Examination of Witnesses (Questions 120
- 136)
TUESDAY 7 DECEMBER 1999
MR SIMON
VAN DER
BYL, MR
RICHARD SWINSON
AND MR
JERRY MCLAUGHLIN
120. Do you have any plans to transfer even
more to rail in the coming months?
(Mr McLaughlin) It is a continuing process. There
is a number of applications in at the moment for developing rail
and it is a continuing process. It is all moving in that direction.
We are looking for opportunities to move material by rail wherever
possible.
(Mr van der Byl) I do not know whether Richard Swinson
wants to add anything about his own direct rail connections?
(Mr Swinson) It is not just rail, it is water, as
well, in the industry. We are now moving more by water than ever
before. Could I just come back on the china clay issue in Cornwall?
It is not so much about costs but about the logistic and the environmental
impact of moving that material from where it rests at the moment
either to a port or to a rail loading facility. We all know what
the Cornish roads are like and the infrastructure down there.
There is quite an important environmental impact getting that
material to a port or to a railway.
121. In terms of not just china clay, in terms
of aggregates, generally, it would be helpful to have almost chapter
and verse on where you think the rail freight grants and grants
to assist the canal transportation could actually be used to help
with the transfer from road to rail or water.
(Mr Swinson) On a historic basis or for the future?
122. What do you have in mind to transfer from
road to rail?
(Mr Swinson) It is very difficult for an association
to present evidence on behalf of all membership because obviously
there is some commercial advantage sometimes for people and it
is dependent on finding suitable rail sites for reception of aggregates,
and then there is the question of planning permission.
123. It is just that in their evidence to us
the CPRE have suggested that whatever you might put into the New
Deal about wanting to tackle this issue, at the end of the day
you will be dependent upon the willingness of your members to
make this happen and the providers of those transportation services
to make them available as well.
(Mr Swinson) There is a very active dialogue going
on with the rail companies now, they are very different animals
from when they were nationalised; they are much more commercial,
as Simon has referred to, and they are very pro-active with the
industry in trying to find suitable sites and to get more aggregates
onto rail.
(Mr McLaughlin) The main problem is probably the availability
of access to the rail infrastructure and the availability of depots
as opposed to the willingness of the industry to put material
on rail. We would like to put more on rail if the overall infrastructure
was there.
Joan Walley: I can tell you there are
opportunities in Stoke-on-Trent to do that.
Mr Loughton
124. I would like to come on to SSSIs but before
I do I want to get clear that nothing you have said so far suggests
that this tax, however vague the proposals, distinguishes between
good and bad practice in the quarrying industry, that the person
who is the least environmentally friendly in the way he or she
digs things out of the ground will be penalised just as much as
the person with the best environmental track record up to date?
(Mr van der Byl) That is certainly our understanding.
125. From what you said the cost is therefore
going to fall on the construction industry effectively, if it
is going to be passed on, but if it is not passed on and the industry
tries to absorb it itself, due to competition and over-supply,
surely the only way that companies are going to keep up their
profitability is to produce yet more aggregates which is what
we are trying to avoid here. Leading on from that to SSSIs, do
you think if the tax is introduced or there are changes to existing
regulations and policy that there is a risk that quarrying firms
could retreat from some of their best practice, particularly from
the voluntary agreements dealing with SSSIs and the many you have
already mentioned requiring responsible management?
(Mr van der Byl) I would have to say that I would
hope none of the QPA members would retreat from any of their environmental
obligations, particularly on SSSIs. There is, however, a danger—and
I know Richard will articulate this much more clearly than I could—of
the tax having to be absorbed in part by the industry and the
effect that will have on the industry's ability to do more than
just good practice and normal practice. That is the key point
about this. The key point about the New Deal is that we are trying
to bring for the first time the whole of the industry together
under a managed programme of environmental improvement. That is
not to say there has not been improvement up to now, of course,
but it is to take this next big step, and it is an enormous step
to get all of the industry, for example, certified under ISO 14001.
So what we are trying to achieve with this is a controlled, managed,
huge advance in environmental behaviour—the point which
Richard made earlier—but I think the danger of having to
absorb any large percentage of a tax, which might happen, exactly
on the premise that you make, is that some of the current level
of better than average performance will suffer. Richard might
be able to tell you more about this.
(Mr Swinson) On the question of demand, when you said
the industry could sell more aggregates, we are a reactive supplier,
we do not generate demand in any way, we cannot advertise and
generate more demand for aggregates, so we are purely reacting
to construction activity.
126. On that point, you are susceptible to competitive
practices from imports from other countries where products are
not taxed. Am I right to say that finished building products imported
into this country would not be liable to tax?
(Mr Swinson) That is correct. We understand that imported
primary aggregates will be taxed in the same way as UK produced
aggregates. On finished products there may be some of that depending
on the level of tax on finished products—concrete blocks
or such things. But I do not think it is significant in terms
of tonnage.
