Budget 2011 and Environmental Taxes

Written evidence submitted by the Mineral Products Association

PART ONE. THE IMPACT OF CARBON TAXATION

1. Summary

1.1. The UK mineral products industry provides essential materials needed to supply UK economic growth and play a critical role in the sustainable solutions necessary for a low carbon economy .

1.2. Considerable early action has been taken in the mineral products sector. The cement industry has decoupled economic growth and environmental impact.

1.3. The UK Portland cement industry has reduced absolute CO2 emissions by 58% between 1990 and 2009, outstripping the UK economy as a whole. Between 1998 and 2009 total cement emissions have reduced by 52% (21% reduction per tonne of output), whilst over the same period economic growth [1] in the sector has increased by 55%.

1.4. The 2011 Budget will add increased environmental taxation to mineral product producers. This additional tax is not counteracted by an equivalent reduction in non-environmental taxation.

1.5. The additional costs on small, medium and large businesses in the UK mineral products supply chain will inhibit growth, threaten jobs and leave some sub-sectors such as cement and lime vulnerable to carbon leakage.

1.6. Carbon leakage is not the way in which the UK should be achieving its UK carbon budgets as set out in the Climate Change Act. The UK should not increase its exportation of emissions whilst increasing its imports of manufactured goods.

1.7. The 2011 Budget missed an opportunity to minimise the risk of carbon leakage and promote the use of the UK’s natural resources to supply the UK economy and therefore establish a secure and sustainable supply of local materials for the construction and allied industries.

1.8. Environmental taxes in 2013 will cost the UK cement industry at least £63.7m (equivalent to £10/t cement).

1.9. The creation of natural accounts is unnecessary if materials are supplied in accordance with Responsible Sourcing standards. The mineral products sector has an excellent record of providing certified responsibly sourced materials.

2. Introduction

2.1. The Mineral Products Association (MPA) is the trade association for the aggregates, asphalt, cement, concrete, lime, mortar and silica sand industries . With the recent addition of The British Precast Concrete Federation (BPCF) , it has a growing membership of 405 companies and is the sectoral voice for mineral products . MPA membership is made up of the vast majority of independent SME companies throughout the UK , as well as the 9 major international and global companies. It covers 100% of GB Portland cement production, 90% of aggregates production and 95% of asphalt and ready-mixed concrete production and 70% of precast concrete production . Each year the industry supplies in excess of £5 billion of materials to the £110 billion construction and other sectors. Industry production represents the largest materials flow in the UK economy and is also one of the largest manufacturing sectors . For more information visit: www.mineralproducts.org

2.2. The inquiry into the Budget 2011 and Environmental Taxes is particularly relevant to the members of the Minerals Product Association because environmental taxation affects all aspects of our business. For example, the aggreg ates levy targets the sale of mineral products; carbon taxation affects mineralogical processes such as cement, asphalt and lime both directly and indirectly; and fuel duties affect the delivery to market of mineral and concrete products.

2.3. The evidence provided in this submission assesses the effectiveness of the principle environmental taxes affecting the sector and its relevance to low carbon economic growth and sustainable development in the context of the Budget 2011.

3. Direct Carbon Taxation

3.1. The Cement, Lime and Asphalt sectors are all directly affected by the EU Emissions Trading Scheme. Despite being listed as vulnerable to carbon leakage in the European Commission’s assessment the EU ETS will add substantial costs to cement and lime manufacture from 2013 to 2020 (Phase III). In the cement sector the shortfall of free allocation created by challenging European benchmarks will add £54.5million directly to the cost of UK manufacture or result in carbon leakage. Similarly, in the lime sector the Phase III allocation shortfall created by the EU cap on emissions will add £5.8million to the cost of UK lime production at £30/tCO 2 .

3.2. HMG should recognise that some UK sectors e.g. cement, are more vulnerable to carbon leakage than European counterparts in the same sector. Decisions on how rationalisations and capacity extensions that took place in Phase II of the scheme are treated in Phase III are part of particular concern.

