Commons Sitting of 23 April 2001

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  DEFENCE
  The Secretary of State was asked—

  Macedonia
  Mr. Tam Dalyell: If he will make a statement on military action in the former Yugoslav Republic of Macedonia. [156926]
  The Secretary of State for Defence (Mr. Geoffrey Hoon): The Government support Macedonia's right to defend its territorial integrity and sovereignty, including with proportionate and appropriate military action. We are giving a range of non-lethal military equipment to the Macedonian Government to assist them. We have a small number of troops based in Macedonia, providing logistics support for UK forces in Kosovo, and a defence adviser working with the Macedonian Ministry of Defence.
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  In Kosovo, UK troops are providing reinforcements to the Multi-National Brigade (East) region in an area that includes the Macedonian border.
  Mr. Dalyell: Is the Macedonian Ministry of Defence, as opposed to the Macedonian Government, being co-operative?
  Mr. Hoon: Yes.

  Procurement Policies
  Mr. Nick St. Aubyn: If he will make a statement on his Department's procurement policies. [156927]
  The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): The essence of our procurement policy is to secure the best equipment capability at the best value for money, through competition and prime contracting where viable. Our Smart acquisition programme is enhancing the efficiency of our acquisition process by streamlining the organisation, introducing new techniques and commercial best practice, building a closer and more constructive relationship with industry and improving the training and development of our acquisition personnel.
  Mr. St. Aubyn: The Government have just finished paying between £30 million and £60 million to refit 1,100 CVR(T) tanks with diesel engines under a non-competitive contract. Were the Government aware before that contract was granted that those new engines would not operate in an A1 climate, such as that in the middle east; or was that key drawback of the new engines only discovered after the contract was awarded?
  Dr. Moonie: That matter has been referred to before in the House and, as the hon. Gentleman knows, the single-source procurement strategy was adopted because Alvis Vehicles Ltd. is the design authority for CVR(T)

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  and has certain proprietary intellectual property rights over the vehicle. On the hon. Gentleman's specific question, I understand that there are no particular problems that cannot be managed in theatre.
  Mr. John McFall: The Minister will be aware that the Secretary of State recently visited the Clyde submarine base at Faslane, where he talked to the unions about future procurement and work practice policies. He will also be aware that there is a combined trade union response document on securing work for the future. He knows that the work force are committed and loyal. Can he give us a progress report on the discussions between the Secretary of State and the work force and on the options regarding the combined trade union response on the future work practice at the Clyde submarine base?
  Dr. Moonie: We are well aware of the high quality work that has been carried out for us for many years at Faslane. My right hon. Friend the Secretary of State and the unions held constructive meetings during his visit, and
  I can assure my hon. Friend that their submission is receiving the most careful consideration.
  Mr. Menzies Campbell (North-East Fife): Can the Minister confirm that confidentiality is a very important component of effective procurement and that effective procurement could easily be compromised if, for example, listening devices were present in the Ministry of Defence? Can he confirm, as the Secretary of State implied yesterday, that some 30 such devices have been discovered? Can he say who is believed to have been responsible for their being placed in MOD buildings; estimate how long they have been in position; and tell the House whether it is true that they only came to light when the current refurbishment of the main building began? What additional precautions have been taken to ensure that future procurement is not prejudiced in any way?
  Dr. Moonie: I have always thought that one should not believe everything that one reads in the Sunday press, and this story is a very good example of that principle. I am very sorry to have to dampen some of the feverish speculation that has occurred, but the media reports of bugging devices being found in MOD buildings appear to have been derived largely from a misunderstanding involving an information security exhibition that was held for MOD staff in the main building in March. The exhibition, which was designed to improve staff security awareness, included a stand demonstrating the types of listening device that are readily available in high street shops and which could, potentially, be planted in MOD establishments to obtain information illegally. As I am sure all hon. Members are aware, the MOD protects itself against that threat by maintaining the capability to detect such devices should they be planted in our establishments at home or overseas. Clearly, I cannot comment in detail on the reports, but I can confirm that they are inaccurate and that no breach of security has occurred.
  Mr. Barry Jones: Does my hon. Friend still intend to procure 25 A400M heavy-lift military Airbus aircraft? Has he seen the speculation that
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  Britain's A400Ms would only fly in conjunction with French and German A400Ms? Would he care to comment on that speculation?
  Dr. Moonie: I am quite sure that the speculation does not come from my right hon. Friend but, once again, it is an indication of the inaccuracy of reporting in the newspapers. The aircraft are not due to fly for another
  10 years, but I can confirm that it is still our intention to order the fleet.
  Dr. Julian Lewis: Will the Minister confirm that the only way to ensure value for money in the procurement of the type 45 destroyer programme is to be certain that more than one firm will be capable of building the ships? How can he defend the constant prevarication over whether the contract for at least one of the ships will be awarded to Vosper Thornycroft? The uncertainty over that matter is putting the jobs of my constituents who work for Vosper Thornycroft gravely at risk.
  Dr. Moonie: I am happy to confirm that it is still our intention to purchase one of the ships in the manner described. Our policy on the procurement of the type 45 has not changed.

  Type 45 Destroyer
  Mr. Christopher Chope: When the first type 45 destroyer will enter service with the Royal Navy. [156929]
  The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): As my right hon. Friend the Secretary of State for Defence stated in the House on 11 July last year, we remain committed to an in-service date of 2007 for the first type 45 destroyer.
  Mr. Chope: The Minister said, in answer to my hon. Friend the Member for New Forest, East (Dr. Lewis), that the procurement strategy had not changed. In that case, why have the Government not rejected out of hand the unsolicited bid from BAE Systems and why do they not confirm that the original strategy—which would give Vosper Thornycroft on the south coast of England an equal share in the programme—still stands? Would it not be a very good way of celebrating St. George's day to place faith in a great English warship builder that has exported more than 300 warships in the past 10 years?
  Dr. Moonie: It is British yards that we are in favour of—not just English ones. I repeat what I said before: the policy has not changed. Of course, it is incumbent on us to give careful consideration to proposals that would ostensibly save a great deal of money, and we would be in dereliction of our duty if we did not do that. However, I can confirm that things are progressing well and that the initial stages of the programme are on time.
  John Robertson: I thank my hon. Friend for that statement, but will he bring forward the orders to help the workers on the Clyde and to ensure

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  that they receive a fair share of the work? Perhaps he could also remind Conservative Members that the ships are British, not English.
  Dr. Moonie: The programme is progressing as fast as it can. There have been no delays, information is being shared and the design is progressing. There is nothing more that I can say other than to add that the ships will be brought into service as quickly as possible.
  Mr. Quentin Davies: Is it not quite clear that the Government's agenda on this matter is to try to pull the wool over the eyes of everyone concerned and to keep it there until after the election? The Government signed a contract with BAE Systems in December for the first three of class and that was supposed to provide for the second of class to be built by Vosper Thornycroft. No such contract has been awarded or has even been offered to Vosper Thornycroft and, as my hon. Friend the Member for New Forest, East (Dr. Lewis) just said, the Government have markedly not responded to the BAE Systems pre-emptive offer to build all 12 of class, which would be thoroughly inconsistent with everything that the Government have said about their strategy for this matter. Is it not quite clear that the Government have very bad news in store either for the workers of the Clyde or for the workers of the Southampton and Portsmouth areas and that they are simply determined to hold that news back until after the election?
  Dr. Moonie: I am sorry to disappoint the hon. Gentleman, but there is no truth in any of the allegations that he has made.

  Foot and Mouth
  Mr. Bill Olner: If he will make a statement on the role of the armed forces in tackling the outbreak of foot and mouth disease. [156930]
  The Secretary of State for Defence (Mr. Geoffrey Hoon): May I, first, take this opportunity to pay tribute to the men and women of the armed forces, to the staff of the Ministry of Agriculture, Fisheries and Food, the state veterinary service and other Government Departments and to the many volunteers who are working so hard to combat this disease?
  The armed forces have responded speedily and effectively to various requests from MAFF for assistance. Their mission is to provide logistical and organisational support, and thereby contribute to the eradication of the disease and to the return to normality in the countryside. Military personnel have supplemented MAFF regional staff in the co-ordination and best use of contractor teams and other Government assets involved in disposing of carcases. They have also provided direct support to MAFF at other stages of the reporting, identification, culling and disposal chain and in the disinfection of premises.
  Mr. Olner: I thank my right hon. Friend for that reply. I also pay tribute to the armed forces for the work that they have been seen to have done on the ground. Given that the current outbreak is far tougher to deal with than the one that took place in 1967—that is due in part to the vastly increased number of sheep movements across the
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  country—are there any further roles that the armed forces can play, particularly in the vexed question of the disposal of carcases?
  Mr. Hoon: I am grateful to my hon. Friend, in particular for his observations on the comparison between the current outbreak and that in 1967. We estimate that as many as 2 million movements of sheep might have been made before this outbreak was detected, which has presented considerable difficulties in tracking down the disease and in dealing with it. I am also grateful for his comments on the role of the armed forces, which continue to provide support to MAFF. Indeed, I anticipate that a further deployment of logistic troops will be made to Devon to deal with the backlog of carcases in that county.
  Mr. Dafydd Wigley: The Secretary of State may be aware that a case of foot and mouth confirmed yesterday arose because the infection was carried on a person's clothing. Will he give an assurance that every step is taken to ensure that no infection is carried by the clothing of members of the armed forces who deal with foot and mouth infected animals?
  Mr. Hoon: Certainly the armed forces that are involved in combating the disease ensure that their organisation, behaviour and individual activities do not contribute to the spread of foot and mouth. Indeed, we severely restricted training by the armed forces to ensure that they did not use land that might cause them to spread the disease.
  Mr. Ben Bradshaw: I welcome what my right hon. Friend the Secretary of State said about extra armed service personnel coming to Devon to add to the excellent work that they are doing from the Ministry's offices in Exeter. However, is he aware that their job is being severely hampered by the desperate shortage of disposal sites in our county—[Interruption.] Yes, Devon sunshine. Had hon. Members come to Devon, they would have the same tan.
  Will my right hon. Friend ensure that there are more disposal sites? What discussions has he had with other Departments and, crucially, the Environment Agency about finding more sites to deal with the desperate backlog of carcase disposal?
  Mr. Hoon: Extra logistical support is being deployed to Devon and part of its effort is urgently to address the problem of disposal sites. Work is under way on a mass burial site at Ashmore, but completion is some days away. It is crucial that we clear the backlog of carcases in Devon.
  Mr. Iain Duncan Smith: May I join the Secretary of State in congratulating the armed forces on their fantastic work? The way in which they have dealt with the problem since they were called in, and the focus that they have given to the disposal and to the need to speed up the processes, is something on which they should be congratulated.
  An issue arises directly from the fact that the armed forces have been so successful. Last week on, I think, 19 April, we discovered from The Guardian and other papers that Brigadier Malcolm Wood, who is responsible in Whitehall for co-ordinating the role of the armed forces, said:

