Interpretation of Part

Clause 48 – in the House of Commons at 10:30 pm on 23rd April 2001.

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11 pm

Photo of Richard Ottaway Richard Ottaway Shadow Spokesperson (Treasury)

I beg to move amendment No. 26, in page 38, line 25, at end insert— 'except that, when any tangible moveable property which would not be regarded as aggregate for the purposes of this Part is imported, it shall be aggregate to the extent determined in regulations by the Commissioners.'.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

With this it will be convenient to discuss amendment No. 24, in page 39, line 35, at end insert— '"United Kingdom" means the United Kingdom except Northern Ireland.'.

Photo of Richard Ottaway Richard Ottaway Shadow Spokesperson (Treasury)

The amendments go to the heart of the consequences of the aggregates tax, which will lead to the exportation of jobs overseas.

Amendment No. 24 would exempt Northern Ireland from the tax. I have no doubt that my Friend the hon. Member for East Londonderry (Mr. Ross) will have something to say about that. Aggregate is taxed in its basic form when it is used for commercial exploitation in this country. It is also taxed in its pure form when it comes into this country to be used for that purpose. However, it is not taxed when it is imported in products such as pre-cast concrete. We are concerned that pre-cast concrete will be made in the Republic of Ireland and then imported easily into Northern Ireland without liability in respect of the aggregates levy.

Pre-cast concrete is only in small part cement, but it contains a large proportion of aggregate, so the House should be under no illusion but that a substantial amount of aggregate is involved. The same applies to ready-mixed concrete, which has a life of about an hour and a half, so its range of movement is about 20 miles by road. One can therefore assume that the entire 20-mile strip along the Northern Ireland border will become an aggregate-free zone, as pre-cast and ready-mixed concrete is imported from the Republic.

Amendment No. 26 seeks to draw attention—I confess that it does so fairly deviously—to the importation of asphalt from Normandy. As I said, ready-mixed concrete has a shelf life of about an hour and a half. Asphalt has a life of about 36 hours, and is rather like ready-mixed and pre-cast concrete, as it comprises a small amount of bitumen that glues together a large amount of concrete. It is used for making roads. We are advised that it is perfectly feasible for asphalt to be made in northern France and shipped into this country with substantial savings. Indeed, we are told that that already occurs.

The Financial Secretary said earlier that the transport costs would offset the impact of the levy, but that will certainly not be the case in Northern Ireland. He hinted that he would say something about Northern Ireland, and I hope that he will do so. We are also advised that if sufficient quantities of asphalt are imported from northern France, it will be far more economical to use such materials than to pay the tax in this country.

Photo of David Heath David Heath Shadow Spokesperson (Environment, Food and Rural Affairs)

Although the amendment rightly deals with imports to the United Kingdom, does the hon. Gentleman accept that exactly the same arguments apply to exports of concrete products? There is a double effect in relation to such products, as not only the levy but the transport costs to which he referred must be paid. That causes a distinct competitive disadvantage.

Photo of Richard Ottaway Richard Ottaway Shadow Spokesperson (Treasury)

The hon. Gentleman is absolutely right. If I remember correctly, the matter to which he refers was dealt with in an amendment that will not be considered because of this stupid guillotine business to which we have been subject. There is no credit when aggregate is exported in pre-cast concrete products.

I am sure that my hon. Friend the Member for West Dorset (Mr. Letwin) will have much to say about these matters, and I hope that the hon. Member for East Londonderry will also make some comments. As time is short, I shall sit down and make way for others to speak.

Photo of Oliver Letwin Oliver Letwin Shadow Chief Secretary to the Treasury

I begin by clarifying in slightly more detail than my hon. Friend the Member for Croydon, South (Mr. Ottaway) the reason for the construction of the amendments and by elucidating their drafting. We were bound to table them in their current form because of the absurdities of today's timetable. The issues that they cover could not be debated before 7 pm; we did not have time to debate important issues that relate to clause 17. We therefore had to find a method of debating them at the end of the proceedings and thus benefit from the excessive amount of time that had been allowed for boilerplate clauses. Consequently, as my hon. Friend put it, slightly oddly, amendment No. 26 would amend an interpretation.

The amendment refers to the definition of aggregate. It states that aggregates should be construed in accordance with clauses 17(1) and 18, except that, when any tangible moveable property which would not be regarded as aggregate for the purposes of this Part is imported, it shall be aggregate to the extent determined in regulations by the Commissioners. "Tangible moveable property" refers to items such as those to which my hon. Friend referred. They include pre-cast concrete and asphalt. We do not want the commissioners to determine the matter, as the amendment would provide.

It was almost impossible to include our intentions in an amendment to an interpretation. That is a ridiculous way in which to proceed with such an important matter. We would have liked to debate a new clause which set out our intentions properly. However, the Government decided to timetable the proceedings, and we have therefore had to use the device in the amendment. I hope that the Financial Secretary will not stoop to claiming that a problem arises from the odd casting of the amendment. That is his responsibility, not ours. We do not stand by the amendment's words; if he wants to take away the point and include it in another provision, that is fine. We are trying to protect many jobs, and I shall discuss that shortly.

