Letter from the Financial Secretary, HM
Treasury to the Chairman of the Committee
The Clerk of the Committee wrote to the Treasury's
Parliamentary Clerk on 18 October about the Committee's intention
to conduct a short inquiry into the introduction of the aggregates
I thought it might be useful first to provide some
background and context to your investigations into the levy.
The environmental rationale and the efficient
rate of an aggregates levy were established by independent economic
research, commissioned by the former DETR. Initial findings were
published in April 1998. The Government invited an academic review
of this work, which informed the second round of research. The
study concluded that there were significant environmental costs
associated with quarrying, including noise, dust, loss of visual
amenity and damage to wildlife habitat, and estimated the value
of these costs on a conservative basis at £1.80 per tonne.
The Government has set the levy at a more cautious rate of £1.60
The aim of the aggregates levy is to reduce
these environmental costs and encourage the use and development
of recycled and alternative materials in place of virgin aggregate.
The levy will also encourage greater resource efficiency within
the construction industry. The 0.1 percentage point cut in national
insurance contributions for employers which is part of the aggregates
levy package will also promote employment in Northern Ireland
as elsewhere in the UK. Spending of resources provided for the
Sustainability Fund as a result of the levy's introduction is
a devolved responsibility, but again it will offer benefits to
As you will be aware, the aggregates levy was
announced in Budget 2000, although the principle was initially
aired in 1998 via the Government's consultation on how an aggregates
levy could operate. Provision for the levy was included in the
Finance Act. A whole day was devoted to discussion of the levy
in Committee of the Whole House. The levy is due to take effect
from April 2002.
Turning to the position of Northern Ireland,
a great deal of data on the Northern Ireland aggregates and aggregates-processing
industry has been gathered and analysed, including evidence from
the Northern Ireland Executive, the Quarry Products Association
(Northern Ireland), the British Aggregates Association and the
British Pre-cast Concrete Federation, who I am meeting this week.
Officials and I have been in contact with industry groups to request
further information in addition to the analysis provided by these
groups. I have also received representations from several interest
parties, which are being closely studied.
In addition to exchanging data and information,
there have been several meetings with representatives from the
industry and the Northern Ireland Executive. HM Treasury and HM
Customs officials recently visited the Northern Ireland Executive,
and met representatives of the Northern Ireland aggregates industry.
HM Custom's officials also visited border area quarries and discussed
aggregates issues with representatives of the industry during
the summer. I visited Northern Ireland this week and met with
As a result, Treasury Ministers are currently
actively considering the issues surrounding the detailed implementation
of the levy as part of the ongoing Pre-Budget Report and Budget
2002 process, including the issues relating to Northern Ireland.
We expect to announce progress on many of these issues in the
Pre-Budget Report this autumn.
I am very happy to help the Committee with its
inquiry. In particular, although the timescale is very tight,
I will undertake that the Committee will be supplied with a short
memorandum about the consideration of these issues. However, given
that I am currently considering decisions relating to the aggregates
levy, I would find it very difficult to comment on these issues
publicly in advance of any possible announcements in the Pre-Budget
Report. For that reason, you may feel that my value to the Committee
at this stage is limited. I would however be delighted to attend
with officials to supplement any technical or policy questions
that arise from the memo, or simply to hear your views.
I hope that I have reassured the Committee that
the Government has been carefully examining the issues raised
in Northern Ireland by the aggregates levy and is actively considering
them ahead of the Pre-Budget Report and Budget 2002.
In addition, if you would find it helpful, I
would be very happy to meet or talk to you about this issue, and
in particular to discuss how best I can help with the Committee's
Inquiry subject to may earlier caveats.
26 October 2001