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  "I don't think any of us doubt that we should have been called in earlier".
  When I was looking over the 1968 recommendations, the previous report made the situation crystal clear. It said:
  "but military assistance … should be accepted as early in the outbreak as possible … the earlier the military can be called in, the better."
  Perhaps the Secretary of State will take this opportunity to tell us why it took nearly a month from the original outbreak for the armed forces to be deployed.
  Mr. Hoon: I have studied carefully the account of the 1967 outbreak and have told the House that the circumstances then were different, not least because of the considerable number of animal movements across the country before this outbreak was detected. The hon. Gentleman is not right to suggest that it took a month before members of the armed forces were involved in dealing with the outbreak. They advised and assisted early on. He continues to pursue his argument because he confuses the presence of the armed forces behind the scenes, in which they gave advice on logistics, with their public participation, which became necessary when the scale of the outbreak became known. Since then, members of the armed forces have been involved in extensive work to combat the disease, which they will continue to carry out.

  Compensation
  Miss Anne McIntosh: How much his Department has paid in compensation to ex-service men in each of the past five years. [156931]
  Mr. Tim Boswell: How many compensation claims are outstanding against his Department. [156933]
  The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): The Ministry of Defence claims database does not distinguish between claims from former and serving members of the armed forces. The total amount of compensation paid to serving and former service personnel in each of the past five years was £20.5 million in 1996–97, £30.2 million in 1997–98, £37.4 million in 1998–99, £40.9 million in 1999–2000 and £47.9 million in 2000–01. The last figure is provisional and subject to final validation.
  There are 8,570 claims outstanding against the Ministry of Defence. Of those, 2,092 are third party motor claims, 1,981 are service personnel employer's liability and 1,451 are civilian employer's liability. A total of 2,341 of those outstanding claims are from serving and former service personnel.
  Miss McIntosh: I am grateful for those figures, which prove that there is a culture of political correctness and a creeping tendency towards compensation claims in the armed forces, placing officers and those who serve under them in an extremely difficult position. Does the Minister agree that the legal liability under which the MOD will pay compensation has increased under this Government
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  since we signed up to the European convention on human rights, and that it would increase yet again if we agreed to join an international criminal court?
  Dr. Moonie: What I can confirm is that the number of outstanding complaints has remained relatively constant over the past four years, which would suggest that what the hon. Lady asserts is not the case. The major change came about in 1987, when we accepted full liability for compensation issues. Clearly, court decisions on human rights will have some effect on numbers as rights are established or not. Overall, however, we expect the number of outstanding claims to decrease over time as the time scales for case management introduced by the 1999 civil justice reforms take effect.
  Mr. Boswell: In light of my hon. Friend's comments, will the Minister not acknowledge that the numbers are going up and that there is a prevailing climate of litigiousness and political correctness? It is essential that Ministers give no signal whatever that it is open season for compensation claims. Will he assure the House that risks will be properly and professionally managed, that claims will be handled tightly but not unfairly and that, wherever possible, losses will be mitigated through effective rehabilitation?
  Dr. Moonie: I have already said that the number of outstanding claims has remained constant over the past four years, so that deals with the first part of the hon. Gentleman's question. With regard to rights, I do not see anything wrong in serving members of the armed forces, male or female, having the same rights as any other citizen in this society. We manage our claims very carefully. Where there is clearly a liability to pay compensation, we do so, and where there is not, we defend our position vigorously.
  Mr. Paul Keetch: May I ask about compensation claims arising from active service, particularly in relation to Sierra Leone? Ten members of 1 and 2 Para returned from Sierra Leone with malaria and had not been given tablets before they left, but the Ministry of Defence is giving compensation to only one of them. Why are the Government expecting the other nine to go through the courts to get their compensation? Will the 100-plus other troops who have come back from Sierra Leone with that debilitating disease be given compensation?
  Dr. Moonie: The answer to the second question is no. The answer to the other is that 17 claims were made against us. We feel that we clearly have liability in one case because the person was not treated until after four or five days in theatre. In all the other cases, treatment was started prior to deployment, despite what has been said to the contrary, and we will not be paying compensation.

  Army Manpower
  Mr. John Bercow: When the Army will reach its full manning strength. [156932]
  The Minister for the Armed Forces (Mr. John Spellar): The Army remains firmly committed to achieving full manning by 2005. Although the current

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  strength figures pose a very significant challenge to achieving that target, work is in hand across a wide range of initiatives.
  Mr. Bercow: That was a risible response. With the Army 8,000 under strength and the extremely worrying slippage in the target date for full manning highlighted by the Select Committee on Defence, which concluded that insufficient energy and imagination were being applied to the task, why can the Minister not see that what he needs to do is tell the House whether he agrees with the Chief Secretary to the Treasury in rejecting full manning? If the Minister is not big enough to stand up to the Chief Secretary, why does he not make way for my hon. Friend the Member for Salisbury (Mr. Key), who certainly is?
  Mr. Spellar: I do not think that I should trade sizeist comments with the hon. Gentleman. Boomerangs are probably not the best choice of weapon that he could make in that respect.
  The hon. Gentleman should accept that part of the reason for the gap between trained strength and liability is that we raised the level of liability: in the strategic defence review, we considered what the post-cold war requirement was, rather than stick to the previous figures. There was a gap of 7,736 in 1992, under the previous Administration, and when we came into power the gap was 5,597. His criticism of the Army recruitment teams is misplaced—[Interruption.]
  Mr. Speaker: Order. The hon. Member for Buckingham (Mr. Bercow) must let the Minister answer.
  Mr. Spellar: It is heroic to have achieved the current recruitment numbers in the face of the lowest unemployment for 25 years and the 1 million extra jobs owed to excellent management of the economy by my right hon. Friend the Chancellor of the Exchequer. That does not mean that we are complacent. As I said, there are a number of initiatives under way, many of which are bearing fruit. The hon. Member for Buckingham (Mr. Bercow) should recognise that recruiting in the face of full employment is always more difficult than in the conditions of unemployment that the Conservative Government left us.
  Mr. Russell Brown: Does my hon. Friend agree that the range of measures introduced since 1997, including the service families taskforce and the recent announcement on service accommodation, will go a long way towards making life in the armed forces more attractive to recruits? Do they not clearly demonstrate the Government's commitment to overcoming the very difficult conditions for recruitment seen under the previous Government—
  Mr. Desmond Swayne: Oh, so it is our fault is it?
  Mr. Brown: There is no doubt that we have taken major strides forward while Conservatives have merely thrown bricks and barracked.
  Mr. Spellar: I thank my hon. Friend for that. He is right, not so much about recruitment, although such measures have an impact in that respect, as about retention of experienced and trained members of the forces.
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  The hon. Member for New Forest, West (Mr. Swayne) asks whether it was the Conservatives' fault. The answer is yes, it was, to a significant extent. The Conservatives mismanaged the adjustment at the end of the cold war and considerably overshot the number of troops they forced out of the armed forces. The best advert for the armed forces is someone who goes back home and says what a good time he is having and what a worthwhile job he is undertaking as a member of those forces. The worst possible adverts were people who had thought that they had a career in the armed forces, but were made compulsorily redundant under the previous Government. The previous Administration sent a clear message that the Army was no longer recruiting, and it has been the subject of a major and successful effort by our recruitment teams to turn around that message and make it clear that we are open for recruitment and open for business.
  Mr. Martin Bell: Is the Minister aware that some infantry regiments are spending up to £40,000 of privately raised money on their recruitment? Should not that be the Government's responsibility and not theirs?
  Mr. Spellar: We are spending considerable sums on recruitment. Individual regiments rightly and proudly undertake a lot of their own recruitment work, as they want to ensure that their personnel are as well recruited as possible. That is a traditional activity. We need to read across from the successes of some regiments in order to learn the lessons and to spread them to other regiments. A significant amount of work is being done to spread best practice in that regard.
  Mr. Robert Key: Neither the Minister nor my hon. Friend the Member for Buckingham (Mr. Bercow) need be sensitive about size. I am sure that we could arrange for the signing of a compact against sizeism in the forthcoming election. The problem with his figures is that they do not add up. Nobody doubts the success and determination of the adjutant-general's department in respect of recruitment and retention; indeed, they are beyond doubt. The problem is not that the Ministry of Defence lacks commitment, but that the Treasury lacks it. We have heard that there is a shortfall of 8,000 troops, and the Chief Secretary to the Treasury said that it would cost £1.3 billion pounds to fill it. At the same time, however, the defence budget continues to fall as a percentage of gross domestic product. That is the problem. Will the Minister commit himself, and say that there will be no further reductions in county regiments, old regiments afoot, the Lancers or the Royal Tank Regiment? Will there be no further cuts?
  Mr. Spellar: The hon. Gentleman is weightier than his arguments. The situation is limited by the ability to recruit. We have had success in that respect, although there have been some retention difficulties. The measures that I outlined just now, and which we have announced previously, have improved matters, but circumstances are extremely difficult, as high employment—we have the lowest unemployment for 25 years—is a major challenge to recruiting. Our people are rising to that challenge, however, and all who meet the standard are being recruited into the armed forces. That is welcome and that effort is being properly funded. If he goes out into the

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  streets of Salisbury to urge more youngsters to join the armed forces, as I hope that he will, they will be recruited and properly funded.

