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Mr. Letwin: I am grateful to the Financial Secretary for giving way, although I was actually chuntering from a sedentary position. However, I will ask him a question. Perhaps the hon. Gentleman should listen to a tape recording of his own remarks. Is he aware of just how "Yes, Ministerish" he sounds? If I had been the official charged with inventing every reason that I could think of--including reasons that I could barely think of--for rejecting the new clause, I could certainly not have come up with a better list than the one he has provided.

Mr. Timms: It would be classic "Yes, Minister" to introduce a new clause to do something when we do not quite know what we are trying to achieve. That would be a serious mistake and I could not support such a proposal. As I pointed out in yesterday's debate, the new clause sets out three groups which should be consulted. I can again assure hon. Members that we shall indeed consult representatives from all three of those groups.

Mr. Edward Davey: I am grateful to the Financial Secretary for giving way, especially as I was unable to be in the Chamber for all of the debate on the new clause. Will he confirm that the sustainability fund, which will produce the environmental improvements referred to in the new clause, is an intrinsic part of the levy? If he can

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confirm that, will he explain why he is going ahead with the levy even though he has not sorted out the sustainability fund?

Mr. Timms: The hon. Gentleman is confused. The sustainability levy is part of the package as it stands. It will have an initial value of £35 million and we are consulting on precisely how the fund will be applied and to what categories of use it will be put. The hon. Gentleman is mistaken: the fund will be in place from the introduction of the levy in April next year and does not depend on any of the mechanisms mentioned in the new clause.

Mr. David Taylor: Will my hon. Friend confirm whether he is to consult the British Precast Concrete Federation, which makes a very powerful case in favour of the pre-cast concrete industry being treated in same way as the clay, silica sand and cement industries, all of which will not be covered by the aggregates tax?

Mr. Timms: I confirm that I have in the past week met representatives of the British Precast Concrete Federation. We had a useful discussion. We are consulting widely on the measures, as we always do.

Amendments Nos. 1 and 2 propose abolition of the levy. The Committee of the whole House considered that matter at the start of Committee stage and took a clear view that the aggregates levy should be in the Bill. I have no doubt that that view will, rightly, be repeated today. The levy is being introduced to address the significant environmental costs associated with quarrying and it will bring about environmental benefits, as I have described. The introduction of the levy and the associated cut in employers national insurance contributions will contribute to the Government's strategy, consistently applied, of shifting the burden of taxation from good things, such as employment, to bad things, such as environmental damage. That was the intention we set out in our 1997 statement of intent on environmental taxation and it is the approach that we have taken.

I am grateful to the hon. Member for West Dorset for confirming that a Conservative Government would not proceed with the reduction in employers national insurance contributions. We have also heard that the Conservatives would reverse the reduction in employers national insurance contributions associated with the climate change levy--0.3 per cent. in that case. In addition, the hon. Gentleman has made more clear the Conservatives' intentions regarding the 0.2 per cent. reduction in employers national insurance contributions associated with the landfill tax. I do not know precisely why the Conservatives want to pile up taxation on employment, but I am certain that our approach of shifting the burden of taxation away from employment is the right one. We shall continue to pursue it.

The levy will be revenue neutral for the Exchequer because all of the proceeds will be recycled through the reduction in employers national insurance contributions and the £35 million sustainability fund that will help to develop alternatives to primary aggregates extraction and help to redress the local impact of quarrying in communities that are affected by it.

Mr. Letwin: Will the Financial Secretary give now the undertaking that he refused to give earlier: that if his

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Government are fortunate enough to be re-elected, each and any subsequent increase in the aggregates levy will be accompanied by an equal and opposite reduction in national insurance contributions or some other tax?

Mr. Timms: I do not want to discomfit the hon. Gentleman, but in our enjoyable debate on the subject in the Standing Committee yesterday, he made a lengthy case against the landfill tax, saying that we were giving out more in the reduction in employers national insurance contributions than we were taking in through the landfill tax. He was simply wrong about that: the revenue from the landfill tax is significantly less than--in fact, it is equivalent to about two thirds of--the revenue forgone through the reduction in employers national insurance contributions. The hon. Gentleman was mistaken in yesterday's debate and it is unwise of him to pursue that line of argument further today.

Mr. Letwin rose--

Mr. Timms: No, I want make some progress--a couple of other points need to be made to complete the picture. It is possible to make greater use of recycled aggregates, as we discussed in earlier debates. They will be more attractive because the price of primary aggregates will include an additional cost that will not apply to them, and that will be beneficial.

8.45 pm

In my response to my hon. Friend the Member for North-West Leicestershire (Mr. Taylor), I mentioned my discussions with manufacturers of pre-cast concrete blocks. The hon. Member for West Dorset made something of that. I do not believe that the prospect of significant imports from across the sea of pre-cast concrete blocks will be a serious problem. The industry did not suggest that. However, I accepted in an earlier debate that Northern Ireland might be a different case, and today I met the hon. Member for Foyle (Mr. Hume) and two representatives of the quarrying industry from Northern Ireland. The Northern Ireland Executive is also considering the problem, which we will continue to explore. The land border between Northern Ireland and the Republic means that the situation there is different.

As for concrete blocks from Norway or elsewhere in continental Europe, the cost of transport is a sufficiently high hurdle for the 1 per cent. of pre-cast blocks that are imported not to change. Those are specialist products and they do not reflect the bulk of what is produced in the United Kingdom.

Dr. McCrea: Having listened to those representations, when will the Government determine what action to take to alleviate the problem faced by businesses in Northern Ireland?

Mr. Timms: I can only repeat what I said to the hon. Member for Foyle this morning: we will work with the Northern Ireland Executive and, if there is a strong case for us to act, we will do so. I cannot, however, say precisely when that will be.

I hope that the House will hold to its clear view on the issue and reject the amendment. It was interesting to hear the hon. Member for West Dorset say that the

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Conservative party would not implement the measure and, instead, would try to achieve a negotiated agreement with the industry. The Quarry Products Association and the Government invested much work in examining the prospects of a negotiated voluntary agreement. For several reasons, those discussions were not successful and the package that the QPA put to us for the Budget last year contained serious difficulties, not least the likelihood of falling foul of European law.

However, another reason for that lack of success was the great hostility of the British Aggregates Association, to which my hon. Friend the Member for North-West Leicestershire referred. I think I am right in saying that the BAA came into existence when a group of small quarries came together to object to the big quarrying companies formulating an agreement that did not benefit them. The hon. Member for West Dorset needs to be cautious before believing that a negotiated solution is possible.

The real question facing hon. Members is whether we face up to the need to address the environmental costs of quarrying. If the House decides--as I believe it will--that that is necessary, our proposal is the right way to proceed.

Mr. David Taylor: My hon. Friend is right to say that Leicestershire has a significant mineral extraction industry. Many small firms operate there. Does he believe that the implementation of the levy risks accelerating the industry trend towards a smaller number of larger quarries, with the extra haulage costs and other problems that are associated with that?

Mr. Timms: I have not seen any evidence of that, and none that I am aware of has been forthcoming. The way in which the industry responds to the levy is a matter for the industry.

Amendment No. 3 at least has the merit that the House has not already rejected it, but the environmental costs of aggregates extraction will not cease in April 2004. Therefore, there is no justification for limiting the life of the levy to that date.

For the reasons that I have set out, I hope that the House will reject the new clause and the amendments.

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