The same points apply to amendment No. 24. It is obviously bizarre to define the United Kingdom as the United Kingdom except Northern Ireland. I hope that my Friend the hon. Member for East Londonderry (Mr. Ross) will not interpret it to mean that the Conservative party has taken leave of its senses and supposes that Northern Ireland is not part of the United Kingdom. At this stage of our proceedings, as opposed to the stage when we should have debated the point, during our consideration of clauses 16, 17 and 18 or of a new clause, there is no way of introducing an exemption for Northern Ireland. My hon. Friends would support such an exemption. Again, I hope that the Minister will not quibble with the method of solving the problem, because his timetable motion created the need for it.

I want to explain the reasons for the problem. The hon. Member for Somerton and Frome (Mr. Heath) rightly pointed out that we are dealing with a symmetrical problem of export and import. We are also tackling the problem of competing with imports—import substitution—and the ability of our exports to compete with home-produced items elsewhere in the word—export substitution.

The amendments deal with only half the problem, as the hon. Member for Somerton and Frome (Mr. Heath) said and my hon. Friend the Member for Croydon, South acknowledged. It is clearly our intention, and it ought to be the Government's intention, to deal with the whole problem.

The problem is acute, but I get the impression from the responses that we have received from the Financial Secretary throughout the evening that he does not think that that is the case. He is not given to the practice, to which some Ministers and other hon. Members are occasionally given, of making things sound as though they are all right when he does not think that they are. I have, therefore, a real worry that he is being completely honest when he says that he does not think that there is a problem. I think that he is wrong, and if he is convinced that there is no problem, it is unlikely that he will change the text, however wrong it is.

I hope that I can begin to open the Financial Secretary's mind sufficiently, so that the discussions with the industry to which he referred will be treated by the Government not in the spirit of an annoying delegation that needs to be batted away, but a genuine inquiry to discover whether the industry passionately believes, as I do, that there will be a real problem, and whether the industry is probably right because it has done its sums.

Photo of Edward Davey Edward Davey Shadow Minister (Olympics and London), Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury), Liberal Democrat Spokesperson (Olympics and London)

The point made by my hon. Friend the Member for Somerton and Frome (Mr. Heath) about exports could be dealt with if the Government extended the list of relevant substances. They could add to the list the requirement that aggregates used in manufactured products should become a prescribed industrial process. The Government could, therefore, find a way of getting round the problem by providing a new regulation, as they are empowered to do in the Bill. I still think, however, that, in relation to the hon. Gentleman's amendment, the problem would not be addressed through that prescribing process.

Photo of Oliver Letwin Oliver Letwin Shadow Chief Secretary to the Treasury

The hon. Gentleman may be right, and there may also be other means of achieving the desired effect within the scope of the Bill. While we are at it, there may be other means of achieving what we are trying to achieve more elegantly, as I have mentioned. I hope that the Government will see that my remarks are aimed at the essence of the measure, rather than at mere accidents of phrasing.

Why is Northern Ireland a particular problem? First, there are lots of small quarries in a highly competitive marketplace. As I understand it, the average sale price of concrete in Northern Ireland is such that the effective sale price of the aggregate is only about £3 a tonne, which is rather less than twice the proposed tax. The tax will, therefore, impose a huge mark-up on the aggregate component cost of concrete in Northern Ireland.

The second reason Northern Ireland is particularly exposed is that it is very close to southern Ireland. There is, no doubt, already a problem due to exchange rates. I do not want to engage in hyperbole, and I do not claim that the entire Northern Ireland concrete industry will suddenly relocate to southern Ireland overnight—that is not so. However, on a rather longer time scale than overnight, such relocations might persistently occur. Northern Ireland is not a part of the United Kingdom that has had particularly good luck with employment. According to estimates provided by the industry, about 4,000 jobs could be affected. The Province can ill afford to lose those jobs.

Nothing that the Financial Secretary has said so far suggests that the transport cost argument—which has been his main argument to counter assertions that there is a real problem here—would apply in Northern Ireland. I shall come to the case of mainland Europe in a moment. However, in the case of Northern Ireland and southern Ireland, there will be opportunities for the relocation of production to places only slightly further away from the scene of their deployment than is already the case in Northern Ireland. In many cases, merely moving south of the border will involve a very small distance, and we see no reason to doubt the assertion that it will be possible to wipe out large parts of the Northern Ireland industry.

11.15 pm

In the context of mainland Europe, the Financial Secretary, as I have said, relied on transport cost arguments. We understand that there are considerable opportunities for coastal quarry exports from, for example, Norway. There is no reason why such coastal quarries—in Norway or, indeed, Holland, Belgium or France—cannot be used to meet UK, particularly southern UK, pre-cast concrete requirements. Shipping is a perfectly feasible means of transport and, especially when demand for the product is close to our coast, we may see a significant switch.

If the Financial Secretary is saying that the industry has not provided him with an adequate cost breakdown showing the economics of such an exporting of jobs, it would be helpful if he stated that in terms. I am sure we can arrange for the industry to present him with costed examples showing that there is a real problem. As I said earlier, I think that the Government already accept the logic of protecting against the exporting of jobs. That is why they have provided for raw aggregates, when imported, to be subject to the levy. There cannot be an objection in principle.