3.3. The UK Government is supportive [2] of a move to a -30% EU GHG target but has not detailed how it intends to protect the UK economy from carbon leakage that will result in job and tax revenue losses. The 2011 Budget was a missed opportunity for the UK Government to commit to UK manufacturing, minimise carbon leakage and secure UK employment and the security of supply for essential basic materials.

3.4. All MPA members are also affected by the Climate Change Levy. From April 2011 the rate of rebate for sectors (such as cement and lime) with Climate Change Agreements was reduced from 80% to 65% and represents a significant additional burden for those sectors. The impact of this change for the lime and cement sectors is £1.8m/year added cost. In the 2011 budget the Chancellor committed to reinstating the 80% rebate on electricity only from 2013 for sectors that can achieve energy efficiency targets in new climate change agreements (CCAs). In the Budget the Government retained the 35% tax level on all other energy for those sectors with CCAs, so the move in the Budget to revert the electricity rebate to 80% favours those industries that have a greater proportion of electricity in their energy mix. In the cement sector around 90% of the energy use is from fuels and only 10% from electricity. The Climate Change Levy costs the cement and lime sector £4-5million annually and the 80% rebate change on electricity will benefit cement and lime production by around £0.8million. However, in both the cement and lime sectors considerable early action [3] has already been taken and meeting new energy efficiency targets will require new investment and/or purchases of CO 2 credits to offset the additional effort needed to meet the targets. The requirements of these new CCAs have yet to be published so the impact on costs of meeting new targets cannot be evaluated at this time.

3.5. Operations and activities in the mineral products sector that not covered by CCAs or EU ETS are impacted by the Carbon Reduction Commitment (CRC). The removal of revenue recycling from the CRC means that the scheme is effectively a complicated tax. Increased energy prices over recent years have shown that in many sectors simply increasing the cost does not lead to energy efficiency. CRC needs to be redesigned so that it is simplified and incentives rather than penalises companies to address energy efficiency.

3.6. It is vital that UK carbon budgets enshrined in the Climate Change Act are not met by exporting the UK ’s climate change obligation. Recent research [4] shows that the UK is becoming increasingly reliant upon imported goods and that the UK is exporting its climate change obligation. It would be perverse if locally sourced, locally produced and largely locally consumed materials such as cement were to suffer from carbon leakage due to excessive UK and EU taxation. Until there is a globally equal carbon price the cement and lime sectors should continue to receive free allocation in the EU ETS and should be compensated for the high electricity prices that the EU ETS provides.

4. Indirect Carbon Taxation

4.1. The Chancellor introduced a carbon price floor in the 2011 budget. This tax on fossil fuels used for electricity generation will have enormous consequences for major energy consumers in the mineral products sector. The £16/tCO 2 carbon floor price will add £4.94 tax in 2013 and this will add £2.76m to the cost of cement manufacture ( Annex I ) and £0.36million to the cost of lime manufacture in the UK .

4.2. In total, the membership of the MPA consumes around 1500 GWh of electricity and the carbon price floor will add £4-5Million to our member’s businesses.

4.3. The Government’s stated position is that the Carbon Price Floor will increase to £30/tCO 2 in 2020 and if sectors vulnerable to carbon leakage are not protected from this additional cost the Carbon Price Floor will accelerate carbon leakage and damage the UK economy. It should be recognised that at CO 2 price of €25/tCO 2 all of the UK cement clinker production is vulnerable to carbon leakage [5] , similarly the cost of UK lime production would increase by more than 50% and would be vulnerable to off-shoring at a CO 2 price of €30/tCO 2 [6] .

4.4. The Government’s own Impact Assessment identifies the cement and lime sectors as being the most heavily impacted by its Carbon Price Floor proposal. The Budget measures to stimulate growth such as the reduction in Corporation Tax and the restoration of Climate Change Levy relief are certainly important steps in the right direction, but for energy intensive businesses these are very small steps compared with the much larger and escalating impact of a guaranteed minimum price for carbon.

5. Attempts to shift the balance between environmental taxation and non-environmental taxatio n

5.1. Climate change is important to mineral products such as cement and lime for two principle reasons; firstly because their manufacture emits CO 2 both directly and indirectly and secondly because the uses of mineral products in a low carbon economy can help to reduce greenhouse gas emissions.

