Clause 127 - Aggregates levy: amendments to provisions exempting spoil etc

Part of Finance Bill – in a Public Bill Committee at 10:45 am on 25th June 2002.

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Photo of John Healey John Healey The Economic Secretary to the Treasury 10:45 am, 25th June 2002

I fear that the hon. Gentleman has taken the discussion well beyond the particular purposes and details of the clause into much more general environmental policy. Clearly, within the purposes of the provision and the clause, the levy is designed to have the impact that I stated. It is not designed to have a direct impact on the quarrying practices of suppliers in the industry and the techniques that they use.

The hon. Member for Christchurch asked why limestone waste is not afforded the same treatment as other industrial mineral wastes such as china clay. The answer is threefold. Limestone is not included in the list of exempt industrial minerals in section 18(3) of the Finance Act 2001 because it is an aggregate. The material arising from limestone extraction is, in reality, low-grade primary aggregate rather than true waste and is often used and sold as such. Genuine waste will not be subject to the levy. As it will not be sold, it will not be commercially exploited. However, if limestone is used for a prescribed industrial or agricultural process rather than as an aggregate, it is relieved under section 30 of the 2001 Act.

Let me deal with amendment No. 256 and, in so doing, explain the purpose of and provisions in clause 127. The clause deals with two separate matters. First, it amends the aggregates levy legislation to make taxable the overburden—the top layer of material that must be removed before a mineral can be worked—from china clay and ball clay extraction. Secondly, the clause contains a provision to exempt waste from the processing of all industrial minerals that are exempt from the levy. Previously, coal, slate, china clay and ball clay were covered. The clause brings into the exemption provision minerals such as fluorspar and other small-quantity minerals that are extracted. The changes will encourage the use of aggregates unavoidably produced in the process of extracting industrial minerals and help to ensure consistent treatment of mineral waste under the legislation.

Amendment No. 256 would exempt any waste, spoil or by-products arising from the production of aggregate and, therefore, subvert the purpose of the clause. The Government conducted the development of their plans for the aggregate levy and their preparations for its implementation on 1 April in a very open and consultative spirit, with regular meetings with the industry, trade associations and other interest groups. In keeping with that, there have also been detailed discussions with the aggregates industry on a suitable definition of waste aggregates or aggregate by-products. To date, the industry has been unable to provide us with a suitable alternative, comprehensive definition.

Quite simply, the reason is that it is difficult to produce a clear and consistent dividing line or borderline between what is and what is not waste. Aggregate quarries produce rock, sand or gravel. Therefore, any rock, sand or gravel that can be used as aggregate and sold as such is not waste but an

aggregate. It is only correct that the purchaser pay the environmental costs associated with its extraction; therefore, it is covered by the provisions of the levy.

Sometimes, quarry owners may describe some of the aggregates that they sell as by-products because they regard them as incidental to the production of their main or higher-value products, on which they make larger profits. However, exactly the same aggregates may be a main product from another quarry. In other words, one man's by-product or waste may be another man's main product. It would be unfair and distorting to base liability for the levy on whether the quarry owner regards such material as a by-product. Genuine waste materials will not be commercially exploited and, therefore, will not be subject to the levy.

Moreover, as we announced in the pre-Budget report in 2001, the Government continue to examine with the industry whether it is possible to deliver additional environmental benefits through the aggregates levy by encouraging the more general and positive use of true waste aggregates that would not otherwise be commercially exploited. On that basis, I hope that the hon. Member for Christchurch will feel moved to withdraw the amendment. If he is not prepared to do so, I ask the Committee to reject it.