Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 94 - 99)




  94. Good morning, Mr van der Byl and welcome to you and your colleagues.
  (Mr van der Byl) Good morning, Chairman.

  95. Thank you for your written submissions and also for coming this morning. Is there anything you would like to add to your written submissions before we begin to ask you questions about it?
  (Mr van der Byl) I would very much like to, Chairman. Thank you for the opportunity.

  96. Could you make it brief please?
  (Mr van der Byl) I will. Could I first introduce my two colleagues. On my right is Mr Richard Swinson, who is the executive director of RMC Group, one of the biggest UK aggregates companies but also active worldwide in 25 countries, and also the chairman of QPA for this year. On my left is Mr Jerry McLaughlin, who works for me, he is my economist and public affairs adviser, and clearly has a great interest in the tax situation. Thank you, Chairman, I would like to make a few brief comments if I may. We are very grateful for this opportunity to provide oral evidence to the Committee. I thought it would be helpful if I very briefly described the QPA and its membership. The QPA is the trade association of the aggregates industry and represents some 90 per cent of the volume of aggregates produced in this country for construction in addition to a number of other very valuable down-stream products, and these include things like ready mixed concrete and asphalt, also for the construction industry, lime for other industries, secondary materials like slag for the steel industry and now of course recycled aggregates. We believe that the timing of this inquiry is very significant. Your inquiry into the 1999 Budget unfortunately pre-dated the submission of our full New Deal package and also the availability of the very significant research by Professor David Pearce. We believe that the New Deal package is a-ground-breaking initiative and it is my personal understanding that it is the first time that any industry has been invited to develop an alternative to a tax proposal. If we have the opportunity of delivering this package, the United Kingdom aggregates industry will be the world leader for environmental performance. For this to work, the New Deal must be a partnership with Government, particularly if we are to encourage the non-QPA aggregates producers to make the environmental progress implicit in our package. In particular, it is vital for the Government, which still represents some 40 per cent-plus of the customer base for aggregates, to recognise environmentally sound suppliers by making its public purchasing policy dependent on green credentials. We strongly believe that the New Deal is the best environmental option. It addresses the key environmental impacts directly through initiatives such as full industry accreditation to the environmental management system, ISO 14001; a commitment to invest over £100 million in the next five years in new capacity for recycling and secondary material; a strong commitment to industry-wide environmental training; and a commitment to invest £20 million per year in the independent Sustainability Foundation; and, of course, then there is the green public purchasing policy which I mentioned a second ago. Tax, on the other hand, would be environmentally inefficient, and this is corroborated by evidence from Professor Pearce and ECOTEC, independent evidence, and both of these have been advisers to Government in the past. The latest Pre-Budget Report implicitly acknowledges that tax could only have limited environmental benefits and ministers have also recognised it would not be able to discriminate between good and bad operations. Tax would therefore clearly be a construction tax, adding significantly to public spending programme costs. This would seem somewhat perverse, given the Government's laudable objectives through the EGAN-initiatives to reduce the overall cost of construction. So we very much hope to make progress with Government to reach agreement on this partnership proposal. That concludes my remarks, Chairman. Thank you.

  Chairman: Thank you very much indeed, Mr van der Byl. I will ask Mr Loughton to begin the questioning.

Mr Loughton

  97. Mr van der Byl, as you know, the aim largely of this Committee is to look at Government policy and aims and objectives on the environment and then look at the facts and the results and see whether they match up. Many people and yourselves have been critical about the deal of confusion and lack of clarity coming from the Government on what the aggregates tax is supposedly there to achieve. What is your understanding from the Government about the objectives of this tax and how that objective will be achieved?
  (Mr van der Byl) I would share your view that it is confusing, there have been a number of different signals. Can I ask Jerry to offer some specific comment from the various Budget Reports and Pre-Budget Reports about the objectives, and I can perhaps chip in with the statement in the last Pre-Budget Report which again is pretty vague?
  (Mr McLaughlin) The initial concern was related to the physical effects of quarrying. There has been a number of research projects over quite a few years which have identified issues such as noise, dust, local transport and visual impact. When the July 1997 Budget was published it was announced research was going to be carried out into these sorts of areas with a view to developing a policy position, so it was fairly clear then I think that we were talking about trying to mitigate environmental impacts. Then, when we put forward our proposals, in the 1998 Pre-Budget Report, for example, it said that ministers had offered to consider carefully our alternative, "and such measures would have to permanently secure greater or equivalent benefits to the tax", so there was a clear environmental choice between our idea and the tax. What concerns us slightly in the most recent Pre-Budget Report is that in Table 6.1, which lists the announced and potential tax measures, it has a column which looks at the environmental impact of possible measures and with regard to aggregates tax the environmental impact is "possible reductions in noise, dust and such like" and we think that is not a terribly rigorous expectation for an environmental policy measure, so we have some concerns about what the precise intention is now.

  98. Your view on the way the government has set it up and consulted on it is that it is far from comprehensive in what it is trying to achieve.
  (Mr McLaughlin) There has not been a consultation that has drawn that together. There has been a series of statements in the Pre-Budget Report and the Budget; there is a consultation paper by HM Customs & Excise on if there was a tax what is the most efficient way of doing it—that is a mechanical exercise about avoiding potential tax evasion and such like—but there has not been a clear-cut assessment of what the issues are and what we need to do to meet the concerns.

  99. How do you think that compares with the approach the Government has taken on the energy tax and climate change levy, the pesticides tax and the land-fill tax, which is something that we would be interested in? What I am trying to get is, was there some confusion as to why the Government has come up with an aggregates tax? It does not seem to be based on some clear research that says, yes there is a problem there and these are possible ways of dealing with it. There are other taxes, certainly from Kyoto with CO2 targets, or whatever, where there is a clear train of thought and research.
  (Mr McLaughlin) We are partly involved in the land-fill consultation. We are involved in the climate change levy issues. I think there is a clearer definition of what the purpose of the tax is and what sort of discussions there are with industry; I think that is right.

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