|Aggregates Levy (Registration and Miscellaneous Provisions) Regulations 2001 and Aggregates Levy (General) Regulations 2002
Mr. Heath: I am sure that the right hon. Gentleman has answered the question, but I repeat—in all ignorance, so that he can have more fun—that one problem with the form is the lack of space to set out the reasons for site closure. I can think of several quarry owners who will not find the space adequate to express their views of the Government when they go out of business.
Mr. Boateng: I hear that, but I am quite sure that they will be just as happy making their points down the telephone as they will writing them down.
Let me deal now in detail with the points made in debate. It was said that companies should be able to claim bad debt relief on processed products, but such relief would have to apply equally to companies that produce aggregates and to those that merely buy them. I am sure that the hon. Member for Aylesbury recognises that many thousands of companies manufacture products with some aggregate content. I do not believe that he is seriously suggesting that they should all pay the tax so that there can be bad debt relief, as that would create massive compliance costs for business; that cannot be his intention. Aggregates that are used in processed products cease to be aggregates at the point of mixing; they cannot subsequently attract relief from the levy, because mixing changes their nature. I hope that he will feel, on reflection, that that is perhaps not his strongest point.
The hon. Gentleman's argument about adjustment to contracts is covered in primary, not secondary legislation. We should, however, recognise that the levy is a tax on aggregates. There is clearly a dispute between some, but I hope not all, Opposition Members and the Government about whether aggregates should be taxed. The levy is, however, a tax on aggregates and is designed to reduce the extent to which they and the environmental harm that flows from their extraction have an impact on society. It is perfectly understandable, therefore, that the provisions should apply to supplies of aggregates rather than to other products. That point extends also to bad debt relief.
Mr. Salmond: I am sure that the Minister will concede that not all aggregates are the same. The Government originally intended not to tax non-crushed aggregates, and I understand why they switched position to avoid introducing an additional complexity into the system. Does the right hon. Gentleman accept, however, that before that switch, coastal defence systems that contained 99 per cent. non-crushed aggregates, which would be normal for a breakwater, would not have been taxed? I hope that the Government's consideration of the matter led them to conclude that they could shift position without ending up taxing something entirely beneficial that they never meant to tax in the first place.
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Mr. Boateng: I hear what the hon. Gentleman says, but he knows that the Government's shift in position was a direct result of our dialogue with the industry, although he might not like the outcome. None the less, I understand his point about coastal defences and I am reflecting on it. Were I not doing that, I would have made an announcement about it today. It is a serious matter that is worthy of serious consideration. However, we should not be taken to task for shifting our position on crushed and non-crushed aggregates, because we did so as a direct result of dialogue with the industry.
In a similar vein, I could not help but smile at our being taken to task when the hon. Member for Somerton and Frome had his fun with the press release. That is fair enough—he has to say something—but the press release was issued in that form to give industry advance notice of our intentions regarding notification. We introduced a measure in the Budget that will form part of this year's Finance Bill. It is designed to reduce complexity and compliance costs, as we will no longer require people to notify us of the fact that they are not registered. That should be welcomed. When the industry comes to reflect on these matters, it should be aware that that is one burden that will not be imposed on it.
We will deal with that measure in the Finance Bill. As a result, it is necessary to remove regulation 3(2) of statutory instrument No. 4027, which deals specifically with notification. Far from chastising us for that, the hon. Gentleman should welcome it as another example of the Government's being prepared to listen in relation to the tax—[Interruption.] I hear him say from a sedentary position that the introduction of the measure has been chaotic, but that is far from the truth. The levy goes back to 1997, and at every stage of its introduction we have sought to involve the industry and base action on evidence.
Let us take the drafting of the regulations as an example. The revisions to the drafts were exposed to the industry for comment after the debate by the whole House in April 2001. A consultation group met in York, then twice in Leicestershire and again in Crewe. We took the opportunity presented by the pre-Budget report to highlight the proposed treatment of waste aggregates in Northern Ireland in relation to differential rates and the sustainability fund. The discussions went on and on, and only in December did we lay the first registration regulations. Whatever our disagreements about the levy and its faults, it cannot be said that its introduction has not been a model of the way in which we should consult and involve industry in a matter that clearly affects industry.