  Territorial Army
  Mr. Nigel Waterson: By how many the Territorial Army is under strength; and if he will make a statement. [156934]
  The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): The latest available official figures show that the Territorial Army is under strength by 520 personnel.
  Mr. Waterson: May I inform the Minister that, like many other hon. Members, I visited my excellent local TA signals unit in Eastbourne during the recent TA open day? Does he agree that the morale of the extremely committed men and women in the TA is potentially undermined by the fact that the Government have cut the TA during the current Parliament, but are requiring ever greater service from serving TA members, to a level that has never been required in the past?
  Dr. Moonie: I am glad that the hon. Gentleman enjoyed visiting his local TA unit. I enjoyed a similar visit a couple of weeks ago. The current TA bears little relation to that of 10 years ago. It is a far leaner organisation and is far better fitted to the tasks that we want it to perform than it was when it had the rather inappropriate structure which we were bequeathed. I am confident that the organisation will continue to go from strength to strength, especially as we have just started a recruitment campaign to encourage people to join it.
  Mr. Huw Edwards: When I met the commanding officer of the Royal Monmouthshire Engineers last week, he did not tell me that his regiment was under strength. However, he informed me that certain members of the regiment had volunteered individually to help in dealing with the foot and mouth crisis, and that the local information centre for the crisis, which was set up by the Welsh Assembly, had been housed at the regimental headquarters in Monmouth. Will my hon. Friend join me in commending the work of the regiment in supporting our farmers at this time?
  Dr. Moonie: Yes, I certainly shall. We are grateful for the role that reservists play in joining up with units for a period of service, especially with regard to the work that they are doing on foot and mouth. Currently, almost 500 volunteer and regular reservists are called out on operational duties. I can only say how much we appreciate their efforts on our behalf.

  European Security and Defence Policy
  Mr. Andrew Robathan: What recent discussions he has had with his French and German counterparts on the proposed European rapid reaction force. [156935]
  Mr. Owen Paterson: If he will make a statement on the European security and defence policy. [156936]
  The Secretary of State for Defence (Mr. Geoffrey Hoon): I regularly meet my French and German counterparts to discuss a range of defence matters. My hon. Friend the Under-Secretary attended the European Union Defence Ministers' informal meeting in Brussels on 6 April. European security and defence policy was discussed on that occasion.
  Our efforts are focused on delivering the headline goal to improve the military capabilities available to the European Union and NATO. Nations identified initial contributions to that goal last November. We are now engaged in the detailed analysis of the required improvements and the action needed to effect them.
  Mr. Robathan: Did the Under-Secretary tell the Secretary of State that it was revealed at the meeting in Brussels that the German Government, who have a deficit of £1 billion in their defence budget, would be unable to fulfil their commitment to provide 18,000 troops to the European defence force? Would the Secretary of State like to comment on the remarks of the French Chief of General Staff who said that NATO and the European defence force would be entirely separate? The Secretary of State has denied that; nevertheless, it is the case. Furthermore, the American Secretary of State—
  Mr. Speaker: Order. I think that the Secretary of State has got the drift.
  Mr. Hoon: If the hon. Member for Blaby (Mr. Robathan) stands in any forthcoming elections to the Bundestag, he will be able to ask the German Defence Minister those questions. However, I have already dealt with the other matter fully. The hon. Gentleman knows that we are committed to improving European military capabilities.
  Mr. Paterson: The Secretary of State says that he has dealt with the question fully. What does he say to General Gustav Hagglund, who is in charge of the rapid reaction force, and who claimed that we were considering not a subsidiary of NATO but an independent body? What about the comments at the weekend of a German defence spokesman, who said that the proposed European air transport command would "operate independently from NATO"? Can the Secretary of State spin his way out of that?
  Mr. Hoon: Another Member of Parliament seems anxious to join the Bundestag. As to the highly speculative accounts in certain newspapers, which are fuelled by the shadow Secretary of State, I stress that members of the RAF will remain firmly under British control.
  Mrs. Alice Mahon: On the question of deployment, does my right hon. Friend agree that any premature referendum in Montenegro could destabilise

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  the whole region? If conflict spilled into Montenegro, who would be deployed as peacekeepers: NATO or the rapid reaction force?
  Mr. Hoon: Montenegro's relations with the former republic of Yugoslavia are a matter for Montenegro, not the British Secretary of State for Defence. Arrangements for KFOR to be deployed in Kosovo have already been made. They will continue unless and until its presence is no longer required.
  Sir Peter Tapsell: While I have no present plans to stand for election to the United States Congress, may I ask the Secretary of State for Defence whether he has noted that a series of influential, experienced and pro-British American statesmen have said that the European rapid reaction force poses a serious threat to the future of NATO and to the American commitment to the defence of Europe?
  Mr. Hoon: The hon. Gentleman would have to hold US citizenship for 20 years before he could stand for Congress. I am sure that he has time for that. If he were elected, he would find a range of opinions there, as in any democratic country. There are some who are critical of improvements in European capabilities; however, in my experience, there are more who support the efforts of European nations to be more responsible for their security and thus less dependent on the United States taxpayer.
  Mr. Iain Duncan Smith: When listening to the Secretary of State, I am led to wonder whether he has not already sought election to the Bundestag. We never get an answer to a straight question. When the remarks of any Government are quoted, the Secretary of State simply says, "Well, that's their opinion". They are also the opinions to which he signed up.
  Perhaps the right hon. Gentleman could comment on the proposals from the Germans and others for the joint transport command, reported in various newspapers. When questions on that point were put to the Ministry of Defence over the weekend and today, the Secretary of State's spokesman—or probably the Secretary of State himself, as he does not much like quotes being attributed to him—said that he was unaware of such proposals. Will the right hon. Gentleman tell us whether he is unaware of such proposals or not?
  Mr. Hoon: The hon. Gentleman's kneejerk prejudices on European questions are well known. I have already made it clear in relation to those reports that the RAF and its equipment will remain firmly under British control. That is an answer to his question, and if it is the answer that he was seeking, perhaps he will accept it. The proposals that have been made over a long period for improving the co-ordination of European forces—not simply of air forces but of navies and of armed forces on the ground—have been well known to anyone who has followed this debate closely. I assume, given the hon. Gentleman's objections to this kind of co-operation, that
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  if he had been Defence Secretary in either 1914 or 1939, he would have refused to allow British forces to co-operate alongside their then European allies.
  Mr. Duncan Smith: The Secretary of State is again attempting to use smooth words with nothing behind them. The reality is that he knows about this matter only too well. His spokesman told the newspapers yesterday that he was unaware of any such proposals, but the right hon. Gentleman knows very well that Rudolf Scharping has been proposing this for some time: right back into 1999, at which time the right hon. Gentleman was fully aware of it.
  Will the Secretary of State tell us what is different about the situation now? He knows that these are proposals not just for co-operation but for a unified force, in exactly the same way as the Euro army proposals are. The Secretary of State should face up to what he has committed this country to, and admit now that the Government begin to deny, they deny more, then they sign the documents and pretend that they have not signed them: what a falsehood they put on us.
  Mr. Hoon: I mentioned 1914 and 1939. Perhaps I should bring the hon. Gentleman more up to date. There was co-ordination and co-operation among air forces in the bombing campaign over Serbia, which was conducted effectively by a combined allied operation. That has been the history of aerial warfare throughout the past century. I am very surprised that the hon. Gentleman does not recognise that it is in the interests of all European armed forces to be able to work more effectively together, and that he does not accept that—I say this for the third time today—the RAF, its personnel and its equipment will remain under British control.

  Defence Contracts (North-East)
  Mr. Jim Cousins: How many civilian jobs in the north-east of England he has (a) created and (b) safeguarded by the awarding of defence contracts since the completion of the defence review. [156938]
  The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): Approximately 350,000 jobs are dependent on defence expenditure and equipment exports. More than 60,000 new contracts are placed each year and the Ministry of Defence does not record the number of jobs created or safeguarded as a result of each individual procurement decision. As my hon. Friend will know, in March of this year the Ministry of Defence confirmed a contract worth £250 million with Vickers Defence Systems for the supply of 66 specialist Challenger-based engineer tanks. That will help to sustain all 500 jobs at its Newcastle plant and up to another 1,000 jobs among UK sub-contractors.
  Mr. Cousins: I congratulate my hon. Friend on his efforts. I also congratulate the Minister for Defence Procurement on her unfailing helpfulness and courtesy to north-east Members of Parliament when they pursue these issues. However, my hon. Friend will be aware of the very difficult situation facing shipbuilding workers in the north-east, which is part of the fallout resulting from the difficulties of the Cammell Laird group. Is he also

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  aware that, whereas one in 10 members of the military forces in the United Kingdom is recruited from the north-east, only one in 200 of civilian MOD employees is located there? Is my hon. Friend giving his attention to these matters, and will he offer any prospects for assistance?
  Dr. Moonie: I am well aware that areas such as the north-west and north-east, which supply the largest percentage of our recruits in England, suffer when it comes to the deployment of Ministry of Defence jobs. It is our policy where possible to devolve jobs away from the south-east to other regions, and I assure my hon. Friend that I will do all that I can to ensure that that happens.
  We are also well aware of the problems that Cammell Laird is experiencing. We support the receiver's aim for RFA Argus to be completed at Birkenhead, and have agreed on a system whereby that can be done. We are also in discussions with the receiver on the best options for the company's contract for work on RFA Fort George, which is due to arrive at the yard on the other side—rather than the north-east—on 7 May. It is, however, too early to speculate on the outcome.
  I assure my hon. Friend that we are doing all we can to support our colleagues in the Department of Trade and Industry, and their efforts to find a solution to the problems of Cammell Laird.
  Mr. Edward Leigh: What the Minister did not say about Cammell Laird is that the company had hoped for a considerable amount of work in connection with ro-ro ferries—work that the Government have placed in Germany. Is that not a betrayal of hundreds of workers in the north-west and north-east of England?
  Dr. Moonie: As the hon. Gentleman well knows, the contract for the ro-ro ferries encompasses their management and service over their lifetime, as well as their construction, which represents a very small part of the total value of the contract. It has been let to Weir, the British company that will control it.
  We spent a great deal of time and effort on the contract. As the hon. Gentleman is well aware, the yards are not subsidised. We sought best value for money throughout, and we believe that as a consequence we achieved the best solution.

