§ .—(1) A disposal is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—
- (a) has been removed (by dredging or otherwise) from water falling within subsection (2) below, and
- (b) formed part of or projected from the bed of the water concerned before its removal.
§ (2) Water falls within this subsection if it is—
- (a) a river, canal or watercourse (whether natural artificial), or
- (b) a dock or harbour (whether natural or artificial).
§ 3) A disposal is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—
- (a) has been removed (by dredging or otherwise) from water falling within the approaches to a harbour (whether natural or artificial),
- (b) has been removed in the interests of navigation, and
- (c) formed part of or projected from the bed of the water concerned before its removal.
§ (4) A disposal is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—
- (a) consists of naturally occurring mineral material, and
- (b) has been removed (by dredging or otherwise) from the sea in the course of commercial operations carried out to obtain substances such as sand or gravel from the seabed:.—[Mr. Heathcoat-Amory.]
§ Brought up, and read the First time.
§ Madam Deputy Speaker (Dame Janet Fookes)
With this, it will be convenient to discuss the following: Government new clause 6—Mining and quarrying.
Government new clause 7—Pet cemeteries
Government new clause 8—Exemptions: power to vary.
Government amendment No. 12.
Amendment No. 70, in clause 59, page 40, line 34, at end insert—'(9) Subsection (1)(b) above shall not apply where the material is deposited in an underground cavity created by the controlled solution mining of salt and the material arises from the processing of naturally occurring minerals to remove their naturally occurring impurities and the deposit of the material in such underground cavity will not give rise to environmental pollution and, due to the natural source of such material, there is no scope to reduce the quantity of such material and there is no more environmentally benign way of dealing with the material.'.Government amendment No. 13.
§ Mr. Heathcoat-Amory
The House will recall from debates at earlier stages of the Bill that we are introducing a landfill tax, which will come into effect on 1 October. It aims to reduce our reliance on landfill, and will promote more sustainable waste disposal practices, especially by encouraging the reuse and recycling of material—and, indeed, waste reduction. It will also ensure that waste disposal costs reflect the full environmental impact of landfill.
The revenue from the new tax will be used to make a further cut in employers' national insurance contributions, which have already fallen from 13.5 per cent. in 1979 to 10.2 per cent. now. A further cut costing about £0.5 billion will be made in April next year, also funded by revenue from the landfill tax.
It is worth recalling that the total reduction in national insurance contributions since 1979 is now worth about £7.85 billion a year. That represents a direct relief on employment costs, and it partly explains why our employment record is better than those of most of our European competitors.
or New clause 5 and its associated amendments and other new clauses arise from discussions that we had in Standing Committee, and with the trade, with other 1053 interested potential taxpayers and other groups. Their effect is to exempt dredgings and waste from mining and quarrying operations, and to introduce a power to vary the scope of the exemptions by Treasury order. We specifically intend to use that power to exempt historically contaminated land from the tax.
I mentioned dredgings, and shall say a little more about that subject, because it interested the House and the Committee in earlier debates. New clause 5 provides that a disposal is not taxable if the material being disposed of consists entirely of material dredged froma river, canal or watercourse",a harbour or suchlike. Most dredgings would not fall to be taxed in any case, because the material is often disposed of at sea or on land, rather than in a landfill site. But some material is disposed of in licensed landfill sites, and so would otherwise fall to be taxed.
We are exempting such material because the waste is naturally occurring, and exists to be dredged only because of the operation of natural forces. Moreover, dredging has a beneficial effect on navigation and in preventing flooding. It produces a relatively easily definable category of waste, and I am therefore happy to confirm the exemption by introducing the new clause to give it practical effect.
New clause 6 exempts waste from mines and quarries. It was never our intention to tax such waste unless it was disposed of in licensed landfill sites, but it became apparent following discussions with the industry that quite a tonnage of such waste is disposed of in licensed sites and would therefore be taxed. The exemption will apply to all naturally occurring waste arising from mining and quarrying operations. The exemption will not apply where waste arises from a process separate from mining or quarrying operations, or if it arises from a process that permanently alters the waste's chemical characteristics.
The next major category that I want to mention is contaminated land. Customs and Excise has consulted widely on the matter with the agencies involved in clearing up contaminated land. A consultation exercise took place on a draft clause that tried to define a category of contaminated land, linking it to the necessary planning approval, to provide an objective criterion for the eligibility for exemption. But it became clear that too many clearance projects do not require planning permission, and we have decided instead upon a different approach. The exemption will apply to waste from the clearance of contaminated land where the clearance of all or part of the contamination is necessary to allow the land to be used for the intended purpose when the development is complete. The exemption will apply to waste arising from the reclamation of the land, but current polluters will not be able to benefit from it.
