Memorandum from English Nature
1.1 English Nature is the statutory body
responsible for advising both central and local government on
nature conservation and for promoting the wildlife and natural
features of England. In fulfilling its duties, English Nature:
Advises Ministers on the development
and implementation of policies for nature conservation;
Advises Ministers on other policies
affecting nature conservation;
Identifies, notifies and safeguards
Sites of Special Scientific Interest (SSSIs);
Establishes, maintains and manages
National Nature Reserves;
Provides guidance and advice on the
principles and practice of nature conservation to a wide constituency;
Commissions and supports a wide range
of research and other projects relevant to nature conservation.
1.2 Through the Joint Nature Conservation
Committee, English Nature works with sister organisations in Scotland,
Wales and Northern Ireland to advise Government on UK and international
nature conservation issues.
1.3 English Nature supports the use of economic
instruments for environmental policy, as part of a package of
measures which should include a strong regulatory framework. However,
it is important to assess whether such measures are likely to
deliver environmental benefits and decide on a case by case basis.
We take a pragmatic approach to the evaluation of economic instruments
in terms of whether they will deliver benefits for nature conservation,
setting our evaluation in the context of the following criteria:
Objectives. Whether the objectives
of the instrument are consistent with environmental priorities.
Design. Whether an instrument can
be designed effectively, and be sufficiently linked with indicators
of environmental damage, to deliver the right response.
Market circumstances. Whether the
conditions (eg elasticity of demand) and structure (eg competitiveness)
of the market is conducive to the positive transfer of economic
signals to achieve environmental objectives.
Use of revenues. Where design issues
or market circumstances are likely to limit the direct environmental
benefits from the instrument, whether there are any complementary
proposals to increase funding for environmental purposes.
Fairness. Whether there any problems
relating to social priorities, international competitiveness,
cross-sectoral fairness or implementation timescales.
1.4 The remainder of this response concentrates
on the three areas of interest identified by the Committee: pesticides,
aggregates and the details of the climate change levy. However,
English Nature is also interested in other areas where economic
instruments may have the potential to help nature conservation
objectives, including water abstraction, peat extraction and nutrient
pollution. We note the DETR's ongoing research on water abstraction;
however, little attention appears to be being devoted to the latter
two areas. In neither of these areas has English Nature yet come
to the view that economic instruments would be feasible or appropriate,
but the concerns over impacts are sufficient to warrant further
Government consideration of this options alongside other policy
2.1 We support the view, expressed in ECOTEC's
report for DETR, that there are measured effects and risks to
wildlife over and above those preventable through the current
regulatory process. This suggests the existence of externality
costs not covered by regulation and a clear requirement for further
policy action. The ECOTEC research estimates £50-120 million
per annum in clean up costs to the water industry, to meet environmental
concerns and drinking water requirements, plus other costs elsewhere.
We have recently advised DETR on the basis of current concerns
in relation to wildlife; see the summary of this advice at Annex
2.2 We believe that an economic instrument
could provide useful signals to farmers and deliver some environmental
benefits, as part of an overall package of policy measures. A
well designed measure would support the Government's strategy
to tax "bads" rather than "goods". However,
it is important to note that the main objectives should be to
promote wise use of pesticides rather than eliminate them altogether.
2.3 Two important changes are needed to
the implementation of such a mechanism to ensure that it delivers
significant benefits for wildlife:
2.3.1 Increased funding for complementary
measures. Farmers' response to a tax may be modest at the expected
tax rates. This is partly due to the effect of harmful subsidy
payments, the removal of which can be expected to strengthen the
price signal in the long term. However, the tax provides a great
opportunity to increase public funding for environmentally beneficial
measures, some of which could address the reductions in biodiversity
brought about by the intensification in farming, including pesticide
use. These should include:
An enhanced and re-focussed agri-environment
programme which would lead to direct environmental benefits. ECOTEC
estimate that a tax at an average rate of 30 per cent would deliver
£85-130 million per annum, at current prices and sales volumes.
This is roughly equivalent to the current annual agri-environment
programme in the UK. If the tax were accompanied by an increase
in that programme it would make a very significant contribution
to the delivery of the Government's objectives in the Biodiversity
Action Plan. Since these environmental payments would be made
to farmers, it would lessen the burden of the tax on that sector
as a whole and could be used specifically to help vulnerable farms.
Finally, it could be used to lever in further resources for the
agri-environment programme by acting as "match-funding"
for monies re-directed by modulating commodity regime payments
under the Common Agricultural Policy.