There is a possibility that the Financial Secretary is right, and a possibility that the industry is right. Let us suppose that the Financial Secretary applies the levy to the import of pre-cast concrete and other fabricated substances, and disapplies it to the exporting of those substances. If he is right, it will make no difference: nothing will be lost, and nothing gained. If the industry is right, he will have saved between 4,000 and 10,000 British jobs. Why take the risk? What possible reason is there for neglecting to make some slight drafting changes to the Bill, if the possibility is either that no damage will be done or that great good will be done, with no downside risk? I cannot for the life of me understand why the Financial Secretary should resist that argument.

We are not talking just about the problem of pre-cast concrete, or, indeed, that of asphalt. I am sorry to harp on about dimension stone, to which I referred at length when giving the example of Mr. Jones. The fact is, however, that dimension stone itself will be exempt, but all the waste and secondary aggregates will not. As I said earlier, we do not really know what will count as not being exempt, but clearly a lot of stuff that comes out when the rock is cut to make the dimension stone will not be exempt.

United Kingdom dimension stone will be competing with dimension stone from other European Union countries that do not suffer from the same disadvantage. The production of dimension stone in those countries is presumably accompanied by roughly the same by-products, which can be sold without the disadvantage of the aggregate levy—or in the case of France, if I remember rightly, a levy of about 5p rather than £1.60 a tonne. Our dimension stone industry, which is not a big part of the industry as a whole, is headed for the rocks—if I may use an infelicitous metapho.

The UK limestone industry will be crippled. I understand that it can take up to six tonnes of feed material to produce one tonne of industrial-grade limestone. As the hon. Member for Somerton and Frome pointed out, scalping must remove all the weak and impure stone as part of the process. All those scalpings will be subject to the tax. As the hon. Gentleman mentioned in his speech on the initial amendment hours and hours and hours ago, if that scalping is taxed, a place for it will have to be found. If it is left in the quarries, the limestone extraction from those quarries will become uneconomic and virtually technically impossible, so it will have to be moved. If it is moved, it will be taxed and that will render the economics decidedly disadvantageous.

The hon. Gentleman mentioned that simply as a disadvantage for the industry and it is, but it is not just that, because there is cross-elasticity: there will also be a severe competitive disadvantage for our industry—the imported variety will not face the tax. In addition, exporters of the material will be at a severe competitive disadvantage.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

I have been listening to my hon. Friend's case with much sympathy. Can he explain why the Government want to increase the cost of construction, to put jobs at risk in an industry in which I worked for many years, and to make this country less competitive than those countries that are close to us and part of the economic community? It seems nonsense that the Government emphasise the importance of competitiveness and then reduce the competitive nature of the UK construction industry.

Photo of Oliver Letwin Oliver Letwin Shadow Chief Secretary to the Treasury

I think that the only honest answer to my hon. Friend in relation to the question about competition is that this is, as we said at an earlier stage in the proceedings, a comedy of errors. I do not think that the Government intend that result, or the sequence of results that we have been describing. I think that they have simply produced these provisions at too great a rate without full and proper consultation with the industry and have missed a major set of points, o, at best, so to speak, they have missed the danger that these circumstances will arise. Therefore, there is not a reason, there is only a cause for the problem—and the cause of the problem is negligence. However, there is an opportunity, as my hon. Friend will surely agree, for the Government to make up for that. They just need to correct these serious lacunae. That will not make the tax perfect. It will still leave a tax that we would far rather were not on the statute book, but at least it would resolve a problem of between 4,000 and 10,000 jobs potentially leaving this country. The Government have the opportunity to solve that problem.

Speciality aggregates have not been mentioned so far in our debates. The Government may be resting under the misapprehension that they have solved the problem in relation to speciality aggregates. They may think that, because the export is exempt from the tax, all is well, but the lesser-quality secondary aggregates that are produced at the same time as the speciality aggregates—we face the same problems here as in many other cases—will not be exempt. The average cost of the production of speciality aggregate will again be greater than the cost encountered by international competitors.

We see that pattern over and over again. It is either that the substance itself, in the case of pre-cast concrete or asphalt, is not being properly exempted when it is imported or exported; or it is that something is being exempted, but some other things that are produced when the thing that is exempt is produced are not being exempted and are raising the average cost of the production of the so-called exempt item. Therefore, across a wide range of products, and hence a wide part of the industry as a whole, UK jobs, completely needlessly, are being put at risk.

I go back to the question to the Financial Secretary: why take that risk? If I am wrong, nothing will be lost by making the changes to exempt those items. The fiscal effect on the Financial Secretary's own logic will be zero because he will not reduce NICs by a slightly smaller amount. In the first year—unlike all subsequent years—I agree that there will be a neutral effect. Meanwhile, he may be protecting British jobs. If I am right, he will be. This is a bet that he can make with sublime confidence, and he ought to be making it now. Otherwise, if we come back in a year or two and discover that large parts of the British industry have been wiped out needlessly, he will not be forgiven.

Photo of Mr William Ross Mr William Ross UUP, East Londonderry

I am deeply grateful to the hon. Member for Croydon, South (Mr. Ottaway) and his hon. Friends for tabling amendment No. 24 which—albeit not very elegantly—intends to disapply the tax to Northern Ireland, for the very good reason that Northern Ireland is the only part of the UK that faces competition across a land frontier.