  Sierra Leone
  Mr. Mike Gapes: If he will make a statement on the contributions of British forces to security and training in Sierra Leone. [156939]
  Mr. Andrew Mackinlay: If he will make a statement on the armed forces' deployment in Sierra Leone. [156944]
  The Minister for the Armed Forces (Mr. John Spellar): British troops are in Sierra Leone to assist the democratically elected Government to establish effective and accountable armed forces. We have between 550 and 600 troops on the ground in Sierra Leone at any time. They constitute the United Kingdom's contribution to the international military advisory and training team, soldiers
  16
  providing the short-term training teams, and a brigade headquarters. The short-term training team commitment has recently been taken on by 2 Battalion The Light Infantry, which succeeds 2 Battalion The Royal Gurkha Rifles. As I announced in January, we will continue to provide the training teams at least until September this year.
  In January we deployed a field surgical team to cover the gap in medical facilities caused by the roulement of the UN medical facilities.
  Mr. Gapes: Will my hon. Friend send a message of support from the House to our soldiers and other personnel, whom I have seen doing an excellent job in Sierra Leone?
  How is progress being made towards the establishment of the international military advisory training team with the Canadians and others? What proposals have the Government for the strengthening of the Sierra Leone Government's control over its territory, enabling that Government to taken more and more territory away from the Revolutionary United Front and the appalling activities of those terrorist thugs?
  Mr. Spellar: I thank my hon. Friend for his comments about the excellent job being done. It is a great advantage that a number of Members from all parts of the House have been able to visit Sierra Leone, and to see that work being undertaken. It has also given considerable encouragement to the troops.
  A number of countries are already participating in the IMATT, and, again, excellent work is being undertaken for the training of the Sierra Leone army. We have been strengthening the headquarters of UNAMSIL—the United Nations mission to Sierra Leone—so that it, and the Sierra Leone army, can establish normality in the country.
  Mr. Mackinlay: How many United Kingdom forces personnel, including our special forces—police, security and intelligence services—have been killed during their deployment in Sierra Leone, or as a consequence of that deployment?
  Mr. Spellar: According to my recollection, one member of the Paratroop Regiment was killed in an extremely successful operation to rescue some of our forces—an operation that was widely remarked on not just in the House, but across the world.
  Mr. Crispin Blunt: The Minister said that the short-term training commitment would last until at least September this year. When does he expect the Sierra Leone Government to be able to achieve normality in that country, which I presume means the defeat of the RUF? Will he confirm that it is only then that our troops will be able to come home?
  Mr. Spellar: Our forces are there primarily in the training role. Obviously, it will be a matter of assessing the capability of the Sierra Leonean Army and, as the hon. Gentleman rightly identifies, success on the ground. It is a little difficult to predict a time scale on that.

  Defence Policy Priorities
  Mrs. Linda Gilroy: What representations he has received on his amendments to defence policy priorities since the strategic defence review; and if he will make a statement. [156942]
  The Secretary of State for Defence (Mr. Geoffrey Hoon): There have been no fundamental changes in the Government's defence policy priorities since the strategic defence review was published in July 1998. However, the Government recognise the need to adapt to a changing world. That is why, for example, we recently updated our strategic analysis and published the results in two publications: "Defence Policy 2001" and "The Future Strategic Context for Defence."
  I have had discussions concerning the strategic defence review and our defence policy priorities with a wide range of people and received and responded to many representations on those defence policies.
  Mrs. Gilroy: I thank my right hon. Friend for that reply. Given its significant potential contribution, what steps have the Government taken to develop their policy of multinational defence co-operation? In particular, does my right hon. Friend see any further scope for the development of co-operation between the Royal Navy and the navies of allied countries?
  Mr. Hoon: Clearly, there is strong potential for further effective co-operation between the Royal Navy and the navies of other countries. We could, for example, build on the success of the French ship attachments to the United Kingdom and Royal Navy involvement in French exercises—building on work set out by the last Conservative Secretary of State for Defence. We can improve the interoperability of our Navy further through joint exercises. Opportunities are provided by membership of the five powers defence arrangement for regular joint exercises and training with Australia, New Zealand, Malaysia and Singapore. We are also seeking to develop closer co-operation on amphibious issues with France, Italy, Spain and the Netherlands.
  Mr. Julian Brazier: Will the Secretary of State confirm that one of the SDR priorities was to recruit all three services up to strength and to provide 3,000 extra men for the Army? Will he further confirm that every category of regular personnel except naval officers lost numbers during the previous fiscal year; that premature voluntary release is at a 10-year high; that medical downgrading is at almost its historic peacetime high; that the addresses of over a third of the regular reserve have been lost; that officer recruiting for the Territorial Army has collapsed; and that the royal naval reserve is also losing numbers fast? It is time that the Secretary of State thought again a little about his personnel policy options.
  Mr. Hoon: What I can confirm is that the Government remain committed to the force levels set out in the strategic defence review, but that, in a strong economy, we recognise that retention is an issue with which we have to deal. We are putting considerable administrative effort into improving retention levels. Notwithstanding the strong economy, recruitment is proceeding satisfactorily and many young people see the armed forces as an
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  attractive way of life, particularly given the activities in which the armed forces are currently engaged. There is a matching up between the advertisements and the reality of life in service.

  Female Soldiers
  Mr. Desmond Swayne: What recent assessment he has made of the fighting capabilities of female soldiers. [156946]
  The Secretary of State for Defence (Mr. Geoffrey Hoon): A review of the employment of women in the armed forces is currently in progress. I expect to receive advice on its conclusions later this year.
  Mr. Swayne: What steps is the Secretary of State taking to ensure that the criteria against which female soldiers will be measured are not watered down, to the detriment of our operational capabilities?
  Mr. Hoon: The review that is being conducted is extremely thorough. It comprises a wide-ranging review of scientific literature. There is an attitude survey, a field trial looking at team dynamics and assessments from each of the three services, but I emphasise that operational effectiveness will be the deciding question. We will not allow any decision to be taken that in any way compromises the operational effectiveness, the combat effectiveness, of our armed forces.

  Army Manpower
  Mr. Graham Brady: If he will make a statement on Army manpower. [156947]
  The Minister for the Armed Forces (Mr. John Spellar): As at 1 March 2001, whole Army strength stood at 100,199, a shortfall against the currently assessed post-strategic defence review requirement of around 8,000. The Army remains firmly committed to achieving full manning by 2005 and work is in hand across a very wide range of initiatives.
  Mr. Brady: The Secretary of State said a few moments ago that recruitment to the Army was progressing satisfactorily. Does the Minister understand that the real problem is retention within the Army? Is not the failure of this Government to make the Army and the other services an attractive career the real reason why the Defence Committee says that it will be 2008 before the target is reached?
  Mr. Spellar: It is rather unfortunate that the hon. Gentleman prepared his question before hearing the earlier replies, which made it clear that retention had improved considerably, not least because of the considerable measures that we have undertaken to improve the quality of service life. Much of that was needed to address the significant problems that had built up in the 18 years of Conservative Government, not least the question of accommodation. Equally, we must recognise that recruitment and retention are taking place against a background of a strong economy, in which unemployment is at its lowest level for 25 years, there are 1 million extra jobs and a considerable number

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  of youngsters are going into tertiary education. The recruitment teams for the Army and other services are performing a magnificent job in bringing youngsters into the armed forces, but they are not complacent, and additional work is being undertaken to improve recruitment at all levels. I hope that the hon. Gentleman, along with his colleagues, will be going to local schools to urge youngsters seriously to consider the armed forces as a good career prospect.

  Russia
  Dr. Vincent Cable: What discussions he has had with the US Administration about threats posed to western security by Russia. [156948]
  The Secretary of State for Defence (Mr. Geoffrey Hoon): I have had discussions with the US Administration on a wide range of defence items, including threats to western security. The 1999 NATO strategic concept made clear that Russia was not currently regarded as a threat and that
  "a strong, stable and enduring partnership between NATO and Russia is essential to achieve lasting stability in the Euro-Atlantic area".
  Dr. Cable: Does the Secretary of State share the increasingly sceptical and hostile attitude of the Bush Administration to Russia on proliferation, espionage and other matters, or does he feel that there is an opportunity to strengthen our relations with Russia under the common European Union framework?
  Mr. Hoon: I have made it clear that, under the framework of NATO, we support NATO's 1999
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  conclusion that efforts should be made to secure a strong, stable and enduring partnership between NATO and Russia.

  European Security and Defence Policy
  Dr. Julian Lewis: What representations he has received concerning the European security and defence policy. [156955]
  The Secretary of State for Defence (Mr. Geoffrey Hoon): I refer the hon. Gentleman to the answer I gave earlier today to the hon. Members for Blaby (Mr. Robathan) and for North Shropshire (Mr. Paterson).
  Dr. Lewis: I am delighted that the Secretary of State has referred me to his earlier answers, because that enables me to point out how inadequate they were. Is it not a fact that senior American politicians, the Finnish general in charge of the European rapid reaction force and the French Chief of the Defence Staff—who has not, incidentally, modified or retracted anything he said, despite the earlier predictions by the Secretary of State—have made it perfectly clear that the ERRF is to operate outside, not inside, the NATO structure? Will he now stop his waffle about the need to co-operate with our European allies—which we all support, within NATO—and set our doubts at rest? Is not what is being proposed the building of something outside NATO which will undermine NATO—something of which our American allies are becoming increasingly aware?
  Mr. Hoon: We have now had experience of two American Administrations, and both have made it clear that they support efforts by European nations to improve their military capabilities because by doing so they contribute to the success of NATO. We have made it clear that we regard the development of any improved European capabilities as a contribution to NATO.

