Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 320 - 339)



  320. If the Government were now to forgo any tax on pesticides, would it not have exempted from taxation a major aspect of influence on our environment and influence upon one of our perhaps most important resources, our drinking water?
  (Mr Timms) It would clearly be a significant decision if we decided not to introduce pesticide taxation. Can I ask you to repeat what you are suggesting we would have to give up?

  321. If you gave up the principle of taxation on pesticides, given that we have accepted that there will be taxes on bad influences on the environment, it is fairly uncontentious to say that pesticides are a bad influence on the environment, and to forgo tax on pesticides would perhaps send a wider signal.
  (Mr Timms) I do not think that it should, if that were the outcome. We would make that decision because we were convinced that the partnership approach was to be a better way of addressing the problem. I do not think that anyone should read into that, if that is the outcome, a wider decision about other issues that we may consider as well. We need to take each of the decisions on their merits. I believe that there are benefits from a voluntary partnership approach. The effects would be rather different from the effects of a tax, and it would simply be a question of weighing up which would be the more appropriate, given what is available in this instance or any other where similar considerations arose.

  322. What do the Government know about economic impacts that a tax may have on farmers?
  (Mr Timms) There have been a number of pieces of work. For example, MAFF has commissioned and carried out some work on the impact on farmers. There is the ECOTEC study and I have also talked about the DETR commissioning a study in 1997 on the costs and benefits of pesticides. There have been a number of studies on the subject.

  323. What about the differential effects upon different sorts of farming?
  (Mr Timms) Let me ask Simon to comment on that.
  (Mr Virley) Yes, the impact of a tax or charge on farming incomes has been covered in quite a lot of detail in the ECOTEC report in terms of different types of farming and in different regions of the UK.

  Chairman: We now turn to the aggregates tax.

Mr Gerrard

  324. I shall start with a couple of points that you have discussed in some detail in relation to pesticides. You may want to say similar things. Does the general principle of "the polluter pays" apply to aggregates? On the cost, there is an estimate of £380 million for environmental costs. How confident are you of that figure? We have had some suggestions that it is an under-estimate and does not really take account of the value of biodiversity, for instance.
  (Mr Timms) On the first question, I believe that the principle applies here. On your second question, it is inevitable that there is a variety of views. It is quite hard to obtain precise figures for what we are measuring. I do not think that it is surprising that there is some uncertainty about the figures. However, the study that was commissioned on this and carried out by London Economics was an extremely thorough piece of work. There were two rounds and an international panel of experts was consulted on the latter part of the work. What we have is as impressive a body of work on this subject as one could hope to accumulate. I believe that that gives a high degree of confidence about the conclusions and their appropriateness to the basis on which the Government make their decisions.

  325. You are happy that the £380 million is a reasonable figure?
  (Mr Timms) I am happy that the conclusions of the study are as good as one could hope for in making decisions in this area.

  326. I think that there is general agreement that if we are to reduce primary aggregate extraction, that will depend on greater recycling. There was quite a bit of confusion in the evidence given to the Committee about the proportions of both construction and demolition waste and of secondary aggregates currently being recycled. What is the view of the Government on that? What data do the Government have on the levels of recycling?
  (Mr Timms) We have received some data, some of which the Committee may have seen. A study was undertaken by Arup in 1990 which suggested that construction and demolition waste of the order of about 11 million tonnes was at that time being recycled compared with the total figure of 24 million tonnes. That was in 1990 and I gather that a survey is to be undertaken shortly to secure better data. The existing target is that we should recycle 40 million tonnes a year by 2001 and 55 million tonnes a year by 2006. That includes both recycled and secondary materials. On the basis of the estimates that are available it looks as though the 2001 target is more or less on target. The further survey work to which I have referred will produce results later this year that will give us a better handle on this.

  327. Do you have any more up to date figures specifically on the construction and demolition waste?
  (Mr Virley) Not at this stage, no. The Department of the Environment, Transport and the Regions is commissioning further research.

  328. Is that something on which we should concentrate? Can we compare our performance with that of some other countries like the Netherlands, Belgium and Denmark where between 80 and 90 per cent core construction and demolition waste is recycled? Our figure is down at 45 per cent according to the 1990 figure.
  (Mr Timms) There is no doubt that there is scope for going further on this. That is why the targets have been set. Whether those are the right targets is a matter for the ministers in the DETR to comment on. I would certainly agree that there is a good deal of scope here. Clearly, one of the aims of the tax would be to increase the level of recycling.

  329. Should we look at a specific target on the core waste rather than a target of 55 million tonnes that embraces everything?
  (Mr Timms) I would be interested in the Committee's view on that. We have tended to take the targets that have been developed by the DETR which has the expertise in the area. I have no doubt that there is a case for further refinements on the work done so far.

  330. When do you expect to be able to identify what scope there may be for recycling? What may the barriers be to improving performance?
  (Mr Timms) Clearly, the introduction of a tax would be an incentive to greater recycling. That is the measure that we are looking at currently, rather than what is happening in the construction industry more widely which others may consider. We are also, as you know, in discussions with the main industry association about an alternative voluntary approach. We shall be looking at the details of that over the coming weeks. Other than the tax measure, I cannot think of anything that we, in the Treasury, are doing specifically to increase the degree of recycling in this area.