127. Could you give us more detail on the impact
on SSSIs?
(Mr Swinson) I think it would be retrograde if the
progress the industry has made with English Nature was to slip
back, and perhaps some of the members would feel they have moved
forward on voluntary agreements and understandings with these
bodies and there would be great disappointment in the membership
if we do not achieve a partnership with Government on this. We
have been looking at it for 2½ years, have put a lot of effort
into it, it has not been easy for us to convince the membership
at times as to what we should do, but we have got very good support
for what we have put forward and we believe we can deliver it.
This will move us forward, there is no doubt about that.
128. You are doing your own research on things
like the impact on SSSIs, I gather. When is that going to be ready
and who are you surveying?
(Mr van der Byl) We have done some internal work to
assess what SSSIs we are managing and on what special interests
they are and in which regions and so on, and that has certainly
been done in-house. Our proposal in the New Deal is to take that
to its ultimate conclusion, that is to jointly do research with
English Nature, which we would underwrite, in assessing the whole
of the SSSI interest within the quarrying sector, past and present,
and work out what we need to do to do the best for SSSIs.
Mr Loughton: Do you want to talk a little
more about the New Deal? Apart from the SSSI commitment, what
other things are you putting into the voluntary package?
Dr Iddon
129. Chairman, before we leave that, could I
ask a question about SSSIs? Some of these SSSIs must be in quarries
which have dormant permissions, are you guaranteeing that those
SSSIs will never be disturbed into the future?
(Mr van der Byl) I do not have the details on dormants
to hand, I regret. I think the agreement we have had with English
Nature up to now is that each site will be taken on its merits,
and each site is quite different, each special interest is quite
different. It is very clearly understood, I think, by both sides
that you can still quarry in the vicinity of a SSSI as long as
the special interest is not damaged, and that is certainly what
we have tried to do, with better or less than absolutely perfect
success up to now. But the areas where we have not quite got it
right have diminished to at the very most a handful of sites where
there is still some doubt as to whether we should do something
else to improve the management of that SSSI and the care of it.
But I think they are literally a handful and it may only be down
to one site now across the whole nation.
Mr Loughton
130. Do you want to elaborate a little more
on the other proposals, the non-SSSI proposals, in the New Deal?
(Mr van der Byl) The key elements of it are two-fold.
There is a series of voluntary initiatives for which we have volunteered
as an industry association, and they cover environmental management,
environmental training, transport commitments and obviously the
investment in recycling capacity. We have a very robust set of
performance indicators which we will measure our performance against
and which can be publicly viewed on an annual or six monthly basis,
whichever we agree with Government. We have said we will go further
than we are required to on environmental impact assessment, we
have said we will go further than we had originally said on national
parks commitments, for instance. The icing on the voluntary cake
is the Sustainability Foundation which is entirely a voluntary,
independently managed, £20 million a year foundation, for
use by communities living in the vicinity of quarries to improve
their environment in the wake of whatever operations we have in
that locality. But there is another side to this and that is the
QPA is a voluntary association—people do not have to join
it, they do not have to belong—but our aim jointly with
Government is to improve the whole industry, not just the 90 per
cent which belong to us. We need a bit of help from Government
and the key driver in this is the encouragement by Government
to purchase their public procurement aggregates and the ultimate
end-products, as it were, only from what I would call "green
suppliers", that is those with at least ISO 14001 certification.
There is no competition issue, or European competition issue,
here—and I have checked it with the OFT—on the grounds
that anybody can get an ISO 14001 certificate whether they are
members of QPA or not. That is the key driver to this. We would
also like to see a bit more help from Government on planning enforcement.
One of the key problems is that a number of planning authorities,
who are the enforcers of regulations, perhaps do not get down
into the real nitty-gritty of some of the less responsible operators,
for all sorts of reasons, lack of resources perhaps, and we are
prepared to support that.
Mr Gerrard
131. In your submission when you were talking
about the principles of the tax you said that minimising adverse
environmental impacts and internalising external costs were mutually
incompatible. That seems to be contradictory in terms of the normal
expectations of what pricing would do, what ecological taxation
is about. Are you really saying that including environmental impacts
in the price is incompatible with minimising that impact? Do you
think there is something special about the aggregates industry
that means what are regarded as normal principles of economic
theory on taxation would apply too?
(Mr van der Byl) It is a complex question. If I may,
I will ask Jerry McLaughlin, who is very much up on these things,
to try and answer it.
(Mr McLaughlin) I think it is a question of the efficiency.
The problem with the externality route is if you measure an externality,
say in the case of a quarry the Government research averages out
about £1.30 a tonne, you can tax the industry to £1.30
a tonne, for example, and then you have this neat economic balance
between the externality and the tax but you are not dealing with
the environmental issue. What we are trying to do is focus our
initiatives on minimising the environmental impacts, not trying
to match an externality cost, because this gets into quite an
academic area. If we are going to take the externality cost too
literally I think it ends up being self-defeating. The principle
externality value that was surveyed by the Government's consultants
was the crushed rock outside national parks, that is 55 per cent
of the industry's supply and the measured externality was 34 pence
per tonne. That research was carried out a year ago and since
then the prices have gone up by at least 30 pence per tonne. If
you are going to tax on the basis of pure calculation of externality
you assume that the externality is matched by the price increase,
which is a highly questionable argument. Instead of worrying too
much about the precise value of the externality we have just focused
on reducing those impacts, whatever their value.
