Budget freeze on aggregates levy

THE freeze on the aggregates levy announced in the Budget should be the first step in a proper government assessment of the levy. That was the message from the Quarry Products Association following last month’s Budget Statement by the Chancellor, Gordon Brown. The Association added that the decision to significantly reduce the rate of levy in Northern Ireland, in return for environmental agreements with the industry, had in effect acknowledged that the original decision to introduce the levy was wrong.

In his Budget Statement on 17 March, Mr Brown declared his intention, for the second consecutive year, to maintain the aggregates levy at its initial rate of £1.60 per tonne. He also acknowledged the need for special treatment for the aggregates industry in Northern Ireland; the Government is currently seeking EU state aid approval to extend the current 80% relief on aggregates used in processed products in the Province to cover virgin aggregates as well until 2012.

Simon van der Byl, director general of the QPA, said: ‘We are relieved that the aggregates levy has been frozen, but given that evidence supplied by the QPA illustrates the environmental inefficiency of the levy, and the levy U-turn in Northern Ireland, there is no case for any increase.’

In a recently published report on the impacts of the aggregates levy, the QPA concludes that the levy has almost certainly failed to deliver net environmental gains, has demonstrably not been cost-effective, has already damaged the competitiveness of UK business and threatens to inflict further damage.

‘As a matter of urgency, the Treasury must now carry out an open and transparent assessment of the levy in order to clarify its objectives, and its environmental performance, to inform future policy development,’ said Mr van der Byl.

However, as this item went to press, the more immediate concern was whether or not the new scheme for Northern Ireland, if approved by the European Commission, could be put in place by 1 April 2004.

The Rt Hon Michael Mates MP, chairman of the all-party Northern Ireland Affairs Committee, which is in full support of the Government’s plans to extend the relief scheme in the Province, last month urged the Commission to consider the state aid application in a timely manner, arguing that it was vital for the Treasury to be able to put the new scheme in place by 1 April in order to avoid the additional burdens on industry that would otherwise come into effect on that day.

‘The European Commission has provided funding in other areas that has been instrumental in the regeneration of Northern Ireland’s infrastructure and its economic development. We hope that the goodwill will continue with acceptance of the UK’s state aid application, allowing the aggregates and construction industries in Northern Ireland to survive the impact that the levy has had on their business,’ said Mr Mates.

While welcoming the Northern Ireland Affairs Committee’s scrutiny of the problems caused by the levy, and its continued concern for the aggregates industry in Northern Ireland, Robert Durward, director of the British Aggregates Association, said the Committee’s recent report on the introduction of the aggregates levy in Northern Ireland one year on showed that ‘cracks were beginning to appear in the levy’.

But he added that the problems were not confined to Northern Ireland and that evidence was continuing to emerge that similar environmental and economic damage was being caused by the aggregates levy throughout the UK. ‘We urge the Treasury to address these problems and abandon the levy,’ he said.