Clause 18
Finance Bill
2:15 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
I would like to raise a number of points on aggregates tax, which are part of clause 18. The first is on the issue of neutrality and what the funds raised by the aggregates tax will be used for, which continues from where we left off on the climate change levy and the landfill tax. The clause results in a small increase in the aggregates tax per tonne from £1.95 to £2, which we could say was broadly inflationary. Last year’s increase was more significant; I think that it was 30p per tonne.
Again, the issue when that was introduced was that there was an aggregates levy sustainability fund that was going to use the proceeds of the aggregates tax. My understanding is that in the fund’s first four years of operation, only 70 per cent. of the nominal £117 million allocation went into the aggregates levy sustainability fund. Can the Minister confirm whether that is right? Can she also provide details as to what the fund is there to achieve, and details of the funding formula?
We had this debate in the Public Bill Committee last year. The Minister for Local Government was Financial Secretary then. I asked him whether last year’s increase could be said to have been revenue neutral. Although it could be said that it was introduced alongside a 0.1 per cent. reduction in the rate of employers national insurance contribution, there did not appear to be an equivalent tax cut last year. He pointed out that business taxes were being cut last year, but he confirmed in a letter to me on 5 June 2007 that the increase in the aggregates levy last year, which we saw come into effect last month, was not part of that business tax package. What is the Government policy on recycling the aggregates levy?
Secondly, my hon. Friend the Member for Putney has met industry representatives and experts in this sector and it is a great pity for all concerned that she is not able to fully express all their concerns this afternoon. There are concerns about the precise workings of the aggregates tax. I put that to probe the Government. There are exemptions; for example, slate is not subject to the levy. A number of new slate quarries have opened up since the levy was introduced. They have a competitive advantage over granite quarries, which are closing down. Why is slate not subject to the levy? That is a genuine inquiry.
In addition, I understand that china clay aggregate is not subject to the levy either and nor is shale or aggregate that is exported. Are there any EU law implications, as there so often are, for the fact that exported aggregate is not subject to the levy and would that cause difficulties under the treaty of Rome? I understand that limestone for agricultural use is not subject to the levy but the same limestone if used in construction is. Equally, a limestone quarry that produces aggregates to make cement is not subject to the levy, but a limestone quarry that produces aggregate for concrete is. There may well be very good reasons for those distinctions and I look forward to hearing them.