That will be done by a system of certification by customs, and we want to consult further on the details. That means that the details of the exemption cannot be brought forward by primary legislation. New clause 8 enables the Treasury to make orders to add to, delete or vary the definition of waste exempt from the tax. We intend to use the order-making power because it may be necessary from time to time to alter the exemptions—particularly at the margins—in the light of technical or other developments, or to iron out difficulties that may 1054 arise during the operation of the tax. But it will be used specifically to bring in an exemption for historically contaminated land, and a draft of the order to do that will be ready early next month. Subject to the views expressed, we hope to be able to lay the order in June—well before 1 October, the date on which the tax comes into effect.
§ Ms Primarolo
I should like the Paymaster General to clarify a number of issues with regard to the new clauses. I am grateful to him for his explanation of the new clauses, which arise from our debates in Committee.
I should like the right hon. Gentleman to explain the use and meaning of the word "watercourse" in new clause 5(2)(a). Chambers dictionary defines a watercourse asa channel through which water flows or has flowed".That would seem to exclude lakes, ponds and reservoirs, for instance. Is that the Government's intention? If so, what is their justification for doing so?
New clause 6 deals with mining and quarrying, but it appears that the problems with salt mining that were raised in Committee by the hon. Member for Beaconsfield (Mr. Smith) are not covered by the new clause. If I am reading the new clause incorrectly, perhaps the Paymaster General can explain how they would be covered.
With regard to the exemption powers in new clause 8 and the development of historically contaminated land, we discussed in Committee contaminated land in inner cities, which might be developed for housing projects—a burden would be placed on the developers prior to the development. I understand the difficulties in refining a definition to deal with that issue, but there are a number of related problems. I shall put them before the House, bearing in mind the fact that the Paymaster General said that there would be further consultation on the details of the way in which the exemptions would work. The powers seem very wide at the moment, but if I heard the right hon. Gentleman correctly, he said that the exemptions could vary at the margins according to the development of technologies. If I misheard him, I apologise.
The Environmental Industries Commission, in its representations on the new clause—I presume that it has made the same representations to the Paymaster General—made a series of important points that we need to consider. One was that, if we move the contamination from the historically contaminated land into landfill, we shall not be dealing with the contamination, but simply moving it. The EIC points out that companies are emerging in the United Kingdom which offer on-site remediation technologies and that, as was said in the introduction to the new clauses, the point of the landfill tax is to encourage waste reduction and recycling. The tax is supposed to shape the behaviour of others.
Contaminated land is a substantial problem in Britain, as well as throughout Europe, particularly as most of it is in inner cities and, while it is not dealt with, pressure will continue to be put on green-field sites and sites elsewhere. It is estimated that there are about 50,000 to 100,000 contaminated sites in the United Kingdom alone. I am keen to ensure, as I am convinced that the Paymaster General will be, that we do not undermine the development of the industries that deal with the remediation of contaminated land in what is a very volatile market in the United 1055 Kingdom, by giving developers a route to avoid dealing with the contamination on site and simply allowing free tipping on landfill sites.
Clearly, to encourage those environmental technologies to develop is crucial. Indeed, the Government recognise that, because the Department of the Environment has been encouraging the use of advanced remediation techniques in place of landfill, and Government initiatives, such as the Biotechnology Means Business programme, have been trying to do exactly that. If the House gives too wide a power on exempting historically contaminated land, it will be in danger of running counter to those objectives, and I am sure that that is not the intention.
The royal commission on environmental pollution and the Office of Science and Technology have recognised that greater emphasis should be placed on the commercial application of environmentally friendly technologies that can deal with contaminated sites. We are discussing historically contaminated sites only. The royal commission's call for urgent action to decontaminate urban sites could be undermined by proposals that are too widely drawn.
The Government are in danger of sending out conflicting messages. While their policy wishes to assist the development of the environmental technologies, it is in danger of taking away the home market that would help develop them. I ask the Paymaster General during consultation—before the drafting of the orders that will come before the House—to consider the role of the Department of the Environment and the use of advanced land remediation techniques instead of landfill of contaminated land. He should consider the Department of the Environment's sustainable management strategy, which has set targets for reducing the amount going into landfill sites and could be undermined by the inclusion of contaminated land. He should also consider the DTI's Biotechnology Means Business initiative and the LINK programme on the biological treatment of soil and water to deal with contamination, which covers many Government Departments.
There are numerous environmental arguments for a landfill tax, which we have supported in principle, although we have disagreed with some of the details. On contaminated land, it is important that any short-term arrangements that are made to help out with particular problems of developers do not become medium or long-term solutions that undermine the very industries for whose development the landfill tax was supposed to create the opportunity.