Other research, training, and other
advisory measures to help decision making in relation to pesticides
2.3.2 Better design of the tax bands. The
tax banding needs to reflect better the indirect effects on wildlife,
such as on food sources for birds. The banding also needs to reflect
better the effects of pesticide persistence. A preliminary analysis
by ourselves and the RSPB suggests that design improvements which
take better account of indirect effects are feasible in principle.
A tax base calibrated to doses rather than weight may also in
practice provide a better link with environmental effects;
2.3.3 If neither of these recommendations
is implemented (namely additional resources devoted to accompanying
measures or an improved banding system), then the scale of the
potential benefits to farmland biodiversity would be uncertain.
2.4 Controlling the way that pesticides
are used is as important as controlling the products used and
amount of use, and economic signals will have a limited. This
underlines the need for complementary measures, including those
specified in paragraph 2.3.1 above and other regulatory measures.
We set these ideas out in detail in our response to the consultation
exercise earlier this year.
2.5 We also have strong concerns about the
environmental effects of some veterinary medicines, particularly
sheep dip, and recommend the development of measures to deal with
these concerns. Such products are not currently within the scope
of the tax and alternative policy measures need to be explored.
3.1 Mineral extraction has a wide ranging
impact on nature conservation, in the form of primary habitat
loss through extraction and secondary environmental effects such
as noise, pollution and transport. However, mineral extraction
also provides opportunities for Earth heritage conservation through
the creation of geological exposures, and can provide opportunities
to reverse the decline in wildlife habitats through after-care
schemes. We believe that ensuring an environmentally sustainable
approach to mineral extraction is an essential part of achieving
better environmental quality. To be sustainable, the working of
aggregates should minimise and mitigate for any impacts on nature
conservation interests and maximise opportunities provided by
restoration. Policies affecting aggregate extraction should therefore
promote these objectives.
3.2 We support the Government's recent budget
statement to the effect that research shows that there is clear
evidence of environmental "externalities" from aggregates
extraction, and consequently a case in principle for the imposition
of an aggregates tax. In practice the key issues are whether the
tax can be designed effectively to achieve environmental objectives
and whether it provides the best available policy mechanism for
3.3 The phase two research for DETR indicates
that its measurement of externalities is likely to be conservative
because of the methodology adopted and, importantly, because the
research did not measure the effects on any special landscapes
(such as wildlife habitats) outside National Parks. We also believe
there are other methodological reasons, not stressed in the report,
suggesting that the phase two research estimates are likely to
The tax option
3.4 In practice, designing a tax instrument
that will deliver direct benefits for nature conservation is made
difficult by the following factors: first, impacts are likely
to be very variable depending on the location of the quarry. Secondly,
actual impacts are likely to depend on operational conditions
and the quality of after care. Consequently, a tax instrument
banded simply by rock type is unlikely to be correlated with actual
environmental impacts. The difference in tax bands indicated by
the DETR research relates mainly to "nuisance" effects
on residential areas but does not appear to be closely linked
to impacts on nature. English Nature is disappointed that the
possibility of different designs have not been explored further,
although we recognise the problems involved. Therefore, we believe
that the main contribution of the tax would be as a demand management
tool, though the limited evidence available suggests that demand
reduction will be small, at least on the modest tax rates envisaged.
To achieve benefits for nature conservation, we would recommend
most of the revenue collected needs to be devoted to environmental
schemes. We note that the Customs and Excise consultation response
highlighted the support for the use of revenues in this way.
The voluntary measures option
3.5 English Nature has been closely involved
in evaluating the alternative policy approach: a voluntary package
of measures proposed by the Quarry Products Association (QPA).
The package has the potential to tackle more issues than the tax.
We welcome this initiative since we believe that partnership approaches
with business and landowners are often the most effective way
of discharging our duties and achieving wildlife gain. However,
while we welcome some elements of the QPA's revised package of
measures (July 1999), we are concerned that it falls short of
delivering in some of the key issues that we have identified previously.
We are especially concerned that the conservation of SSSIs has
not been fully addressed. The commitments for SSSIs are weaker
than those for the larger areas designated as National Park. The
package remains an ideal opportunity for the industry to make
the similar commitments on SSSIs. We are also looking for:
A more specific commitment towards
promoting biodiversity and earth heritage conservation;
Clear performance targets in key
areas which can be audited externally, including targets relating
to SSSIs and rates of use of recycled/secondary aggregates.
3.6 A summary of our response to the specific
parts of the package is set out in the attached annex B.
