New clause 12 - Environmental protection rebates scheme
Finance Bill
6:30 pm

Mr Malcolm Bruce (Gordon, Liberal Democrat)

I beg to move, That the clause be read a Second time.

The Committee will be aware that we debated this matter on the Floor of the House but were unable to debate the new clause. Many of us remain concerned about the slightly crude impact of the aggregates tax without any compensation and adjustment for the environmental impact. Representing, as I do, a rural constituency in Scotland, I am aware that there is a particular concern that the crudely imposed tax will fall disproportionately on those quarries that can produce at lower cost because it is a cash tonnage figure rather than a percentage. It penalises the more efficient operators. It may also cause smaller operators to be squeezed out in favour of the larger operators. As a consequence, the local authorities in the rural parts of the north of Scotland and the borders, which own many of these quarries, will find that the costs will go up from a squeezed revenue base with no offsetting benefit.

The clause would introduce a scheme to allow rebates for environmental improvements. I do not wish to detain the Committee, but this is important. I hope that the Minister can at least acknowledge that this concern continues and that there is a worry that the claimed environmental benefits of the tax will not turn out as the Government expect. I hope that the Government will be prepared to review the workings of the tax and to reconsider this proposal to ensure that a tax that is being introduced for claimed environmental reasons turns out to be environmental. There are many who believe that it will not. At the end of the day, it will be catalogued as just another stealth tax, just another opportunity to raise revenue from a particular sector that will cost local authorities money and will not achieve environmental gain. If the clause were adopted, environmental gain would be a condition of the implementation of the tax.

Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)

I can be helpful. We announced in the Budget that we are attracted to the idea of differential rates of aggregates levy for green quarries—the principle that is set out in the new clause. We are exploring with a variety of interested parties how such a scheme might be achieved in practice. There are some significant practical problems to be overcome, not least in defining exactly what a green quarry is. We need to know how those issues can be resolved in a practical and workable way before introducing legislation.

I recognise that the clause is enabling legislation and that accepting it would not commit the Government to very much, but further work is needed to resolve the practical issues surrounding the idea of a green quarry rebate. That work needs to be done before we legislate. The time to legislate is when we know exactly where we are heading, not when we are just guessing, which is what the new clause does. We are attracted to the principle that the clause sets out. We want to explore with all those affected how we can make this successful. When we have done that, we will introduce legislation if we can.

Mr Oliver Letwin (West Dorset, Conservative)

Is the hon. Gentleman aware of the irony of his remarks? It would indeed have been better if the Government had known where they were heading before they implemented the legislation. Had they known where they were heading, they could have had a clause like this new clause.

Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)

The provision in the Bill is completely clear. It is important that we make progress to deal with an important environmental issue. That is what the introduction of the levy will achieve. Beyond that we think that it is right to look at ways in which we can introduce a scheme that deals differently with green quarries. We will certainly seek to consult all those parties that are identified in paragraph 4 of the new clause. The hon. Gentleman suggested that we are introducing a stealth tax. I refer him to an earlier debate in Committee, in which it was mentioned that the introduction of the aggregates levy will be revenue neutral, because there will be a reduction in employers' national insurance contributions plus the new sustainability fund, which will account for all the proceeds from the levy.

Mr Malcolm Bruce (Gordon, Liberal Democrat)

I accept the Government's undertaking that the aggregates levy will be revenue neutral across the piece, but it will not necessarily be revenue neutral to the businesses that are directly affected. If it were, it would be pointless and would have no effect. Under different circumstances, I might take the matter a little further. However, I wish to put on the record that my hon. Friend the Member for Torridge and West Devon and I remain concerned that the Government are pressing ahead without addressing how we might find a solution to the problem. The Government have been forewarned about casualties—which might still materialise—and anomalies, in which quarries are encouraged to do things that are not environmentally friendly provided that they export their products and in which we actually choose to use import substitutions for things that we can produce domestically, to get around the levy. Such anomalies will emerge.

Generally, environmental taxes have merit. However, the more of them there are and the more complicated they are, the less impact they have and the more distorted the result. I accept that the Financial Secretary has acknowledged that there is a problem and that the Government are prepared to continue examining it. In the spirit of his response and assurances—and in view of the time—I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Mr Edward O'Hara (Knowsley South, Labour)

We now come to new clause 13, with which it will be convenient to debate new clause 14.

Mr John Burnett (Torridge and West Devon, Liberal Democrat)

In view of the time constraints, and since we hope to have an opportunity to discuss the matters tomorrow, we will not move the new clause. New schedule 2 Limited liability partnerships: investment LLPs and property investment LLPs