  331. Is not the truth of the matter, Minister, that the Quarry Products Association say whatever sort of tax you have, whatever extent to which it is hypothecated, it will never address the efficiency, in environmental impact terms, of voluntary action, quite simply because quarries vary in their environmental impact from site to site and a tax, by definition, is a blunt instrument.
  (Mr Timms) There is a good deal of truth in that. Of course, the voluntary approach would have a more direct local environmental impact than a tax. A tax would not be directed specifically at the local environmental impact, whereas voluntary agreements would be. For that reason, and others, I think there are a number of attractions about a voluntary approach. We said to the Quarry Products Association last year when it brought forward its proposals, that what they proposed would not have a large enough impact to persuade us not to go ahead with a tax. We have asked them to come back with further proposals. I know that they are in discussion with the DETR about those. When those discussions are concluded, we shall take a view about which route to go down. I certainly agree with you that there are a number of particular benefits to a voluntary approach in this area.

  332. So what is the point of a tax?
  (Mr Timms) A tax would be a very direct incentive for increasing recycling, the point that Mr Gerrard asked me about. The tax would not be applied to recycled aggregates or secondary materials.

  333. So you would see the object of the tax as improving recycling rather than reducing demand directly?
  (Mr Timms) I think both of those would be effects of a tax, but I suspect that increasing the use of recycled and secondary materials would be the larger of them, given that there is only limited scope for varying the amount of aggregates used or equivalents.

  334. Given the importance of the voluntary and regulated measures that you have just acknowledged, are you going to have those anyway? Whether or not you have a tax, will you have more regulatory or voluntary measures?
  (Mr Timms) I think the current discussion about whether to proceed with a tax gives us an opportunity to enter into serious discussions with the industry. It is a better opportunity, therefore, than we would normally have to talk about a voluntary arrangement. In the normal course of events, there is not that much incentive for people to engage in discussions of this kind. Currently, there is an incentive, and I want to see where those discussions take us.

  335. Given that the Government are an important purchaser in this area, as it builds roads and so on, and therefore has an influence on demand, are there any ways in which the Government procurement machinery can improve practice in this area? The Treasury has talked about procurement and we have a memorandum from you on it.
  (Mr Timms) That may be something that the industry would want to discuss with us. Those discussions are continuing. It probably would not be appropriate for me to go into detail about what is happening in those discussions at this stage. However, that may be an element in the discussions and we would consider that at that stage.

Mr Gerrard

  336. I appreciate that while you are in the middle of discussions on the voluntary approach you may not be able to commit yourself, but what sort of criteria are the Government looking at? In the last Budget there was a statement that a tax would be imposed if the industry did not come up with proposals that were proportionate to what a tax may yield. What does that criterion mean?
  (Mr Timms) We work closely with the DETR and I work closely with Nick Raynsford on this. Our view jointly was that the package that was available last year did not have a large enough impact, although a good deal of work undoubtedly went into it and, as we have said and as the Chairman has pointed out, there are a number of benefits to a voluntary approach. While those discussions are going on I would not want to go into too much detail about what we hope the outcome of them will be, but I believe we have made it clear that we would want the voluntary package to go significantly further than the previous proposals did if we were to reach the view that that would be a better way forward than the tax.[1]

  337. Have you any deadlines in mind for looking at the voluntary approach when you may have to say yes or no?
  (Mr Timms) Clearly, the Budget is a deadline. That is not to say that everything will necessarily be fully completed by that time, but I hope that the Chancellor will be able to make an announcement in the Budget which takes us a good deal further forward.

  338. Are you concerned that if you introduce a tax, if negotiations on the voluntary agreement break down, that that would lead to some loss of goodwill in the industry and you may then have problems of people withdrawing from existing voluntary agreements or planning permissions that have been lying dormant for some years being exercised?
  (Mr Timms) I hope that we would not get the second type of problem, where there are statutory agreements in place, or indeed voluntary agreements that have been negotiated with others. I would hope that the outcome of this matter would not affect that. How the industry would respond to its existing voluntary activities is a matter for it rather than for me. I would have thought it would be in the interests of quarry operators to maintain good relationships with their local communities. We have to make the decision on the environmental concerns raised and that is the basis on which we shall make that decision. Having said that, I acknowledge, as I have already, that a lot of work has gone into this on the part of the industry. It would be quite widely felt as unfortunate if that did not come to fruition. I think we have to take a firm view that we need significant benefits from a package, if a package is the route down which we decide to go.

  339. You indicated on the pesticide tax that you were not enthusiastic about the idea of hypothecation. On aggregates, do you see some clear measures that could be introduced through hypothecating at least part of the revenues?
  (Mr Timms) Our position on hypothecation is that we shall consider the merits of the case in each situation where the possibility arises. What I would say to the Committee is rather what I said about pesticides, that I do not believe that hypothecation is an inevitable or unavoidable element of an aggregates tax. On the other hand, there may be a case, if not for hypothecation in the strict sense, for some mechanism for applying revenues from the tax in a way that addresses environmental issues around quarries. I think I want to leave that open at this stage and make the point that rather than saying I am enthusiastic or that I am not enthusiastic, the Chancellor would want to take the decision on a full assessment of the merits of the case.

1   See supplementary memorandum from HM Treasury, p151-153. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2000
Prepared 11 February 2000