|Aggregates Levy (Registration and Miscellaneous Provisions) Regulations 2001 and Aggregates Levy (General) Regulations 2002
Mr. Heath: It is a great pleasure to serve again under your chairmanship, Mr. O'Hara.
The hon. Member for Aylesbury covered a great deal of ground in considering the regulations. I am happy to associate myself with the prayer against the regulations, because the Government need to be asked some serious questions about them. As the Minister said, there was lengthy and detailed discussion on the matter during consideration of the 2001 Finance Bill, in which I participated, having tabled amendments. I did so because, as much as any other Member of the House, I have experience of the quarry industry in my constituency and the conflicting pressures on the local community.
It would be wrong, and outside the scope of the regulations, to revisit the arguments for and against the aggregates levy. I do not intend to do so here, other than to restate my regret that there is no reward in how the levy will be implemented for good environmental practice in quarries. The Government should reconsider that omission.
No one with even a brief acquaintance of the regulations and their chronology could fail to conclude that, for a tax that has been subject over several years to enormous consultation—as the Minister said—involving the industry and others, it is extraordinary that ultimately we have a measure that seems to have been worked out on the back of an envelope, that is retrospective in its implementation and that the House
Column Number: 011is asked to consider without sufficient notice or information or any real prospect of affecting how the tax will be administered. That is regrettable. If the arguments for it are well founded, we have the opportunity to introduce an aggregates levy as an environmental tax that would achieve the results that the Government claimed for it. My fear is that it simply will not do that.
As I said in my earlier intervention on a point of order, we face the extraordinary circumstances whereby an announcement has been made by Her Majesty's Customs and Excise that it has already implemented changes to the regulations which were implemented from 1 April. The Customs and Excise press release of 17 April 2002, CE25, states that the Aggregates Levy (Registration and Miscellaneous Provisions) Regulations 2001 will also be amended, but that the changes will have effect from 1 April 2002.
Mr. Salmond: I have been watching the Minister's body language very closely.
Mr. Boateng: I do not recommend doing that.
Mr. Salmond: The experience has been a trial. Nevertheless, I have forced myself to watch the Minister's body language, and it suggests that he disagrees with the hon. Gentleman's point.
I am sure that the Minister is poised to intervene to clarify why Customs and Excise is doing this, as it would not be like the Minister to be backward in coming forward.
Mr. Heath: I am grateful to the hon. Gentleman for that observation. He is able to look at the Minister, but if I were to observe his body language I would be out of order, as I am addressing the Chair.
However, I agree with the hon. Gentleman that it would be helpful if the Minister would intervene now to tell me that the words that are plainly printed in the Customs and Excise press release are incorrect in some detail. It appears that that is not the case. I am right to think that we are discussing regulations that have, in effect, already been amended, but that has not been stated in the letter of the regulations, and we await a further proposal from the Government on that.
Let us deal with what actually is written on the paper. I hope that my inquiry is not frivolous, and that the Minister can help me with regard to it. I have looked very closely at form 3, and at pages 22, 23, 24 and 25 in the schedule to statutory instrument No. 4027, and I am at a loss to understand exactly what is going on in this form.
With regard to its repetitive nature, I thought that we had got rid of the idea of the importance of filling in forms in triplicate. I say in all ignorance to the Minister that I would welcome an indication as to why we have what appear to be identical forms in almost every respect—there are minor changes on consecutive pages—particularly given that, in the main body of the regulations, regulation 22(2) already states that
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Therefore, there is no need for minor variations in the body of the schedule, and I would welcome guidance on why we have the benefit of these small changes from page to page.
