Examination of Witnesses (Questions 100
TUESDAY 7 DECEMBER 1999
100. You mentioned your own report from ECOTEC
about the effectiveness of such a tax. Can you elaborate?
(Mr McLaughlin) We have commissioned two pieces of
independent research, there was research from ECOTEC carried out
by Dr Dominic Hogg, which was published in 1998. That was to do
two things, it was to look at the price sensitivity or price elasticity
of aggregate demand to determine if tax changed the price structure,
what effect that would have on demand. It concluded there was
very low price sensitivity. A conclusion was also that tax was
therefore an inefficient means to an environmental end because
of the limited elasticity but also there was an unclear relationship
between a level or change in the level of production in the environmental
impact, basically because there were huge differences between
the environmental impact of different quarries, different sorts
of operations. The link between production and externalities or
environmental impact is unclear. Earlier this year we commissioned
Dr David Pearce to look initially at, really, the training aspects
of our environmental proposals to see what impact that would have
on environmental performance. That study expanded to cover training
and environmental management systems. Dr Pearce concluded that
the tax would be environmentally inefficient because tax would
not have a significant impact on production or the generation
of the environmental impacts, whereas the evidence suggested that
even on the limited number of our proposalshe looked at
our proposalsit would have a more efficient impact on reducing
adverse environmental impact.
101. Looking at this proposed tax and in comparison,
as Mr Loughton said, with previous taxes, like the land-fill tax,
from your experience of these three and how the discussions with
the Government went, do you think there is a case for the Independent
Commission and the Green Tax Commission to take an independent
look at these taxes on a sort of practical as well as the correct
basis and see whether they are sensible?
(Mr McLaughlin) I think there is a case. I think there
is inconsistency here which we recognised which could be addressed
in terms of public independent scrutiny, I am sure that is right.
102. In the CPRE's report Rocky Logic they question
whether the historic concession between economic development,
growth and a demand for aggregates will continue. What is your
view about the future demands for aggregates?
(Mr van der Byl) We have made no secret, and we said
so publicly on a number of occasions, that we believe that the
forecast for the next five years for primary aggregates should
be broadly flat. That, I think, is borne out by our recent past
experience in the last three years, where I think, give or take
five per cent, we have been flat or going down in the primary
aggregates volumes. I think the difficulty in the past has been
that various independent assessors on behalf of Government in
the process of generating the mineral planning guidance notes
have tried to look too far ahead and possibly not necessarily
not far enough backwards to get the sort of trends. There are
other things that have happened in the process of making this
judgment, that is that GDP is not so much linked with construction
volume but construction price, and that the relative volume use
of heavy construction materials now and aggregates and aggregate
products is per price of a construction product significantly
lower. There is a very clear downward graph if you do the comparison
on construction price against aggregate volumes, so even if there
was steady GDP growth, if that trend were to continue, I think
you could safely predict that primary aggregates would probably
stay flat. There is another point to this, that is the missing
link in all this argument, if you look at total construction aggregates
volumes they have probably gone up but the difference is that
the difference has been supplied by recycled and secondary aggregates.
These volumes have significantly increased in the last five to
ten years to the extent that we are now already in 1999 beyond
the targets set for the industry in 2001 in the last mineral planning
103. What was the main reason for the increased
industry use of secondary aggregates? Was that the land-fill tax?
(Mr van der Byl) I am sure the land-fill tax has played
its part, quite clearly, but it is relatively recent. I think
the upward trend probably started before. Richard Swinson has
firsthand knowledge of it and Jerry McLaughlin has the statistics.
If I can ask them both to add something, personal knowledge in
Richard Swinson's case and statistics in Jerry McLaughlin's.
(Mr Swinson) Secondary aggregates and recycled aggregates
have been used more and are still increasing. We are already ahead
of other countries in Europe in the percentage of recycled aggregates,
we are ahead of Holland which has been hailed as a leader in this
field. Can I add one point to what Simon van der Byl said? There
has been a change in the construction mix, clearly, with the reduction
in the construction programme, which is fairly heavy on aggregate
demands. The construction mix has changed and it has become slightly
disjointed from what we expected in the 1970s and 1980s. That
has shown, compared with the total construction bill, a lower
demand for aggregates within that demand.
