Justine
Greening: My right hon. Friend makes some interesting
comments. Is it not ironic that although we have such detail, when it
came to the retrospective aspect of vehicle excise duty, apparently no
assessment was made, although the amount would have been in the
millions?
Mr.
Redwood: My hon. Friend makes a good tangential point.
Indeed, I see no impact assessment of the £5 billion
loss on buying bank shares at today’s market prices, which the
Government seem to want to do. That might be a good thing to analyse,
but we are charged today with looking at this policy shift from one
preferred method of dealing with contaminated land to another preferred
method, and the tax changes that the Treasury is proposing. For
parliamentary scrutiny to mean something, and for Ministers to reach
wise judgments about policy options, one has to start with as much
evidence as one can possibly amass. I thus urge the Minister to think
again because I simply do not believe that this set of figures is up to
the task, because there are many big gaps, and when some of the gaps
have been filled in, the figures are difficult to
believe. 4.49
pm Mr.
Nick Raynsford (Greenwich and Woolwich) (Lab): I shall not
detain the Committee for long, but I want to bring us back to
fundamental issues about the direction of policy. I represent a
constituency that has a large amount of formerly contaminated land,
much of which has been decontaminated, but where—I am thinking
of the Greenwich peninsula in particular—a very high proportion
of the highly polluted land has had to be transferred away from site to
landfill. Just across the river from the Olympic site, to which the
hon. Member for Southport referred, there has been, absolutely
correctly, a strong emphasis on remediation on site. That has not only
ensured a far more environmentally appropriate solution, but
drastically reduced the external implications arising from vehicles on
the roads transporting waste to landfill sites and damage to the wider
environment. It is because those externalities are difficult to measure
that it is probably quite hard for my hon. Friend the Minister to give
a fully accurate assessment of the benefits.
However, I have absolutely no doubt that the direction of travel is
correct, and I note that only in recent years has there been a real
shift towards remediation on sites, such as on the Olympic
site.
Dr.
Pugh: I hope that the right hon. Gentleman can enlighten
me on this. Is it possible, with all contaminated land, to engage in
remediation techniques on site?
Mr.
Raynsford: The hon. Gentleman raises an issue that the hon. Member
for Putney also mentioned, which I was about to address. At the Olympic
site, exemplary results have been achieved in extremely difficult
circumstances against a very tight project management timetable to
deliver an enormous amount of work by 2012. Most of the people who have
looked at that site have been surprised by what has been achieved
there. If remediation is possible in such circumstances, I suspect that
it will be possible in most, provided that there is the will to do it.
We should send the message that that will should be there, rather than
give succour, perhaps unintentionally, to those who say that it is all
too difficult and cannot be done, and that we will have to go on doing
things as we did in the past—by transporting contaminated land
to landfill elsewhere.
I have only
one question for the Minister on this issue: when will the land
remediation relief be extended? Her policy involves phasing out the
current exemption, and I am interested to know when the extended relief
will be phased in so that there is a financial incentive to ensure that
people do the right
thing. 4.52
pm
Angela
Eagle: My right hon. Friend has hit the nail on the head
in his short contribution to the debate. He rightly emphasised that
there has been a great deal of progress since the introduction of the
landfill tax on ways of dealing with contaminants on site, such as the
development of soil washing. That is a way of treating contaminated
soils on site, and rescuing the soil by taking the contaminants out of
it and disposing of them, which has to be better than carting tonnes of
material to landfill and not being able to take out contaminants,
thereby leaving problems on both the site being cleaned and the
landfill site. Such developments are due partly, I suspect, to the
landfill tax and partly to the increased interest in decontaminating
brownfield sites. That interest, in turn, has been caused partly by the
Government’s policy of incentivising development on brownfield
sites, which has brought about positive developments in this area. My
right hon. Friend is right to point that out.
In some
cases, it is not possible to do all the decontamination on site, but we
are interested in continuing to incentivise research and development in
that area, so that we can reduce to the absolute minimum the amount of
material that has to be physically removed from the site for it to be
cleaned. Asbestos is an obvious example of something that one would not
wish to remain on a contaminated site. I hesitate to mention Japanese
knotweed, but it is another example. If it is dumped, it tends to grow
at and affect the site at which it is dumped. There are various
contaminants that it is undesirable to leave in situ, but an increasing
number of those that tend to
be found on brownfield sites are treatable on site.
The shift from a policy developed in the ’90s to one that
recognises that changes have taken place is welcome. The hon.
Member for Putney agrees with our approach with regard to what we are
trying to do. She was right to say that on-site decontamination was not
always possible. She asked about numbers of sites. It is not possible
to know in advance how many sites might require off-site transport to
deal with contaminants, because we cannot always know in advance what
will be found. However, the trend mentioned by my right hon. Friend the
Member for Greenwich and Woolwich has continued. Fewer sites now need
to be dealt with by a dig-and-dump approach, and we hope that that will
continue to be the case. I cannot give the hon. Member for Putney an
exact number of sites involved because it is impossible to
know. The
hon. Member for Southport and the right hon. Member for Wokingham
wondered how the switch had been signalled. It was announced and
consulted on during the 2007 Budget. The 2007 pre-Budget report
announced our intention to proceed and published a consultation. In
December we published the responses to that. In the 2008 Budget we
published the consultation responses and confirmed the timetables. We
shifted the final date for phasing out the scheme from 2010 to 2012 as
a response to consultations that we held with those who were most
affected.
My right hon.
Friend the Member for Greenwich and Woolwich asked when the other
part—the positive part—of this will come into law. That
will happen on 1 April 2009 as part of the Budget process.