I turn to the substance of the regulations. The hon. Member for Aylesbury mentioned the taxation position of overburden, and he was absolutely right to say that there is an ambiguity in the Government's position. What is of particular importance to the limestone producers is the ambiguity in the Government's position on scalpings. They have failed to find an adequate definition of scalpings. There is no doubt that, at the moment, scalpings will carry an aggregates tax. If so, that will make their disposal on a commercial market virtually impossible. That will have all sorts of knock-on effects—with regard to the substitution of markets and the fact that they will become a waste product on the floor of the quarry—and that will encourage the use of more virgin stone, which is the opposite of what the Government are trying to achieve in this legislation. Therefore, I ask the Minister to look again at the issue of scalpings. The Department has been looking at it for some time, and it seems that the productive discussions that it has had about it with the hon. Member for Banff and Buchan and others have yet to satisfy anyone.
I turn to the related matter of uncrushed rock, and whether that falls within the definitions offered here. We know that the Government now intend to include uncrushed rock, and I understand the logic of saying that if crushed rock is going to be included, removing uncrushed rock and crushing it later comes to the same end point. However, that begs the question whether the legitimate aggregate uses of uncrushed rock—such as in sea defence, which was mentioned earlier—will fall within the context of the regulations and the tax. I would be grateful for guidance from the Minister on that.
I also seek the Minister's guidance on what is in effect the self-definition, by those registrable under the regulations, of uses that are exempt or relieved. Much of that depends on end use. Can he tell me how Customs and Excise will treat a producer who in good faith has certificated an end use as a relieved end use if it is subsequently found that the purchaser from that quarry has put the product to an end use that does not fall within the definitions for relief? That seems to be a lacuna in the present arrangements. Perhaps the Minister will correct me if I am wrong, but there does not seem to be any possibility for appeal against a decision by Customs and Excise on that. Identifying the end use intended by prospective customers is a major concern.
The Government have announced that they intend to tighten up the regulations on materials derived as a by-product of construction. That is absolutely right. The identification of a potential problem there is one of the positive effects of negotiations with the industry. Materials deliberately created as a by-product of construction and then used for an aggregate purpose will be covered. However, there remains considerable scope for substitution of material and avoidance of the levy. If the Government intend that to be the case, let us be clear on the rationale behind it. Recycling
Column Number: 013material that is unavoidably produced is one thing, but widening that to include peripheral material in order to avoid the aggregates levy is digging from a different hole in a different place. It is not clear that that is an environmental advantage. What are the Minister's views on that?
The hon. Member for Aylesbury drew attention to the tax position of contracts requiring stockpiles for supply. That is a real issue; I am glad that he brought it up. I agree with him that the stockpiled material becomes taxable at the point at which it becomes subject to an agreement to supply. I am not absolutely sure that I agree with him that that is triggered by the movement of the first consignment. It is arguable that the tax point is before that—the point of signing a contract or coming into an agreement to supply. That is a big problem for smaller quarries, especially those without the commercial muscle to resist the demands of a big customer. It would be to everyone's benefit if the Customs and Excise position were clarified.
There are clear provisions in the regulations for bad debt with the primary supplier. What is less clear is the position on bad debt with subsequent suppliers of taxable material, who have, in effect, paid the levy. It is not unusual, in manufactured stone goods, to end up with a large supply or to be awaiting supply and to get into a bad debt position. In equity, there should be a tax write-off there, but under the regulations such arrangements seem not to apply, which is unfortunate.
The arrangements are hugely complex. I do not think that the Government have yet arrived at a satisfactory position.
I have one last point. The whole argument in support of the aggregates levy was based on the studies done on local environmental benefit. What sticks most in the craw of my constituents and others is the fact that the specific benefit to which they had looked forward is now to be diffused throughout the country by means of the sustainability fund, and not used in the immediate vicinity of the quarries that suffer environmental disbenefit. The arrangements for the use of the sustainability fund will not benefit predominately those English counties of Somerset, Leicester and Derbyshire that produce the vast majority of stone won for aggregates use. Instead, that task passes to English Nature, English Heritage and the Countryside Agency and their equivalent bodies in Wales and Scotland.
|©Parliamentary copyright 2002||Prepared 29 April 2002|