5.2. The UK Portland cement industry has reduced absolute CO2 emissions by 58% between 1990 and 2009, outstripping the UK economy as a whole. Between 1998 and 2009 total cement emissions have reduced by 52% (21% reduction per tonne of output), whilst over the period 1997-2007 economic value added [7] in the sector has increased by 55%. Annex II.

5.3. Environmental taxes and energy costs make up a considerable proportion of manufacturing costs (>40% of variable costs). Annex III shows that in the cement sector environmental taxes from the climate change levy, landfill tax, the carbon price floor and the shortfall in EU ETS free allocation will cost the cement manufacturers £63.7million, equivalent to around £8.5/t of cement in 2013 based on 2009 activity levels. This cost could escalate to £188million (£25/t cement) if free allocation in the EU ETS is removed and no rebate on the Climate Change Levy existed.

5.4. In the Budget 2011 the Chancellor attempted to balance the increase in environmental taxation with a reduction of 2% in corporation tax. The cement sector example in Annex IV shows that the reduction of corporation tax is estimated to be worth around £1.45Million but this does not compensate for the increased taxation on electricity producers from the Carbon Price Floor that will be passed directly through to consumers.

Annex I

Note:

This data shows that the reduced cost of the climate change levy rate is far outweighed by the added cost of the Carbon Floor Price.

Annex II


Annex III


Annex IV

PART TWO. THE AGGREGATES LEVY AND AGGREGATES LEVY SUSTAINABILITY FUND

6. Summary

6.1. The aggregates levy provides a case history of the operation of an environmental tax, including lessons for future taxes

6.2. The Aggregates Levy was introduced as a revenue neutral measure in 2002 with revenue used to finance the Aggregates Levy Sustainability Fund and a general 0.1% reduction in the rate of employers’ national insurance contributions. (Employers’ NIC rates were increased by 1.0% a year after the introduction of the aggregates levy.)

6.3. In spite of assertions in successive Budgets that the aggregates levy has been environmentally effective, there has been little substantive evidence presented to support such assertions and no open or transparent evaluation of the impacts of the levy by Government

6.4. The Aggregates Levy Sustainability Fund (ALSF) was designed as the means by which the aggregates levy delivered environmental and sustainability improvements to local communities and more broadly

6.5. The disengagement of the ALSF (managed by Defra) from the Aggregates Levy (managed by HM Treasury) has undermined the Aggregates Levy policy announced in Budget 2000 and introduced in 2002.

6.6. Defra funding for the ALSF has been persistently lower than the value of the ALSF originally announced by HM Treasury

6.7. The ALSF has been ended by Defra in spite of independent evidence of the fund’s environmental success to date and "potentially more significant gains in the longer term".

7. Introduction

7.1. MPA members have direct experience of a range of environmental taxes and market measures and the aim of this part of the submission is to focus on the experience to date of the aggregates levy, introduced in April 2002. This experience may be of wider interest in the context of designing and implementing other environmental taxes. In the 2011 Budget the planned indexation increase in the rate of the aggregates levy was postponed for a year, but of greater environmental significance an integral element of the aggregates levy package introduced in 2002, the Aggregates Levy Sustainability Fund (ALSF) in England, was ended in 2010/11. The demise of the ALSF was not mentioned in the Budget, but announced on the ALSF section of the Defra website just before Christmas 2010 and subsequently in parliamentary answers.

8. The Aggregates Levy – has it achieved its environmental purpose?

8.1 The 2000 Budget (6.91) stated that the purpose of the Aggregates Levy was "to ensure that the environmental impacts of aggregates production not already addressed by regulation are more fully reflected in prices, encouraging a shift in demand away from virgin aggregate towards alternative materials such as recycled aggregates." The 2008 Budget included a table summarising the impact of the levy as "an 8% reduction in sales of aggregates in the UK between 2001 and 2005" and "an increase of nearly 6 million tonnes of recycled aggregates in England. Reductions in noise and vibration, dust and other emissions to air, visual intrusion, loss of amenity and damage to wildlife habitats."

