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The aggregates tax is a tax on a vital industry, and it will not serve the purpose that the Government suggest that it will. My quarrel with them is not that they are taxing as such, but that they are presenting this tax as an environmental tax.
About eight or 10 years ago, I remember sitting down with some of my colleagues when the Labour party was in opposition. One of our environmental spokesmen was terribly excited about a meeting at which a representative of Friends of the Earth had said that the extraction of material in a certain place would destroy the water table. When I had a proper job I was a geologist, so I must confess that I was a little confused and wondered how the water table could be destroyed by extraction. However, at the end of the discussion I turned round and said, "I hope that we will have a minerals policy that is not based on the views of the last lobby group to whom our spokesman talked." I fear that that has happened with this tax. It originated with a lobby group and has been dressed up even though there is no way in which it is an environmental tax. If Ministers have been convinced by their advisers or by the political input that has gone into the Department that it is an environmental tax, I am very sorry that that has happened.
Although I accept that some people may not extract minerals in the best possible way, the industry is doing a good job because it has been regulated. Planning regulations are the way to improve the environmental standards for extraction and restoration work. If the industry does not conform to those regulations, the offending companies should be shut down. However, nearly all the companies that I know of extract in a principled manner and are only too anxious to restore. The national water sports centre in Nottingham is a classic example of effective restoration after mineral extraction. It is not necessary to tax the industry to get it to behave properly, because it is already doing that. Quarries in my area have been used for recreational activities. Companies such as Foster Yeoman--I do not know whether it operates in the constituency of the hon. Member for Somerton and Frome (Mr. Heath)--do superb restoration work. I recommend the books that it publishes, such as "Wildlife after Gravel".
The tax is hypocritical. If money is to be raised, let it be done practically. Although not a concern for my constituency at the moment, most mineral extraction takes place in rural areas and is often the only alternative to farming. It provides much ancillary employment in the haulage industry and other businesses that supply the quarries and quarry extractors. A tax on the industry is a tax on jobs. I cannot envisage it improving the environment. The only way to do that is to impose tight planning controls, planning regulations and planning enforcement on mineral extraction.
Mr. William Ross (East Londonderry): The hon. Member for Rhondda (Mr. Rogers) said that the tax was a tax on jobs, but it is more than that: it is a tax on the cost of a house because a considerable amount of aggregates goes into building a home. Although I hope that we will have time to debate amendment No. 24, which relates to Northern Ireland, I shall concentrate on amendment No. 4, which refers to
We are driving up the cost of housing, and the tax will translate into a tax on all houses sold. The increase in the cost of new dwellings will increase the price of existing dwellings. When the Government consider the effect of the tax on road building, they might say, "It doesn't really matter. It's being recycled back to us in one form or another", but that is not the point. Everyone who uses aggregates in buildings and road construction puts on a percentage and the total sum at the end of the cycle will be much larger than the initial tax.
I am aware of, and sympathetic to, the many valid arguments against the tax which will be made in the debate and to many of us individually. The Government's arguments for introducing it are pathetically weak. It has nothing to do with being green; it is simply a revenue-raising exercise that will do far more harm than good. The industry will not have significant revenue returned to it by any other means, so the tax is clearly not revenue neutral.
The tax will not increase recycling. By and large, where it is possible to recycle materials, people will do so. The resources are finite, and so is the capacity for recycling. Substantial recycling is already being carried out and is economically viable. Without this tax, we could and would go on recycling as much as possible throughout the country. The tax is not environmentally friendly because there is no disincentive for the primary producer who removes material from the ground. He is driven by demand from other industries.
Once again, unfortunately, it is the peripheral regions of the United Kingdom that will suffer most from the tax. In Northern Ireland, in particular, the burden will be compounded by factors that do not impact on the industry in the rest of the United Kingdom. In a letter dated 31 October last, the Financial Secretary to the Treasury said:
Apart from the low value of aggregates in Northern Ireland and the distribution of the industry there, we must remember that it is the only region of the UK that shares a large frontier with another state. If the Financial Secretary examines the matter a little more closely, he will realise that such a tax was considered by other EU states and rejected, as it was confidently predicted that the
Mr. Bercow: Further to the point that I put to the hon. Member for Somerton and Frome (Mr. Heath) earlier, does the hon. Gentleman agree that his fear of an especially adverse impact of the tax on the people of Northern Ireland serves further to underline the necessity of publishing the details of any rebate scheme not merely before the commencement date of the tax, when it will too late to debate them, but before the passage of the Bill itself?