§ Mr. Tim Smith (Beaconsfield)
I congratulate my right hon. Friend the Paymaster General on the way in which he has handled the landfill tax. I fully support the principle of a landfill tax, but it is important that, at the margin, we should get its scope right.
Concern was expressed in Committee on behalf of several industries that felt that they would be placed at a competitive disadvantage or had other genuine reasons for exemption, and my right hon. Friend tabled the new clauses, especially new clause 8. It is always difficult to decide whether it is right to give the Government more order-making powers, but in this case it is sensible, because we may want to vary the scope of the tax, and contaminated land probably will not be the last example of where that would be necessary.
1056 The CBI minerals committee welcomed new clause 6, on mining and quarrying, but asked for some reassurance on two matters. The first is straightforward. It seeks confirmation that the exemption provided by new clause 6 embraces the naturally occurring materials that result from the processing of a mineral as part of the normal mining or quarrying operation. I thought that that was clear. Secondly, it seeks reassurance that new clause 6 covers processes which are an essential part of the operation, but which take place at a different location. It would be helpful if my right hon. Friend could deal with those two points in his reply.
The hon. Member for Bristol, South (Ms Primarolo) mentioned salt. My hon. Friend the Member for Congleton (Mrs. Winterton) has tabled amendment No. 70. As she is not here, I should mention it because I am not sure that the new clauses cover it. It would be helpful if my right hon. Friend could respond on that. The underground cavities in the Cheshire plain where the material is disposed of after processing are in my hon. Friend's constituency—which explains why she has tabled the amendment—and it would be helpful if my right hon. Friend could address that issue. I believe that his handling of the matter has been exemplary.
§ Mrs. Helen Jackson (Sheffield, Hillsborough)
I am pleased that, following our discussions in Committee, several new clauses have been introduced on Report. Although the Opposition's preferred option was to spend more time considering the various issues raised by different industries and local authorities, I accept that the new clauses go a long way towards addressing some of their queries.
I should like to ask the Paymaster General to respond to a few points that I have raised with him in the interim. The first involves the continuing discussion about the problems that certain industries will have defining and accepting the various classifications of waste. The Secondary Metals Association—which is the trade association for the scrap metal industry and is obviously important to steel producers in South Yorkshire—remains concerned about how to address the classification issue. How will scrap metal merchants know whether the materials they receive qualify for the £2 levy or the £7 levy?
The second point was raised by the Environmental Services Association, and I do not think that the Paymaster General has responded to it. How will waste be weighed at landfill sites so that landfill tax may be levied accurately to ensure that all operators are competing on a level playing field. In its briefing—with which we all agree—the Environmental Services Association says:the aim of the tax is to encourage the movement of waste up the hierarchy by increasing landfill charges".It does not aim to subsidise some businesses, which might be able to get around the landfill tax, at the expense of others. The association is concerned—as am I—that, if waste is not weighed on weighbridges in every case, there could be discrepancies and unfairness.
Thirdly, I have some concerns about new clause 6 regarding mining and quarrying. There will be concern, particularly in former mining areas, that potential developers of opencast sites will see the landfill tax as a means of increasing their opencast operations.
Many of the arguments about mining and quarrying were reasonable and well founded. I listened carefully to 1057 what the Minister said: that waste in mining and quarrying operations would not be exempt—if I understood him correctly—if the operation was separate from the mining operation or if the composition of the waste was altered. I should like some assurances that opencast operators will not have significant gains out of new clause 6. There are huge areas in Yorkshire and the north-east that would be particularly concerned if it was seen as a ghetto for opencast operators.
My fourth point relates to new clause 8—an open-ended clause that could mean everything, nothing, half, quarter, three quarters and could be said to accommodate most of the concerns that were raised in Committee. It leaves loopholes. We want further clarification about when the loopholes will be closed if new clause 8 is seen to offer too much flexibility to Ministers, to operators or to waste disposal people.
The Minister will be aware that I raised a number of concerns of the British Iron and Steel Producers Association in Committee because it wanted dispensation to clear and develop its contaminated land for clean uses such as housing. We were supportive of the association's representations. I am happy because its representations have been addressed by new clause 8, but it seems to me that the dispensation could go much wider and that, perhaps, we do not want it to go too much wider.
It is extremely important—as my hon. Friend the Member for Bristol, South (Ms Primarolo) said—that the widening of the exemption to include all contaminated land is not jumped on by waste operators as a way of avoiding the pressures that the landfill tax is supposed to put on them to look for ways of recycling waste, cleaning up waste or using waste for new productive purposes through the environmental technologies that have been mentioned by the Environmental Industries Commission.
