MINERAL COMPENSATION MOFIFICATIONS (Hansard, 17 June 1981)

§ Mr. Oakes
I beg to move amendment No. 17, in page 23, line 41, leave out '10' and insert '20'.
This is a rather more important amendment than some that we have discussed. It relates to the multiplier for the compensation that the industry pays for damage that it has done to the environment. In the other place it was generally accepted that the top figure would be 20 per cent. On the last day in Committee the Minister introduced an amendment reducing the figure to 10 per cent.
The amendment seeks to restore the position to what the other place decided—a 20 per cent. maximum. We are talking about a maximum. It would be open to the 1145 Secretary of State, in regulations, to introduce a figure of less than 20 per cent. However, despite the industry's representations, I suggest that 10 per cent. is too low a maximum.
We must consider the different kinds of extraction that we are talking about and the different effects that they may have on the environment. As the hon. Member for Truro (Mr. Penhaligon) told the Committee, there have been devastating effects in his constituency from extraction, which not one but subsequent generations may have to suffer almost for ever unless sufficient money is available for restoration. In its wisdom the other place decided on 20 per cent. Perhaps under pressure from the industry, the Minister halved the figure.
I agree with everything that has been said about balance. Indeed, on Second Reading I introduced the concept. The whole Bill is a question of balance between the rights and needs of industry to make a profit, to employ people and to make productive use of our mineral resources and the rights of the environment and those who live in the area not to have it ruined, as it was perhaps in the nineteenth or early twentieth century in my area and those of the hon. Member for Truro, my hon. Friend the Member for Ashfield (Mr. Haynes) and many others.
I believe that a maximum of 20 per cent. is the right balance. I know that in the present economic circumstances industry whines somewhat about that figure and has prevailed upon the Minister to reduce it to 10 per cent. Under the amendment it would still be open to the Minister to fix a smaller figure, but it would equally be open, on the face of the legislation, to make it 20 per cent.
I ask the Minister to reconsider, as he did earlier this evening, the decision that he made in Committee and to adhere to the decision that resulted from the debates in another place—this is a House of Lords Bill —and restore a maximum figure of 20 per cent., in the interests of future generations.
We are not talking about the effects of this action upon local authorities. We are dealing with the effects of the extractive industries upon people's lives and environment. Where a mineral extractor, quite rightly, makes a profit from extraction, it is reasonable for the House to state that the maximum compensation that he should pay to restore damage caused to the environment should not be limited to a mere 10 per cent., but should be up to a maximum of 20 per cent. It is possible for the Minister to determine a lesser figure, but let us adhere to the decision of the House of Lords and restore a top figure of 20 per cent.

§ Mr. Alexander
I oppose the amendment, and I hope that my hon. Friend the Minister will do the same.
The amendment would mean that any enterprise of any size would bear 20 per cent. of the value of its minerals before compensation for restrictive conditions could be claimed. It would be difficult, if not impossible, for some sections of the extractive industry to continue operating profitably under such circumstances. If they cannot operate profitably, job opportunities and the viability of the service industries surrounding them are consequently diminished. Without doubt, that would happen if the figure were 20 per cent. In my view, it would be a penal and unwarranted burden on the industry.
I cite the example of British Gypsum, which operates in my constituency. Up to March of this year, it faced a decline in demand for its products of 15 per cent., and a further decline of 10 per cent. is expected this year. I put 1146 it to the right hon. Member for Widnes (Mr. Oakes) that this is one of the few industries which actually create prosperity and employment from the natural resources of this country. As such, it should be encouraged and not penalised. A rate of 20 per cent. would be penal and, in my view, tantamount to a wealth tax.
I hope that the House will reject the amendment.

§ Mr. Haynes
The hon. Member for Newark (Mr. Alexander) has suggested that 20 per cent. is penal. The theme that comes across loud and clear to me is that it will affect profits. All that Conservative Members talk about is profits. Even the oil barons talk about profits. We are talking about the community and the people in the community, and about the protection of their livelihood and of the areas in which they live.
What is being suggested by Conservative Members is tantamount to industry being able to do just as it likes. That would be the end result. They should forget the profit motive for a change. I am sick of hearing about it from Conservative Members. Let us think of the ordinary people. That would make a change for the Government.

§ Mr. Giles Shaw
I am sure that the right hon. Member for Widnes (Mr. Oakes) will understand that in moving the amendment he was seeking to make a fundamental change in the Bill at this late stage in its progress. More important than that, he is under a slight misconception, because when the Bill was debated in another place no provision was made in the Bill. There was merely reference to the consultation document, which had been in circulation prior to that debate, in which the figure of 20 per cent. was set down. I want to correct the impression, which the right hon. Gentleman may inadvertently have given, that there was, as it were, the provision for a 20 per cent. threshold in the Bill in the other place which has been reduced to 10 per cent.

§ Mr. Oakes
I did not want to mislead the House in any way. What I had hoped I said—I may not have done so at this late hour—was that the assumption in the other place from the consultation document was a 20 per cent. figure. I agree with the Minister that there was no provision for a figure in the Bill at that time.

§ Mr. Shaw
Certainly that was the case. It was the figure that was quoted in the consultation document.
The level of 10 per cent. that is now in the Bill was set after careful consideration of the views of the mineral planning authorities and the circumstances of minerals operators in general.
I understand the concern of the hon. Member for Ashfield (Mr. Haynes), that frequently during the debate on the Bill there has been a contribution on behalf of the industry, which is finding that its resources are under attack or have at best been under strain. He must accept that we are dealing with a core matter, where the industry may not be able to sustain operations if the level of compensation is set too high. We have received many representatives from the industry illustrating the case of the small operator, and a large proportion of the industry is in this category. The view of those people is that they cannot afford the liability of a possible 20 per cent of the notional asset value.
On the basis of the formula that we have in mind at present, even in the case of the 35 per cent. of sites with 1147 the lowest notional asset value, the mineral planning authority will not have to pay compensation for the imposition of new conditions unless the loss or damage sustained by the operator is more than between £2,500 and £4,000. I realise that this is not a large sum, but I believe that it will enable worthwhile improvements to be made, although naturally the planning authorities would like the figure to be higher.
This is where we come to the question of balance, which the right hon. Gentleman knows so well, and the previous amendments, Nos. 15 and 16, are to some extent the other side of the coin. If we maintain the five-year review period, we consider that the 10 per cent. compensation threshold is the more effective and more just threshold. As the notional value of the site increases, so does the amount of loss or damage that the operator will have to incur before compensation is payable. For the next 15 per cent. of sites the figure will be between £4,000 and £8,000. For the next 20 per cent. the figure will be between £8,000 and £20,000, and so it will go up to the top 10 per cent. of sites with the highest notional value, when the operator could be faced with loss or damage up to £100,000.
Those are significant levels of expenditure, particularly for an individual operator, and I am convinced that to double them, which is what the amendment would do, would be to place too great a burden on the industry and those who work therein. It is necessary to ask the industry to pay something towards environmental improvement, and that is the object of having the compensation clause included in the Bill as opposed to the matter being left for regulation.
I consider that 10 per cent. of the notional asset value is fair to both sides. I hope, in view of his continued interest in fairness in relation to the Bill, that the right hon. Gentleman will not feel it necessary to press the amendment.