Select Committee on Environmental Audit Fourth Report



102. In examining each of these three environmental tax measures in detail—pesticides, aggregates, and the Climate Change Levy—it appeared to the Committee that there had been some significant differences in the approach the Government had adopted in developing its proposals. We would pick out in particular the following points.

103. In the case of pesticides, the Government has not conducted any study of the total environmental costs (cost externalities) which the use of pesticides gives rise to. These would include direct financial costs resulting from any excessive use of pesticides, the costs imposed on the water industry in removing pesticide residues from the water supply, and financial valuations of the impact of pesticides on biodiversity through the use of contingent valuation techniques. The only studies which have actually been carried out relate to the first of these— the scope for farmers to make cost-effective reductions in the use of pesticides. There have been no Government studies which have attempted to evaluate all three. This approach contrasts strongly with that adopted by the Government on aggregates, where—as the Minister has acknowledged—it spent a considerable amount of money on financially evaluating the impacts on the environment in terms of the noise, dust, transport effects, and adverse effects on biodiversity and landscape. We also found it interesting that the Government placed such reliance on this study in driving forward its tax proposals for aggregates. We therefore recommend that the Government adopts a consistent approach in the evaluation and use of financial and non-financial costs and benefits in considering possible environmental tax measures.

104. In each of the three taxes there has been some form of formal consultation exercise. But the timing of these in relation to the process of which they are a part and the extent to which these have addressed key issues of concern have varied significantly. A number of organisations, for example, suggested that the formal consultation on the Levy was mainly confined to technical issues and that the main issues of principle had been already decided by the Government.[223] We have noted above that the failure by the Government to properly consult and secure a consensus approach on the issue of eligibility for rebates is causing considerable concern among industry and may lead to further delays in the timetable for finalising negotiated agreements. By contrast, the formal consultation on aggregates closed in September 1998 and therefore pre-dated many significant later developments such as the final London Economics report and the proposals for a voluntary scheme put forward by the industry association. The QPA commented that there had been little subsequent attempt by the Government to enter into any dialogue with them to attempt to clarify the Government's objectives or criteria, while environmental organisations complained that they had not been involved in the process and in helping to develop the industry's proposals.[224] Even on the Levy, where discussion has been greater, the Society of Motor Manufacturers and Traders told us that they had only become aware of DETR bilateral discussions with industry sectors from reading newspaper reports.[225] Here again, we feel that the Government can give more substance to its new-found enthusiasm for "partnership approaches".

105. Other aspects of the processes also gave us some cause for concern:

In the case of the Levy there were obvious and very clear objectives for the tax—namely the reduction of carbon emissions—although these have been to some extent imposed as a result of the UK's Kyoto commitments. By contrast, in the case of aggregates the objectives of the tax and the criteria for appraising the voluntary proposals were particularly obscure.[226]

It became apparent to us that relevant good data were sometimes not available. In the case of aggregates there was an obvious lack of up-to-date information on the volumes of each waste stream arising and the extent of recycling.[227] This was particularly surprising in view of the Government's emphasis on recycling. Even in the case of the Levy, we received evidence that there were in some cases significant problems with data on energy use and cost effective savings.[228]

A number of submissions raised concerns about hypothecation and pointed out, for example, that the Government's policy on whether or not revenues would be recycled would materially influence their views. In the absence of such a steer, it was impossible to form a definitive view.[229]

106. In assessing these various factors, we can only conclude that the Government appears to be pursuing a visibly harder line with the aggregates industry than it has for the pesticides industry—even though there is, both theoretically and practically, a particularly strong case for introducing a tax on pesticides. The Government's approach to each of the three taxes has been markedly different. A Green Tax Commission would ensure greater consistency of approach in researching and developing tax proposals and in building consensus between Government, business and industry and environmental advisory bodies and NGOs.

223  Ev p94, 113, 162 etc. See also Customs and Excise Climate Change Levy: an analysis of responses to the consultation, November 1999. Back

224   QQ97-99, 179 Back

225   Q242 Back

226   QQ97-99. Ev p54 Back

227   See paragraphs 37-40 Back

228   See paragraph 89 Back

229   Eg Q143 Back

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