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Mr. William Ross: I am deeply grateful to the hon. Member for Croydon, South (Mr. Ottaway) and his hon. Friends for tabling amendment No. 24 which--albeit not very elegantly--intends to disapply the tax to Northern Ireland, for the very good reason that Northern Ireland is the only part of the UK that faces competition across a land frontier.

We all know that the one outstanding feature of aggregates is that they are heavy stuff; we are looking at one tonne per cubic yard. They are also not of very high value. If there is a tax and the material has to be carted around the country for any great length of time, the price rapidly goes up. In terms of direct competition with producers in the Irish Republic--some of whom already operate across the frontier--we will tip the balance decisively in their favour.

The Financial Secretary said that the distance that a lorry can travel economically into Northern Ireland is about 15 miles. The industry in Northern Ireland thinks it is considerably further, and I agree. The one thing that the Government have left out of their calculations is the vast difference in the cost of fuel between Northern Ireland and the Republic, which means that someone can pick up a load in the Irish Republic and travel a long way with it--much further than the Government believe.

There are large deposits of sand and gravel in the Province and in the Republic, many of which are exploited. Some firms own gravel pits on both sides of the frontier and operate, as commercial advantages dictate, across it. In some cases, the stuff is taken a long way: for example, from the Limavady district to Belfast, which is 60 miles.

The situation will get a great deal worse, because the people concerned are experienced in the field on both sides of the frontier. They know exactly where the

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financial advantage will lie. They can close their operation in Northern Ireland down to a low level, produce the vast majority of the material in the Republic, take it across to Northern Ireland and sell it there. They will still make their money and will have no problem with tax.

The Financial Secretary will try to tell me that if the material is imported, the tax can be charged. There is a slight difficulty with that. He will recall that, earlier this year, I asked him:

The Minister replied:

In plain terms, that answer means, "I don't know how much aggregate is crossing the frontier into and out of Northern Ireland." If aggregate is put on a ship, one has some idea of how much is involved, but if it is put on a lorry, it cannot be traced in these days of open frontiers across Europe; so we face a decided disadvantage.

11.30 pm

If the Financial Secretary does not know the figures--and he cannot in this case because the records are non-existent--he will be proceeding blindly, but the industry in Northern Ireland knows what the inevitable consequences of the tax will be for the industry in the Province. I shall spell those consequences out to the Financial Secretary.

For a start, only a certain amount of primary production will take place in Northern Ireland. The sand and gravel will be produced there, it will cross the frontier where it will be manufactured into a concrete product, and then it will come back again. The jobs in the concrete industry will migrate from the Province to the Republic. The industry will need to move only 100 yards across the frontier, set up its equipment to manufacture pipes and concrete beams, and 4,000 jobs in Northern Ireland will disappear in a short time. Once they are gone, and even if the tax is removed in two or three years' time, it will be too late and the damage will be done. Once folk have built up their operations in the Republic, they will have no good reason to bring them back to Northern Ireland.

When I raised the matter with the Financial Secretary earlier, he said that other countries in the European Union were introducing the tax. The hon. Member for West Dorset (Mr. Letwin) mentioned France; if several EU countries introduce the tax, it will have to be the same to maintain a level playing field. Dublin certainly has no intention of introducing any tax because it is to its commercial advantage to capture as many jobs as possible, and devil take the hindmost--in this case, Northern Ireland.

This is a serious issue that could have a tremendous effect on the cost of building a house. A normal-sized house takes 80 tonnes of building sand. Those of us who are not involved in the industry might think that that is a heck of a lot of sand, but all the walls need plastering and

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the mortar contains sand. Added to that is the hard fill, and 200 or 300 tonnes could be needed per house, depending on the site. Aggregate is also needed for the concrete bricks or blocks. People complain about the price of houses, but this hidden tax will shove up the price by £2,000 or £3,000 because everybody will work on a percentage all the way down the supply chain.

This is a mad tax that will do no good to the country at large, and if applied to Northern Ireland it will do much damage. Of course, aggregates can be replaced in some cases. Bricks can be made out of clay, and that is done in Northern Ireland. Clay tiles can be used for roofs. Most of the tiles used in Northern Ireland are imported from Great Britain, and they are no cheaper for being put on a boat and taken across the Irish sea. In fact, they are much pricier than concrete tiles. Many people prefer a slate roof, but few can afford such roofs nowadays. Asbestos is cheaper but carries environmental concerns. We surely have environmental concerns about asbestos nowadays.

Pipes used to be made of clay. Now the smaller diameters are made of plastic, but beyond a certain size the only materials with the necessary structural strength are concrete or steel. We make a lot of concrete pipes in Northern Ireland, and certainly some very large ones. Concrete is a useful and effective material, and we are cutting the feet from under people who make it. That is completely wrong.

We make large concrete beams for bridges. The hon. Member for South Antrim (Dr. McCrea) has a firm in the constituency where he lives--the owner is my constituent--that exports very large concrete beams. It can do so only because of the low cost of the material in Northern Ireland. The only alternative material is steel, and I am not sure that that is considered all that environmentally friendly these days.

There are at least seven relatively large firms making concrete products in my constituency, and there are several one, two, three or five-man operations giving employment in the area. They will all be forced out of business if the tax goes ahead. I fear that the Government intend to plunge ahead with this tax throughout the United Kingdom. They will not only do a great disservice to Great Britain but create a disaster in Northern Ireland. That is why, although I would normally be horrified by such amendments, I see good reasons for this one.

I hope that the Minister will listen. He told me earlier that the tax was neutral and would be redistributed, but it will not necessarily be redistributed to the areas from which it is levied--it will be distributed far wider than that. The areas where many of the relevant activities take place tend to be isolated, with relatively few employment opportunities. Such activities provide employment, as well as a vital material for the whole construction industry.

However we look at it, all we are going to do is increase the cost of constructing buildings, roads and bridges. What on earth is the benefit supposed to be? The Government went down this road without thinking it through. The more people examine the proposals, the more concerned they become. I hope that that increasing concern will be felt by Treasury Ministers, even if they

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are not prepared to say it now. Perhaps they will carefully consider the peculiar and difficult circumstances that the tax will create for the producers of Northern Ireland.

Mr. David Heath: I strongly agree with the points made by the hon. Member for West Dorset (Mr. Letwin). The amendment is very convoluted, as he readily admitted, but its intentions are good.

The hon. Member for East Londonderry (Mr. Ross) touched on the commercial effect of substitution in the domestic market and the consequent lack of competitiveness for companies competing against imports. That will be a significant factor in the pre-cast concrete industry, as other fabrics will be used, without any clear environmental benefit.

The Government are guilty of muddled thinking. They have exempted some industries that require aggregates in their production processes, for no reason except that they were the ones that they first thought of. They appear not to have considered the position of the pre-cast concrete industry at all. They are prepared to accept that there may be substitution with steel and with clay, particularly for roofing products and paving materials. What is the environmental advantage of stopping aggregates being dug and increasing the digging of clay? I say that there is none.

Profitable companies will be seriously compromised by this measure without further thought from the Government. I urge them, even at this late stage, to think very carefully about what they propose.

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