Aggregates Levy (Registration and Miscellaneous Provisions) Regulations 2001 and Aggregates Levy (General) Regulations 2002

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The Chairman: Order. The hon. Gentleman is straying beyond the strict terms of the debate.

Mr. Heath: I am grateful for your guidance, Mr. O'Hara. It was in the form of a peroration that I drew attention to the inequitable distribution of funds, the lack of criteria that will apply to the distribution of funds from the sustainability fund and its linkage with the aggregates levy and the regulations that we are discussing today.

5.20 pm

Mr. Salmond: The Minister said that he and I have had some productive discussions on the matter. They were certainly courteous; they were certainly lengthy and they were certainly detailed. But we will have to

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judge whether they were productive, having heard the right hon. Gentleman's response to the excellent points made by the Opposition today. He must not confuse processes with outcome or debates with conclusion. If the conversations were productive and there are genuine concerns about some of the details of the regulations, a productive outcome would be for the Minister to do something about it, not just to talk courteously about such matters to other hon. Members. Let us hope that he will do that.

I wish to consider in detail statutory instrument No. 761, regulation 13, the schedule and various industrial exemptions. The reason why the measure is set out in detail under the statutory instrument shows that the Government's approach to taxation is deeply flawed. As the Minister knows, I have been concerned about the regional impact of the regulations; the measure will take £12 million from the Scottish economy. I am worried about a flat-rate tax. As Conservative Members should know, such taxes can cause substantial trouble because they have a disproportionate effect, which has little to do with either value or income.

I am worried about secondary aggregates, too. If a product is worth only £1 a tonne, and a tax of £1.60 is put on it, we do not have to be high-flying economists to realise that that may, as the hon. Member for Aylesbury said, result in the build-up of secondary aggregates. All Opposition members of the Committee are concerned about timing—even though we are debating retrospective legislation. As we have heard, Customs and Excise may implement it before we have even discussed it.

Labour members of the Committee should be concerned about the impact of such matters on the public sector. We have just had a Budget to boost and benefit the public sector—I agree with its central tenet—but 40 per cent. of aggregates are used by the public sector, mainly for road building. As with the national insurance charge on employers, the regulations will have a disproportionate effect on public sector finances—giving with one hand, and taking back with the other.

Given the detail of the statutory instrument, I wish to probe the Minister's thinking on tax credits and the industrial processes that are exempt. Under regulation 13(2)(d)(iii), sand or gravel that is used for beach restoration purposes is entitled to a tax credit. Presumably that is because the Government and the rest of us say that restoring beaches that are subject to coastal erosion is good; it is something with which people do not want to interfere and that therefore it should be entitled to a tax credit. However, why is coastal protection which stops erosion in the first place not also exempt under the industrial process or entitled to a tax credit? If the Government have identified, as they have under the regulations, a tax exemption because restoring beaches is good action to take, it is extraordinary that they do not want beaches to be protected so that they will not be subject to coastal erosion.

The Minister knows about the great worry in my constituency. It concerns the breakwater in Peterhead harbour. It is a huge project for which the bay

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authority has been saving up. Too poor for many years, it has just got into the position of being able to go forward, and now finds, even using the minimum amount of aggregate to pursue the project, that there will be a £1.2 million surcharge on a £20 million project, which calls it very much into question. The Minister may like to know that I have checked in the last few minutes with the chairman of the bay authority, and contrary to whatever information may have been winging about the corridors of power in Whitehall, that project is still in substantial jeopardy as result of the tax.

What makes it worse, if we examine the regulations in detail, is the point made by the hon. Member for Somerton and Frome (Mr. Heath): non-crushed aggregates were never meant to be taxed in the first place. That is relatively new, and it is only in the last few months that the Government have switched position to apply the aggregates tax to non-crushed aggregates. In projects such as the one I described, large lumps of ore from Buchan are taken about five miles up the road. The same lumps are put in the form of a breakwater to defend the coast, to prevent sand from being eroded from the beach, and more important, to make that harbour a 365-day safe harbour.

