Select Committee on Northern Ireland Affairs Third Report


The Northern Ireland Affairs Committee has agreed to the following Report:


1. On 11 December 2001 we published our First Report, on the "Introduction of the Aggregates Levy in Northern Ireland". The aggregates levy, introduced by the Government from 1st April 2002 as an environmental tax, is designed to deter the quarrying and use of virgin aggregates.

2. In our original inquiry we discovered substantial weaknesses in the Government's plans as they affected Northern Ireland: specifically, a failure to recognise and address the problems for the local economy arising from the land border with the Republic, and the different tax regime there. Following our oral evidence session with the Minister on 22 November 2001, on 27 November the Government proposed as a concession in the pre-Budget Report to phase in the levy for processed products in Northern Ireland over five years.[1] While we welcomed this step, we called for the Government to postpone the introduction of the aggregates levy in Northern Ireland altogether until the full impact of the proposal on the local economy had been properly examined.[2]

3. When we received the Government Response to our Report on 8 February 2002, we saw that the Government had neither accepted our primary recommendation nor addressed our other concerns. We therefore invited the Minister to discuss the matter with us again. The Government Response and the minutes of evidence of this second meeting are both printed with this Report.

4. We continued to point out that the proposed concession would only defer the economic problems for Northern Ireland, rather than solving them. The Minister told us that the Government "anticipate that the environmental concerns ... will also apply south of the border [and] ... one would expect the Republic to be recognising the importance of the approach that we are taking". He implied that the Republic was coming under pressure from other quarters to follow the United Kingdom's lead.[3] However, he later added that "it might be many years before [the Government of the Republic] were so persuaded".[4] Since the Minister has freely acknowledged that harmonisation is many years away, the case has still not been made for the levy in its present form for Northern Ireland. In the year's grace which the phased introduction will give to manufacturers of processed products in Northern Ireland, we expect to hear either that the Government's efforts to achieve harmonisation promise success, or that the phasing of the levy will be further postponed until a proper case can be made for it.

5. We remain concerned that, having now admitted that part of the founding research "was not at all robust", the Government should continue to place so much confidence in the remainder of the research.[5] Nonetheless we welcome the Minister's acceptance that "in research and preparation you need a fuller knowledge and a fuller research base than we had in terms of the introduction of this tax. That full knowledge has to include Northern Ireland and its special circumstances".[6]

1   Introduction of the Aggregates Levy in Northern Ireland, First Report 2001-2002 (HC 333) paras 88-90 Back

2   Introduction of the Aggregates Levy in Northern Ireland, First Report 2001-2002 (HC 333) para 94 Back

3   QQ8-9 Back

4   Q13 Back

5   Q32 Back

6   Q43 Back

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Prepared 30 April 2002