Examination of Witness (Questions 57-59)
16 SEPTEMBER 2003
MR NIGEL
LUCAS
Q57 Chairman: Mr Lucas, thank you
for coming to help us look into this problem. In your submission
you say that the total value of output in the construction industry
is approximately £2.4 billion per annum and this means total
aggregates sales of about 22 million tonnes. Are you able to tell
the Committee how much of that is virgin aggregates, recycled
or processed products?
Mr Lucas: No, Chairman, I would
not have a detailed break down of that[9]
Q58 Chairman: Who would?
Mr Lucas: Probably my colleagues
in the QPANI might be able to give an indication.
Q59 Chairman: So we are asking the
wrong person the question. We must try and find that figure by
other means. What effect has this levy had here so far and how
much more do you think that impact will be felt as the phasing
in of this goes on year by year?
Mr Lucas: Chairman, our submission
tends to concentrate more on the effects on the economy and on
the construction industry itself rather than on detrimental effects
on the quarrying sector. However, I may return to that point in
a moment. As the submission points out, the construction industry
here makes a significant contribution to Northern Ireland's GDP
and thereby its local economy. The industry supports around 45,000
operatives directly and indirectly. We are facing a time of substantial
increase in infrastructure spend in Northern Ireland. The Finance
Minister, Ian Pearson announced earlier this year a package of
around £2 billion of additional spend. This is to address
an infrastructure backlog that has arisen over the last 30 years.
It is crucial to the construction industry's ability to maintain
and meet this challenge in the increase in infrastructure spend
that we have a vibrant aggregates supply market and if the aggregates
supply market is suffering through the effects of the tax then
obviously it will have a significant knock-on effect on the construction
industry's ability to meet this increase in infrastructure spend.
In my submission I draw an analogy to the financial cost to the
industry. The "tax take" out of a £2.4 billion
turnover equates to approximately £35 million per annum.
We also draw attention to an example where the public sector represents
some 60% of construction output, therefore the 60% of the £35
million of "tax take" is around £21 million out
of public sector spending. That as an analogy equates to the entire
maintenance programme for the Roads Service for a full year. Another
example is in the north-west of the province where there is a
large water treatment works project that has recently been announced
called Culmore. At the time of writing this submission the funding
was in some doubt. This is one of the 56 hot-spots for water treatment
plants in Northern Ireland that will have to be put in place to
meet the EU Compliance Directive on the quality of water treatment
by 2005. At the time of writing this submission the funding for
the Culmore plant, around £20 million, was in doubt. Therefore,
although the Culmore plant has recently announced the funding
is now secure, the analogy is that if you look at the amount of
tax taken out of the economy at a time when these water treatment
plants or other projects are vitally needed, then it is obviously
going to put some of these projects in doubt.
9 The witness subsequently informed the Committee that
on advice from the QPANI the split is about 50:50. Back
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