(Mr McLaughlin) To confirm the statistics, as it were,
there is assumed to be a relationship between GDP, economic growth
and aggregate demand. When the previous Government forecast was
done a few years ago that was the way the figures panned out.
Over the past 10 years we now have a level of economic growth
which is 20 per cent higher than it was 10 years ago. Construction
has gone down but it is now at the same level it was in the boom
of 1989 and we are running about 30 per cent lower. For every
unit of construction activity we are using 30 per cent less aggregates
than was the case. Whether that trend continues or which way it
goes is difficult to tell because there is underlying demand for
spending in areas like railways, road maintenance, water, public
utilities, schools and hospitals. If that demand came forward
obviously the demand and supply of aggregates would increase.
We advised the Government that in looking at their mineral planning
policy they should just assume a fairly flat picture because of
104. Connected to that, the last but one answer,
Richard Caborn stated: "Quarrying new material should be
a matter of last resort not a soft first option." To what
extent do you agree with that statement or otherwise?
(Mr van der Byl) Perhaps I can give you the first
answer. I understand precisely what he is getting at and indeed
we have also said the same in our submission to the Department
of the Environment, Transport and the Regions for the early stages
of the discussion of the next MPG 6. We have said that the first
option should be secondary and recycled materials and that when
those cannot be used, either because they are not available or
because they are not sensible from a performance point of view
or from an environmental point of view, then you would use primary
aggregates. But I think you will find two things with that. One
is that the availability of a usable, from a performance and availability
point of view, recyclable material is actually limited because
your primary source for that would be demolition and construction
waste. So you actually have to knock something down or tear it
up in order to create the, as it were, virtual quarry. As evident,
perhaps, in your very nice, new office building across the road,
there is still a call forfor very good environmental reasonsgood,
solid, mass construction because it is energy efficient at the
end of the day. You have not got any air conditioning in there
because it has got enough mass to retain the heat in the winter
and keep in the cool in the summer and you have natural ventilation
with it. You could not do that with a steel and glass building,
you would have to air-condition, for example, which is energy-wasteful.
You could not do that with recycled material either because it
would not have the performance strength, if you like, to achieve
that objective. So there will always be a call for primary aggregates
but there are definitely calls for recycled material and the market
is very robust right now.
105. I wanted to make clear that I take no personal
responsibility for the decision to build the magnificent office
block across the road! English Nature has I believe conducted
research into the effect of quarrying on SSSIs so why have you
not been doing your proposal already? Why the recent interest
(Mr van der Byl) We have always had an interest in
SSSIs and I hope you will hear in your third segment of evidence
this morning that there are something like 700 SSSIs which are
either former or current quarries. The previous quarries have
just been left 100 years ago, or 200 years ago, to let nature
take its course in terms of restoration, but they have become
actually rather fine SSSIs. We have done an in-house survey of
what we currently manage and we have 169 SSSIs in active management
covering the whole spectrum of special scientific interest. I
think we have a very clear understanding with English Nature and
a relationship about how these should be managed, and it is certainly
my understanding that there may only be a handful of those which
are in any contention by way of the way they are managed or have
been managed in the past. So I think we do have a very good understanding
of SSSIs and we intend to maintain that.
106. I come from a region of the world where
there is quite a lot of quarrying, limestone quarrying, and I
am quite familiar with it. There is also a degree of open cast
coal mining and I know which I prefer to live next door to. Have
you got any view about taxing aggregates but not taxing open cast
(Mr van der Byl) I would not dare to comment on open
cast mining but I can certainly give you the view that it does
seem slightly strange from a purely environmental point of view,
and it was an open question at the very first Budget, in the Red
Book which accompanied it, that it was not certain whether it
was going to be an aggregates-only measure or surface extraction,
minerals extraction, measure. If I were to take you back to limestone,
I do not think I can go into a limestone quarry and tell you whether
it was a cement quarry or an industrial lime quarry or an aggregates
lime quarry, they are all limestone. Indeed, ladies' talcum powder
is limestone, it has just been treated in a different way. I am
not sure I am capableI do not know whether Richard would
be, he has spent his entire life in the industryof telling
by just walking into a quarry that it was for one end product
or another. So it does seem to be slightly odd to me that only
one product should be taxed where the activity is identical in
each case. It does not seem to be logical at all to me but perhaps
Richard can tell you the subtle differences in limestone which
I do not understand necessarily.
