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Mr. Jack: Before the hon. Gentleman moves on to the aggregates tax, could he summarise his precise personal position on the climate change levy? Does he think that, as currently formulated, it should be dropped?
Mr. Illsley: Yes, I do. As I said after today's announcement on the British coal industry, there is no need for the climate change levy. It now takes about two years to build a gas-fired power station. We are providing assistance to the coal industry to compete with gas-fired power stations. However, since 1912, gas production has been increasing and coal production has been decreasing. The time has just about come when the gas industry will simply do away with coal. Removal of the stricter consents policy will achieve whatever emissions level we need. I am sad to say that, as my area's industry will be hit, first, by the climate change levy and, secondly, by the loss of our coal industry.
Sand, silicates and other aggregates are used in the glass industry, much of which is located in my constituency. My glass producers will be hit both by the climate change levy and by the aggregates tax. Their raw materials costs will increase.
Recently, the Quarry Products Association wrote to me, and presumably to other hon. Members, to point out that it was dismayed that its request for a voluntary agreement to deal with the Government's environmental concerns was rejected in favour of the tax.
Mr. David Heath (Somerton and Frome): I am glad that the hon. Gentleman is dealing with the aggregates tax. Does he agree that the tax, because of its bad design, will not promote recycling materials rather than using virgin stone, and that it will attack the very companies that are installing the infrastructure necessary to improve the environment? Will they not be worse off for taking that action?
Mr. Illsley: The hon. Gentleman anticipates my point. The tax will not promote good practice in the aggregates industry. The good operator and the bad operator will be equally affected.
Although the glass industry can recycle waste glass, it cannot use recycled quarry materials, as the Government would like it to do. I fully support the protection of national parks and the sites of quarries and minimising the use of raw materials through voluntary agreements, but the proposals will be a tax on jobs in my constituency. We talk a lot about the north-south divide. Here are two examples of a northern heavy industry manufacturing constituency being affected by Government policy.
I welcome the thrust of the Bill and the Budget. I very much welcome the extra money for the national health service and other services and the fact that our economy is strong and our public finances are in good shape. I just wish that the Government would look again at the climate change levy; the aggregates tax; what we are doing for our pensioners; and smuggling.
7.51 pm
Mr. Christopher Gill (Ludlow): It is a great pleasure to follow the hon. Member for Barnsley, Central (Mr. Illsley). I should like to say across the party divide how much I agreed with his comments on bootlegging, the climate change levy and the aggregates tax. I have the same experiences in my constituency.
The Government speak of working for a stronger and fairer Britain. That is an admirable aspiration, but after that I part company with them. I imagine that many Conservative Members agree that a stronger economy cannot be built through the imposition of additional taxes on the wealth-creating sector. We have listened to Government rhetoric. Ministers have said that businesses and jobs will benefit from the Budget. A reasonable test of the Bill is to examine how it will impact on businesses in my constituency, just as the hon. Member for Barnsley, Central assessed its effects on his constituency.
As the hon. Gentleman rightly said, the aggregates tax will be a tax on jobs. There are many jobs in quarries in my constituency, including those operated by Aggregate Industries at Much Wenlock, the Bromfield sand and gravel company at Ludlow, Hanson at Clee hill and Lafarge Redland at Bridgnorth. The Quarry Products Association is not best pleased that, having spent the best part of 18 months working up a partnership agreement and hoping to persuade the Government to accept a package
of 30 regulatory and voluntary proposals that it maintains would have guaranteed a much better deal for the environment, its proposals have been rejected in favour of a tax.It seemed rather unprincipled of the Government to encourage the Quarry Products Association to believe that if it came up with satisfactory answers that addressed the Government's objectives, no tax would be imposed. The other disappointment is that the tax will undoubtedly have serious ramifications throughout the economy. The tax will not differentiate between good and bad operators and provides no incentive to improve environmental performance.
I say that with some feeling, because the quarry on Clee hill last year won the civic trust award and a national quarry reclamation award for doing a very good job restoring quarry workings after they have been worked out. It is a slap in the face for the operators of that quarry and others who have worked hard to do the right thing by the environment to find that the proposals that they spent a lot of time, money and effort on have been rejected. They were given no reason to suspect that, like many other interest groups, they were being taken for a ride by the Government, who eventually imposed an aggregates tax on Budget day of £1.60 per tonne. The Quarry Products Association points out that many small operators working on a small profit margin will be at serious risk of closure, which would lead to job losses. I am concerned about that, because those jobs are very important in my constituency.