That is when the two shifts essentially balance each other out. The
date of 30 November will bring to an end the final
applications for exemption under this part of the scheme. This process
has been in the public domain for over a year, and it would be hard for
the industry to argue that it had not been made aware that it was going
on or that that date was in the frame.
The hon.
Member for Putney asked what responses were produced by the
consultation. The main concerns expressed were about how long the
phase-out period would last, and we responded by extending it for two
years. Few people, if any, suggested that it was not correct to move
away from the regime put in place in 1996 and shift to a corporation
tax-related relief. We feel that we have the right approach.
The hon.
Member for Southport was right when he said that there are
uncertainties about what the precise figures and behaviours should be,
how the scheme will work out and whether there will be progress. He
also asked whether there was consultation prior to introduction. Yes
there was—it was extensive and has been ongoing for over a year.
Of course we will keep an eye on how the switch of regimes affects
behaviour, whether we need to do anything to refine incentives and
whether there are any unexpected consequences. If such unexpected
consequences appear, of course we will consider a change to the
regime.
Mr.
Redwood: Does the Minister agree that careful control is
needed when cleaning up on site to avoid nasty materials from leaching
into the water courses?
Angela
Eagle: Of course I agree. Soil washing must be done in a
way that is consistent with public safety and with minimising the
chances that such a thing might happen.
Dr.
Pugh: On the uncertainties, clearly when the contractors
were consulted they were given a choice between land remediation on
site, which was offset by land remediation relief, or dumping which was
offset by exemption. Neither the exemption nor the offset from LRR
would significantly account for all their costs, so it would still be
the case that the total cost to the developers of one option was
greater than the total cost of the other. Presumably, had the
developers thought that, they would have said it. I assume, as the
Minister is nodding, that they did not say that—that was not
their
view.
Angela
Eagle: The consultation demonstrated that there was
general agreement that the shift was desirable, partly because of the
change in approach and the new techniques that have become available
since the original process was developed with the landfill tax itself.
Obviously, we will keep these issues in mind and keep an eye, with the
industry, on the effects of the changes. We discerned no major
disagreements in principle to the changes on which we
consulted.
The hon.
Member for Putney asked about CO2 changes. The reduction in
carbon emissions is principally due to reduced emissions from the
transportation of waste to landfill sites; that is the 5,000 tonnes of
CO2 resulting from reduced transportation that is included
as a benefit in the cost-benefits.
The right
hon. Member for Wokingham had a series of questions on the impact
assessment. The £3,000 is the one-off cost for those who have to
accelerate projects slightly to meet the 30 November and the December
deadline if they wish to register a site for the exemption. The right
hon. Gentleman will notice, I hope, that there is no requirement for
that to be accompanied by every piece of information that HMRC would
need to put the exemption into effect—it is to register a
particular site for interest. He is right, as is the hon. Member for
Southport, that these sites can sometimes take a number of years to
develop and clean. Therefore, we try to be as flexible as possible in
the way in which the current system will be phased out without having a
cliff edge. That has been generally welcomed.
The right
hon. Member for Wokingham commented on the £7,200
figure—that is £8 per company that would have to fill in
an application for an exemption. Last year, 850 companies applied for
the scheme in that manner. It is simply a small administrative issue.
We are confident that we have done the work to estimate as far as
possible the effects of administrative burdens. There is something
called the standard cost model. It is an activity-based costing
methodology that considers the activities that businesses need to
engage in to comply with their legal obligations and estimates the cost
of such activity in running an efficient business. In practice, some
businesses may face higher costs if they are not operating fully
efficiently. It was using this standard cost method that the
administrative burden of applying for the exemption certificate was
placed at roughly £8. Only a limited number of companies are
involved in this area. They have been well used to applying for the
exemptions, and this is our best estimate as to the likely
administrative burdens of making a shift. We take our obligations to
fill in the cost assessments seriously and, in sometimes uncertain
areas, we try to make the best guess that we can using standard models.
There is more method to it than perhaps the right hon. Gentleman
was willing to allow in his contribution, but he is right to keep
looking, to check that we get it
right. With
those reassurances, and knowing that there is wide acceptance that this
is the right kind of shift to make, I hope that the Committee will be
happy with the statutory
instrument.
Justine
Greening: The other key question that the Minister has not
addressed involves the additional £40 million tax
revenue. I have a number of questions. Who would bear that burden? What
assessments are being done? What is the overall impact on landfill duty
versus corporation tax that nets off to £40 million? Can the
Minister provide the Committee with any additional details as to how
the £40 million was arrived
at?
Angela
Eagle: The £40 million applies to those who,
despite all the advances in technologies, cannot remediate without
taking things to landfill, so they end up paying
a tax, although before the changes they had an exemption. It is an
additional £40 million to the Revenue, which would be used to
fund the changes to corporation tax—the extra relief that we
shall introduce in April 2009, as we said explicitly. The
landfill communities fund value is reviewed annually, taking account of
a range of factors—environmental, social and so on. The
phase-out of the exemption will be factored into that for future years.
The shift is meant to be revenue neutral. We are certainly expecting
that the money that comes in from getting rid of the exemption will go
towards funding the relief in corporation
tax. Again,
I hope that with those reassurances, the Committee will be happy to
agree to the statutory
instrument. Question
put and agreed
to. Resolved, That
the Committee has considered the draft Landfill Tax (Material from
Contaminated Land) (Phasing out of Exemption) Order
2008. Committee
rose at seven minutes past Five
o’clock.
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