8.2 From these and similar comments the objectives of the levy can be summarized as follows:

· To reduce the physical environmental impacts of aggregates supply

· To ensure that the price of aggregates should fully reflect the full external costs of supply

· To increase the supply of recycled materials in aggregates markets

9. Have the environmental impacts of aggregates supply been reduced significantly by the aggregates levy?

9.1 The aggregates levy is a production tax and not a tax levied on environmental impacts. The Government argument that the levy has reduced environmental impacts is based on the assumption that the level of aggregates production is a proxy for the level of environmental impacts, hence the claim (paragraph 8.1) that the levy has reduced noise and other impacts. [8]

9.2 This claim has been made consistently in Budgets without being informed by any sectoral research or analysis. To quote from a report [9] by the European Environment Agency from 2008; "In the United Kingdom, there was no quantitative data available to show any improvement (in environmental impacts). This was because of the lack of any measures in place. Neither Government nor industry provided any evidence to show that the aggregates tax brought about reductions in noise and vibration; dust and other emissions to air; visual intrusion; loss of amenity and damage to wildlife habitats."

9.3 We believe that the industry’s environmental performance has improved significantly over the past decade, due to a combination of regulation and industry action. There is no mechanism within the operation of the levy in Great Britain for distinguishing between different levels of environmental performance nor to encourage higher standards. To provide an illustration of industry action, The 2010 MPA Sustainable Development Report indicates that 81% of aggregates sites surveyed have certified environmental management systems. The limited environmental assessment made by Government also ignores the contribution that the industry makes to sustainability and nature conservation through the restoration of sites. The calculation of monetary values for industry environmental impacts which underpins the levy [10] discounted any long term benefits arising from site restoration. Industry performance was described in January 2011 by Poul Christensen, Chairman of Natural England as follows:

"I salute the minerals industry in the way you do conservation; working with local people and conservationists to transform mineral sites into new habitats for wildlife, new business opportunities and new places for people to enjoy…"

9.4 While there is increasing evidence that the aggregates industry’s environmental performance is improving there is no evidence to support government’s contention that the aggregates levy has contributed in any significant way to such improvements.

10. Does the price of aggregates as a result of the aggregates levy fully reflect the full external costs of supply?

10.1 The original levy rate of £1.60 per tonne was based on a survey process 10 used to establish the price individuals would be prepared to pay through additional tax payments in order to close the local quarry in the survey locations and to end quarrying in national parks (although those surveyed knew that this tax cost would not in practice arise – it was a hypothetical exercise). The monetary values calculated through the survey process, known as "contingent valuation", were then scaled up by the population of quarries in the UK and a value/cost of £1.60 per tonnes of aggregates produced generated.

10.2 The use of this survey methodology to establish an environmental cost of aggregates supply was fundamentally flawed, for example through the assumption that the restoration of quarry sites provides zero environmental benefits, and to the best of our knowledge has never been used again to inform the level of environmental taxation in the UK. As such the initial levy rate was not based on a rigorous nor reasonable assessment of the external costs of supplying aggregates.

11. Has the supply of recycled materials in aggregates markets been increased significantly by the aggregates levy?

11.1 Appendix one to this part of the MPA submission includes a time series of the GB aggregates sales from primary and recycled sources. Government claims that the levy led to "an 8% reduction in sales of aggregates in the UK between 2001 and 2005" and "an increase of nearly 6 million tonnes of recycled aggregates in England." [11]

11.2 The GB data in the appendix confirms that sales of primary aggregates have declined since 2000, most notably in the recent recession years, and that sales of recycled materials have been relatively more robust. However, the extent to which this is due to the aggregates levy is unclear. There has been an evident trend of increase in the supply of recycled materials in GB aggregates markets since the mid 1990s due to a range of factors such as the increasing cost of landfill and more efficient construction practices, and the change in this trend growth since 2002 is relatively marginal. No doubt the aggregates levy has made some contribution to this trend but there is no quantified evidence of the significance of the impact.

