Memorandum from Wildlife and Countryside
Link Minerals and Planning Group
AGGREGATES TAX AND THE QUARRY PRODUCTS ASSOCIATION'S
NEW DEAL FROM THE AGGREGATES INDUSTRY—A PARTNERSHIP FOR
ENVIRONMENTAL IMPROVEMENT—THE IMPLICATIONS FOR THE ENVIRONMENT
SUMMARY
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.
BACKGROUND
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.
AN ASSESSMENT
OF THE
NEW DEAL
II
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.
COSTINGS
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.
VALUATION OF
THE ENVIRONMENTAL
BENEFIT
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.
SITES OF
SPECIAL SCIENTIFIC
INTEREST
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.
THE REPORT
BY DAVID
PEARCE
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.
THE AGGREGATES
TAX
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:
Pros:
— 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.
Cons:
— 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".
BEYOND THE
TAX
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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