Rural Taskforce
3.30 pm
Mr. Archie Norman(by private notice): To ask the Minister for the Environment if he will make a statement on the work of the rural taskforce with regard to the foot and mouth crisis.
The Minister for the Environment (Mr. Michael Meacher): It became clear, soon after the current outbreak of foot and mouth disease began, that the disease and the restrictions that were introduced to control its spread would have implications for the rural economy that went well beyond the agricultural sector. My right hon. Friend the Prime Minister therefore asked me to set up the rural taskforce with a remit to consider the implications of the outbreak of foot and mouth disease for the rural economy, both immediately and in the longer term, and to report to him on appropriate measures.
The taskforce includes all the Government Departments involved, the devolved Administrations and experienced members from the private and voluntary sectors, including the rural business and tourism sectors, farmers and representatives of rural communities. It first met on 14 March. There have been four further meetings so far, and the next meeting will take place on Wednesday. I am extremely grateful for the hard work and dedication that the members of the taskforce have put in and for the practical common sense that they have shown in discussing the issues.
The taskforce's work covers both short-term measures to alleviate the hardship that so many people and businesses are facing and measures to aid the speediest possible return to normality. I shall remind the House of measures that have already been announced, starting with the measures to assist businesses to weather the immediate problems.
First, I have announced a number of measures to provide relief from business rates. They include increased Government funding, from 75 per cent. to 95 per cent., to enable local authorities to offer hardship rate relief to businesses in rural areas, targeted at businesses below £12,000 rateable value, and offering reductions of up to £1,290 over a three-month period. A further measure is the deferment, by three months, of the deadline for business rate appeals in rural areas.
Rural businesses will also be, helped by the Government's legislation to extend mandatory 50 per cent. rate relief to all food shops in small rural settlements, and that legislation will also provide a transitional, five-year, 50 per cent. mandatory rate relief for new enterprises on former agricultural land. At the same time, recent regulations have extended 50 per cent. rate relief to sole village pubs and garages with a rateable value of less than £9,000. We have also arranged that when a rural local authority agrees to defer payments my Department will in turn defer the payments that the authority is due to make to the national rate pool. The Valuation Office will consider applications from businesses for a reduction in their rateable value to take account of the impact of foot and mouth disease.
Secondly, the Inland Revenue and Customs and Excise will take a sympathetic approach to requests for deferral or extended time to pay for tax and national insurance contributions, especially for rural businesses in agriculture,
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transport and tourism, and related retail businesses. Thirdly, the major banks have made it clear that they will, on a case-by-case basis, consider mechanisms such as extended lines of credit, capital repayment holidays and other measures. Fourthly, we have extended the types of business that can apply for loans up to £250,000 under the small firms loan guarantee scheme.
Fifthly, I announced a further £15 million for regional development agencies to help rural businesses in the worst hit areas. Sixthly, to help those who have lost work because of foot and mouth, the Benefits Agency has announced that it will provide quick assessment of applications for jobseeker's allowance from such applicants, and my right hon. Friend the Secretary of State for Education and Employment has announced a skills boost package to ease the impact of foot and mouth disease on jobs.
Finally, the Government have pledged to match public donations to rural charities, to help to address cases of severe hardship and to provide support for organisations responding to rural stress. The scheme is being administered by the Countryside Agency and will apply to personal donations, including the generous donations of the Prince of Wales and the Duke of Westminster.
Everyone agrees, I think, that the key to recovering from the serious economic effects of the disease is to get back to normality as quickly as possible. That is why the taskforce has put a lot of effort into ensuring that the message that most of the country can be safely visited is widely understood. Its work has led to a number of advertisements under the auspices of both the Government and other key organisations, to explain the position to the general public and encourage people to go and enjoy the many facilities that are open.
The Countryside Agency will also make available grants of £3.8 million to help local authorities to open their footpaths. Further advertising by tourism organisations is being promoted by the Department for Culture, Media and Sport, and my right hon. Friend the Secretary of State announced additional support of £6 million for the English Tourism Council and the British Tourist Authority to get the message across that Britain is open for business.
That all adds up to a total package for immediate practical help for the rural economy of more than £200 million, but that is not the end of the story: there is a great deal more to do, especially in considering longer-term measures to help to get the rural economy moving when the disease has been dealt with. I look forward to further meetings of the taskforce to advance that important work.
Mr. Norman: We welcome the Minister's response. Let me remind the House of the chronology of the crisis. The first outbreak of foot and mouth was reported on 20 February, and it took nearly four weeks to form the rural taskforce. The rate relief measures to which the Minister referred were announced a month after the outbreak, and the loan guarantee scheme for affected businesses was announced on 6 April.
When the Minister last made a statement to the House, about a month ago, on the measures to be taken, he described them as a preliminary package. We welcomed them, as far as they went, at that stage, but it is now clear that the impact of foot and mouth on rural businesses is

23
at least as severe as we all feared at that time. It is reported that, over Easter, there was a 70 per cent. drop in bookings in the Yorkshire dales; a 40 per cent. fall in rural Cumbria; and a 35 per cent. decline in business in rural Devon.
Although the number of reported cases of infection has now reduced, the crisis is far from over for business. Indeed, it is reported that since Easter the level of bookings in most rural tourism areas has declined still further. The British Hospitality Association estimates that the total loss from overseas visitors alone will be £3 billion, with a further £2 billion from domestic tourism.
Some businesses are already on the point of closure. Indeed, some have closed, including small abattoirs, such as Lamberhurst abattoir in Kent. If ever there was an emergency in a business sector, it is now. If ever there was a need for a generous, speedy and decisive Government response, it is now. For those businesses, the acid test of the Government's response is whether cash is hitting the bank account, as we said a month ago. It is not whether there are high-profile ministerial visits, but whether those businesses are being enabled to survive the crisis. The question, therefore, is whether the Government's response today, which contained no new proposals and no new money, is generous and long lasting.
The Minister says that the rural taskforce has met four times in about six weeks. Will he tell us when it last met and reassure us that it will continue to meet throughout the duration of the crisis? Will he reassure us that he will continue to come to the House to report on the progress that it has achieved and the extent to which the £200 million package to which he referred has been dispensed to small businesses? While he is about it, will he confirm his previous, very helpful, statement that there will be a formal public inquiry into the crisis? What will the terms of reference be, and when do the Government plan to announce the details of the inquiry?
The right hon. Gentleman referred to the rate relief package. He will be aware that many rural businesses consider the Government's arrangements woefully inadequate, on two counts. First, the rateable value ceiling of £12,000 excludes many—if not, in some areas, most—rural businesses. It seems to many businesses miserly compared with the £50,000 limit in Scotland and Wales. The difference between those two limits is, for many, inexplicable. In the south lakeland area alone, it is reported that a quarter to a third of all businesses, and a half of all tourism businesses, are ineligible for the scheme. Indeed, quite small hotels and bed-and-breakfast businesses will not qualify under the £12,000 limit.
Secondly, is the right hon. Gentleman aware that many district councils are unable to afford the remaining 5 per cent. of rate relief? Indeed, the costs of administration and other costs imposed on them by the foot and mouth crisis mean that large increases in council tax are already looming in those areas. Will the right hon. Gentleman consider, as we have proposed, introducing rate relief of 100 per cent. and providing extra support for those councils worst affected, or does he believe that council taxpayers should bear the cost of the crisis for years to come?
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On the loan guarantee scheme, is the right hon. Gentleman aware of the absolute fury expressed by many small businesses at the 8.75 per cent. interest rate to be charged? That seems extortionate in the light of the fact that many can borrow more cheaply than that through their own bank account or overdraft. How much money has been extended through the scheme and how many businesses, if any, have benefited specifically, or is the scheme a smokescreen for the fact that the Government are unable to offer any realistic long-term support? Will the Minister discuss with the Chief Secretary to the Treasury, the right hon. Member for Oxford, East (Mr. Smith), the possibility of bringing into force the interest-free scheme that we proposed some four weeks ago?
The third area of support is marketing support for tourism. Can the right hon. Gentleman explain the reasons for the Government's parsimonious approach to support for tourism? If ever there was a time to promote Britain abroad generously, on a long-lasting basis, it is now. Yet the English Tourism Council has been granted only an extra £4 million, compared, we understand, with an extra £5 million being spent in Scotland. The British Tourist Authority put in a bid for £20 million in support but has received only £2 million. If ever there was a time to take decisive action to market Britain, it is now. We have proposed giving a £10 million grant to the English Tourism Council and doubling the BTA's budget. Can the Minister say whether he is prepared to consider those proposals or why the Government have made such an ungenerous response?
The environmental effects of burning carcases have been much reported in the media. We welcome the Minister's recognition this morning on the "Today" programme that there is no risk-free option for disposal, and we share that view. Does he accept, however, that the widespread concern across the country has resulted from a lack of reassurance to date? Does he accept that if the Environment Agency had been more forthcoming in identifying sites for burial, and if the Government had been quicker in introducing more on-site farm burial—as we recommended and as was recommended following the inquiry into the 1967 outbreak—the problem would not have been as great as it has been?
The Minister last made a statement to the House on 20 March, and we hope that this will not be the last time we hear from him. Does he agree that what he then called a preliminary package should indeed have been so? That statement should have been the first of a series of bold announcements to tackle the crisis decisively and communicate action effectively.
Since then, however, we have had a flurry of high-profile ministerial visits and an awful lot of public relations, but very little money for most businesses. For businesses suffering under the threat of bankruptcy and deeply worried about the future, the Government's response has been parsimonious to the point of penny-pinching, confused in communication and ineffective in delivery.
Mr. Meacher: The hon. Gentleman asked a number of questions of varying relevance. I shall try to deal with each of them.
The hon. Gentleman twice made derogatory references to ministerial visits. The visits that I and a great many Ministers have made have been extremely well received,

