Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  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 proposals—he looked at our proposals—it 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.

Mr Jones

  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 guidance note.

  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 the uncertainties.

  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 for—for very good environmental reasons—good, 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 in it?
  (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 mining?
  (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 capable—I do not know whether Richard would be, he has spent his entire life in the industry—of 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.

Dr Iddon

  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 recycled.
  (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 improbable—well, 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 recycling?
  (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.

Dr Iddon

  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 on that?
  (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 relatively short-term.

  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 also—a bit of a saga, really—the 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.

Joan Walley

  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 be transporting?
  (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.

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