I urge the Minister to take seriously the commission's recommendations that, in every case, Ministers and Members of Parliament ought to be assured that the best environmental option that achieves a sustainable waste management strategy is being pursued and that we do not simply respond to pressure from this or that waste disposal operator who is using the term "contaminated land" to avoid landfill tax payments.
§ Mr. Barry Sheerman (Huddersfield)
I welcome the landfill tax and regard this as an exciting new era in terms of how we deal with much of the waste that we produce. I intend to refer not to animal cemeteries—unfortunate as that may be—but to mining and quarrying and the exemptions that have been suggested under new clauses 5 and 6. The exemptions are important—we all know that mining and quarrying produce more waste than any other source.
We have a highly reputable, efficient and competitive waste disposal industry that does a good job on well-administered sites, but there is the other world of cowboy operators—sometimes the small operators—that regulations do not seem to reach. My only concern is that there are certain elements in the exemptions that seem to cater to the fly-by-night cowboy operators. One worries that there will be tax evasion and more inefficient and rather dodgy sites. We do not want a proliferation of fly tipping across the countryside. It is already a real problem and some attention has to be directed to it.
1058 I welcome the fact that there is an exemption. All hon. Members have been lobbied by an efficient and welcome lobby—not all lobbies are welcome. A number of waterway and canal societies, including the Huddersfield narrow canal society, have lobbied me. I am glad that the Government have been able to respond with an exemption.
Some would say that we do not want exemptions for one part of an industry when similar exemptions are not available for another part of it. I refer to the chemical industry and the production of salt. There is concern about competitiveness. That sector of the industry believes that it is being hard done by and that further consideration should be given to its special case. I do not know the pros and cons of the case, only what my postbag looks like and the arguments that have passed across my desk. The issue needs further attention.
The Government need flexibility to deal with poisoned land. The issue must be dealt with sensitively. Technology is changing quickly in this area—indeed, the tax is producing new technologies. The energy from waste movement is producing new technologies. We already know that operators in the waste world are looking at totally different technologies because they know that the landfill tax is coming in on 1 October. That is all very good, but we must have a system that is sensitive enough to react quickly if my hon. Friend the Member for Bristol, South (Ms Primarolo) is right and we experience evasion of the tax and movement towards a less good disposal of polluted land.
§ Sir James Molyneaux
I join those who have welcomed the exemptions, because they are a move in the right direction. We pay tribute to the Treasury Ministers and all who served on the Committee for starting to move in the right direction. The exemptions will be of great benefit to small local authorities and we have—with only one exception—small local authorities in Northern Ireland.
We also welcome the flexibility conferred by new clause 8 and the powers to vary by order. The hon. Member for Beaconsfield (Mr. Smith) and others asked whether there would be a general welcome for the powers for central Government to take certain action by order. In Northern Ireland, we can hardly object to the phrase "made by order", because the Secretary of State for Northern Ireland has no other option. He must govern Northern Ireland "by order" in nearly all respects, so we do not quibble with that one.
I want to ask the Paymaster General for an assurance that the commissioners will consult district councils meaningfully, because they have two interests in this area. First, they are bound to be affected directly because they will run some of the sites. Secondly, councils are regarded—I think that this is the case throughout the United Kingdom—as the link, even the go-between, between central Government and the average citizen. For that reason, it would be useful if district councils, as the recognised authorities, had effective lines of communication and consultation with the commissioners.
We must be merciful to councillors, because they are usually blamed—I am sure that the problem is the same on both sides of the water—for the actions and inaction of Governments of whatever complexion. I say that to preserve my neutrality. Some Departments sometimes 1059 seem to welcome the fact that the fire is directed at local councillors rather than the Ministers who are answerable to Parliament. I want to pay tribute to councillors in the presence of my hon. Friend the Member for East Antrim (Mr. Beggs), who has served for a long time on a local authority. He endures all the heat and burden of the day and very often gets little sympathy from those who elect him—and still less sympathy from Governments, again of whatever complexion.
§ Mr. John Home Robertson (East Lothian)
I warmly endorse the closing words of the right hon. Member for Lagan Valley (Sir J. Molyneaux), not least because my wife has recently been elected to a Scottish local authority.
Sadly, I am about to develop a substantial constituency interest in the landfill industry since Blue Circle Industries plc has obtained planning permission to use what used to be an enormous quarry close to Dunbar as a large landfill site, which will be available to users in south-east Scotland and north-east England. I fear that the site will provide lots of revenue to the private company, Haul Waste, that has bought it from Blue Circle.