25
and I am surprised that the hon. Gentleman does not think it beneficial for Ministers to get into the countryside to see things for themselves and talk with whoever wants to talk to them about the situation. Perhaps he would prefer just to sit here in Westminster.
We announced our proposals on rate relief within days of the formation of the rural taskforce. Those measures were announced extremely quickly and other measures have followed ever since.
The hon. Gentleman mentioned figures suggesting that bookings for Easter were down. In some cases they were, but the Easter summary produced by the English Tourism Council estimates that business reached 70 to 80 per cent. of last year's levels. In Cumbria, attractions fared pretty well.
Mr. David Maclean: Oh!
Mr. Meacher: Even in Cumbria, 50 per cent. of attractions reported an increase in visitors. Resorts, coastal towns and cities have generally done well or very well, as have day-out attractions. The hon. Gentleman's Jeremiah picture went fairly wide of the mark.
The hon. Gentleman was anxious to say that the amount of money made available by the Government was small. As I said in my statement, it amounts to more than £200 million, and I do not think that that sum is as small as he suggested. It has been well received, and we are considering further measures.
I assure the hon. Gentleman that the rural taskforce will continue to meet under my chairmanship until foot and mouth disease has been overcome, election or no election. I hope that he is content with that.
With regard to the public inquiry about which I have spoken, I should make it clear that I was honestly saying what I believe will be the case. It is, of course, a matter for the Prime Minister to announce the terms of reference, in his own time, and I am sure that he will do so.
On the £12,000 rateable value threshold and the 5 per cent. payment by rural authorities, the hon. Gentleman asked a genuine question, as opposed to some of the political points that he made. We are aware of complaints that that is insufficient. We have asked the Local Government Association to provide the evidence to justify those allegations. We asked some time ago—
Mr. Maclean rose
Mr. Speaker: Order. The right hon. Gentleman seeks to catch my eye, but his chances will diminish if he keeps interrupting the Minister.
Mr. Meacher: We requested the Local Government Association, some time ago, to give us the information by the end of today—we shall make a decision on that basis.
The hon. Member for Tunbridge Wells (Mr. Norman) asked how many firms have used the small firms local guarantee scheme. The Small Business Service has received more than 400 inquiries relating to foot and mouth disease compared with a normal inquiry rate of 40 a day. More than 700 applications for information had been received about a week ago—the number is certainly more now.
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With regard to the £6 million boost for tourism, perhaps the best way to answer is to quote the comments of Edwin Griffin of Meeting Planners International from the United States. After visiting this country at the invitation of the British Tourist Authority, he said:
"Our media has distorted the true picture—a disservice to the public by not properly informing them. It was good to see the unaffected farm life in comparison to those TV reports. I will be telling my 20,000 members to investigate for themselves what Britain can offer."
I think that money was extremely well spent.
Lastly, on the question of pyres, I made it clear this morning that the Government's first priority is—and remains—to maximise the use of rendering, of incineration in properly controlled industrial plant and of burial in registered landfill sites. I am very interested to note that the preference of the hon. Member for Tunbridge Wells is for on-site farm burial. Let me tell him that the place where 160,000 carcases are not yet disposed of is Devon, so his solution is totally unworkable because of the high levels of the water table there. Our proposals are the only practical option.
Mr. Dale Campbell-Savours: I welcome my right hon. Friend's opening remarks; his words will be read by many people in my constituency. Despite two good days at Easter, the tourism industry in the west of the Lake district is really in crisis. We had stage 1 a month ago—my right hon. Friend referred to it. May we have stage 2—not compensation, but financial support, highly targeted, to help people who really are suffering?
I witnessed the work of the taskforce last Thursday—the proceedings were excellent. Will my right hon. Friend arrange for the taskforce to take evidence not only from local authorities and organisations identified with local authorities, but from some of the grass-roots organisations that have sprung up in these areas to represent the people who are in trouble, such as Cumbria crisis alliance in my constituency? That organisation has done some good work on small measures—inexpensive but targeted—that could be introduced and would change the fortunes of people who are in financial difficulty. Will my right hon. Friend put his weight behind the right of such organisations to give evidence to his taskforce?
Mr. Meacher: I am happy to support those measures. Looking at the evidence over Easter, we are aware that bookings and takings for many small rural businesses were much better than many had feared, but they were certainly still down. In Keswick, Ambleside and other places in my hon. Friend's constituency, takings were relatively good, but I accept that there are areas with really severe problems. I repeat that we are looking at further measures for giving practical, selected and targeted advice to help them.
I am also happy to agree that the evidence feeding into the regional development agencies comes not only from bodies such as those my hon. Friend mentioned, but from some of the smaller bodies, such as the Cumbria crisis alliance. I was impressed by the quality of the evidence that I received from many of the bodies that I visited on that day and I intend to return before long.
Mr. David Heath: On the matter of footpaths and bridleways, can the right hon.

27
Gentleman confirm that the animal health authorities' powers to close footpaths lapsed on 16 March and that some authorities are concerned that, if they reopen those footpaths, they will not be able to close them again if circumstances require that to happen?
On the publicity campaign, assuming that it did not cost £6 million to bring the group of American tour operators to Britain—a worthwhile objective in itself—will the right hon. Gentleman tell us to what extent there has been a properly targeted marketing exercise, overseas and in this country, to encourage people to visit our rural areas again?
Has the right hon. Gentleman a conception of how broadly defined are the businesses affected by the foot and mouth disease crisis? Is he aware that they go well beyond those businesses that are directly affected by agriculture or tourism? In my constituency, I visited a garden centre, where takings are down by 80 per cent; a mower supplier, where takings are down by 60 to 70 per cent; and a marquee supplier, which is now laying off staff. Many such businesses are not in towns of fewer than 3,000 people and hence do not qualify as being in rural areas. Is he aware of the disappointment at the patchiness of the response from the Inland Revenue, Customs and Excise and the banks, despite the encouraging statements made by him and others? Will he consider the approach taken by the utilities to those businesses?
On hardship relief and rates relief, will the right hon. Gentleman tell us how long the current measures will last? Why was no assessment made of how many businesses would be encompassed by a £12,000 ceiling on rateable value, or a £9,000 ceiling for garages and pubs? Many of us in rural areas think it extraordinary that that cut-off point was put in place. Will he tell us how many business rates revaluations have taken place and how quickly they are being processed?
Finally, will the right hon. Gentleman tell us why no date has been allocated for the Second Reading of the Rating (Former Agricultural Premises and Rural Shops) Bill, which was presented to the House some weeks ago? Why are there no Government amendments to the Finance Bill, which will be debated today and tomorrow, to provide relief for rural areas? Does that not suggest that the Government understand neither the scale of the problem for rural businesses, nor the urgency with which measures must be taken to deal with it?
Mr. Meacher: The hon. Gentleman asks whether the powers exist to close footpaths that have been reopened. Of course, if there is justification in terms of the spread of the disease or new infections, the powers could be invoked. The Government have made a considerable effort to reopen footpaths, parks and other facilities, so we are anxious to ensure that they are not closed again, unless there is very good reason to do so in terms of the disease.
I believe that the BTA's efforts in the 12 main overseas markets are, as the hon. Gentleman says, a properly targeted exercise. The hon. Gentleman asks about the need to extend aid such as rate relief beyond immediate farm businesses. That is exactly what we propose to do for haulage and retail businesses, and it represents an extension of the existing limits on rate relief.
I should like to know about the patchiness, to which the hon. Gentleman refers, in the response of the Inland Revenue and the banks. I have made it clear that if there
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is any evidence of that, I will certainly ensure that I, or others, speak strongly to those who have made it clear that there will be no such patchiness and that sympathy will be generally and fully displayed.
I understand that the £9,000 threshold represents an extension or increase on the current level, but we believe that it is justified; it has not been arbitrarily set. The hon. Gentleman asks how many revaluations have taken place. I cannot give him tha figure, but if we have the figure, I will certainly write to him. I certainly take the hon. Gentleman's point about the Rating (Former Agricultural Premises and Rural Shops) Bill. I am very keen to see that Bill make progress, and I will certainly discuss it with my colleagues in Government.
Mr. Lawrie Quinn: Have my right hon. Friend and his taskforce been able to make any progress in opening footpaths, particularly in coastal areas and on arable land? Many people who have made representations to my office feel that some local authorities have shown tardiness in making progress on this important issue. Has any progress been made, either, on preserving the genetic stock of rare breeds, such as the rare hefted sheep breeds on the moors in the North York moors national park?
Mr. Meacher: I pay tribute to the work of the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Stretford and Urmston (Ms Hughes). She has taken particular responsibility for getting footpaths and other facilities open and has achieved considerable success. For example, Norfolk has reopened more than half its network, Surrey has reopened a similar proportion and even Cumbria, which has been badly hit by foot and mouth, reopened more than 100 paths before Easter. British Waterways has reopened two thirds of its 1,600 mile towpath network, the Forestry Commission reopened 80 sites before Easter and hundreds of National Trust properties are now open.
Let me say, particularly to Conservative Members, that even authorities, such as Buckinghamshire, that have retained a blanket approach are now responding to public demands to review decisions on individual paths. Such authorities may or may not be playing politics with the Government, but they must understand that they certainly should not play politics with rural businesses in their areas.
We are aware that rare breeds, particularly the hefted Herdwicks on the fells, are a real issue. Those special bloodlines must be preserved and we are still considering the best way to ensure that they are.
Mr. Tom King: Is the Wales Office represented on the Minister's working party? If so, has he explained to it why he proposes to offer businesses—whether in Somerset, Devon or Cumbria—significantly worse terms of assistance than those that will be offered in Wales?
I endorse the remarks of the hon. Member for Workington (Mr. Campbell-Savours). It is true that seaside areas had a reasonable Easter for tourism, because some people who might have gone into the countryside or to the national parks were diverted to seaside areas. However, prospects in truly rural areas, such as the national parks, are every bit as dire as so many of us

