Examination of Witnesses (Questions 140
- 150)
WEDNESDAY 14 NOVEMBER 2001
MR JOHN
WOODS AND
MR DECLAN
ALLISON
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.
Chairman
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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