3.7 Evaluating the potential of the aggregates
tax against that of the voluntary package is difficult in the
absence of any indication about the use of revenues under the
tax scenario. However, our preliminary view of the relative merits
of the alternative policy measures, based on the current situation,
is as follows:
The package of voluntary measures
has the potential to address impacts on nature more sensitively
than is likely under the tax. We find the package disappointing
and insufficient, especially as a result of the lack of substantial
measures for the protection of SSSIs. However, if the package
is enhanced to deal with the suggestions made by English Nature,
this is likely to be the preferred alternative for nature conservation
The benefits of a tax alternative
are more likely to be related to a general decrease in demand
for primary aggregates, though it seems that will be small, at
least on the modest tax rates envisaged. Even if a suitable package
of voluntary measures is agreed, we recommend that the Government
state an intention to keep alternative policy options, including
the tax, open for the long term. These additional policy measures
may be necessary if demand levels accelerate so steeply as to
compromise sustainable development objectives or if the voluntary
package fails to deliver the intended benefits.
4. THE CLIMATE
4.1 Given the Government's stated commitment
to introduce the Levy, our response is concerned with the implementation
details. There is general consensus that the imposition of a "downstream"
tax makes it more difficult to design incentives for switching
to environmentally preferable forms of energy use. Having made
this decision, we believe that the remaining elements of tax design
need to be focused on ways in which the environmental benefits
can be maximised. While efforts to reduce the compliance costs
should be applauded, the primary objective of the design should
be to achieve the maximum feasible reduction in emissions. We
believe that opportunities have been missed in the current proposals,
especially in respect of the choice of energy unit as the tax
base, and the treatment of cleaner energy sources.
4.2 Given the current proposal to impose
the tax "downstream", it is essential that maximum opportunity
is provided in other ways to encourage the use of environmentally
preferable methods of electricity generation. We also note that
the proposal to base the whole of the tax on energy inputs means
than it is less well correlated with emission levels than if it
had been based on carbon content.
4.3 Renewables. The Marshall Report suggested
the possibility of a number of measures, including:
Tax relief in relation to carbon
reductions to suppliers of renewable energy where this is provided
directly to the final customer;
Where renewable energy is not supplied
directly to the final customer:
Establishment of suitable green business
electricity contracts and tax relief for energy suppliers under
Assuming feasibility, direct incentives
to renewables generators on the basis of approximate percentage
of electricity coming from renewable sources. We recommend that
the feasibility of this option is fully considered; and
Tax credit schemes or hypothecated revenue
to encourage investment in renewable provision.
English Nature supports the need to consider
these fully, but has no view on the feasibility of specific measures.
4.4 While we support the development of
renewable sources of energy on the basis of climate change objectives,
we are also concerned about the direct impacts of the establishment,
operation and decommissioning of such schemes in relation to sites
of high nature conservation value. It is important, therefore,
that policy approaches providing additional incentives for renewables
are accompanied by research and development programmes focusing
on the assessment and mitigation of impacts.
4.5 Other "cleaner" sources. Ways
should also be found to provide incentives for switching towards
other forms of "cleaner" energy use, in addition to
renewables. These might include combined heat and power schemes,
low NOx combustion techniques, flue-gas desulphurisation and,
importantly, carbon sequestration to reduce climate forcing. Incentives
could include the following, subject to further consideration
for their feasibility:
Direct or indirect Climate Change
Levy reliefs, based on carbon content. These should include the
development of "green" business electricity contracts
including "cleaner" sources other than renewables;
Tax credit schemes for investment
in "cleaner" technologies;
Further incentives for combined heat
and power (CHP). As we understand the current proposals, they
aim to remove any penalties on combined heat and power in the
form of double counting of energy production. However, the proposals
do not appear to include any positive incentives for this efficient
form of energy production.
4.6 Use of revenues. We welcome the consideration
being given to the use of revenues to encourage better practices.
However, it is important that the fund is sufficient in size to
be able to make a significant contribution to the UK climate change
4.7 UK climate change targets. We appreciate
the need to lessen the immediate burden for energy intensive industries.
It is important, however, that the overall rates of tax set are
sufficient to help achieve the UK climate change targets. We also
recommend that clear arrangements are put in place to monitor
the effect of the tax on the achievement of the UK targets. We
recommend a clear policy signal in advance to the effect that
the tax rate, and the reductions involving the energy intensive
sectors, will be adjusted if necessary in order to achieve the
targets. We also note the exemption of the domestic sector, and
suggest this may need to be reconsidered in the longer term, using
mechanisms which provide the necessary incentives while avoiding
adverse social consequences.