It is interesting to note that Haul Waste is a subsidiary of the privatised South West Water, so there will be a number of snouts in that trough. All those involved will want to get their cut from the business and, under the landfill tax, the Chancellor of the Exchequer will get £7 a tonne out of the same hole.
My main anxiety is that, after the privatised water industry gets its profit out of that hole in the ground and the Chancellor of the Exchequer has had his take, very little might be left to protect the environment of the neighbourhood. We all know that landfill sites can be very messy locations. The best impression of the east coast of Scotland will not be created if people travelling up the A 1 or the east coast main line go past a colossal hole full of visible, smelly, messy rubbish. It is therefore important that people who operate such sites should be given incentives to do so in an environmentally friendly and responsible manner.
§ Mr. Roy Beggs (East Antrim)
The hon. Member will share my concern that Haul Waste is seeking planning permission for a huge—probably the biggest—quarry site in Northern Ireland on the edge of Larne lough. Does he agree that landfill sites must be strictly supervised to ensure that leachate does not flow into rivers and loughs to cause permanent and, in many cases, irreparable damage?
§ Mr. Home Robertson
We are in danger of having a general debate about the merits and demerits of landfill sites, but I agree entirely with the hon. Gentleman.
I am personally very sad about the development in my constituency because, in my 18 years as Member of Parliament for East Lothian, I have never received a single complaint about the council-operated tip in my local authority. All the rubbish is baled and most of my constituents do not even know where it goes. Under the new set-up, the rubbish will be tipped loose. The wind will blow it around, the gulls will fly and the rodents will run around. I fear that the site will be revolting and I am concerned that—after everybody has had a profit—the environment of the area should be protected.
1060 My specific point about the new clauses and amendments in this group arises from something that the Paymaster General said in his introductory speech. He said that the purpose of the landfill tax is to encourage the reuse and recycling of waste material. It does not quite do that.
Encouragement can involve carrots or sticks, and the tax is a stick that will penalise landfill, but there is nothing in the package to encourage recycling and investment in plant for recycling. That point was clearly made to me by a waste operator in my constituency, East Coast Skips Ltd., which told me that it is enthusiastic about co-operating with Government policy and wants to invest in equipment to recycle timber, paper, glass and anything else.
Unfortunately, under these provisions, the company's cash flow will suffer because it will have to start paying the £7-a-tonne levy and it will receive no incentive to invest in the equipment for recycling. It would not be unreasonable for at least part of the revenue from this tax to be made available to encourage people in the industry, local authorities and others to invest in the equipment that they require to do what we all want them to do. I hope that the Paymaster General will address that constructive suggestion.
§ Mr. Tim Devlin (Stockton, South)
I welcome the opportunity to say a few words about landfill tax, because it is of great concern in my constituency, which is Britain's largest chemical-producing area. When I recall the Second Reading of the Finance Bill, I am pleased to see in new clauses 5 and 6 that the Government have taken notice of some of the criticisms that were made about the tipping of material dredged from harbours and rivers and about inert material washed from potatoes and resulting from the movement of soil.
I still have three concerns, which have already been communicated to the Department of the Environment by Teesside development corporation, by contractors in my constituency and by me on behalf of Harcross, the largest producer of chrome in this country and in Europe. Its main competitors are in America, the far east and South Africa, so any burden placed on that company puts it in an unfortunate uncompetitive position against the major competitors that it faces in other parts of the world. I shall be interested to hear what the Paymaster General has to say about my three points.
The first point is about Harcross. I have read new clause 6 on mining and quarrying and I am uncertain whether a company that takes mined material from another country, separates it into a useful metal and an inert waste and then landfills the waste in a pit on its own land will be liable to pay the full £7 a tonne rate of tax. If it is liable, that will significantly affect its competitive position. I am interested to know whether the steps that the company has taken to reduce the waste that it produces—they have cost a considerable sum—will be offset against the amount of tax that it may have to pay if it is indeed liable to the tax.
My second concern relates to the activities of the urban development corporations. This point has been pursued with the Department of the Environment by Teesside development corporation. It has to do with contaminated land being excavated to regenerate an area, and whether 1061 the scrapings taken up from the surface of the earth and then sent away to landfill will be liable to the £7 a tonne tax. If they are, that will, in effect, be a tax on regeneration. I had understood from the DOE that that would not happen, and that the removals would be classed as inert material and thus be exempt from the tax. The development corporation and I would both be grateful for confirmation of that.