Mr. Ross: The hon. Gentleman is perfectly correct, and I hoped that the Government, who place so much stress on transparency, would be more than willing to produce all the facts and figures and the details of the research that has been carried out. They have lamentably failed to do so up to now. Those of us who have talked to the industry in Northern Ireland take the view that much, if not all, of the regional aggregates industry will suffer grievously as a consequence of the tax.
The House knows as well as I do that the Government are not averse to granting regional tax exemptions that they consider necessary--for example, the exemption from air passenger duty for travel between the highlands and islands and mainland Scotland. I think that a similar exemption should have been granted for travel to Northern Ireland. I travelled here today by air and will return home in a few days by air, just like almost everyone else who travels in and out of Northern Ireland. Sea transport of human cargo is far less prevalent now than it used to be. Exactly the same argument applies to Northern Ireland as applies to the highlands and islands--however, that is a debate for another day.
The Government have demonstrated a certain pragmatism in their approach to regional problems--the problems of being on the periphery of the kingdom--so they should have demonstrated the same pragmatism when considering the imposition of the aggregates levy in Northern Ireland. It is estimated that the industry there is worth about £35 million in tax to the Treasury. That estimate is based on the 1999 figure of 23 million tonnes of aggregates, of which 22 million tonnes would be taxed under the proposed scheme. However, it has been estimated that the imposition of the tax would cost 4,000 jobs--70 per cent. of those employed in the industry in the Province--and that it would cost the Treasury £60 million. The deal does not strike me as a good one.
The majority of the jobs in the industry are not in extraction, but in the value-added end of the process; however, the value-added end can easily migrate to the Irish Republic--indeed, some has already done so. Raw products would continue to be extracted in Northern Ireland, but they would be taken across the border to be refined or processed, usually into concrete products, and then returned to Northern Ireland, thereby escaping most of the duty--I understand that there is no tax on imported downstream products. Therefore, the environmental tax
In addition, it must not be forgotten that the average value of raw aggregates is £2.60 a tonne in Northern Ireland, whereas the average value in Great Britain is £6.50 a tonne. Translating the proposed tax into a percentage of value, it would be a 60 per cent. tax in Northern Ireland, but only a 25 per cent. tax in Great Britain. That disproportionate burden presents an extremely serious problem that the Government should address.
In previous Budgets, the Government have demonstrated in small ways their willingness to consider the problems of those who are on the periphery of the kingdom--the air tax is one example. I can think of a few suitably pragmatic solutions to the obvious problem arising from the aggregates tax. I do not know whether the Government have carried out a thorough analysis of the impact on the industry in Northern Ireland--I shall not embarrass Ministers by asking--but to my knowledge none of their research was conducted in the Province, and I dispute the mythology of the contingent valuation system. I seek some rational consideration of the impact that one-way cross-border trade will have on the economy and job prospects in Northern Ireland. The Government should give at least some assurance that they will consider that problem.
It would be possible to exempt the Province from the tax and for the Treasury to make a net saving in the process. As a lesser evil, the Government could impose the tax at a rate that fairly reflects the lesser value of raw aggregates in Northern Ireland; that could be done by setting it at a lower rate, or introducing it as a percentage of product value. The Government could at least tax imported value-added products. Those are real options and I urge the Government to consider using them to protect the industry in Northern Ireland while there is still an industry there to protect.
Over the years, I and other Northern Ireland Members have uttered clear warnings about the effect of the steadily increasing tax on fuel. The Financial Secretary knows perfectly well about the consequences of ignoring those warnings with regard to Northern Ireland, and about the enormous loss to the Treasury that is associated with fuel smuggling, racketeering and thuggery of all sorts. Interestingly, since foot and mouth reared its ugly head, the amount of smuggled fuel seems to have fallen rapidly and has stayed down. People now seem able to seal the border to stop foot and mouth disease getting across, even though they could not seal it to stop murderers crossing. However, I let that go, as it is also a matter for another day.
The Government have a chance to consider seriously the tax before it comes into operation, and they should give favourable consideration to the impact that it would have in the regions and, in particular, in the Province that I have the honour of representing. They must consider what will happen, unless they can achieve the miraculous feat of persuading the Republic of Ireland Government to introduce the same tax in the Republic, which would put us all on a level playing field. At the end of the day, that is all that we want, but we do not currently have it.