11.3 In terms of value for money the impact of the levy in generating additional sales of recycled materials in aggregates markets is questionable. The costs to construction clients (who ultimately pay for the levy through higher material and construction costs) of the aggregates levy have been in the order of £350 - £400 million pa. The evidence suggests that the marginal additional supply of aggregates that could reasonably be attributed to the levy is probably up to one million tonnes pa - and probably now less as we are closer to maximising the available supply – therefore the additional recycled tonnage which can be attributed to the levy has come at a very high cost to construction and aggregates clients, 40% of whom are in the public sector.

12. The role of the Aggregates Levy Sustainability Fund (ALSF) and the implications of Government’s decision to end the ALSF in 2010/11.

12.1 The decision to implement the ALSF with the Aggregates Levy was set out in the 2000 Budget as follows: 6.94 To further the Government's aim of shifting the burden of taxation from "goods" to "bads", the revenues from the levy will be fully recycled to the business community through a 0.1 percentage point reduction in employers' NICS and a new Sustainability Fund. The Government will be consulting shortly on how this fund can best be used to deliver local environmental improvements.

12.2 The 2000 Pre Budget Report confirmed the value of the ALSF "the Government has decided to allocate £35 million to the new Sustainability Fund that will be introduced alongside the aggregates levy in April 2002." Of this total £29.3 was allocated to England, with the fund to be administered and distributed by Defra.

12.3 The ALSF was introduced as an integral part of the aggregates levy package in recognition of the fact that the levy itself would deliver little direct environmental benefit, but the targeting of a proportion of aggregates levy revenue could support environmental and sustainability improvements if distributed through organisations such as Natural England, English Heritage, WRAP and for local community projects in quarrying areas. It was described in an independent evaluation [12] of the ALSF carried out for Defra in 2010 as follows: "The levy has been described as a blunt instrument as it is not differentiated by location or material. Therein lies the rationale for the ALSF, which was introduced concurrently with the levy. By targeting a proportion of the levy at the sources and impacts of aggregates extraction, the Fund maximises the reduction of, and compensation for, its environmental externalities."

12.4 The independent evaluation referred to in the previous paragraph concluded:

"Over the period 2008 – 11 the ALSF stands to make an important contribution to its overarching objective to reduce the environmental footprint of aggregates extraction, and make measurable progress under each of the five themes. The fund will generally deliver good value for money with potentially more significant gains in the longer term. Notwithstanding the ALSF’s significant achievements to date, there remains a strong case for further funding for knowledge and data management; targeted research and practical or site-based assistance to address national priorities; facilitation of further-improved co-ordination, collaboration and behavioural change, and to deliver further benefits to local communities."

12.5 The use of the ALSF has generated real benefits to local communities in quarrying areas, has supported positive outcomes for nature conservation, heritage, the marine environment, carbon reduction and recycling and research activity.

12.6 In spite of these benefits and the evaluated value for money of the ALSF programme since 2002, Defra advised in early 2011 that "the ALSF did not [13] represent a core activity for the Department, and therefore, funding could not continue beyond the current financial year" and that "no specific consultations were undertaken on the decision to discontinue the Aggregates Levy Sustainability Fund (ALSF)".

12.7 Defra also sought to justify the decision to end the ALSF on the basis that "the two are separate – in that the levy does not pay directly for the fund." [14]

12.8 The clear problem which has arisen is that the ALSF, while an integral element of the Aggregates Levy policy, became disengaged from the Levy. Defra ended the ALSF because it was not "a core activity", therefore removing the most valuable environmental and sustainability outcomes arising from the aggregates levy policy. The overall principles and design of the Levy set out in the 2000 Budget and implemented in 2002 have been undermined by this Defra decision.

13. The Distribution of the Aggregates Levy Sustainability Fund in England

13.1 The ALSF in England has been administered by Defra with funds allocated to a number of distributing bodies. Although it was announced originally that the ALSF would be worth £35 million pa (£29.3 million in England) the amount of money allocated by Defra has been consistently below this level of funding. As the ALSF is a Defra cost and not ringfenced, any money not spent on the ALSF has been retained for use in other Defra budgets.