(Mr Swinson) I think, broadly, Simon is right, you
cannot differentiate the method of winning and working limestone
for a cement works or an aggregates work, or a lime works for
that matter. I think the thing about green tax is that it needs
to change people's behaviour and I think we try to demonstrate
it is not really going to change people's behaviour. An aggregates
tax is not going to reduce significantly the usage of aggregates,
it would not significantly reduce demand for cement. If you put
a tax on it at a high level then you will distort the market,
you will distort it against steel or imports and so on. As Simon
said, there does not seem to be any pure logic in aggregates being
singled out, but I think we are back to whether it is going to
be an effective green tax or not.
107. I think I heard Mr Swinson say a moment
ago that with respect to recycling we are ahead of Holland?
(Mr Swinson) Yes.
108. I have some figures here which are from
a recent EC Commission report led by the Symonds Group which suggests
that that is not the case. I have a figure of 45 per cent for
recycling for Britain from that report and the Netherlands stand
at 90 per cent, Belgium at 87 per cent and Denmark 81 per cent
(Mr Swinson) Is that 81 per cent of aggregates used
are from recycled sources?
109. That is what I assume.
(Mr Swinson) With respect, I think that is highly
improbablewell, I know that it is not true. If you are
saying that 81 per cent of aggregates used in Holland come from
recycled sources, I am absolutely adamant that is not true.
110. Do you have a figure?
(Mr van der Byl) Jerry has the statistics to hand.
111. It would be helpful if we had your statistics.
(Mr McLaughlin) I understand your difficulty, Sir,
because I read the same report and it is not entirely clear what
the ratios are referring to. In order to try and clarify this
we asked our equivalent industries in Europe to tell us what their
market was for primary aggregates and what their market was for
recycled materials of all sorts, and then we looked at recycling
as a ratio of the total market. In the case of Great Britain,
the recycling is supplying 17 per cent of the UK aggregates market.
In the case of Holland, it is 15 per cent. What probably happens
in Holland is that they may be recycling perhaps more of their
supply of recycled products, because maybe the industry is more
organised, but they also consume quite a large quantity of primary
aggregates, so as a proportion of the market it is not any higher
than it is here. The European average that we were able to determine
for the proportion of aggregates markets met by recycling was
seven per cent.
112. So those figures are quite low, are they
not? Would you therefore agree with me we have a long way to go
in reducing the demand for primary aggregates by introducing more
(Mr McLaughlin) I think one has to understand the
ratios. We are looking at the moment at a primary aggregates market
which for three or four years has been running between 210 and
220 million tonnes. We are looking at the supply of recycled materials
at around 40 to 45 million tonnes, which compares with about 30
million tonnes 10 years ago. The problem is the availability of
supply. The best information we have, and there is continuing
research on this, is that there is around about 70 or 75 million
tonnes of demolition waste generated over the year, and there
is only a proportion of the market which that can supply, and
obviously a proportion of that material is soft materials such
as timber, plastic and soil. So based on the existing level of
information, it looks as though a practical maximum in terms of
recycling would be somewhere between 60 and 70 million tonnes,
so that is a target. So when one looks at the ratios you have
to bear in mind the availability of the source and that is the
general policy framework which the Government is looking at.
113. If we could look back at the Rocky Logic
Report again, which was produced by the CPRE, they point out the
worrying discrepancies between the amounts of mining waste and
fly ash generated and the amount actually recycled. Are you aware
of what is happening to that large proportion of material?
(Mr McLaughlin) There is an issue there with other
extractive industries because I think I am right in saying that
when one mines china clay there is probably a ratio of 9:1 of
unusable material for usable material. In terms of slate mining
as well, a very small proportion of the product is actually used
for the primary purpose. The difficulty with these extracted products
that have a potential use in the market is, one the quality is
not terribly high and two, their location. In terms of slate,
most of the available material is in North Wales in Snowdonia,
with china clay it is in Cornwall and some in Devon. Moving large
quantities of that material towards construction markets is an
environmental issue in itself, you would need a lot of transport
resources and infrastructure. One has to be realistic about how
much of that sort of material can be shifted around the countryside
to the main construction markets. There are other products, such
as iron and steel slag, which are completely used because they
are products that are generated in construction markets. The characteristics
of it are well understood and it is an established product.