My third concern is material used for landscaping. I have to admit that I am rather confused by a letter that I have received from a junior Minister at the Department of the Environment, with whom I have corresponded on this matter. Incidentally, he offered to meet me to discuss the problem but has not yet found himself able to do so. The letter, dated 14 March, says:You question whether the landfill tax should also apply to inactive or inert wastes. Inactive or inert waste is waste which does not decompose when it is landfilled to produce methane gas, or have the potential to pollute groundwater. We recognise that the risk of environmental pollution is much smaller for this type of waste, and the lower tax rate of £2 per tonne will apply to inactive wastes to take account of this.On the next page, the letter continues:The landfill tax will provide an incentive to use these materials productively rather than disposing of them in landfill sites".Further on, the letter continues:The purpose of the tax is to face producers of waste with their actions … Research published by my Department into the recycling of demolition and construction waste does suggest that there is scope for increasing both the total quantity of waste recycled and the proportion which is recycled as quality secondary aggregate.The point here is whether construction industry waste—bricks, tiles and pipes—which is then sold by companies to other companies for use as hard core on building sites to fill in soft patches in the ground, and as underlay for carparking areas and farmyards, will be classed as waste. Will it be classified as destined for landfill or as recycled material that is wholly exempt from the tax? That is an important aspect to the chemical industry and to agriculture generally. Hard-core material is often sold to companies such as ICI to build bunds around their plants, so that if there is a chemical leak it can be contained within a specified area. It is then landscaped with topsoil, effectively creating what looks to the eye of the passer-by like a long, low hill. That improves the visual aspect of many a factory and plant, at the same time as adding to safety.
Many companies sell their hard core for the construction of new roads, farm roads, farmyards, turning areas and parking areas. Is that classified as landfill? If so, will the material be charged at £2 a tonne, or will it be classed as recycled material? That point has been raised by hauliers in my constituency who are anxious for the answers. I look forward to some guidance on how this part of the construction industry will be affected by the proposed landfill tax.
I must warn the Minister that if people have to pay landfill tax to take their waste to an approved tipping site, we face the prospect of a considerable increase in fly tipping. That concerns me greatly. Will the Minister therefore ensure that local authorities provide at least one place where local residents can take their unwanted bedsteads and domestic refuse and dump it for free? At the main incinerator and waste disposal unit in Teesside 1062 we currently have to pay £25 a load. Providing a free dump would be a massive incentive for people on low incomes to dispose of their rubbish properly.
§ Mr. Paddy Tipping (Sherwood)
I welcomed the landfill tax when it was announced in the Budget and I followed its progress in Standing Committee. I still welcome it, although the more I examine it the more difficult the subject becomes. I am particularly pleased by new clause 6 as it affects the deep coal industry. I had never thought that that industry would be affected by the landfill tax, but I am pleased that the new clause clarifies the matter.
I should like to pursue the Minister a little further on the consequences of the tax for the coal industry. Will materials brought in for engineering work be exempt from the landfill tax? I offer the Minister two examples. During construction of a colliery slag heap, the base is lined with clay to prevent water from permeating it. That clearly involves bringing waste on to the site, but it is designed to stop other waste from polluting the water.
Secondly, capping a colliery tipping site with soil needs to be done to enable tree planting to take place. I am keen that that, too, should be exempt from the landfill tax.
It also seems clear to me that if coal is brought out of the mine and then washed, that is part of the coal mining process, so the resulting waste should not be liable to the landfill tax. Sometimes coal is transported away from the colliery to another site for washing; does it matter whether the process takes place on the same site?
I may be pushing my luck a little, but it would be helpful to the coal industry to have these answers. It would also help the industry if fly-ash were exempt from the tax. I assume that subsection (5)—a process forming part of those operations and permanently altering the material's chemical composition"—excludes fly-ash, but I use it as a device to ask the Minister about what category fly-ash will come under—the higher rate, or the lower rate for inactive and inert waste. The coal industry faces many challenges at the moment, and I know that the Revenue is consulting on this. I, for one, am very anxious that the industry should survive.
§ Mr. Heathcoat-Amory
I am grateful to the House for the general welcome for the tax. I think that it is seen as an advance in environmental terms, and that it will raise a useful sum that will be applied to relieve the burden of employment taxation.
On the specific questions, the hon. Member for Bristol, South (Ms Primarolo) asked about dredging and whether material reclaimed or taken out of ponds and lakes will be exempt. The answer is no. The dredging exemption is designed for the removal of material that has entered harbours and waterways through natural forces. It is also designed to keep those harbours and waterways clear for navigation purposes and to prevent flooding. That is not the case for material removed from stagnant ponds and lakes. I remind her that, if such material is disposed of other than to a licensed landfill site, it will not be taxed anyway.
§ Ms Primarolo
What about material removed from reservoirs that do not have a throughput of moving water?
