Select Committee on Environmental Audit Minutes of Evidence

Memorandum from Wildlife and Countryside Link Minerals and Planning Group



  1.  The key test that is to be applied to The New Deal from the Aggregates Industry—a partnership for environmental improvement ("New Deal II")[1], is Richard Caborn's demand that any alternative to an aggregates tax be deliverable, permanent, proportional and credible. In our view the New Deal II does not achieve these for the following reasons:

    —  Delivery is not guaranteed. The proposals in the New Deal II are largely voluntary. Where an element of compulsion is suggested the contracts or regulations required are not yet in place to "enforce" this. Some require Government action and are not deliverable by the QPA itself, albeit that the QPA is committing to support such action, for example the proposed increased planning fees, air pollution targets, etc. As a trade association the QPA is severely limited in the sanctions it can apply, the most "draconian" being to expel a member, which is self defeating and will not meet the aims of the New Deal II. The QPA is only as strong as its weakest member. Some of the inadequacies of the New Deal II result from a "lowest common denominator effect" whereby the QPA were understood to be more ambitious with some of their proposals but were unable to carry some of their members. Beyond that the QPA is not an industry-wide association, so significant numbers of producers will be outside the New Deal II provisions.

    —  In some cases the is no guarantee. Some of the commitments in the New Deal II appear to diminish over time, some end after three or five years, and others are not guaranteed because of their voluntary nature.

    —  Proportionality is not achieved. The package is not "proportionate to what a tax might yield". It does not create environmental benefits equivalent to a tax, nor is it proportionate to the value of the environment as suggested by the London Economic findings on environmental costs. The Sustainability Foundation does not compensate for adverse effects of the industry, and does not achieve the long term dynamic incentive needed for reducing primary aggregate use. Fundamental to the New Deal II is whether it will actually reduce the use of, and therefore rate of extracton of, primary aggregates. It seems unlikely that it will. The package does not explore fully all the scenarios on the influence of demand and the increase in efficiency of use.

    —  The package lacks credibility as it does not tackle the demand side of aggregate provision, although there are some commitments that show a willingness to address the industry's environmental impact. The New Deal II will not stand on its own, but is probably credible if elements of it are implemented in combination with regulation and/or some fiscal incentives.

    —  A fifth "test" might have been added by Mr Caborn—is the New Deal inclusive? Despite its sub-title, "a partnership proposal for environmental improvement", the New Deal II has not been the subject of widespread consultation, and none of the members of Wildlife and Countryside Link have been involved in its detailed construction. A more inclusive approach would have highlighted some of the weaknesses and flaws of the package. For instance, it really does not address biodiversity or landscape issues effectively—the "key component" on SSSIs is perhaps the weakest element of all (see below). Yet Wildlife and Countryside Link members could have indicated what the package must deliver for these nationally important sites. These and visual appearance are products of where and how much aggregate is extracted. Biodiversity and landscape impacts were the two major impacts identified as of concern to the public in the London Economics study, yet the package is much more focused on localised environmental impacts of quarry management. In this respect the New Deal II does not really address sustainable development.


  2.  The Government's sustainable development strategy, A Better Quality of Life—A strategy for sustainable development for the UK[2], has four main aims—to achieve:

    —  social progress which recognises the needs of everyone;

    —  effective protection of the environment;

    —  prudent use of natural resources; and

    —  maintenance of high and stable levels of economic growth and employment.

  3.  In respect of minerals the strategy stresses the need to meet minerals demand "at the least environmental cost and, as far as possible, without exporting environmental damage to other countries"[3]. This includes consideration of the location of workings; making the best use of minerals, (for instance by reducing demand, through more efficient use of primary aggregates, and greater use of recycled aggregates and waste materials); minimising impacts of extraction on the environment and local communities; rehabilitating sites to beneficial after-use; and keeping planning conditions up to date. The strategy states that "an aggregates tax will be introduced if the industry is unable to deliver an acceptably improved package of voluntary measures which address the significant environmental costs of aggregate extraction"[4]

  4.  Wildlife and Countryside Link agree with the Chancellor's assessment of the initial proposals put forward by the Quarry Products Association (QPA) in November 1998, that they fall well short of providing a credible alternative to an aggregates tax. The latest proposals produced in the July 1999 New Deal II, have made little substantive progress from the original package although the New Deal II does provide greater detail of the measures proposed. Some of the problems with the QPA's approach remain however.