We all know that the one outstanding feature of aggregates is that they are heavy stuff; we are looking at one tonne per cubic yard. They are also not of very high value. If there is a tax and the material has to be carted around the country for any great length of time, the price rapidly goes up. In terms of direct competition with producers in the Irish Republic—some of whom already operate across the frontier—we will tip the balance decisively in their favour.

The Financial Secretary said that the distance that a lorry can travel economically into Northern Ireland is about 15 miles. The industry in Northern Ireland thinks it is considerably further, and I agree. The one thing that the Government have left out of their calculations is the vast difference in the cost of fuel between Northern Ireland and the Republic, which means that someone can pick up a load in the Irish Republic and travel a long way with it—much further than the Government believe.

There are large deposits of sand and gravel in the Province and in the Republic, many of which are exploited. Some firms own gravel pits on both sides of the frontier and operate, as commercial advantages dictate, across it. In some cases, the stuff is taken a long way: for example, from the Limavady district to Belfast, which is 60 miles.

The situation will get a great deal worse, because the people concerned are experienced in the field on both sides of the frontier. They know exactly where the financial advantage will lie. They can close their operation in Northern Ireland down to a low level, produce the vast majority of the material in the Republic, take it across to Northern Ireland and sell it there. They will still make their money and will have no problem with tax.

The Financial Secretary will try to tell me that if the material is imported, the tax can be charged. There is a slight difficulty with that. He will recall that, earlier this year, I asked him: how much aggregate, broken down by type, was (a) imported to and (b) exported from the United Kingdom by (i) land transport and (ii) sea transport, indicating his estimates of the value of such materials, in the current year and each of the previous three years. The Minister replied: Data on exports and imports of aggregate are published annually in the British Geological Survey's United Kingdom Minerals Yearbook. It is not possible to break this down between land transport and sea transport."—[Official Report, 26 February 2001; Vol. 364, c. 516W.] In plain terms, that answer means, "I don't know how much aggregate is crossing the frontier into and out of Northern Ireland." If aggregate is put on a ship, one has some idea of how much is involved, but if it is put on a lorry, it cannot be traced in these days of open frontiers across Europe; so we face a decided disadvantage.

11.30 pm

If the Financial Secretary does not know the figures—and he cannot in this case because the records are non-existent—he will be proceeding blindly, but the industry in Northern Ireland knows what the inevitable consequences of the tax will be for the industry in the Province. I shall spell those consequences out to the Financial Secretary.

For a start, only a certain amount of primary production will take place in Northern Ireland. The sand and gravel will be produced there, it will cross the frontier where it will be manufactured into a concrete product, and then it will come back again. The jobs in the concrete industry will migrate from the Province to the Republic. The industry will need to move only 100 yards across the frontier, set up its equipment to manufacture pipes and concrete beams, and 4,000 jobs in Northern Ireland will disappear in a short time. Once they are gone, and even if the tax is removed in two or three years' time, it will be too late and the damage will be done. Once folk have built up their operations in the Republic, they will have no good reason to bring them back to Northern Ireland.

When I raised the matter with the Financial Secretary earlier, he said that other countries in the European Union were introducing the tax. The hon. Member for West Dorset (Mr. Letwin) mentioned France; if several EU countries introduce the tax, it will have to be the same to maintain a level playing field. Dublin certainly has no intention of introducing any tax because it is to its commercial advantage to capture as many jobs as possible, and devil take the hindmost—in this case, Northern Ireland.

This is a serious issue that could have a tremendous effect on the cost of building a house. A normal-sized house takes 80 tonnes of building sand. Those of us who are not involved in the industry might think that that is a heck of a lot of sand, but all the walls need plastering and the mortar contains sand. Added to that is the hard fill, and 200 or 300 tonnes could be needed per house, depending on the site. Aggregate is also needed for the concrete bricks or blocks. People complain about the price of houses, but this hidden tax will shove up the price by £2,000 or £3,000 because everybody will work on a percentage all the way down the supply chain.

This is a mad tax that will do no good to the country at large, and if applied to Northern Ireland it will do much damage. Of course, aggregates can be replaced in some cases. Bricks can be made out of clay, and that is done in Northern Ireland. Clay tiles can be used for roofs. Most of the tiles used in Northern Ireland are imported from Great Britain, and they are no cheaper for being put on a boat and taken across the Irish sea. In fact, they are much pricier than concrete tiles. Many people prefer a slate roof, but few can afford such roofs nowadays. Asbestos is cheaper but carries environmental concerns. We surely have environmental concerns about asbestos nowadays.

Pipes used to be made of clay. Now the smaller diameters are made of plastic, but beyond a certain size the only materials with the necessary structural strength are concrete or steel. We make a lot of concrete pipes in Northern Ireland, and certainly some very large ones. Concrete is a useful and effective material, and we are cutting the feet from under people who make it. That is completely wrong.

We make large concrete beams for bridges. The hon. Member for South Antrim (Dr. McCrea) has a firm in the constituency where he lives—the owner is my constituent—that exports very large concrete beams. It can do so only because of the low cost of the material in Northern Ireland. The only alternative material is steel, and I am not sure that that is considered all that environmentally friendly these days.