§ Mr. Heathcoat-Amory
Unless a reservoir is a waterway used for traffic, and therefore might qualify as a type of canal, I do not envisage that it will be exempt. 1063 That question illustrates the validity of the new clause, which introduces an order-making power, because it is precisely these marginal issues that may fall to be altered in due course.
§ Mr. Home Robertson
I do not think that the Minister quite understands what a reservoir is. A body of water is not a reservoir unless water flows through it. The whole purpose of a reservoir is for water to go in at one end and to be taken out at the other, and if in the process silt gets into the bottom of the reservoir, presumably it is reasonable to allow the operator to remove it without being taxed.
§ Mr. Heathcoat-Amory
Nor do many canals have water flowing through them. They are not rivers; some canals are virtually stagnant, yet they take traffic and therefore have to be kept clear for navigation purposes. I can envisage, if I stretch the definition to its extreme, a type of reservoir that might also be used to take commercial traffic and might therefore form a type of canal. That might fall to be exempted from the tax. In general terms, I feel that reservoirs will not fall within the exemption and therefore material removed from them will fall to be taxed.
§ Mrs. Helen Jackson
Surely, as we in Yorkshire know, the whole point about reservoirs is that if they are allowed to silt up, the supply and resources can be threatened. That issue has been raised not once but many times by the people of Yorkshire in the past six months, because silting up may have contributed to the problems last year. I should be grateful if the Minister would agree to examine the implications of that.
§ Mr. Heathcoat-Amory
I do not want to get into the problems of Yorkshire Water during the debate. The problem there is too little water rather than too much silt. I would rather re-emphasise the point that the order-making power is partly designed to deal with possible future definitional problems, where the House may decide to move the borderline between exempt and non-exempt material, which neatly makes the point for the new clause, which introduces such a provision.
The hon. Member for Bristol, South wants to ensure that the contaminated waste provision is not abused and that it should not be used in cases where there is a perfectly good alternative. The point is that clearing up historically contaminated land is currently extremely expensive, and it would act as a deterrent if such material were to bear tax at £7 a tonne. It would give every incentive to the development of green-field sites rather than the contaminated brown-field sites, where we wish to see development taking place in some cases.
Of course, there are other ways to deal with contamination. Soil can be washed. I have even heard that microbes can be employed to chew up the offending contamination, but all this technology is in its infancy and at present is a good deal more expensive than existing methods. If the balance were to shift, we would need to consider whether it would be appropriate to continue to exempt contaminated sites.
I am grateful for the remarks of my hon. Friend the Member for Beaconsfield (Mr. Smith) about the way in which we have tried to introduce this tax through listening 1064 to representations that have been made. Indeed, we have gone a long way towards meeting some of the objections where they are well founded. He mentioned the salt mining industry. I can confirm that material put back into salt cavities will not be exempt, because it has been altered chemically. In other words, what is taken out of the salt cavities is different from what is being put back in. We have, however, met some of the industry's concerns by bringing within the definition of the lower rate these deposited materials, which will be taxed at £2 a tonne rather than the original £7 a tonne. In addition, we shall make an allowance for the water contained in the brine material that is pumped back into the excavated cavities.
The hon. Member for Sheffield, Hillsborough (Mrs. Jackson) asked me about the different classifications of waste between the upper and the lower rate. In answer to a written question, I announced the categories that fall within the lower rate, but before that is taken forward into secondary legislation we are open to further representations.
The hon. Member for Hillsborough asked about weighbridges. It is not our intention to insist that all landfill sites be equipped with a weighbridge. Many of them are, but where there is no such facility for weighing material, for environmental control purposes the quantity of waste has to be assessed. When that is done to the satisfaction of Customs and Excise without a weighbridge, we shall use that as a basis for taxation. It is important when we introduce a new tax that we do not unnecessarily burden small operators with capital expenditure that they might not be in a position to meet. It is not a requirement that there should be a weighbridge at smaller sites.
The hon. Member for Hillsborough also asked about opencast mining. No special privileges will apply. The planning process must take care of the question whether opencast mining can take place, and spoil and waste from that operation will be exempted in exactly the same way as they are from deep mining. She also made a point about being restrictive about the definition of historically contaminated waste. I have dealt with that point.
My hon. Friend the Member for Beaconsfield also asked me two questions about mining waste. I can answer both of them positively. Material that is normally processed or separated from quarried or mined material will not be taxed. Similarly, it does not matter whether that process takes place at the quarry or whether it is geographically separate.
The right hon. Member for Lagan Valley (Sir J. Molyneaux) asked about the need for consultation, particularly with district councils. Talking to representatives and officers from local authorities is very much part of our consultation exercise, and we shall continue to engage in such consultation.
