Examination of Witnesses (Questions 320
- 339)
TUESDAY 18 JANUARY 2000
MR STEPHEN
TIMMS MP, MR
SIMON VIRLEY,
MR DAMIEN
MCBRIDE
AND MS
HEATHER MASSIE
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.
Chairman
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
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