites with difficult terrain could see costs surge by more than £50,000 per home, potentially rendering many developments financially unviable.
For the 8,300 homes studied, total additional costs would reach £121 million. The HBF warns numerous projects would simply become economically impossible.
Brownfield sites hit hardest
The policy would particularly harm brownfield development, where existing materials must be cleared before construction begins. This contradicts government priorities to regenerate previously developed land rather than building on greenfield sites.
Beyond housing, the steel industry has raised alarms. UK Steel warns the tax would add £1 million annually per company for disposing of production residues such as asbestos, slag and refractory dust, further damaging British steelmaking competitiveness and potentially pushing production overseas.
Political backlash
Ben Houchen, Conservative mayor of Tees Valley overseeing a major industrial regeneration project, accused the government of ignoring real-world consequences. He argued the policy would “grind the construction sector to a halt” and make regeneration unaffordable.
“While they talk about growth, they’re simultaneously making it harder to deliver on the ground,” Houchen said, contrasting Britain’s approach with other countries actively encouraging construction.
Treasury defense
The treasury maintains the increase would discourage waste misdescription and promote material recycling.
A spokesman emphasised the government’s commitment to homebuilding and stated they’re consulting businesses about the tax’s impact.
Last year, approximately 14.4 million tonnes of waste paid the lower rate or were exempt. If all paid the new rate by 2030, it would generate an additional £1.8 billion annually—revealing the significant revenue motivation behind the proposal.
This proposal clearly amounts to a straightforward tax grab that prioritises short-term revenue over long-term housing delivery and economic growth.