I am a coastal fishing MP, and like all fishing MPs, there is nothing I care more about than issues of safety in terms of the sea, coastal protection and ensuring that coastal communities have a fair deal. The Minister is a courteous man, and I am sure that it was not his intention to arrive at a situation in which he would be responsible for placing such an obviously environmental, economic, and safety-related project in substantial jeopardy. I would ask him, whatever advice he is getting from officials, to use some political nous, think closely and think again.

Examining the schedule to the general regulations, I find that clay pigeon manufacture—code 030 in list A—is to be exempt as an industrial process from the aggregates tax. I am second to none in my admiration for clay pigeon shooting as a sport, and I am absolutely delighted that it has gained a vital exemption from the tax. I am sure that the whole Committee is delighted for clay pigeon fanciers around the country. In my constituency and many others there are people who pursue that sport, and I am sure that the Minister had one of his productive discussions to enable that industrial process to be exempted. The simple point that I would make is that, important though the manufacture for clay pigeon shooting is—a vital sport in our economy—and much as all of us would like to support it, surely coastal defences are as important, or more important, in terms of how they touch on the economy and the safety of our coastal communities.

Recently, I saw an article detailing the Government's projections for global warming. Much of England is severely at risk of ending up under water over the next 100 years. I will have to think about that concept, but I think that, on balance, that would be a bad thing. During the next few years, coastal defences

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will be required not just in Peterhead but across much of England. I am quite certain that, when the Minister has had time to think about it, he will not try to prevent that by putting a tax on something he never meant to tax in the first place. I ask him in all seriousness to look again at the project because I am sure that he would not want to be responsible for preventing something as beneficial and vital for the north-east of Scotland from taking place.

5.28 pm

Mr. Boateng: We have had a good debate, characterised by the good humour and courtesy that one would expect, not least from the hon. Member for Banff and Buchan, who makes a powerful case on behalf of his constituents. He understands why it would not be appropriate for me, or for the Government generally, to come to a decision on any fiscal measure on the basis of the impact that it would have on a single project, such as the one he describes. However he makes an important point about coastal defences, and it is that point on which I shall continue to reflect in the hope of arriving at a conclusion in the not-too-distant future. I shall write to him about the matter, because it is clearly of significance and substance.

Mr. Salmond: Will the Minister give way?

Mr. Boateng: With the utmost respect, no.

On occasion, Mr. O'Hara—and it is a pleasure to be serving under you once again—you have had to call to order hon. Members who have strayed into wider arguments. One understands why—it is because we are here to debate regulations and details—but I do not think that it is out of order to say that in the regulations we have sought to distil the substance of the consultations inspired by wider concerns into the creation of a practical framework for the delivery of what is, I hope, a desirable outcome for those on both sides of the Committee. We have tried to acknowledge the wider environmental concerns arising from the extraction of aggregates, which affect all our constituents.

The point of the regulations is to enable us—here I use the rather difficult, techie phrase that is common jargon in environmental discourse—better to internalise externalities. We toyed with that concept when the hon. Member for Banff and Buchan had his interesting and productive debate in Westminster Hall. However, to apply that concept in the field under examination requires attention to detail, and I make no apology for that. Throughout the regulations, we aim to acknowledge the importance of reducing compliance costs for the industry, and to achieve our objectives.

In a revealing phrase, the hon. Member for Somerton and Frome demonstrated most unusual candour for a Front-Bench spokesmen of his party when he used the expression, ''I say in all ignorance''. Labour Members are often aware of that phenomenon, but seldom hear it acknowledged by Liberal Democrat Members, so his candour is welcome. However, he went on to make the valid point that three forms seem rather repetitious. It is important to establish what those forms are meant

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draw out, and he was right to say that there are small differences between them. He will be glad to have it confirmed that it is not necessary for all three forms to be completed in detail. It is possible to convey the same information by telephone. I hope that that is of comfort to him.

 
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Prepared 29 April 2002