Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of Witnesses (Questions 140 - 150)



  140. Native Northern Irish flax was used for thousands of years as a roofing material.
  (Mr Allison) I can if you wish go into more detail on the figures.

  Mr Pound: I am grateful. I appreciate that the issues of jobs and replacements were covered in earlier questions.

Mark Tami

  141. Putting aside the viability or otherwise of the recycling of aggregates—and, as you said—people will move—your evidence suggests that new industries could be set up. I have always been concerned that that sounds good in theory but is more difficult in practice. There is also the question of the timespan that will ne heeded, and, even if that were possible, the matter of what would happen in the meantime when such industries are setting up or resiting themselves in these areas.
  (Mr Allison) A point to consider is that in Northern Ireland a lot of quarrying is done on a very small scale: farmers who are quarrying their land because farming is longer economically viable. In those instances it would be easy for them to convert to, say, organic farming, for example, or to producing alternatives such as timber or retailing schemes like farmers' markets.

  Longer term, larger companies with capital and skills could invest in appropriate technology—

  Powerscreen International, for example, produces aggregates recycling plant. The capacity is there; it is matter of encouragement and funding.

  142. But if you are an individual on the farm, say, who happens to work on the quarrying

  element, even on a small scale, it may not be easy for you to work something else on the farm.
  (Mr Woods) I think that the right economic and policy signals are needed here. One of the key points mentioned was that integration of policy is critical. At present, a major discussion is taking place in Northern Ireland about the future of agriculture. Declan Allison mentioned the possibilities of organic and low-input farming. We need th synchronise the new signals being sent out to farmers. I understand that we in Northern Ireland are committed to maintaining the family farm as a viable unit for the future. The policies being formulated by the Department of Agriculture and Rural Development are, indeed, compatible with those being implemented by the Treasury. So these things must work together and we see no reason why they should not do so.

  143. The vast number of people working in the industry will not suddenly transfer to being organic farmers or some related area.
  (Mr Allison) The available transferrable skills are equally suited to quarrying and to recycling aggregates, for example. That is but one example and it is not limited to the quarrying industry: there is something for the wider rural community.

  144. One other point: what is to that they could not do that anyway and carry on with aggregates?
  (Mr Allison) Well, there is no incentive for that, given that they are pretty much at the limit, with farming being in crisis. There is no incentive to continue farming, but if the land is said to be of no value, they can dig it up and get a great deal of money for it. Obviously that is where the incentive is. If we disincentivise that, we can start to develop other things.


  145. Finally, in your memorandum to us in October, you said that it was very important not to have an imbalance between the revenue raised by the levy and the amount returned in Northern Ireland, and that it would it take about £28 million to create a fiscally neutral effect. Where do you see that £28 million coming from?
  (Mr Woods) The figures supplied to us by the Department of Finance and Personnel are that £35 million will be collected through the levy and that £7 million will be returned in national insurance contributions. We felt that £28 million should therefore be returned to Northern Ireland. The problem we see is not so much one of where it is coming from but how it might be returned, in that the Barnett formula is what rules, and it is not currently possible for the Chancellor to say that this is money for X or Y. But it seems to us equitable that for this tax to work in Northern Ireland, the money would have to come back in some way. We have mooted the idea of a £28 million sustainability fund which is clearly a large sum for a sustainability fund, although if such a thing were theoretically to exist it would it would clearly be for us to apply it

  widely in promoting the alternatives for the rural economy.

  146. Sure. But if it does not come—Christmas comes once a year but the Chancellor doesn't give out £28 million once in a century, unless he has to. If it does not come, do you not then concede that this tax will operate unfairly in Northern Ireland?
  (Mr Woods) I think that one could apply that argument to many taxes.

  147. You could apply it to all taxes, but we are talking about the difference between the tax being operable in Northern Ireland and in Great Britain. Without that return, do you concede that it would be unfair?
  (Mr Woods) I concede that we would think that it was unfair. Whether this is an argument for not implementing it is another matter. This is a real challenge for devolution for the Chancellor to get his head around, so to speak.

  148. Again, I am not trying to put words into your mouth, but if you do not get that extra return available to be spent in Northern Ireland, the tax would be unfair in Northern Ireland as

  opposed to Great Britain?
  (Mr Woods) No, I do not think that I can say that, because there will be areas of Great Britain that will be similarly affected in that the amounts of tax collected will differ from the amounts going back into the local economy, depending on which forms of regional government . . .

  149. I have not followed that. You have conceded that the tax is the same for everyone in

  Great Britain, therefore that the whole industry will have to bear it and that the Government will return it, in terms of the contributions and the results of the levy, on an equal basis in Great Britain. I am asking you a very narrow question: if you don't get that extra subvention which you have established at £28 million in Northern Ireland then the tax vis-a-vis Great Britain will be unfair? That is what I am asking you.
  (Mr Woods) I feel slightly backed into a corner on this one in that it would be unfair if we drew a direct comparison between Northern Ireland and Great Britain as a whole. But what I should like to add is that if, for example, we drew a comparison between Northern Ireland and Cornwall, purely for the sake of argument we might well find that the amount of revenue taken from Cornwall does not correspond to the amount of money going back in national insurance contributions or in any other way. Therefore, in that sense, it may not be unfair.

Mr Tynan

  150. May I ask whether the £35 million raised as a result of the tax is largely because of the disproportionate amount of quarrying taking place in Northern Ireland, in which case we could expect it to come down as a direct result of the implementation of the tax?
  (Mr Woods) Yes. Perhaps I could add briefly to that. All the figures used are for the amount of tax collected, taking account of current extraction levels. If the tax is to work, it means that extraction of aggregates will decline, therefore less money will be collected by the Treasury.

  In terms of the costs that the tax will impose economically, actually, as we shift from using virgin aggregates in the vast quantities that we use in Northern Ireland, we will be able to achieve savings.

  Chairman: Mr Woods and Mr Allison, thank you very much indeed. May we ask you to leave as quickly as you can so that we may move the next witnesses in and keep the show on the road.

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