29
feared they would be, and they continue to be so. In those circumstances, the businesses that are anxiously listening to the Minister will have received scant comfort. Interest-free loans are not a blanket measure, because particular businesses can decide whether to take them up. However, unless the Treasury understands that such loans are the only measure that will genuinely help those businesses, the true infrastructure for tourism in rural areas will be lost.
Mr. Meacher: The question of the level of rate relief and the total to which it applies is a matter for England and the devolved Administrations to decide for themselves. The right hon. Gentleman is right to say that, in Wales, the relief is significantly higher, but that is a matter for the Administration there. We have judged what we believe a right and fair package to be.
The right hon. Gentleman said that certain businesses and areas are still suffering, and I am not complacent about that. I am well aware that many businesses are in a dire state. In some ways, what happened over the Easter break has eased the problem a bit. However, that is not true in some cases, and in others, businesses face the long period until Whitsun with a reduction in bookings. I entirely realise that.
The question is to decide the best way of providing help. The fastest way to give businesses help is to use the existing channels, and that is why we made £120 million additional lending available through the small firms loan guarantee scheme—[Interruption.] I am aware of the interest rate, which we are considering. However, we have extended the scheme to more businesses, including catering, retail and tourism businesses. In addition, we have given greater flexibility on repayment holidays and up to 10 years to repay. I have also met the banks, which assure me that they are taking a sympathetic approach. We will continue to consider all the options for helping businesses, including soft loan schemes, but we must be satisfied that new schemes will work quickly and are well targeted. Of course, as we have made clear, we cannot afford to fund every business.
On all the visits that I have made, and in all the meetings of the rural taskforce and with the rural development agencies, I have made it clear that we need precise, quantified evidence of the degree of need and the cost of relief. We are beginning to receive a considerable amount of information from various organisations, including the regional development agencies, which we are actively considering. I hope that we will be able to make a decision soon.
Mr. Dennis Skinner: Is my right hon. Friend aware that his statements today and a few weeks ago reflect his ability to provide some relief because of the state of the economy, by contrast with the time when the Tories were in government—the experts in running up deficits instead of surpluses? Does he also acknowledge that I was in Parliament in 1992 when a crisis was caused in seven separate regions? Thousands of businesses went down the pan. It was not a case of 70 or 80 per cent. losses; all the shops and businesses that relied on the pits went under. Not one single penny was given by the Tory Government to help those failing businesses. Is he further aware that in Carlisle, where the current crisis is causing a big problem, the Tories called for an election for a
30
Liberal seat and the people, who are so appreciative of the money that is being provided, kicked the Tories out, beat the Liberals and Labour won the seat?
Mr. Meacher: My hon. Friend, as so often, makes a telling point. We are all aware that the Tories are extremely good at offering large sums just before an election that they know they are going to lose and which they will not, therefore, have to meet.
Sir Patrick Cormack: Is the right hon. Gentleman aware that, had he come to Staffordshire where there are 47 outbreaks of the disease or on an excursion to the Welsh marches with my wife and me last week, he would have been horrified by the complacency, unimaginativeness and ungenerosity of his statement, which did not begin to acknowledge the devastation in rural areas? Will he also accept that it is far more important to compensate businesses and to ensure that they survive—some of them depend on the agricultural shows that are being cancelled right, left and centre—than to go on bleating about footpaths? Does he know that, in my constituency, canal towpaths are open within 3 ft of livestock in fields, whereas playing fields in village centres are closed? There is total confusion about what is being done and he is taking a risk by encouraging the reopening of some footpaths.
Mr. Meacher: The hon. Gentleman is usually a fair man, but his comments are over the top. Incidentally, I was in the Welsh marches as part of my most recent visit and I saw at first hand the situation in parts of Herefordshire and Gloucestershire. I entirely agree that some local authorities are confused even now about what can be safely opened. There is no justification for that. The guidelines set out exactly how the guidance is to be operated. The great majority of local authorities are opening not only footpaths, but parks and facilities—including, as he suggests, playing fields inside urban areas. It is ridiculous that they were ever closed, but they can certainly be reopened.
I ask the hon. Gentleman to consider not just any particular item in the package but the cumulative weight of all the measures to which I have referred. They amount to over £200 million, and if we add what rural development agencies and charitable bodies have offered, the total is about £220 million, which is not a small sum. I am still seeking detailed evidence on which further selective but well targeted help can be based, and the hon. Gentleman ought to recognise that.
Mr. Harry Barnes: There are 111 landfill sites in England being used for the disposal of carcases. What action has been taken to ensure that we are following European Union regulations, which say that carcases should make up only 5 per cent. of the content of such sites, with the other 95 per cent. being normal waste? That is particularly important in my constituency at the Erin void, where there is a problem because the site is right next to the communities of Duckmanton and Poolsbrook. We must ensure that not too many carcases are sent to those areas.
Mr. Meacher: The Environment Agency is responsible for ensuring that landfill sites are used in accordance with both EU and national regulations. I have no evidence that

31
that is not happening, but if there is such evidence, I will be glad to follow it up. I do not know the particular sites to which my hon. Friend referred, but if he writes to me, I will pursue the matter.
Mr. David Prior: Does the Minister agree that the foot and mouth virus could still be entering the country in imported meat products? If so, why does he not ban the importation of all meat products from countries that have the disease?
Mr. Meacher: That is one of the issues that the Government will be considering once the number of outbreaks begins steadily to reduce and we can see an end to this episode. The matter has been raised before, and my right hon. Friend the Minister of Agriculture, Fisheries and Food will examine it closely.
Mr. Eric Martlew: May I take my right hon. Friend back to the £15 million given by the taskforce to the RDAs? It is very welcome in Cumbria, but is it the first instalment? Is he convinced that the RDAs have the mechanism for giving out the money? Will he ensure that Cumbria, the worst affected county, is treated generously when the money is distributed?
Mr. Meacher: I am grateful to my hon. Friend for what he said about the package in relation to Cumbria. My discussions with the leader and the chief executive of Cumbria county council lead me to believe that it is welcome, and I am glad to hear my hon. Friend confirm that. We believe that the RDAs are the right bodies to disburse the moneys. They have had considerable success in getting to know all the stakeholders and many of the smaller businesses in their areas. They, better than central Government, can distribute money to make sure that it is maximally effective. If there is further aid, which we are considering, we certainly intend that it should be delivered through them.
Mr. John Burnett: The Minister will know that my constituency has been dreadfully affected by the foot and mouth crisis. It has had a devastating impact not only on agriculture but on every business, including those in tourism and trekking. Dartmoor, in particular, is unbelievably badly affected and has come to a standstill. I spoke just now to the chief executive of Dartmoor national park. Will the Minister please ensure that the affected area boundaries are re-examined every week and that the reasons for changing or not changing them are published? I cannot emphasise enough that it is crucial to get the countryside open as soon as possible.
Mr. Meacher: I hear what the hon. Gentleman says and I realise that his constituency is one of the worst affected in the country. In terms of dealing with the backlog, Devon is probably the most seriously affected area now that the backlog in Cumbria has been cleared to a large degree. I accept that Dartmoor in particular has been grievously affected.
I hear what the hon. Gentleman says about a regular—he says weekly—re-examination of the infected area boundaries. I shall certainly discuss that with my right
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hon. Friend the Minister of Agriculture, Fisheries and Food. I undertake to ensure that what the hon. Gentleman seeks to achieve can be achieved, perhaps by the use of some such method as he suggests.
Mr. Tam Dalyell: Given that the rapid disposal of mountains of carcases is crucial, have the rural taskforce or the Government been in touch with the Nevada department of agriculture at Reno or the school of veterinary medicine at the Louisiana state university at Baton Rouge, both of which have experience of the use of napalm? Is it not true that napalm will dispose of carcases in 60 minutes, whereas pyres take three days, and that because of napalm's lack of vaporising effect, its use does not give rise to the by-products, such as dioxins, that may arise from he burning of railway sleepers or old tyres?
Should not the use of napalm be considered urgently? Is the reason why it is not being considered, even though it was suggested in writing four weeks ago, the fact that there are overtones of Vietnam that might not be acceptable to the public? Given the crisis in the disposal of carcases, should we not at least think about it?
Mr. Meacher: My hon. Friend will not be surprised to learn that we have not consulted the Nevada and Louisiana authorities, but I take his point. I have said that the Government's priorities in order of preference are rendering, incineration in industrial plant, and burial on registered landfill sites. Those remain our priorities.
In Devon, the only option—other than the one that the hon. Member for Tunbridge Wells (Mr. Norman) unwisely suggested—is the use of pyres in the open field. We recognise that issues of public health are involved and we have tried to reduce dioxin emissions, as well as those of other relevant pollutants such as particulates, oxides of nitrogen and sulphur dioxide, by avoiding the use of wood treated with chlorinated agents such as lindane, large amounts of PVC on pyres, and chlorine bleaches in disinfectants. However, I have no Vietnam-related inhibitions about napalm and I am perfectly prepared to look at its use. If it can make a contribution to the—I hope—rapidly decreasing number of fires in open fields, I am happy to take it on board.
Mr. Maclean: Can the Minister not understand the seething anger in Cumbria when, with 40 per cent. of the country's cases, Cumbria—and, indeed, England—is treated as the poor relation; when we see £6 million lobbed to the tourist board across the border while peanuts are given to the Cumbria tourist board; and when we see on the Wales Office or Welsh Assembly website the boast that the rate relief given there is far more generous than that given in England? Can he not understand the mounting anger when, although the Labour-controlled county council says that we will lose £530 million by July, we get only a share of £15 million given to the RDA, which is money down the drain? Minister, we need cash now for the businesses that are being affected to save jobs now, as the hon. Member for Workington (Mr. Campbell-Savours) suggested, not to regenerate them in six months' time.
Mr. Meacher: I recognise the right hon. Gentleman's sincerity. When I came to Cumbria, I was accompanied by him and I recognised his concern for the area. In areas