Where is the sense in the tax? Henceforth, every construction project in the land will cost more. Every new factory, every new house and every new Government building will cost more. Every mile of farm track or forestry access road will cost more. Maintaining and improving the permanent way on our railways will cost more. If they had one, the Government's roads programme would also cost more. Once again, the Government demonstrate their failure to understand that increased taxes and other cost and regulatory burdens imposed on the wealth-creating sector have consequences for the whole economy. I am sad that the Government have failed to recognise that imposing increased taxes on industry puts up costs and makes British companies less competitive.
The Clee hill quarry produces a category of stone that is shipped to south Wales, where it is converted into rockwool. As many hon. Members know, that is an insulating material. There seems to be a contradiction. The Government are imposing a tax on the quarrying industry, but at the same time they are intent on reducing VAT on energy-saving materials. The left hand does not know what the right hand is doing. That is an example of the law of unintended consequences.
Mr. David Heath: The hon. Gentleman is putting a powerful case that is shared by many of us who represent quarrying constituencies. Does he agree that his point could have been foreseen, because the Environmental Audit Committee drew attention to such perverse environmental consequences when we looked at the design of the tax?
Mr. Gill: I have a lot of sympathy with that point. As we get into the detail of the Bill, it becomes clear that the
imperative is to raise more revenue. I shall give an example in a moment of another industry that has argued a sound case for several years and thought that it was going to persuade the Government to see sense, but fell at the last hurdle.The biggest employer in my constituency is the Lawson Marden Star aluminium factory at Bridgnorth. It will be subject to the full climate change levy, whereas the smelters in the aluminium industry will get a rebate. That is very much like the situation that the hon. Member for Barnsley, Central described in the glass industry, where the makers will get rebates but the benders will not.
It will be very difficult to draw hard and fast lines in the sand for individual industries that will be meaningful and, more to the point, fair and that, even more to the point, will not prejudice the jobs that the hon. Gentleman and I value so much in our respective constituencies. Very few businesses indeed will find that the reduction in employers national insurance comes anywhere near compensating them for the amount that they will have to pay out for the climate change levy. It is a bad tax and should be withdrawn.
I want to say a word about small independent brewers--including pub breweries--of which I have not a few in my constituency, such as the Three Tuns and the Six Bells at Bishop's Castle, the Sun at Corfton, the Crown at Munslow, Hobson's brewery at Cleobury Mortimer and the Wood brewery at Wistanstow. They might all have expected that the case for progressive beer duty put by the Society of Independent Brewers was so powerful and reasonable and such sheer common sense that the Government would accept it.
A letter from the general secretary of the Society of Independent Brewers shortly after the Budget said:
- We have overcome all the objections from government departments as to why PBD--
- should not be introduced . . .
The Government are not friendly towards small businesses, as further evidenced by their obdurate refusal to listen to the voice of the Brewers and Licensed Retailers Association, which made the case that bootlegging of alcoholic drinks and tobacco is putting its members out of business. That was another point eloquently made by the hon. Member for Barnsley, Central.
Let us face facts. Six rural pubs per week are closing. They are not going out of business because of market forces but are being driven out of business by a Government obsessed with political correctness and spin, who have a cynical disregard for the bona fide traders who are entitled to believe that the law of the land--the criminal, civil and fiscal law--is on their side. There is a dawning realisation that, under this Government, it is not. I trust that that will be reflected in the ballot box at the next general election.
The quarry owners, the small brewers, the publicans, the newsagents and tobacconists and the sub-postmasters and mistresses are not the only ones to have been sidelined by the Chancellor. In his Budget speech, there was not a mention of farming, Britain's second biggest
industry and one that is crucial in my constituency. After three years of Labour dither and delay, that industry is in desperate straits.The Chancellor might have seen the good sense of reducing the duty on beer, to encourage its production and consumption in this country, as against all the alcoholic drinks that we import. Let us consider the spin-off to the farming industry. If it was required to produce more hops and malting barley, that would be a win-win situation for the brewers, the farmers and the consumers--it would be a virtuous circle--but instead we have the opposite and the Labour party is returning to tax and spend, and the devil take the hindmost.
The inexorable hike in road fuel duty does nothing to improve the rural economy. The Bill contains nothing for people in rural areas. The Chancellor may bluster that corporation tax and the standard rate of income tax have been reduced, and I applaud him for that, but that is no consolation to the road hauliers whose profits have evaporated, to the farmers who are driven to claim income support, or to the retailers who are forced to put up the shutters for the last time because the Government, far from running the bootlegger out of town, are driving the bona fide trader out of business.
I have deliberately concentrated on the effects on business, because there is no escaping the fact that without business there is no wealth creation, without wealth creation there are no jobs, and without jobs and wealth creation there is no money for the public sector.
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