Examination of Witnesses (Questions 100
WEDNESDAY 14 NOVEMBER 2001
100. In 1997 the Government indicated in their
statement of intent that they were looking for the principles
set out in it to "encourage innovation in meeting environmental
standards . . . and deliver a more dynamic economy". Are
you confident that the levy reached that criteria?
(Mr Woods) In Northern Ireland?
101. Before you answer that question, will you
say whether you agree with that Government statement on their
general principles for environmental taxation?
(Mr Woods) Yes. We might quibble with the odd word
but broadly we are very much in tune with their thinking on that,
if it were to be properly implemented. Obviously, proper implementation
would depend on local research being carried out because as it
stands at present, there are doubts about it. Encouraging quality
of growth, not just its quantity, and shifting taxation from the
"goods" to the "bads" would be important.
You mentioned, Mr Tynan, a dynamic economy.That is particularly
important in this context, assuming that it is in context. The
DTI, in response to last year's sustainable development strategy,
brought up the issue of a key economic indicator being waste arisings.
I mention the DTI here rather than our own DETI; we do not yet
have a sustainable development strategy for Northern Ireland yet,
but clearly this is the direction in which Government thinking
is going. They stated that a key economic indicator is waste risings;
they spoke of a low-waste economy and of critically high levels
of resource productivity combined with a strong innovation policy.
Our fear is that if Northern Ireland is exempted from the aggregates
levy it will find itself left behind in those terms. It will not
have the incentives needed to develop the sort of technologies
that will be needed globally to achieve sustainable resource use.
Environmental regulation and environmental and ecological taxation
drive innovationwe know this from examples from a number
of countries. There is an opportunity to create jobs in new industries
that have a future rather than just hanging on to jobs in clearly
unsustainable enterprises. It is an opportunity for us to be swift
on our feet economically in spotting new opportunities. Unfortunately,
at the moment we seem to be fighting a rearguard action against
the policies which drive innovation which, ultimately, is self
102. The London Economics Environmental Cost
and Benefits of Supply of Aggregates indicated in 1999 that of
5,030 persons surveyed about the environmental impact of quarrying,
on on-site noise, 31 persons said in response that there was an
impact: that is 0.6 per cent. On blasting noise and vibration,
32 persons out of 5,030 responded; this, again, is 0.6 per cent
saving that there was impact. Sixty-seven people attributed cost
arising from the impact of dust; this was 1.3 per cent. The highest
response175 peopleattributed cost to the adverse
effect of naturethis was 3.5 per cent. Sixty-one of the
5,030 said that there was cost arising from eyesore, from chlorane.
Is not there too much playing up of this issue, in that such a
small response from people living in close proximity to quarrying
operations considered that there were serious actual environmental
impacts? Is not this whole issue more about stealth tax?
(Mr Woods) On the last point, I do not think that
it is not about stealth tax, because it is aimed to be fiscally
neutral, as all ecological taxes are. On the other points, I have
not read the study but I can see that it might sound unconvincing.
If it were compared with studies of other
activities that people find distasteful, this
might tell us a little more about what people usually say about
something such as aircraft noise, for example. We might then discover
an average response. There are bigger issues there than the immediate
that people suffer in terms of dust and noise and so on. Obviously
we must take into account the fact that a small number of people
suffer a great deal from these, whereas we might find that most
people of those 5,000 are only
marginally affected, while others may be to
a greater extent. My colleague mentioned long-term issues such
as loss of landscape and habitat. Clearly, these affect us cumulatively:
it would depend on the way in which the picture was portrayed
to people in terms of how it might pan out in the long term in
relation to amenity and so on.
103. While I accept the data that Mr. Beggs
introduced, I am aware that flora and fauna
were not polled. Had they been, the result would
have been slightly different. Surely we have a duty to recognise
the needs of the biodiversity of flora and fauna, which cannot
(Mr Allison) Quite so. There are also long-term implications.