The hon. Member for East Lothian (Mr. Home Robertson) mentioned the burden imposed on local authorities that might have to provide for, or encourage, the recycling to which the tax relates. Between 1990 and 1994, the Government provided some £10 million in grant to assist the development of alternative environmental technology, including recycling technology. More specifically, local authorities were permitted to borrow more than £50 million for capital investment in recycling facilities. All that will be boosted by the introduction of the 1065 tax. The hon. Gentleman may call it a stick rather than a carrot; nevertheless, it is a direct incentive for all waste producers, and all who handle waste, to find alternatives to land filling. Recovery of waste, incineration with heat recovery and recycling in all its forms will be given a direct impetus.
§ Mr. Home Robertson
I was referring not only to local authorities but to established contractors, large and small. The Government say that such contractors want to begin recycling rather than landfilling. The Government are clearly imposing a substantial extra burden on their cash flow by introducing the £7 a tonne tax, but at the same time the Government want them to invest in recycling equipment. Surely it is reasonable for those contractors to gain an incentive—perhaps a grant scheme—from the tax revenue, so that they can install such equipment.
§ Mr. Heathcoat-Amory
As I have explained, through the normal credit approval procedures the Government have directly encouraged local authorities to install such facilities. Even without the tax, however, many self-sustaining recycling systems exist. For instance, all aluminium cans are taken by Alcan and other companies and turned into new aluminium ingots. A further direct financial incentive will be given; it will be in everyone's interest to remove aluminium from the waste stream in order to recycle it, and to reduce the volume that would otherwise have to be taxed when it went to landfill.
§ Mr. Sheerman
I am rather worried about the fact that the Minister has not mentioned trusts. I am thinking of carrots rather than sticks. I would have thought that, under the new clause 5 criteria, the trusts that we expected to benefit from the landfill tax would be able to supply some of the "carrots" that we all eagerly awaited from 1 April. Will those trusts disappear, or will they remain with us? Will they be affected?
§ Mr. Heathcoat-Amory
The trusts are very much part of the legislation. I have not mentioned them only because they are not part of the new clauses, and I do not wish to be ruled out of order. We hope that environmental trusts will spring up to develop other ways of dealing with the waste stream, including research into alternatives. They may also clear up some of the so-called orphan sites that would otherwise remain derelict.
My hon. Friend the Member for Stockton, South (Mr. Devlin) referred to material brought into the country and then separated out as part of an industrial process. He asked whether the resulting material would be taxed. It would, but, without access to further details, I do not know whether it would be taxed at the "inactive" rate of £2 a tonne or at the higher rate of £7. My hon. Friend gave the more specific example of what he described as "scrapings" from contaminated land. That would be exempted under the provisions relating to contaminated land.
My hon. Friend gave other examples from a letter that he had received from the Department of the Environment, and questioned me about material from the construction 1066 industry. In particular, he wanted to know whether material that was sold would be taxed in any way. The answer is no. If material has a use and is sold to an end user, it will not be taxed; it will be taxed only if it goes to a licensed landfill site. Ordinary inert waste would be taxed at £2 a tonne. My hon. Friend also mentioned fly tipping. We already have provisions in environmental law to deal with that, and we want them to be rigorously enforced to prevent incentives being given to those who engage in fly tipping rather than responsible disposal.
§ Mr. Devlin
I am grateful for my right hon. Friend's helpful comments. It seems from what he has said that, if the incinerator that currently stands at the centre of Teesside is removed and the development corporation demolishes and clears the site, that will be treated as an exempt disposal.
§ Mr. Heathcoat-Amory
If the site were shown to be historically contaminated, we would envisage exempting it, but it is dangerous for Ministers to give definitive interpretations of tax liability from the Dispatch Box. If my hon. Friend would like a more authoritative reply, he had better write to me.
The hon. Member for Sherwood (Mr. Tipping) asked me about material brought on to a site. If it is bought by those who are lining, or indeed capping, a site, that would not be a disposal for landfill purposes and would not be taxed. As for coal, the hon. Gentleman gave an example in which water was added. I know that water is often added to pulverised ash from power stations to help transport it. We do not want to tax water that is added in that way; customs will apply a conversion factor so that the actual material is taxed.
The hon. Gentleman also asked about processing that is geographically remote from the original site. That itself would not mean that the material was taxed, provided that it was part of the same basic operation and that the material was not chemically altered—provided, in other words, that it was still part of the original quarry or mining operation. It would not matter where the operation took place.
Having given those few elaborations, illustrations and reassurances, I commend the new clauses to the House.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.