Select Committee on Northern Ireland Affairs First Report


FIRST REPORT


The Northern Ireland Affairs Committee has agreed to the following report:-

INTRODUCTION OF THE AGGREGATES LEVY IN NORTHERN IRELAND

SUMMARY

The Finance Act 2001 provides for a levy of £1.60 on every tonne of aggregate - sand, gravel, rock and related products such as asphalt - extracted or commercially exploited in the UK. This levy has been designed as a 'green' tax, in keeping with the Government's intention to "reform the tax system to increase incentives to reduce environmental damage".[1] The Government hopes that imposition of the levy will encourage users of aggregate to make better use of recycled aggregate, and other more environmentally-friendly material.

However, the proposal has the potential to cause particular problems in Northern Ireland which the Government has until recently omitted to consider. Unlike the rest of the UK, Northern Ireland has a land border with another state. The availability of readily accessible levy-free products made from aggregates in the Republic of Ireland seems likely to displace demand rather than transforming it as the Government hopes. Evidence suggests that the additional transport costs arising from importing such material into Northern Ireland will only cancel out the price differential some 25 or 30 miles inside the Northern Ireland border.

The consequence of introducing the levy in Northern Ireland will not be a greater use of other materials but the export of jobs to the Republic and increased lorry transport across the border, creating more pollution. In the absence of alternative materials in any quantity, the principal customers for aggregates, the public construction sector, will have to spend a greater proportion of fixed budgets on essential materials. The rate of investment in regeneration will decrease.

The Government acknowledged the difficulties in Northern Ireland through a temporary concession in the Pre-Budget Report on 27 November. We welcome this but believe a more lasting solution is still required.



1  Environmental taxation - statement of intent, H M Treasury press release, 2 July 1997 Back


 
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Prepared 11 December 2001