  5.  We support The House of Commons Environmental Audit Committee statement in its report on The Pre-Budget Report 1998 that:

    "we consider it important that the Government does what it can to reduce the demand for aggregates, including boosting the use of secondary and recycled materials, in order to preserve non-renewable natural resources; minimise disruption to ecosystems and the loss of biodiversity; and preserve the amenity value of land" (para 41).

  6.  The same Committee, earlier this year, considered further the environmental implications of the 1999 Budget, following the March Statement, and recommended:

    "We have not seen evidence that alters our view that the case for the Climate Change Levy and Aggregates Tax has been made, with both measures providing the potential to achieve very real environmental improvements. We therefore urge the Government to stand by its commitments to these measures".[5]

  7.  Our submission assesses the pros and cons of the QPA's New Deal II, and the proposed aggregates tax in relation to the key environmental objectives of Wildlife and Countryside Link (WCL). This paper:

    —  summarises our concerns with the New Deal II in relation to the four criteria set out by Richard Caborn;

    —  examines the New Deal II proposals, assessing their significance and the extent to which they go beyond what can be reasonably expected of the industry (Annex A);

    —  comments on the costing put forward by the QPA for the package;

    —  comments on the paper by David Pearce included in the QPA document (Annex B); and

    —  suggests ways in which constructive elements of the New Deal II can be incorporated into the design of an aggregates tax, for example through an Entrust-type scheme and differential rates of the tax.

  8.  The Government could choose any one of the following options:

    —  taxation—the aggregates tax;

    —  self-regulation and funding—the QPA's New Deal II;

    —  greater regulation—for instance, enhanced planning powers; or

    —  a combination of taxation, regulation and self-regulation—a combination of the above.

  It is WCL's view that the option that best meets the Government's objectives is a combination of taxation, regulation and self-regulation using a packaged approach.


  9.  WCL's environmental objectives in respect of minerals are as follows:

    —  to reduce the extraction of primary aggregates—by encouraging more recycling and greater use of re-cycled materials; re-use of vacant buildings or alternative uses; and more efficient construction;

    —  to avoid, or where this is not possible, mitigate the adverse environmental effects of quarrying—including indirect effects, like reducing transportation of minerals by road; and

    —  to ensure that the industry makes a greater contribution towards the environmental costs of its activities, and to encourage a shift towards a more minerals efficient economy.

  10.  Most of the "30 positive commitments" listed by the QPA in the New Deal II were included in the original New Deal. Only seven of the 30 commitments are new, and of these only four are included in the Key Components of the Package[6]:

    —  11—finance fundamental research on the impact of quarrying on SSSIs;

    —  14—major investment in recycling plant and equipment;

    —  21—mandatory use of low sulphur fuels in the transport fleet;

    —  27—mandatory use of low sulphur fuels on internal quarry plant;

    —  28—introduce energy reduction targets;

    —  29—establish a Quality Mark for environmental performance; and

    —  30—promote environmental purchasing policies with clients.

  11.  Table 1 (Annex A) provides our detailed assessment of the pros and cons of the list of "key commitments" in the New Deal II.


  12.  Some of the costings behind the New Deal II contain questionable or unexplained assumptions. Some will clearly reduce over time, for example planning enforcement fees and the savings from ISO 14001. This calls into question whether the package really costs £104 million and is worth £159 million.

  13.  The industry cost of implementing the New Deal II is suggested to be £104.2 million per annum. It is not clear how long this annual figure is expected to last as the costs of some of the commitments are largely born in the first few years, and others are presented only as action in the next three to five years. Although the costs for some of the commitments are clearly defined, such as for the Sustainability Fund, we question the figures for three reasons:

    —  the financial benefits of some commitments are not included in the costings;

    —  some of the figures probably include expenditure that is already committed; and

    —  the figures tend to over-estimate the total net costs to the industry as a result.

  14.  Several of the commitments will clearly bring medium and long-term benefits to the firms themselves and are arguably the sorts of initiatives firms in the sector should be pursuing anyhow. These include training, liaison with local communities, and the transport code of conduct. These benefits are difficult to assess, but they provide vital elements of the context within which these costings should be considered.