Mr. Luff: For the record, it is helpful to point out that the Minister's remarks should not be construed as meaning that the industry agrees with the aggregates levy. The British Aggregates Association wrote to every member of the Committee today, stating:
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Consultation there may have been, but it does not seem to have won many friends in at least some sections of the industry.
Mr. Boateng: The hon. Gentleman—perhaps characteristically, given his party's record in government—has misunderstood the nature of consultation. True consultation is not about making friends and influencing people, but about making sure that at every stage, people—even those who fundamentally oppose one—have an opportunity to be part of the loop and to be engaged in the process, as the BAA is and always has been. The Opposition might learn a thing or two in that respect.
Mrs. Helen Clark (Peterborough): I take the Minister's point about consultation. However, having read the briefing, I am concerned about the future of the quarrying industry. I have been approached about it in various contexts over the past year or so.
Mr. Boateng rose—
The Chairman: Order. I must remind the Committee that the debate is neither about consultation nor about the future of the quarry industry.
Mr. Boateng: I hear your strictures, Mr. O'Hara and will not respond to my hon. Friend, save to say that we are about to turn to the issue of scalpings. She will find that when she explains our intentions in that respect to her local quarry operators, they will understand what we are seeking to achieve—as will her constituents and all who are concerned about the impact of quarrying on their local environment.
The hon. Member for Somerton and Frome understands that we have a problem with scalpings, because all aggregate material attracts the levy when it is commercially exploited. If it is not commercially exploited, it is not subject to the levy. I am sure that he agrees with that. However, what one quarry defines as scalpings might be another quarry's main product. That is where the local quarries of my hon. Friend the Member for Peterborough (Mrs. Clark) and those in the constituencies of other hon. Members come into play. In constructing regulations, we must recognise that it is not possible to give relief on materials that one quarry might choose to call waste, because to another quarry those materials might not constitute waste.
Mr. Salmond: Does not that illustrate the problems of a flat-rate tax? If the problem is that the product is of low value, the danger of a build-up of low-value materials highlighted by the hon. Member for Somerton and Frome would not exist if the tax were a percentage of value. Why did the Government opt for the flat-rate tax, rather than graduating according to value, as is done in the case of most taxes?
Mr. Boateng: Because what we had to do to internalise the externalities was to use the best available research. That research arrived at a figure, as hon. Members will recall—we have lived with the levy for some time. That figure was £1.80, but after considering the impact of a flat-rate tax, we decided to
Column Number: 020set the tax at £1.60, in part because of our desire to ensure that while internalising the externalities in that way, we did not subject the industry and its products to an unconscionable disadvantage. A choice was made and the House accepted that choice, to which we now seek to give effect in the regulations. In the light of the many hours of detailed consideration given to the levy by the House, in Committee and in Westminster Hall, I feel confident in asking the Committee to approve the regulations.
Mr. Lidington: I am grateful to the Minister, at least for the courteous way in which he responded to the debate. I only wish—to borrow a phrase from the hon. Member for Banff and Buchan—that the outcome had been more productive.
I am genuinely disappointed that the Minister did not address several issues raised by the hon. Members for Somerton and Frome and for Banff and Buchan and myself. The question of long-term contracts and when the tax point arises still causes real concern to the industry. The period of consultation may have been prolonged, but uncertainty remains about a matter that is of central concern to companies whose very existence may be at stake. That is utterly unsatisfactory, and I hope that the Minister will write to Committee members on that point once he has had the opportunity to take advice. I note that he did not attempt to justify the rate of relief for low-value aggregates in the case of bad debt.
The Government have got their legislation and their tax—indeed, they have been busy implementing the tax since the beginning of the month, even though Parliament has not had an opportunity to debate the details of the measure since proceedings on the Finance Act 2001. The fact that there has been a long-running dialogue between Customs and Excise and the industry makes it all the more reprehensible that parliamentary scrutiny has been so rushed and so curtailed.
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