Quarrying is clearly fundamentally unsustainable. Effectively
to lock local communities and economies into an
unsustainable practice means that problems would
arise in trying to find other things to do when the land that
people once farmed has been quarried and they no longer have the
land and the tourism facilities that they might have had. So there
are also those long-term implications.
(Mr Woods) I add a general note of scepticism about
opinion polls in such situations in that they ask people straightforward
questions but these are based on very little information, but
they would often give very different answers had they been given
different information and had the chance to deliberate on the
problems and perhaps scrutinise some of the issues. Perhaps I
am not entirely surprised about how low these results appear to
be. We might uncover rather more disturbing findings if people
were given an opportunity to discuss the issues.
104. You stated in your memorandum that the
levy would encourage innovation and new industries. Would you
like to comment on how you think this would come about, in terms
of new employment and of how loss of jobs can be compensated?
(Mr Woods) My colleague may have something to add.
As regards innovation, we mentioned Powerscreen, a company in
Northern Ireland, which already is doing rather well producing
equipment for the recycling aggregates industry. The industry
generally is in its infancy at present so not much has been happening,
but there are clearly opportunities there which will be achieved
only if there is a driver there to pursue this aspect. You asked
me about the possibility of job migration and job loss.
105. Before you move from that to the specific
answer that you just gave, may I ask whether you see any chance
of an infant recycling industry developing after the aggregates
tax has been imposedassuming it is imposed in Northern
Irelandwhile cheap virgin aggregate is available 10 miles
away across the border? Who would be able to afford to do that
(Mr Woods) The cheap virgin aggregates imported will
surely be taxed, will they not?
106. But they would not pay the levy?
(Mr Woods) Imports of aggregates will be taxed.
107. Sorry. I used the wrong phrase. I meant
to say imports of made-up goods. I beg your pardon. Imported materials.
(Mr Woods) Imported materialsthe secondary
productswill compete fairly. So, will we have the opportunity
to pursue an infant recycling industry? I am repeating your question
to myself. It depends. Clearly, we do not know to what extent
these cross-border transfers will take place. If they are enough
to undermine the industry in secondary products in Northern Ireland
completely, clearly that could be the case. But I doubt whether
anyone is arguing at the moment that the whole industry will be
undermined. The particular concerns are those along the border
rather than in the whole industry. I think that there would still
be an incentive although it still depends on a well-designed ta,
and it is difficult now to have a well-designed tax without research
having been done.
108. The effective cost-benefit analysis arising
from the imposition of this tax is such that something like almost
half of Northern Ireland will have a financial advantage in moving
across the border. Have you considered the potential impacts?
Obviously there are the extra vehicle movements but they will
not be only those of contractors importing added value aggregates;
in addition, some employees may decide that in order to maintain
their jobs, they will travel the appropriate distance to the newly
relocated plants, which also will have an adverse environmental
(Mr Woods) I understand that such are the levels of
wages in the industry that employees are unlikely to travel great
distances. That would be an undesirable outcome which needs to
be measured and assessed. We do not claim to have measured or
assessed it. In terms of the industry moving, I understand the
most likely scenario to be that virgin aggregates will continue
to be extracted in Northern Ireland but will be moved across the
border to be processed in the Republic and then re-exported free
of tax to the north. This is where I come to the critical issue
of the migration of jobs. The QPA figureswhich I believe
the DEFP acceptare that there are roughly 5,600 jobs in
the industry, 3,000 of which are in quarries and pits, which I
take to mean
that they are in aggregates extraction, whereas
2,600 are in processing the secondary productsblocks, asphalt,
109. I cannot remember the exact figures but
my recollection of the questions that we put to the industry were
such that a relatively low proportion of the total employed arose
from extracting virgin aggregates. The greater part was in manufacturing.
