The implications of the border
for the environmental goals
26. We are forced to wonder how the Government could
have got into a position where a proposal genuinely and specifically
targeted at environmental damage could have been developed in
so counter-productive a manner. The implications of the land border
between Northern Ireland and the Republic seem to have passed
them by. We are surprised at the omission of the Government
to carry out any kind of investigation of the impact which the
border would have on the balance of environmental and economic
27. The Republic of Ireland does not have an aggregates
tax. While the Friends of the Earth Northern Ireland and the Green
Party in Belfast argued that the Republic should introduce an
we are not aware of any plans for such a tax. Under the Government's
proposals imported virgin aggregates will be subject to the levy,
but imported 'value-added products' such as concrete will not,
when the manufacturing process takes place outside the United
28. We were told that for the UK in general the effect
of the levy on the difference in price between domestic and imported
goods will not be of great significance because of the associated
haulage costs. Over any significant distance they are expected
to outweigh the impact of the levy, ensuring that local sourcing
remains the more desirable option.
29. However, Northern Ireland cannot be considered
in the same light as the rest of the UK, because of the land border.
Mr Murphy of the Quarry Products Association explained:
"The logic of the tax
legislation as it is currently formed is that by and large the
products our industry produces are not of sufficient value to
warrant import or export. By and large that is true, but true
for Great Britain is not true for Northern Ireland. In a mechanism
by which the tax is expected to work ... the client who is responsible
for that product's use will have no alternative other than to
pay it because you cannot competitively source an alternative.
In Northern Ireland the client has an alternative. The client
can simply source product from elsewhere."
30. The economic implications of this alternative
are discussed in detail in Chapter 4 of our Report. From a purely
environmental point of view, the aggregates producers are convinced
that a significant increase in imports to Northern Ireland of
aggregates and construction material from the Republic will have
negative environmental effects:
(a) increased haulage
will lead to increased air pollution from vehicle exhausts.
The Friends of the Earth Northern Ireland suggested
that the argument about transport effects was of limited significance,
since the average distances travelled in other parts of the UK
were already likely to be much higher.
The QPANI confirmed that the average distance travelled on the
mainland is 32 miles,
whereas the average haulage distance in Northern Ireland is 12
miles. The QPANI also told us that, on average, 4kg of carbon
dioxide are emitted per tonne of aggregate extracted and delivered.
Our primary concern is, of course, not the distance travelled
of itself, but the increase in distance which is directly consequent
upon introduction of the levy. We are inclined to believe that
if the levy would make it economic for producers in the Republic
to transport tax-free aggregates over distances of 20 miles or
more into Northern Ireland, a proportionate increase in CO2
emissions could be expected.
Any added contribution to global warming is a significant consideration
to set alongside the more immediate environmental effects we have
previously discussed, of dust, noise and visual intrusion.
(b) the levy might
prompt Northern Ireland producers to increase levels of virgin
aggregate extraction in order to compensate for loss of business
in value-added products.
Mr Murphy told us one of the options his firm faced
"... stay where we are
in our current location, but close our asphalt plant and ... increase
the rate at which we extract and sell virgin aggregate. In order
to maintain our current level of business activity, we would have
approximately to treble the amount of aggregate we quarry per
It would seem that in Northern Ireland the levy,
whether it is intended to reduce aggregate extraction or to reduce
pollution, is destined to fail its environmental goals.
The exclusion of Northern Ireland
from the research
31. The QPANI told us that London Economics had failed
to take account of: the density and significance of quarrying
in Northern Ireland; the current lower level of travel movements;
and the difference in environmental management of quarrying in
Northern Ireland as compared to the mainland.
We asked them if London Economics had looked specifically at
the situation in Northern Ireland, and they told us "No."
32. Friends of the Earth Northern Ireland confirmed
the flaw. "The lack of research into the effects of the levy
on Northern Ireland is a serious oversight by the Government",
In oral evidence they confirmed this, saying "It is clear
that with our unusual position of having a land border, some research
should have been done in Northern Ireland to take account of this".
Turning to the London Economics report we found that Northern
Ireland was wholly excluded from the research on environmental
impacts "for logistical reasons".
33. We asked the Government what these logistical
reasons were. They told us that:
"The aim was to choose
representative sites in terms of rock type, output and population
density in order to provide a sound statistical basis for generalisation
of the results. While the expert group advised that the researchers
should seek to ensure a reasonably broad geographical spread of
sites, they were content that areas not specifically studied,
such as Northern Ireland, were suitably represented in terms of
the above criteria".
34. This answer tends to support our view of a very
blinkered approach to the issues under consideration. Since we
were not entirely satisfied, we pursued the question of the 'logistical
reasons', and of the efforts made to fill the gaps left by London
Economics, with the Financial Secretary to the Treasury. Initially,
the Financial Secretary told us that "the work was subject
to independent review by a panel of academic experts and not found
wanting in any respect".
Given the comments by Mourato and Pearce which we have quoted
previously in paragraph 17, we were surprised. After further discussion,
however, the Minister conceded:
"The research was managed
by the DETR on a very narrow point of environmental cost. If they
had been asked the questions that we are now asking in the Treasury
and which you are asking as a Committee they would have produced
a different piece of work and it may well be that a separate piece
of work ought to have been commissioned, nevertheless it was not
35. The issue of the border, and of the problems
associated with cross-border price differentials, is not new.
Our predecessors in the last Parliament drew attention to it in
their Third Report of 1998-99;
the former Trade and Industry Select Committee raised the same
point in their Fifth Report of Session 2000-01.
While we accept the Minister's point that the industry's representatives
might have reacted more quickly,
the case nonetheless remains that the QPANI and the CBI met officials
in London about the problem on 29 September 1999,
and that it took another two years for HM Customs and Excise officials
to make the return trip to Northern Ireland, in August 2001.
We also point to the fact that the Steering Group which was supposed
to be providing "advice to the Department [of the Environment,
Transport and the Regions] on the management and direction of
included representatives not only of the DETR but also of the
Treasury, HM Customs and Excise and the Department of Trade and
In the circumstances we find it almost impossible to believe that
the potential difficulties posed by the border were not raised
at some point in the Government's discussions.
36. We are forced to conclude that the lack of
consideration given to the unique position of Northern Ireland
was both unfortunate and unhelpful. The environmental and economic
costs to Northern Ireland could be serious.
42 Ev pp37,71 Back
43 Q49 Back
Ev p25 Back
48 Q6 Back
50 Q52 Back
52 Q94 Back
Environmental Costs and Benefits of the Supply of Aggregates,
Phase 2, London Economics/DETR July 1999p10 Back
55 Q230 Back
56 Q236 Back
in Northern Ireland of Cross-border Road Fuel Price Differentials,
HC334 1998-99, London TSO Back
on Trade and Industry of Motor Fuel Taxation, HC 268, 2000-01,
London TSO Back
for example Q230 Back
61 Q43 Back
Environmental Costs and Benefits of the Supply of Aggregates,
Phase 2, London Economics/DETR July 1999, Preface Back