Examination of Witnesses (Questions 94
TUESDAY 7 DECEMBER 1999
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.
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
(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 itthat is a mechanical
exercise about avoiding potential tax evasion and such likebut
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.