The Northern Ireland Affairs Committee
has agreed to the following Report:
INTRODUCTION OF THE AGGREGATES LEVY IN
NORTHERN IRELAND: THE GOVERNMENT'S RESPONSE
1. On 11 December 2001 we published our First Report,
on the "Introduction of the Aggregates Levy in Northern Ireland".
The aggregates levy, introduced by the Government from 1st April
2002 as an environmental tax, is designed to deter the quarrying
and use of virgin aggregates.
2. In our original inquiry we discovered substantial
weaknesses in the Government's plans as they affected Northern
Ireland: specifically, a failure to recognise and address the
problems for the local economy arising from the land border with
the Republic, and the different tax regime there. Following our
oral evidence session with the Minister on 22 November
2001, on 27 November the Government proposed as a concession
in the pre-Budget Report to phase in the levy for processed products
in Northern Ireland over five years.
While we welcomed this step, we called for the Government to postpone
the introduction of the aggregates levy in Northern Ireland altogether
until the full impact of the proposal on the local economy had
been properly examined.
3. When we received the Government Response to our
Report on 8 February 2002, we saw that the Government had neither
accepted our primary recommendation nor addressed our other concerns.
We therefore invited the Minister to discuss the matter with us
again. The Government Response and the minutes of evidence of
this second meeting are both printed with this Report.
4. We continued to point out that the proposed concession
would only defer the economic problems for Northern Ireland, rather
than solving them. The Minister told us that the Government "anticipate
that the environmental concerns ... will also apply south of the
border [and] ... one would expect the Republic to be recognising
the importance of the approach that we are taking". He implied
that the Republic was coming under pressure from other quarters
to follow the United Kingdom's lead.
However, he later added that "it might be many years before
[the Government of the Republic] were so persuaded".
Since the Minister has freely acknowledged that harmonisation
is many years away, the case has still not been made for the levy
in its present form for Northern Ireland. In the year's grace
which the phased introduction will give to manufacturers of processed
products in Northern Ireland, we expect to hear either that the
Government's efforts to achieve harmonisation promise success,
or that the phasing of the levy will be further postponed until
a proper case can be made for it.
5. We remain concerned that, having now admitted
that part of the founding research "was not at all robust",
the Government should continue to place so much confidence in
the remainder of the research.
Nonetheless we welcome the Minister's acceptance that "in
research and preparation you need a fuller knowledge and a fuller
research base than we had in terms of the introduction of this
tax. That full knowledge has to include Northern Ireland and its
1 Introduction of the Aggregates Levy in Northern
Ireland, First Report 2001-2002 (HC 333) paras 88-90 Back
Introduction of the Aggregates Levy in Northern Ireland,
First Report 2001-2002 (HC 333) para 94 Back