There are at least seven relatively large firms making concrete products in my constituency, and there are several one, two, three or five-man operations giving employment in the area. They will all be forced out of business if the tax goes ahead. I fear that the Government intend to plunge ahead with this tax throughout the United Kingdom. They will not only do a great disservice to Great Britain but create a disaster in Northern Ireland. That is why, although I would normally be horrified by such amendments, I see good reasons for this one.

I hope that the Minister will listen. He told me earlier that the tax was neutral and would be redistributed, but it will not necessarily be redistributed to the areas from which it is levied—it will be distributed far wider than that. The areas where many of the relevant activities take place tend to be isolated, with relatively few employment opportunities. Such activities provide employment, as well as a vital material for the whole construction industry.

However we look at it, all we are going to do is increase the cost of constructing buildings, roads and bridges. What on earth is the benefit supposed to be? The Government went down this road without thinking it through. The more people examine the proposals, the more concerned they become. I hope that that increasing concern will be felt by Treasury Ministers, even if they are not prepared to say it now. Perhaps they will carefully consider the peculiar and difficult circumstances that the tax will create for the producers of Northern Ireland.

Photo of David Heath David Heath Shadow Spokesperson (Environment, Food and Rural Affairs)

I strongly agree with the points made by the hon. Member for West Dorset (Mr. Letwin). The amendment is very convoluted, as he readily admitted, but its intentions are good.

The hon. Member for East Londonderry (Mr. Ross) touched on the commercial effect of substitution in the domestic market and the consequent lack of competitiveness for companies competing against imports. That will be a significant factor in the pre-cast concrete industry, as other fabrics will be used, without any clear environmental benefit.

The Government are guilty of muddled thinking. They have exempted some industries that require aggregates in their production processes, for no reason except that they were the ones that they first thought of. They appear not to have considered the position of the pre-cast concrete industry at all. They are prepared to accept that there may be substitution with steel and with clay, particularly for roofing products and paving materials. What is the environmental advantage of stopping aggregates being dug and increasing the digging of clay? I say that there is none.

Profitable companies will be seriously compromised by this measure without further thought from the Government. I urge them, even at this late stage, to think very carefully about what they propose.

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

Let me first respond to the points of the hon. Member for West Dorset (Mr. Letwin) about timetabling. It has been made clean to him, and it should also be made clear to the House, that if the usual channels on his side had last week sought a change to the order of the discussions this evening, we would willingly have made that change.

Photo of Oliver Letwin Oliver Letwin Shadow Chief Secretary to the Treasury

I have checked with my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) as to the exact order of events. We requested that we debate clause 16 alone among the aggregates tax items, followed by clause 79 and some new clauses. That was rejected, despite this request having been communicated by the usual channels, at the highest level, and despite a subsequent conversation between the Financial Secretary and me.

When that request was rejected, this timetable motion was brought forward. In our anxiety, we did not at that stage notice that our original proposition had been rejected. However, the effect of the timetabling, with time slots up to 7 pm, 9 pm and midnight, was to shove all the important parts of the aggregates tax discussion into the first three hours. There is no reason on earth for the Government to have done that, except by mistake. I take the Financial Secretary's honest word for it that it was not intentional, but it was clearly an error. I admit that we were in error in not spotting that it should have been corrected, but the fact is that this was done not by us but by the Government.

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

The hon. Gentleman rightly and generously accepts that the responsibility for the matter lies on his side, and that it could have been put right if the usual channels had taken steps to do that.

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

No, I will not give way again on this. It is important that the House recognise the reason for the difficulty that the hon. Member for West Dorset and his right hon. and hon. Friends have faced tonight.

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

No, time is getting on, and I need to address a number of points.

The hon. Members for East Londonderry (Mr. Ross) and for West Dorset suggested that there had been some haste about the process. I assure the House that that is not the case. The draft clauses were first published two years ago, in April 1999. Following extensive discussion and consultation, a second set of draft clauses was published in June last year—these clauses have not been put together in haste. The whole process has been one of careful consideration, consultation and modification, and this is a well designed measure as a result.

We could have some fun with the wording of amendment No. 26. The hon. Member for Croydon, South (Mr. Ottaway) disowned the wording. He said that he and his right hon. and hon. Friends had tabled a new clause on the subject. Presumably we can expect to debate that at a later stage in our proceedings. However, the wording of amendment No. 26, which allows the commissioners to deem anything, effectively, as aggregates for the purposes of the levy, would not command wide support.

11.45 pm

To help to maintain a level playing field for UK aggregates companies, any import of aggregate that would be taxable if it had originated in the UK will be subject to the levy on first sale or use in the UK. Under European Union law, we are bound not to tax imported products to a greater extent than domestic ones. That means that any aggregate that would normally be taxable in the UK will be taxed on first sale or use in the UK after importation from another country. Similarly, any imported material that would not normally be taxable if it had originated in the UK will not be subject to the levy.