(Mr Woods) There may be a different explanation. Figures
that they published show that there are 1,360 people in production
in quarries and pits and 1,300 people associated with that, in
distribution. So that might explain what you have said. The actual
extraction of virgin aggregates has 1,300 jobs but in fact there
are a further 1,300 in the distribution of those. Those jobs will
continue. The industry have said that it is likely that they will
continue to extract in Northern Ireland and export to the south.
So the jobs under threat would be the 2,600, and such of those
as are situated close to the border, within whatever the critical
radius would beprobably 25 miles.
110. May I pursue that a little? I am a wee
bit concerned about the details. You said several times regarding
costings that you do not know the answer. You were quite up-front
about it and I can understand why because it is an extremely complex
issue some of which is very subjective. We have a parallel in
that a considerable part of the industry that supplies fuels along
the borderespecially retail sites and petrol stations and
so onhave simply closed down because of the differential
in duties there. That is hard fact; it has happened. Many people
will be concerned that it would also happen in this context because
even for the totality of the job it is easier to manufacture and
add on value at the site of extraction rather than transport from
the site of extraction and manufacture on some other site. I have
a great worry that not enough research has been done but you are
not promoting this fact as a way of addressing the unanswered
(Mr Woods) I certainly agree that there is a problem
and that with your parallel of the petroleum industry there is
clearly a problem because of the border. At the moment I am trying
to disaggregate the jobs threatened through the border effect
and those threatened, as it were, by the overall effect of the
tax. It has been argued that X thousand jobs are under threat
across Northern Ireland. I am trying to work out precisely which
of these are because of the border and which are though to be
because of the tax itself. I understand that the Committee is
particularly interested in the effect of the border. What I am
arguing is that the border's existence will not affect those jobs
which come from actually extracting primary aggregates and the
distribution of them, but that jobs may well be lostand
we recognise fully that this is an issue;amongst that proportion
of the 2,600 jobs in secondary products which are located within
a given distance of the border.
111. At the previous evidence session, when
Mr Murphy was asked about the perspective of employment, he said:
"Due to the fact that exports of value-added products are
not exempted in the same way as exports of virgin aggregate are,
it has created a bizarre situation where you can export virgin
aggregate to a plant in the south and carry out your value-added
process there. As in every industry, the vast majority of jobs
are involved in the value-added process, in some sectors you may
have two, three or four people involved in extraction and maybe
20 or 25 involved in the value-added process". So it is very
much the majority of jobs that are in the value added part of
the industry. Would you argue with that?
(Mr Woods) We are looking at their statistics, which
do not explain it in the same way. I don't know whether he has
112. Where do your statistics come from?
(Mr Allison) This is from the Quarry Products Association's
submission to the Northern Ireland Assembly.
113. The Northern Ireland Assembly. I just wanted
to get this clear because it needs to be looked into.
(Mr Woods) That was my point. The border effect is
problematic and I know that the Committee is trying particularly
to get at the border effect. I am very keen to separate that from
the overall arguments because the argument that the aggregates
levy will lead to a loss of jobs in certain areas are equally
valid for many parts of the United Kingdom, depending on the local
structure of the industry.
114. Will you justify that? What parts of the
UK will be affected in the way that Northern Ireland will? The
problem is that the lack of taxation south of a land border surely
does not exist in the United Kingdom at all: it is the same for
everyone in Great Britain.
(Mr Woods) I did not make myself clear. It is clear
that a number of jobs are threatened as a result of the border's
existence. But there are also a number of the jobs that the industry
says are threatened merely as a result of the tax overall. For
example, the industry has said that the £1.60 tax on an existing
product price of £2.60 or £3 is a very much higher percentage
than any other GB average. We argue that the GB average is not
a fair comparison. In particular parts of Great Britain we may
well find that the price of aggregates locally is towards the
in Northern Ireland. Am I making myself clear?
115. Yes, but you are not answering the question
which both Mr McGrady and Mr Bailey are getting at, which is that
in Great Britain there is a level playing fieldit is the
same for everyoneand that there will be an effect on employment.
