Clause 129 - Aggregates levy: miscellaneous amendments
Finance Bill
11:30 am
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
The answer to the hon. Gentleman's first question is yes. The answer to his second question is that the levy has been in place only since 1 April this year and it is too early to give a definitive answer.
Turning to new clause 27, the first amendment covered by it would extend the adjustment of contracts provision to contracts for the supply of processed
products. To extend any of the provisions of the levy to processed products would be far from straightforward. When aggregates have been used to manufacture processed products they have already passed the tax point and are no longer aggregates for the purposes of the levy. The commercial arrangements for onward supply of aggregates beyond that are intentionally outside the scope of Customs legislation, and it is certainly not something that could be done simply by bolting a new clause on to existing legislation, as Conservative Members seem to think.
The second change that the new clause would make concerns the provisions for adjusting rent or royalty payments as a result of the levy. I confirm for the hon. Member for Christchurch that the Government have already examined the area carefully. We have benefited considerably from our extensive consultation with the industry and other interests. The results of the consultation have produced a suitable measure that renders the amendment unnecessary and, I hope, settles the hon. Gentleman's concerns.
Some rent or royalty payments are adjusted according to indices of aggregates prices published by the Office for National Statistics. The Quarry Products Association proposed earlier this year to make the necessary arrangements with the ONS to produce both levy-inclusive and levy-exclusive indices, so that the levy-exclusive index could be used to adjust rents and to ease industry concerns about the matter. That solution will not require a change to the primary legislation, as section 43 is already wide enough to allow for such adjustments. Therefore, the suggested change to the law covered by the second part of new clause 27 is not necessary.
Finally, let me turn to new clause 26 and the concerns of the hon. Members for Christchurch and for Epsom and Ewell about competitiveness. There is no case for the new clause. The aggregates levy does not significantly affect international competitiveness. Frankly, the scare stories about the potential flight of firms from the UK are just that, because there is limited international trade in processed products. Exports represent only about 3 per cent. of total precast concrete industry sales, and that low level of exports is mainly in high-value products. The prices for such products may range up to £120 or £130 per tonne and are not significantly affected by the levy. Where there is a risk of international competition in processed products—in particular, in Northern Ireland—we have already taken steps to help the industry adjust to the aggregates levy. Apart from that special case, the aggregates levy should not have an impact on the competitiveness of exports of processed products, but we shall carefully monitor that.
Finally, the measure is unlikely to receive the necessary European Union state aid approval, as it is not consistent with the declared nature and logic of the aggregates levy. On that basis, I urge my hon. Friends to reject all three new clauses proposed by the Opposition.