114. Are you saying the material that is not
used following the mining is dumped on site in pits or is it land-filled?
(Mr Swinson) It is dumped back into the excavation.
Clearly in Cornwall some of it is being put in these conicals,
which are a feature of the landscape down there. My understanding
is that it is tipped back into the excavation pits.
(Mr van der Byl) The other point is that the sand
content of that spoil is very much used in the local market as
building sand. It is perfectly usable, it is washed out and it
is very good sand. The problem is that the residue you are left
with is a clay which would have to be stabalised by limestone
or some other primary aggregates product in order to make it usable
as an aggregates substitute. Also there is the transport problem.
There are two other issues with it and the question has to be
asked, "What is the best environmental option for that waste?"
I think English china clay have certainly started with the Dry
Fern project in Bodmin Moor, from my memory, which is a ground-breaker
in restoring this pile of useless clay.
115. Is there a rule for using a lot of the
fly ash in road construction? I think in some other countries
fly ash is used in that respect.
(Mr van der Byl) We import it into this country, would
you believe? Not a lot, it normally goes into lightweight aggregates
as a sort of concrete block product. A little of it is imported.
(Mr Swinson) The main use of fly ash in this country
is a cement material, which if you process it correctly and blend
it with ordinary cement it actually acts as a cement substitute.
That is the main use for fly ash in this country.
116. Recycling or secondary aggregates must
have an environmental impact in itself, would you like to comment
(Mr Swinson) There is no perfect solution. It depends
where it is arising from, whether it can be processed on the demolition
site where it arises and that creates its own problem with control.
If it has to be transported to a site for processing, re-handled,
unloaded and transported back you are introducing the same problems
you have with the distribution of primary aggregates. Generally
the most objectionable feature of quarrying is the traffic movement,
so yes it does generate its own problems but they are probably
more transient than a quarry. In the construction project it is
117. Central government and local government
are huge purchasers, probably one of the biggest in the country
taken together, do you think there is anything that Government
can do to reduce the demand for primary aggregates itself?
(Mr van der Byl) I think the biggest driver is what
programmes for construction local and national government have.
One of the key contributors is road construction and maintenance.
However, local and national government are still responsible for
building schools, hospitals, public housing and so on. The private
sector will also have a key role to play in demand as well. It
really then comes back to the point I was making earlier about
the availability of alternative materials, the environmental performance
of those alternative materials and finally the material performance.
That is an answer we cannot give you right now because we do not
know what the Government's plans are. There will always be a demand,
I think, for primary materials on all three grounds.
(Mr McLaughlin) We are in quite detailed discussions
with the Highways Agency to ensure that the specifications for
road construction are as clear as possible in their willingness
to use recycled products. There is alsoa bit of a saga,
reallythe production of European standards; those will
be standards or specifications based on performance which will
also enhance the potential use of recycled materials. There is
a lot going on, in terms of standards and specifications, to give
the clients confidence in their use. At the end of the day you
have to give the client, who is the engineer who is responsible
for building the bridge or the hospital, the confidence that he
does not have a liability problem in using these materials.
118. Can I pick up on one of the points Mr McLaughlin
made a moment ago when talking about English china clay and talking
about the transportation costs? I am aware that the Council for
the Protection of Rural England when talking about the voluntary
agreement, talks about transport costs being out of your hands
and in the hands of EWS, could you, perhaps, give the Committee
some kind of progress report on the extent to which rail travel
is used for transportation?
(Mr McLaughlin) In terms of statistics three years
ago we were moving about nine million tonnes of material by rail.
This year we will probably move about 13 million tonnes.
119. What would you hope in an ideal world to
(Mr McLaughlin) Looking at the current rail infrastructure
and the availability of depots, and such like, in discussions
with EWS I think they would look at a potential target at the
moment of up to 20 million tonnes. Richard Swinson will obviously
be closer to this than I am, the impression is they are far more
commercially aware than was the case a few years ago.