Concern has been expressed that the levy applies to imports of aggregate in aggregate form. There is concern that the UK's pre-cast concrete sector will be damaged by the importation of tax-free processed products. We have considered that issue in detail. Officials have met the British Precast Concrete Federation, and I shall meet representatives of the federation next week. As a result of a great deal of reflection, we have concluded that we do not expect a significant impact on that sector because international trade in its products is limited by weight and transport costs.

Imports currently represent only 1 per cent. of total pre-cast concrete industry sales because of the substantial cost of shipping pre-cast concrete.

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

Given the lateness of the hour, I shall not.

There are substantial barriers to international trade because of the costs of shipping pre-cast concrete from Norway, France and elsewhere. Such imports as exist are largely in high-value products, the proportionate prices of which would be affected only slightly by the addition of the levy. Our considered view is that there will be no problem.

We are prepared to continue to examine the issue in the run-up to the levy's introduction, and I shall hear the industry's concerns next week. No figures given in the debate have made me question the conclusion that we have drawn so far, but I shall listen carefully to what the industry has to say.

The suggestion made in the debate that 4,000 to 10,000 jobs might be at stake is simply absurd. The pre-cast concrete industry should have the same incentives for efficiency and increased use of recycled aggregates as others will experience as a result of the levy. The aggregates sold for that purpose should contribute to the sustainability fund that will be available to help communities to address the problems arising from quarrying.

The hon. Member for West Dorset told the Committee that he would not have voted for the landfill tax introduced by the previous Government. Even now, some members of his party want the Government to take steps to protect the environment, as we are doing. His party does itself no favours in its current troubled circumstances by lurching to the right in the way that he has done tonight, by repudiating an environmental tax measure introduced by the previous Government.

Amendment No. 24 addresses issues in Northern Ireland, and the hon. Member for East Londonderry made several important points. We have listened carefully to arguments about the implications of the aggregates levy for Northern Ireland. The industry there will be generally protected because imports of aggregate will be subject to the levy and exports will be relieved. Opportunities to smuggle aggregates into Northern Ireland will be pretty limited because of the bulky nature of the products involved and their low value. Customs operational staff have much experience of dealing with such matters. I am confident that, combined with the legitimate quarrying industry, Customs will combat the potential for smuggling across the Northern Ireland land border.

The main concerns expressed relate to the impact on the pre-cast concrete sector. That merits careful consideration. I point out to the hon. Member for East Londonderry and to the Committee that, at this stage, I have seen no convincing evidence—facts and figures—to suggest that there will be a significant impact on Northern Ireland firms; international trade in those products is limited by weight and by transport costs.

We are nevertheless prepared to continue to assess with the Northern Ireland Executive the implications of the levy. The Executive have raised concerns about that and have done some work. We shall be happy to continue that assessment during the run-up to the introduction of the levy, and to consider evidence submitted by the industry on the issue. There may be an issue that we need to address, but at present there is no convincing evidence of it. I ask the Committee to resist the amendment.

The measure is important and will bring significant environmental benefits in its wake—by ensuring that the price of aggregates reflects the environmental costs incurred in obtaining them; by increasing the price advantage for recycled aggregates; and by contributing to a sustainability fund that can be used to address the problems caused by quarrying in affected communities. I urge the Committee to resist the amendments.

Photo of Richard Ottaway Richard Ottaway Shadow Spokesperson (Treasury)

The Minister's response to the arguments was wholly unsatisfactory. Powerful arguments have been made about the damage that will be caused to the British economy and to the British aggregates sector. In those circumstances, we shall divide the Committee.

Question put, That the amendment be made:—

The Committee divided: Ayes 137, Noes 255.

