Select Committee on Northern Ireland Affairs Minutes of Evidence

Supplementary memorandum submitted by the Construction Employers Federation, Northern Ireland

  Thank you for your letter of 5 November regarding further evidence in relation to Mr Bailey's question regarding the proposed National Insurance rebate.

  The total annual volume of aggregate used in the construction industry in Northern Ireland is 22 million tonnes. At £1.60 per tonne, this will generate some £35.2 million of tax.

  Employment in the construction industry is 34,500 which added to the Quarrying sector of 5,600 gives total employment of 40,100.

  With average earnings in Northern Ireland that attract NIC of £13,465 pa (av earnings is £18,000 but first £4,535 of all earnings is exempt from NIC), multiplied by the 0.1 per cent rebate gives total rebate of £539,947

  So you can see that the industry gives in tax some £35.2 million but is only going to receive £539,947 back in NIC concession, leaving the industry in deficit to the tune of £34.66 million.

  One further point to add is that the rebate is for all industries in Northern Ireland so it begs the question why should the construction and quarrying industries subsidise an NIC rebate for all other industries?

  On Monday 5 November, the Minister for Transport (Mr John Spellar) announced Travel Concessions for people who are economically disadvantaged (see Hansard column 30 and 31 attached) and concessions for England and Wales as measures to tackle social exclusion. These concessions have implications for HM Treasury and were only introduced after Treasury approval. This would suggest that there is precedent for derogation from the principle of universal taxation in the UK to achieve social objectives.

  The Committee may wish to consider whether this principle should be applied in Northern Ireland with regard to the Aggregates Tax because of the effects on the industry arising from the land border with the Republic of Ireland.

  I understand that Rt Hon Paul Boateng MP, will be appearing before the Committee. The Committee may wish to explore this principle with Mr Boateng.

8 November 2001

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