Whether it is fiscally neutral or goes to good jobs as opposed
to bad jobsall the things that the Government watchis
one thing, but in Northern Ireland we are talking about an unlevel
playing field created by an artificially created tax where there
is a land border on the other side of which is a different regime.
Therefore what all of us are seeking an answer to is, what is
the extra penalty, and is it fair, in terms of jobs?
(Mr Woods) I agree. The land border effect is unknown
and the loss of jobs in the industrywhich I think is 4,000is
not explicable by the existence of the land border. The industry
is claiming that there are many other reasons for the loss of
jobsfor example, because the industry will simply sell
fewer products. Job losses in the industry will occur throughout
the United Kingdom as a result of this tax but we should regard
them as job transfers to more sustainable industries. Ecological
taxation is designed to transfer jobs from an unsustainable activity
more sustainable one. Many of the industry's
arguments have been that these jobs are disappearing and will
have gone whereas, in fact, there is a potential to transfer to
other employmentwhich is the whole purpose of the tax.
116. Well, what is your answer to the propositionsince
you are Friends of the Earth, not Friends of the Earth (Northern
Ireland)that jobs are being transferred from one sustainable
unecological area in Northern Ireland to the same unsustainable
unecological jobs in the Republic?
(Mr Woods) Clearly that would be futile, so we do
not want it to happen. This may be a relatively small number of
the total jobs lost. I believe that we do not know because we
have not seen the results of the researchand we believe
that research into the precise effect has not been undertaken.
117. That was my point about research. I agree
with you that the Treasury in London did not carry out any research
in Northern Ireland prior to deciding in principle. It has now
made soundings. Would you say that a proper and full inquiry should
be undertaken, analysed and evaluated before the levy is introduced
in Northern Ireland? Also, do you intend to undertake such an
inquiry, based exclusively on Northern Ireland and, perhaps, submit
it to the uninformed Northern Ireland Assembly Committee on the
Dexter side of the argument?
(Mr Woods) Yes, I believe that research should be
done. We have said that we think it should be done very quickly.
There are some months, and the methodologies exist so it should
not be too difficult to complete the information before implementation
of the levy. There is no time to lose, as we suggested to the
Treasury as well. I know that the QPA want it done; perhaps it
would rather it be done over a longer timescale. But we think
that to dely the levy's implementation would be a mistake, in
terms of our own research. I regret that my office comprises only
four people: we work on a number of issues and we are severely
constrained in our resources. We have to learn these issues pretty
fast and to commission research on this would be difficult. I
will certainly bring to bear my colleague Dr. Jenkins' wisdom
in that we could offer his expertise to whoever undertakes the
118. Finally, you stated that the Northern Ireland
Assembly has been lobbied yard by the quarry industry and that
it seems to have accepted the arguments against the levy without
the benefit of a different view. You take that different view.
Are you making a reasoned argument to the Assembly Committee or,
indeed, to this Committee?
(Mr Woods) I hope that we are making a reasoned argument
to this Committee. We have put our argument to the Assembly's
Agriculture Committee. We submitted evidence to three Committees
and were asked to visit one of them.
119. Mr Woods, I do not want to put words into
your mouth. You have been very frank with us and you concede that
there are difficulties because of a lack of research and information
about the effect of the introduction of a UK-wide tax on Northern
Ireland specificallyon its jobs and its economyand
that because of the ability of the people of Northern Ireland
to go to get their aggregates and their value-added aspect a short
distance away across a land border, there might not be an overall
environmental benefit. Does that mean that you are cautioning
that we should pause and look at this before we impose it, or
do your demands remain that even if it does have those negative
effectsthat even if it does not do the good that you wanted
it to doit is better than nothing? I am trying to summarise
what I think you have said because you have been very frank in
stating that the argument is not one sided.
(Mr Woods) I think that to say that there might not
be an overall environmental benefit would not be strictly accurate.