Division No. 189[11.52 pm
AYES
Ainsworth, Peter (E Surrey)Hayes, John
Allan, RichardHeald, Oliver
Amess, DavidHeath, David (Somerton & Frome)
Arbuthnot, Rt Hon JamesHeathcoat—Amory, Rt Hon David
Ashdown, Rt Hon PaddyHoram, John
Atkinson, Peter (Hexham)Howard, Rt Hon Michael
Baker, NormanHowarth, Gerald (Aldershot)
Baldry, TonyJack, Rt Hon Michael
Bercow, JohnJenkin, Bernard
Beresford, Sir PaulKey, Robert
Blunt, CrispinKing, Rt Hon Tom (Bridgwater)
Boswell, TimKirkwood, Archy
Bottomley, Peter (Worthing W)Lait, Mrs Jacqui
Bottomley, Rt Hon Mrs VirginiaLeigh, Edward
Brady, GrahamLetwin, Oliver
Brand, Dr PeterLewis, Dr Julian (New Forest E)
Brazier, JulianLidington, David
Brooke, Rt Hon PeterLilley, Rt Hon Peter
Bruce, Ian (S Dorset)Livsey, Richard
Burns, SimonLloyd, Rt Hon Sir Peter (Fareham)
Burstow, PaulLlwyd, Elfyn
Campbell, Rt Hon Menzies (NE Fife)Loughton, Tim
Luff, Peter
Cash, WilliamLyell, Rt Hon Sir Nicholas
Chidgey, DavidMcCrea, Dr William
Clappison, JamesMacGregor, Rt Hon John
Clarke, Rt Hon Kenneth (Rushcliffe)McIntosh, Miss Anne
Maclean, Rt Hon David
Clifton—Brown, GeoffreyMcLoughlin, Patrick
Cormack, Sir PatrickMalins, Humfrey
Cotter, BrianMaples, John
Curry, Rt Hon DavidMates, Michael
Davey, Edward (Kingston)Mawhinney, Rt Hon Sir Brian
Davis, Rt Hon David (Haltemprice)May, Mrs Theresa
Dorrell, Rt Hon StephenNorman, Archie
Duncan, AlanO'Brien, Stephen (Eddisbury)
Fabricant, MichaelOttaway, Richard
Fallon, MichaelPaice, James
Flight, HowardPaisley, Rev Ian
Fraser, ChristopherPickles, Eric
Gale, RogerPortillo, Rt Hon Michael
Garnier, EdwardPrior, David
Gibb, NickRandall, John
Gidley, SandraRedwood, Rt Hon John
Gill, ChristopherRendel, David
Gillan, Mrs CherylRobathan, Andrew
Green, DamianRobertson, Laurence (Tewk'b'ry)
Greenway, JohnRobinson, Peter (Belfast E)
Grieve, DominicRoe, Mrs Marion (Broxbourne)
Gummer, Rt Hon JohnRoss, William (E Lond'y)
Hamilton, Rt Hon Sir ArchieRuffley, David
Hammond, PhilipRussell, Bob (Colchester)
Hawkins, NickSt Aubyn, Nick
Sayeed, JonathanTredinnick, David
Shephard, Rt Hon Mrs GillianTrend, Michael
Shepherd, RichardTyler, Paul
Simpson, Keith (Mid—Norfolk)Tyrie, Andrew
Smith, Sir Robert (W Ab'd'ns)Viggers, Peter
Smyth, Rev Martin (Belfast S)Waterson, Nigel
Soames, NicholasWebb, Steve
Spicer, Sir MichaelWells, Bowen
Stanley, Rt Hon Sir JohnWhitney, Sir Raymond
Streeter, GaryWhittingdale, John
Willetts, David
Stunell, AndrewWinterton, Mrs Ann (Congleton)
Swayne, DesmondWinterton, Nicholas (Macclesfield)
Syms, RobertYeo, Tim
Tapsell, Sir PeterYoung, Rt Hon Sir George
Taylor, Ian (Esher & Walton)
Taylor, John M (Solihull)Tellers for the Ayes:
Taylor, Sir TeddyMr. Stephen Day and
Thomas, Simon (Ceredigion)Mr. Owen Paterson.
NOES
Adams, Mrs Irene (Paisley N)Cousins, Jim
Ainger, NickCrausby, David
Ainsworth, Robert (Cov'try NE)Cryer, John (Homchurch)
Allen, GrahamCummings, John
Anderson, Rt Hon Donald (Swansea E)Dalyell, Tam
Darvill, Keith
Atkins, CharlotteDavey, Valerie (Bristol W)
Austin, JohnDavies, Rt Hon Denzil (Llanelli)
Bailey, AdrianDavies, Geraint (Croydon C)
Banks, TonyDean, Mrs Janet
Barnes, HarryDenham, Rt Hon John
Barron, KevinDismore, Andrew
Battle, JohnDobbin, Jim
Bayley, HughDobson, Rt Hon Frank
Begg, Miss AnneDonohoe, Brian H
Benn, Hilary (Leeds C)Doran, Frank
Bennett, Andrew F
Benton, JoeDowd, Jim
Best, HaroldDrew, David
Betts, CliveEagle, Angela (Wallasey)
Blackman, LizEagle, Maria (L'pool Garston)
Blears, Ms HazelEdwards, Huw
Blizzard, BobEfford, Clive
Boateng, Rt Hon PaulEllman, Mrs Louise
Borrow, DavidEnnis, Jeff
Bradley, Rt Hon Keith (Withington)Field, Fit Hon Frank
Fisher, Mark
Brinton, Mrs HelenFlint, Caroline
Brown, Russell (Dumfries)Foster, Rt Hon Derek
Browne, DesmondFoster, Michael Jabez (Hastings)
Buck, Ms KarenFoster, Michael J (Worcester)
Burden, RichardGapes, Mike
Butler, Mrs ChristineGeorge, Rt Hon Bruce (Walsall S)
Campbell, Alan (Tynemouth)Gerrard, Neil
Campbell, Ronnie (Blyth V)Gibson, Dr Ian