  15.  In the case of adopting environmental management systems, ignoring the economic benefits and only presenting cost figures is, in our view, not acceptable. The primary reason firms cite for uptake of ISO 14001 is the reduction in their own costs through increased efficiency and reduced waste. There is now a large body of evidence showing the financial benefits to be gained by adopting ISO 14001. One example is the Walls Ice Cream factory in Gloucester. The initial cost of achieving ISO 14001 certification at this plant was £115,000, of which £65,000 was for consultants, £35,000 management time, and £15,000 investment on the site. However, the saving for the site in the first year after certification was £250,000[7]. Given the business management and the financial benefits that result from ISO 14001 it is no surprise that many QPA members are already committed to achieving certification across their businesses, irrespective of the New Deal II.

  16.  A significant proportion of the commitment to recycling is likely to cover existing and likely expenditure plans. Moreover, the estimates of the QPA for expenditure on their Environmental Impact Assessment commitment includes costs that will be incurred through complying with the 1999 EIA Regulations as they affect minerals operators[8].

  17.  The costings assume that all QPA members, and even all non-QPA firms in the industry, will comply fully, but we believe this is unrealistic. Voluntary approaches simply do not provide motivations for compliance that are either strong enough or apply to a sufficient number of firms to deliver this level of compliance. As Lord Marshall put it, voluntary agreements of this sort carry "no guarantee that they will deliver"[9]. Given the heterogeneity of the quarrying industry the problem of free-rider behaviour is likely to be severe. Yet the QPA as a representative organisation is poorly placed to do anything about this problem.


  18.  The figures put forward by QPA as a valuation of the environmental benefit of the New Deal suffer from similar weaknesses to the costing: some of the benefits will occur without the New Deal and the assumption appears to be full industry compliance. Even if the package is worth £159m, this falls considerably short of the London Economics Phase 2 study on The Environmental Costs and Benefits of the supply of aggregates. This estimates, on a cautious assumption, that the environmental cost of aggregates, (in terms of damage to the local and national environment), is at least £250-380 million per year. Moreover, the methodology by which these figures are arrived at is not fully explained, and without explaining this in full, it is not possible to accept the recommendations on face value.

  19.  It is clear that although the London Economics work provides valuations for the primary environmental costs of quarrying it does not, indeed cannot, provide a proper valuation of many of the longer term and generally more irreversible environmental impacts such as loss of landscape and damage to ecosystems. The importance of these costs has been mentioned by the Chancellor specifically. The New Deal II does little to address these substantial and important costs.


  20.  The "key component" on SSSIs is perhaps the weakest of the key components. It commits to finance "fundamental research into the relationship between quarrying activities past and present and SSSIs". An SSSI database should have been prepared before now. The proposals does little to halt the continuing threat to SSSIs from new minterals planning permissions and particularly old mineral permissions. The New Deal II should make a commitment to SSSIs like that it has made for National Parks, but stronger.

  21.  WCL is concerned by the continuing threats posed by the minerals industry to SSSIs. We have been urging the Government to take action to stop any further destruction, by tightening mineral planning guidance and fundamentally reviewing the acceptibility of extant mineral permissions.

  22.  Extant minerals permissions must be revoked or modified if they are likely to damage SSSIs. The Government has stated that it is "not prepared, in future to pay out public money simply to dissuade operations which could destroy or damage these national assets"[10]. If it is unwilling to pay this level of compensation it must revise existing regulations to allow for limited compensation payments to be made, or find another way of protecting these valuable wildlife sites. To permit further damage to such nationally important sites from out-dated minerals permissions is not acceptable.

  23.  If an aggregates tax is introduced to reduce the industry's environmental impact, by encouraging efficiency of use and recycling, then a premium rate of tax for SSSIs could be considered. The Government must appraise any such proposed scheme to assess its likely effectiveness in protecting SSSIs from direct extraction impacts and indirect effects. The review of MPG6 must include clear advice that minerals permissions should not be granted where they would adversely affect designated areas.

  24.  If a tax is introduced but no change is made to existing regulations or policy, we are likely to see any voluntary agreements concerning operations in SSSIs withdrawn by the industry.

  The cost of revocation or modification would remain prohibitive in the majority of cases and increases costs will mean that existing works may be exploited deeper and longer. It is questionable whether any money raised from the tax should, in any case, be used to fund compensation. We are firmly of the view that SSSIs should be better protected from the adverse effects of minerals development, both direct and indirect, through tougher regulation and planning policy.

  25.  To succeed in its aim of improving protection for SSSIs, the Government must prove it is capable of joined up thinking and show an awareness of the impacts of all its policies, through environmental (or sustainability) appraisal. On their own neither the tax nor changes in regulations are likely to achieve ours, nor the Government's, environmental aims. Both measures acting together, however, are likely to help deliver tangible results and show that the Government recognises the value society places on the preservation of its natural heritage.