13.2 Actual ALSF spending has in general been lower than the annual ALSF allocations for reasons including the difficulty in reconciling some project expenditure with annual cycles of spending allocations. During the course of the ALSF some flexibility in the use of the fund was introduced to enable longer term planning and programming of projects.

13.3 The use of the ALSF since April 2002 is summarised below

ALSF FUNDING ALLOCATIONS AND SPENDING IN ENGLAND 2002/3 - 2010/11 £ million

 

 

 

 

 

 

 

 

 

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

2002/3

2003/4

2004/5

2005/6

2006/7

2007/8

2008/9

2009/10

2010/11

Total

Universities

0

0

0

0

0

0

0

0.5

0.5

EA

0

0

0

0

0

0

0.4

0.55

0.35

1.3

ACRE

0

0

0

0

0

0.5

0.5

0.55

0.05

1.6

British Waterways

0

0

0

0

0

0

2

0

0.4

2.4

Carbon Trust

0

0

0

0

0

0

0.8

2.25

1.55

4.6

DfT

0

0

2.5

4.1

2.8

1

1.3

0.9

0

12.6

CEFAS (marine fund)

0

0

0.8

1.3

0.9

2.5

4

4.3

3.2

17

Local Authorities

0.8

0.8

0.5

3.8

2.7

2.8

3

3

3

20.4

MIRO

3.7

3.5

2.1

3.5

2.4

1.5

0.5

1.4

1.1

19.7

English Heritage

5.5

4.2

3.3

4.9

3.4

4.3

1.5

1.95

1.65

30.7

WRAP

7.2

8.9

4.8

7.8

5.4

2.7

6.3

3.45

2.35

48.9

Natural England

10.4

8.4

6

6.7

4.7

5.1

3.8

4.6

3.5

53.2

Original Allocation level

29.3

29.3

29.3

29.3

29.3

29.3

29.3

29.3

29.3

263.7

Total Allocations

27.6

25.8

20

32.1

22.3

20.4

24.1

23.45

17.15

212.9

Actual Spend

17.9

19.2

19.5

25.4

19.6

19.7

24

22.8

17.15

185.25

Defra retention

11.4

10.1

9.8

3.9

9.7

9.6

5.3

6.5

12.15

66.3

"Defra retention" compares the original allocation level of £29.3 million pa with actual ALSF spending, the balance or "Defra retention" being used for non ALSF purposes.

2010/11 figures are estimates derived from the ALSF 2008-11 evaluation carried out for Defra by IHPR (November 2011)

14. Conclusion

14.1 There is and has been a failure of Government to carry out any rigorous assessment of the environmental impact and effectiveness of the aggregates levy since its introduction in 2002. In successive Budgets Government has made repeated assertions about the environmental effectiveness of the levy while offering only superficial evidence for such claims or no evidence. No benchmarks or quantified objectives have been published for the levy. These failures have magnified the wholly unsatisfactory methodology used to calculate the original levy rate, notably the lack of consideration of long term benefits arising from the restoration of quarry sites.

14.2 These shortcomings have been compounded by the decision of Government to end the most environmentally productive element of the levy, the ALSF. This decision highlights the danger of having two elements of the same policy instrument managed by different Government departments (ie Aggregates Levy by HM Treasury and the Aggregates Levy Sustainability Fund by Defra) with potentially inconsistent policy decisions

14.3 The operational history of the Aggregates Levy provides lessons that environmental taxes and measures are unlikely to be regarded as environmentally credible unless these are proportionate to the environmental impact, have clear and transparent objectives and the impacts of the tax or measure are regularly assessed in a clear and transparent manner. It would also seem to be an unsatisfactory situation when a decision of one Department undermines the tax principles set out by another Department.

