Supplementary memorandum submitted by
the British Aggregates Association
Thank you for your letter inviting this Association
to submit further evidence to the Committee and in particular
seeking our views on the Code of Practice & Compliance Framework
document.
The HELM Report vas publish in mid December
and we commissioned Wardell Armstrong, a well known company of
engineering and environmental consultants, to review the proposals
on our behalf. On the basis of Wardell Armtrong's conclusions
we confirmed our total opposition to the aggregates levy but recommended
to our members that, short of the complete removal of the
levy, these proposals were the best deal available to them.
Wardell Armstrong advised that the Code of Practice
and Compliance Framework proposals had merit but identified a
particular weakness, and I quote from their Executive Summary:
"An unfortunate result of the scheme, assuming
that not all aggregates producers elect to join, would be that
a two-tier system of environmental control would be established
within Northern Ireland. Furthermore, since the quantum of tax
saved is linked to tonnage produced rather than the actual cost
of any necessary upgrading works, it is likely that the greatest
impact will fall on the smallest aggregate producers.
We consider that the Code of Practice and Compliance
Framework has some merit and, if a further tax concession for
the costs of initial consultancy and upgrading was offered, we
would endorse the proposals".
We at the British Aggregates Association (BAA)
consulted our members and more widely, within the industry, in
Northern Ireland, and concluded that there was very little likelihood
of producers not adopting the proposals. However, we became concerned
that there was a risk that the small producers, who as Wardell
Armstrong pointed out, will bear proportionately greater costs,
would attempt to prepare the necessary environmental improvement
schemes themselves in order to avoid the "up-front"
consultancy costs. This would risk subsequent failures at the
audit stage and thus create the undesirable two-tier system as
foreseen by Wardell Armstrong.
Jointly with the Quarry Products Association
Northern Ireland (QPANI), the BAA have therefore submitted proposals
to the Environmental Taxation Division of HM Customs & Excise
recommending that SME's be given additional support to cover consultancy
costs and suggesting ways how this might be achieved.
As you are aware, in July 2002 the BAA brought
an action before the Court of First Instance of the European Communities
(CFI) against the European Commission, seeking annulment of their
decision that the aggregates levy in the United Kingdom did not
constitute state aid within the meaning of the Article 87(1) EC.
This action remains before the Court and we have, therefore, advised
our lawyers of the UK Government's latest proposals for additional
relief in Northern Ireland.
Our legal team have reviewed the Government's
latest proposals and have recently advised us that the proposals
may also be illegal. Furthermore, they recommend that, in line
with our long standing action at the CFI, the BAA lodge a complaint
to the Commission requesting that the Commission initiate a Formal
Investigation Procedure.
The BAA remains sympathetic to the very serious
problems facing quarry operators in Northern Ireland and acknowledges
that the proposed new relief scheme may mitigate some of the damaging
elements of the aggregates levy in that part of the UK. Furthermore
we recognise that a complaint to the Commission could have the
effect of delaying or stopping the implementation of the proposed
relief for Northern Ireland. Nevertheless, we believe that it
would not be in the wider interests of all our members to risk
prejudicing our legal argument that the levy does nothing to protect
the environment, and distorts the market in ways that are leading
to significant environmental damage throughout the whole of the
United Kingdom not just in Northern Ireland. The BAA therefore
has continued to seek further opportunities to engage constructively
with the Government. To this end we wrote two letters (on 19 December
and 27 January) to the Economic Secretary to the Treasury, John
Healey MP, requesting a meeting. Unfortunately we received no
response by 9 February 2004 and were obliged by that time to lodge
a complaint with the Commission.
The matter of these proposals is a complex issue,
which cannot be covered adequately in the context of this letter.
Should the Committee wish us to elaborate on any of the points
noted, we will be pleased to submit further written evidence or
present a specialist representative for examination.
12 February
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