132. Let us assume that a tax does come in,
what would your attitude be on the question of hypothecation of
the tax, do you think that would matter?
(Mr van der Byl) I personally think it would only
work as a good environmental tax or as a good tax full-stop if
it were hypothecated to achieve the environmental improvements
that we have offered in our package. The tax would need to be
hypothecated and directly infused back into the environmental
improvement sector, otherwise it is purely a construction tax
and it can be viewed as nothing else.
133. Would you accept that it would be a way
of getting more money into recycling and environmental schemes
than the voluntary system you are proposing?
(Mr van der Byl) It is quite conceivable you could
do it that way but it still has to be managed. The question would
have to then arise, who would manage this if it is not the industry
itself? The improvements have to be done by the industry. It is
a behavioural problem, that is what we are trying to address.
Richard Swinson made that point himself, we are not trying to
manipulate the market, and I do not think you would unless you
were to kill the industry stone dead. The tax would have to be
so high to affect the market that it would either kill the construction
industry stone dead or certainly slow it down quite significantly,
to the detriment of all programmes. We accept, and have always
accepted, that we need to improve our environmental performance.
What we have tried to say is that we have focused precisely on
those impacts which have been measured both by us and by the London
Economic Survey. That is what we are trying to do: hit the noise;
hit the dust; hit the transport and get the restoration right
so that we leave the land in as good or a better state than we
found it. Also, to make sure when we operate we cause the least
amount of damage and effect on our local communities.
134. Essentially you accept the argument that
the environmental impact will depend on how a site is managed.
You mentioned earlier the point that you thought some planning
authorities, perhaps, did not do all they could in dealing with
problems. Are there any other specific improvements that you think
the Government should be making for guidance and in the regulatory
planning regime?
(Mr van der Byl) The DETR have said to us throughout
this discussion that the discussion on aggregates tax and whether
it should be a voluntary issue or not goes hand in hand with mineral
planning guidance. An updated regime, MPG 6 in our case, has been
postponed progressively as the discussion on aggregates tax has
been longer and longer delayed. The two do go hand in hand, there
is no doubt about that at all, we have seen that throughout the
discussion on MPG 6 and the development of our partnership package.
They do go absolutely hand in hand, there is no doubt, and so
the regime has to be changed. It is not that broken, it just needs
a bit ofMr Swinson) What we are offering with ISO 14001
would be of great assistance to the planning control because we
will be doing a certified check that we are complying with all
of the planning conditions. It will make it much easier for planning
control then to say: "All we need to do is look at that documentation
and we will know." There will be an open book on that ISO
14001 report wherever we are transgressing the planning permission
condition. A lot of the work will be done. There will still be
the problem with the other 10 per cent of course. We hope that
if we have the purchasing policy from Government—and we
will tackle other clients in the industry, developers and so on,
to try and get them to look at the supply chain—then the
planners' job will become easier. We also offered impact assessment
on the planning application for extension as to whether they are
within the regulations at the moment, again this will help them
assess the impacts with new development.
135. What you are offering in the New Deal is
much more than planning permissions, you are going considerably
further than that. You have also said that you represent most
of the industry, but not all of it, we may still get problems
of non-compliance, whatever agreements were made. Would you have
objection to an negotiated legally binding agreement rather than
an agreement which was purely voluntary?
(Mr van der Byl) That is a very difficult question
to answer. It depends what the agreement says. We are absolutely
committed as an association to what we have offered. There is
no doubt that there will be sufficient peer pressure within the
association to make sure that nobody was stepping outside that
agreement. I am sure Richard Swinson will back me up on this.
I have absolutely no doubt that all of the QPA members will abide
by the agreement that we make with Government, if we get to that
agreement, and that they will stick with it. That will be an obligation
on them as being members of the QPA.
136. Is that going to be sufficient? If you
look at some of the agreements negotiated in relation to climate
change levels they are backed up by tax or exemptions, is that
not more effective?
(Mr van der Byl) The Government always has the last
word. The one point that has not been made up to now is, even
if we do get a partnership agreement with the Government, the
Government always has this threat hanging over us that if we do
not deliver they will tax us and we accepted that. In a sense,
that is your binding agreement. If we do not get there in the
time frame we offered then the final resort for tax is always
there. It is the threat we accept and we accept throughout this.
Chairman: Perhaps that is an appropriate
moment to end our discussions. We would have liked to have asked
you more questions, but we have over-run our time. Thank you very
much indeed, that was a very useful session for us.
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