  26.  The report attached to the New Deal II by Professor David Pearce challenges the Chancellor's assessment of the proposals as falling well short of what is required as a credible alternative to an aggregates tax. Its focus is almost exclusively on the proposals that were in the initial New Deal document. We have comments on four aspects of this paper, the elasticity of demand for primary aggregate, the locational apsect of environmental damage from quarrying, the utility of the London Economics results, and the credibility of voluntary agreements. These comments are set out in Annex B.


  27.  The Government has recognised that there are "significant environmental costs" to quarrying, that a tax is appropriate in principle, and that the QPA's original New Deal is not a satisfactory replacement for a tax. The pros and cons of a tax are listed below:


    —  A tax will encourage a shift towards a more minerals efficient economy;

    —  A steadily increasing tax should encourage consumers to be more efficient or to look for alternatives. It encourages continuous environmental improvement by the industry in terms of promoting less quarrying or primary material through price pressure, but we need regulation and voluntary measures for other elements;

    —  It can be directly related to output (eg tax on a per tonne basis, with different bands for different minerals) and sensitive areas—eg higher than normal rates for internationally, nationally, regionally and locally important sites and areas (including marine areas);

    —  It may help reflect the environmental cost of primary, as against secondary and recycled aggregates, as primary aggregates do not reflect the full environmental cost of their extraction and processing;

    —  Following its introduction, the tax can be subsequently adjusted in the light of actual impact, thus providing a continuous economic incentive to influence future behaviour; and

    —  If it is hypothecated, it can generate revenue for environmental action programmes—such as research into use of recycled aggregates; revocation of damaging minerals permissions (many of which are extremely expensive to achieve—this is a cost not included in the London Economics research); and funding of environmental improvement programmes (including UK priorities such as climate change, transport and biodiversity programmes and action plans). Some members believe that a regime similar to that under the landfill tax would be welcome, we suggest a model similar to that of Entrust be considered.


    —  There is considerable doubt as to whether the revenues raised by the tax will be made available for environmental purposes. If this does not happen then elements in the QPA's package could not be achieved through the tax; and

    —  Is the price elasticity of demand for aggregates high enough to have an impact on demand? The QPA claim it won't, but the House of Commons Environmental Audit Committee considered even the QPA's own assessment of a 2.5 per cent effect demand for a tax of 10 per cent was "not negligible and that it would be important for the Government to consider likely elasticity in the long-term".


  27.  Logistical barriers in the building/construction industry, such as the perceived lack of quality control in recycled materials, the lack of defined standards; the lack of readily obtainable and guaranteed supply, etc, are barriers that need to be overcome to offset market irregularities.

  28.  We need improved planning practice and guidance, which promotes demand management through a "plan, monitor and manage" approach to planning for aggregates. It should protect important sites, places and species and stop over-allocation of land. We need changes to Building Regulations that help achieve reduced demand and use. This needs to be complemented by better building design and changes to specifications. The insurance industry's nervousness and risk aversion regarding secondary materials needs to be tackled. This requires further research and development, but also action now. The recycled/secondary aggregates market may need stimulation by means other than a tax, eg through subsidisation. This is an ideal opportunity for the Government to exercise joined-up thinking by combining the benefits of policy guidance and regulation with economic measures to ensure that the transition to a more sustainable level of extraction is achieved.

1   QPA (1999) New Deal from the Aggregates Industry-a partnership for environmental improvement, QPA, London. Back

2   HM Government (1999) A Better Quality of Life-A strategy for sustainable development for the UK, The Stationery Office, London. Back

3   HM Government (1999), para 8.62. Back

4   HM Government (1999), para 87. Back

5   House of Commons Environmental Audit Committee (1999) The Budget 1999: Environmental Implications, Session 1998-99, 8th Report, (para 10, page ix). Back

6   QPA (1999) Chapter 4. Back

7   The ENDS Report 264, January 1997, (page 18-20), Environmental Data Services Ltd. Back

8   HM Government (1999b) The Town and Country Planning (Environmental Impact Assessment) (England and Wales) Regulations 1999. Back

9   Lord Marshall (November 1998) Economic Instruments and the Business Use of Energy, London, HM Treasury: (para 36). Back

10   DETR, (August 1999) SSSIs: better protection and management-The Government's Framework for Action. Back

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