Campbell—Savours, DaleGilroy, Mrs Linda
Cann, JamieGodsiff, Roger
Caplin, IvorGoggins, Paul
Casale, RogerGolding, Mrs Llin
Caton, MartinGordon, Mrs Eileen
Chapman, Ben (Wirral S)Griffiths, Jane (Reading E)
Chaytor, DavidGriffiths, Nigel (Edinburgh S)
Clapham, MichaelGriffiths, Win (Bridgend)
Clark, Rt Hon Dr David (S Shields)Grogan, John
Clarke, Charles (Norwich S)Hain, Peter
Clarke, Rt Hon Tom (Coatbridge)Hall, Mike (Weaver Vale)
Clelland, DavidHanson, David
Clwyd, AnnHealey John
Coffey, Ms AnnHenderson, Doug (Newcastle N)
Coleman, Iain
Colman, TonyHendrick, Mark
Connarty, MichaelHepbum, Stephen
Cook, Frank (Stockton N)Heppell, John
Corbyn, JeremyHewitt, Ms Patricia
Corston, JeanHill, Keith
Hinchliffe, DavidMowlam, Rt Hon Marjorie
Hodge, Ms MargaretMudie, George
Hoey, KateMullin, Chris
Hood, JimmyMurphy, Denis (Wansbeck)
Hope, PhilNaysmith, Dr Doug
Hopkins, KelvinO'Brien, Mike (N Warks)
Howarth, Rt Hon Alan (Newport E)Olner, Bill
Howarth, George (Knowsley N)Organ, Mrs Diana
Howells, Dr KimPearson, Ian
Hughes, Ms Beverley (Stretford)Pike, Peter L
Humble, Mrs JoanPond, Chris
Hurst, AlanPope, Greg
Hutton, JohnPound, Stephen
Iddon, Dr BrianPrentice, Ms Bridget (Lewisham E)
Illsley, EricPrentice, Gordon (Pendle)
Jackson, Helen (Hillsborough)Primarolo, Dawn
Jamieson, DavidProsser, Gwyn
Jenkins, BrianQuinn, Lawrie
Johnson, Alan (Hull W & Hessle)Raynsford, Rt Hon Nick
Johnson, Miss Melanie (Welwyn Hatfield)Reed, Andrew (Loughborough)
Robertson, John (Glasgow Anniesland)
Jones, Rt Hon Barry (Alyn)
Jones, Helen (Warrington N)Roche, Mrs Barbara
Jones, Jon Owen (Cardiff C)Rooney, Terry
Jones, Dr Lynne (Selly Oak)Ross, Ernie (Dundee W)
Jones, Martyn (Clwyd S)Rowlands, Ted
Jowell, Rt Hon Ms TessaRoy, Frank
Joyce, EricRuddock, Joan
Keen, Alan (Feltham & Heston)Russell, Ms Christine (Chester)
Keen, Ann (Brentford & Isleworth)Salter, Martin
Kennedy, Jane (Wavertree)Savidge, Malcolm
Khabra, Piara SSheerman, Barry
Kidney, DavidSimpson, Alan (Nottingham S)
Kilfoyle, PeterSkinner, Dennis
King, Andy (Rugby & Kenilworth)Smith, Rt Hon Andrew (Oxford E)
Lammy, DavidSmith, Miss Geraldine (Morecambe & Lunesdale)
Lawrence, Mrs Jackie
Lepper, DavidSmith, Jacqui (Redditch)
Leslie, ChristopherSmith, John (Glamorgan)
Levitt, TomSmith, Llew (Blaenau Gwent)
Lewis, Ivan (Bury S)Southworth, Ms Helen
Lloyd, Tony (Manchester C)Spellar, John
Lock, DavidSquire, Ms Rachel
Love, AndrewStarkey, Dr Phyllis
McAvoy, ThomasSteinberg, Gerry
McCabe, SteveStevenson, George
McCartney, Rt Hon Ian (Makerfield)Stewart, David (Inverness E)
Stewart, Ian (Eccles)
Macdonald, CalumStoate, Dr Howard
McDonnell, JohnStrang, Rt Hon Dr Gavin
McFall, JohnStuart, Ms Gisela
McIsaac, ShonaSutcliffe, Gerry
McKenna, Mrs RosemaryTaylor, Rt Hon Mrs Ann (Dewsbury)
Mackinlay, Andrew
McNulty, TonyTaylor, David (NW Leics)
Mactaggart, FionaTemple—Morris, Peter
McWalter, TonyTimms, Stephen
McWilliam, JohnTipping, Paddy
Mahon, Mrs AliceTodd, Mark
Mallaber, JudyTrickett, Jon
Marshall, David (Shettleston)Truswell, Paul
Marshall—Andrews, RobertTurner, Dennis (Wolverh'ton SE)
Martlew, EricTurner, Dr Desmond (Kemptown)
Maxton, JohnTurner, Neil (Wigan)
Meacher, Rt Hon MichaelTwigg, Derek (Halton)
Michael, Rt Hon AlunTynan, Bill
Michie, Bill (Shef'ld Heeley)Wareing, Robert N
Milbum, Rt Hon AlanWatts, David
Miller, AndrewWhite, Brian
Mitchell, AustinWicks, Malcolm
Moffatt, LauraWilliams, Rt Hon Alan (Swansea W)
Moonie, Dr Lewis
Morgan, Ms Julie (Cardiff N)Williams, Alan W (E Carmarthen)
Morris, Rt Hon Ms Estelle (B'ham Yardley)Wills, Michael
Winnick, David
Mountford, KaliWinterton, Ms Rosie (Doncaster C)
Woodward, ShaunTellers for the Noes:
Woolas, Phil
Worthington, TonyMr. Kevin Hughes and
Wright, Anthony D (Gt Yarmouth)Mrs. Anne McGuire.

Question accordingly negatived.

Clause 48 ordered to stand part of the Bill.

Clause 49 ordered to stand part of the Bill.

To report progress and ask leave to sit again.—[Mr. McNulty.]

Committee report progress; to sit again tomorrow.