 

Appendix 1

 

 

 

 

 

 

 

GB Aggregates Sales 1980 - 2010 - million tonnes pa

 

 

 

Primary aggregates

Recycling

Total Aggregates

1980

199

20

219

 

182

18

200

 

194

19

213

 

213

21

234

 

211

21

232

1985

217

22

239

 

228

23

251

 

254

25

279

 

291

29

320

 

300

32.0

332

1990

278

33.0

311

 

246

34.0

280

 

233

35.0

268

 

239

37.0

276

 

259

39.0

298

1995

241

42.0

283

 

215

45.0

260

 

220

48.0

268

 

218

51.0

269

 

221

54.0

275

2000

219

57.0

276

 

222

60.0

282

 

210

62.0

272

 

203

64.5

268

 

214

67.0

281

2005

204

66.6

271

 

207

68.7

276

 

209

70.5

280

 

187

68.5

256

 

147

56.5

203

2010

148

57.6

206

 

 

 

Sources ONS, DCLG, WRAP, MPA

 

APPENDIX 2 ALSF Parliamentary answers - 1 February 2011

Martin Horwood:

To ask the Secretary of State for Environment, Food and Rural Affairs what recent assessment she has made of the Aggregates Levy Sustainability Fund; and if she will make a statement.

Richard Benyon

An independent evaluation of the Aggregates Levy Sustainability Fund (ALSF) programme of work for the years 2008-11 was recently carried out by the in-house policy resource unit. Overall, the evaluation was positive in that the programme delivered against its objectives and did provide value for money. The evaluation can be viewed on the DEFRA ALSF web pages at:

http://www.defra.gov.uk/environment/quality/land/aggregates

However, during the spending review, and against other departmental priorities, DEFRA concluded that the ASLF did not represent a core activity for the Department, and, therefore, funding could not continue beyond the current financial year. This decision should not detract from the excellent work that has been undertaken by delivery partners, and for which the Department is very grateful.

Martin Horwood:

To ask the Secretary of State for Environment, Food and Rural Affairs what consultations her Department has conducted on the Aggregates Levy Sustainability Fund in the last 12 months.

Richard Benyon

No specific consultations were undertaken on the decision to discontinue the Aggregates Levy Sustainability Fund (ALSF) which was taken in the light of broader departmental spending priorities as part of the spending review. However, an independent evaluation of the ALSF programme of work for the years 2008-11 was recently carried out by the In House Policy Resource unit, and the results are available on the ALSF pages on the DEFRA website at:

http://www.defra.gov.uk/environment/quality/land/aggregates/

All the relevant delivery partners, industry and professional bodies were consulted through the process of drawing this evaluation together.

20 April 2011


[1] Gross Value Added data from the Office of National Statistics for SIC code 26.51 Manufacture of cement

[2] Letter to the Guardian on 30% EU Emissions Cut from Chris Huhne and EU Environment Ministers . 14 March 2011

[2]

[3] The cement sector has improved its Climate Change Agreement energy efficiency by 45% between 1990 and 2010. The Lime sector has improved by 12% between 1998 and 2010.

[4] Helm, D et al. 2007. Too Good To Be True? The UK ’s Climate Change Record.10th December 2007. Vivideconomics.co.uk

[5] 2008 BCG. ASSESSMENT OF THE IMPACT OF THE 2013-2020 ETS PROPOSAL ON THE EUROPEAN CEMENT INDUSTRY . Project report – Abstract for the UK . Boston Consulting Group

[6] 2008 NERA Potential Impacts of the EU ETS on the European Lime Industry Prepared for the European Lime Association . NERA 19 th May 2008

[7] Gross Value Added data from the Office of National Statistics for SIC code 26.51 Manufacture of cement

[8] 2008 Budget Table 6.2

[9] Effectiveness of Environmental Taxes and Charges for Managing Sand, Gravel and Rock Extraction in Selected EU Countries. European Environment Agency report No 2/2008 (page10)

[10] The Environmental Costs and Benefits of the Supply of Aggregates: final report by London Economics for the Department of the Environment Transport and the Regions, May 2009

[11] 2009 Budget paragraph 7.67

[12] ALSF 2008-11 Evaluation for DEFRA 1HPR MAY 2010

[13] Parliamentary Answer –See Appendix 2

[14] Parliamentary Answer – See Appendix 2