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such as Penrith and Longtown, the region has been extremely badly hit. He is wrong to suggest that sums such as £6 million have been handed over in a cavalier fashion to the British Tourist Authority or the English Tourism Council. Those sums will assist areas such as Cumbria as much as others.
I recognise that although Cumbria and Devon will get the lion's share of the latest £15 million that I mentioned earlier, that is not sufficient by itself. The right hon. Gentleman will have heard me say on the day of my visit—if I remember correctly, I made this comment in a meeting at Longtown and in Penrith—that I wanted detailed information and quantifiable data on the basis of which I could judge the size of package necessary to tide businesses over. I am glad to say that the Cumbria taskforce, which is a good body, has been diligent in providing that information. I repeat that we are actively considering what further aid can quickly be given in a practical and well-targeted manner.
Mr. Ben Bradshaw: Will my right hon. Friend intensify pressure on local authorities to reopen public footpaths? At Easter, I did a good deal of walking in Devon, where far too many footpaths are still unnecessarily closed. Also, can we please have an extra bank holiday in the autumn, as has been requested by the British tourism industry?
Mr. Meacher: We are extremely keen to reopen more footpaths. I know that the Under-Secretary of State, my hon. Friend the Member for Stretford and Urmston, will redouble her efforts to ensure that that happens. A large number of footpaths—I am not sure whether it is a majority—have now been opened, but many that are still closed could undoubtedly safely be used. We will certainly exert pressure to ensure that the guidance and guidelines are properly adhered to. On the question of a public holiday, I said in the south-west, where I think that the idea was promulgated, that we had considered the proposal. However, it is not currently on the Government's agenda.
Mr. Eric Pickles: The Minister spoke about ways of reducing the public health risks from pyres. Today, he has been reported in various news reports as saying that the Government are monitoring the situation to establish a clear picture of how dangerous the pyres are. However, that is inconsistent with what I was told at a seminar organised for hon. Members three weeks ago, in which I asked what temperature the pyres had to reach to ensure that the virus was killed. I was told that there was a slight risk at the very beginning of the burning of a pyre, before the temperature started to rise, but that the Ministry of Defence was carrying out monitoring down wind of pyres to assess the virus and other risks. Presumably, that monitoring has been going on for a month, so surely an analysis of the health risks is now available. Will he publish the results and provide an assessment now of the health risks from pyres?
Mr. Meacher: I have already made it abundantly clear today that, although there is public health concern about dioxins, the matter must be seen in perspective. We estimate that the pyres have so far generated about 18 per cent. of the total amount—about 350 g—that is generated
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annually in this country. That needs to be seen in proportion, as the amount is about the same as that which is produced by two bonfire nights. Of course, bonfires on Guy Fawkes night undoubtedly generate a considerable amount of dioxins. That is understood by the public. I put the matter in those terms because it is important to see it in perspective.
We will certainly publish any information that we have about the public health impacts of dioxins. We are not complacent about that and we know that there is a public health risk. We are trying to minimise that risk and we are considering the options for disposal that will produce the least risk for the public. At the same time, we must recognise that leaving carcases rotting in the fields is the worst option of all. The problem needs to be dealt with one way or another. The Holdsworthy pyre is now being monitored. All the main pollutants, including dioxins, are being monitored and we will certainly publish the results.
Mr. Nick Ainger: In Pembrokeshire, we had the best Easter for many years. One of the reasons for that was the work of the county council and the Pembrokeshire coast national park with the National Farmers Union and the Farmers Union of Wales to open as many footpaths as possible before Easter. I emphasise that every footpath was opened with the full agreement of the local farmer and landowner. That needs to be replicated throughout the country. May I recommend to my right hon. Friend the advice and risk assessment that Pembrokeshire county council and the Pembrokeshire coast national park conducted? All local authorities should work with local farming organisations and tourist associations to open as many footpaths as possible.
Mr. Meacher: I am grateful for my hon. Friend's comments and the example shown by Pembrokeshire. We are trying to achieve what he recommends. We have called together local authorities, and Government offices in every region have organised meetings with local authorities to ensure that they understand the guidance and the guidelines, and give a commitment to open footpaths, parks and other facilities as quickly as possible. I hope that his request is therefore being rapidly fulfilled.
Mr. Alex Salmond: The Minister will have noted some scepticism in the House about the scale of the package compared with that of the problem. To enable us to judge properly, can he tell us the taskforce's current working estimate of the overall impact of the foot and mouth crisis on the rural economy in lost output? Will he explain why it is considered adequate to spend a few million pounds in 12 major markets overseas to promote the tourist industry when the Government find it necessary to spend hundreds of millions of pounds on promoting themselves in this country? They are now the largest advertiser in the country.
Mr. Meacher: The amount of money spent overseas has had a disproportionately large impact. It is therefore wrong to suggest that it was not well spent. Of course I understand that at such a time people will actively lobby their Members of Parliament for more money to be spent. However, the Government have to examine each case with great care to ensure that businesses are tided over and that due money is provided. The taxpayers provide that money and it must therefore be entirely justified.

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The hon. Gentleman asked me for our best estimate of losses. My right hon. Friend the Secretary of State for Culture, Media and Sport suggested that it is approximately £140 million a week. That is a substantial total. However, the real answer is not more Government money, however desirable that might be, but getting customers and visitors back into the countryside to spend their money in the way they wish.
Mr. John McFall: I thank my right hon. Friend for his informal contacts with the Scottish Executive to ensure that the west highland way and Loch Lomond in my constituency were open for business at Easter. The Inland Revenue and Customs and Excise are coming to a conference that I am organising at Loch Lomond on Friday. Two hundred businesses will attend and I look to them for maximum flexibility and good news. Despite the protests of the Scottish National party, the ministerial visit and encouragement to tour operators from north America and Europe represent money well spent. Our aim is to open the countryside. Will my right hon. Friend ensure that the initiative continues?
Mr. Meacher: I am sure that my hon. Friend is right. We acknowledge that some limited quantities of Government money—perhaps, depending on the evidence, more than is currently being spent—are needed. However, the best way to assist people around not only Loch Lomond but in all resorts throughout the country is not simply to throw Government money at them, but to enable people who want to experience the beautiful landscape of Scotland to see for themselves that much of the propaganda that is spread abroad is wrong. They can then take back that message, thus enabling the market to operate normally and encouraging visitors to flock in from abroad. That is beginning to happen. The money has indeed been well spent.
Mr. John Redwood: Will the Minister tell the House how little money has found its way into rural businesses from his various schemes so far? The truth is that practically nothing has got through, while thousands of rural businesses are bleeding to death. Are not the Government dithering over vaccination and movement while businesses die and animals suffer?
Mr. Meacher: I know that some Members, such as the right hon. Gentleman, like to prepare their questions and come to the House to make good political points. Let me answer him. We are providing mandatory rate relief of £24 million; discretionary rate relief of £22 million; matched contributions, in regard to donations from the public, of £14 million, including £5 million from the Government; £120 million under the small firms loan guarantee scheme; a £15 million package for the four hardest hit areas; and VAT and income tax deferments that the Treasury now estimates to be worth some £12 million a year. That is solid, clear, precise and valuable assistance. [Interruption.] The right hon. Gentleman makes a sign at me to show that he thinks that that amounts to nil. That is silly, because it amounts to a very great deal. Whether it is sufficient is a matter for
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argument, but to suggest that it is worthless shows the childish attitude of the Opposition as we approach an election.
Mr. Jim Cousins: Those of us who represent big-city areas have rightly allowed these discussions and statements to be dominated by people such as our colleagues from Cumbria and Northumberland. However, I bring to the attention of my right hon. Friend the fact that a particularly vicious and unsubstantiated smear has been widespread. It is that restaurants in Newcastle's Chinatown were one of the sources of the outbreak. That has had a substantial impact on business in Newcastle's Chinatown and on other Chinese restaurants and takeaways throughout Tyneside. They are not covered at all by his proposals or by the Government's proposals to provide relief in rural areas. Is he willing to meet my hon. Friend the Member for Tyne Bridge (Mr. Clelland) and me—we represent the part of Newcastle concerned—to consider how we can address the real problems that have been generated for those businesses by a vicious rumour and smear for which not a shred of evidence has been produced?
Mr. Meacher: My hon. Friend makes a serious point. One of the disadvantages in this kind of episode or crisis—whatever it is called—is that allegations are wildly thrown about and undoubtedly do serious damage. As he said, there is no evidence whatsoever—at least, none of which I am aware—that Chinese restaurants in the Newcastle area were responsible for the outbreak. Many other allegations have been made that are quite wrong. I read in yesterday's newspapers that deer had been widely infected with foot and mouth. Again, that is completely untrue, and it is important to correct such reports when we can. If it would help to meet my hon. Friend and my hon. Friend the Member for Tyne Bridge (Mr. Clelland) with a delegation to try to put this matter right, I should be happy to do so.
Mr. Brian Cotter: In response to concerns about the ceiling for relief being set at £12,000—many of us think that it should be £50,000—the Minister said that discussions would be held with the Local Government Association. When will we hear the association's response on that issue? The Government talk about a sympathetic approach to deferral of VAT. What exactly does that mean? Furthermore, when people initially rang the hotline to ask for a deferral of tax, they were told that they would have to pay 8.5 per cent. interest, although it has since been suggested that that will not be the case. Will the Minister give the House a clear statement that people in great difficulty will not be charged 8.5 per cent. interest?
Mr. Meacher: On the first question, the hon. Gentleman is right. As I said, we have asked the Local Government Association to provide us, by the end of today, with details of its view—if it is its view—of the inadequacy of the £12,000 rateable value threshold and of the 5 per cent. as well. We will certainly give a response, but it will depend on the quality of the evidence. If we are persuaded that it is true that the 5 per cent. contribution from rural local authorities and the £12,000 rateable value threshold are seriously impeding the whole purpose of the exercise—which is to bring help to needy non-farm rural businesses—we shall be prepared to look at the position again.

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The hon. Gentleman asked about a sympathetic approach on the part of banks—or perhaps he referred to the Inland Revenue, and the VAT authorities. If documented evidence is provided relating to the level of takings, and a plausible, demonstrable case is made that that figure results from foot and mouth, the offices involved will treat the matter sympathetically, in terms of the interest rate and the speed of repayment. If that is not the case, I shall be glad to hear evidence.
As for the deferment of VAT—which was mentioned earlier—I read in the paper that an 8.5 per cent. charge was being imposed. That is completely untrue. I said in my statement that in cases of hardship the 8.5 per cent. interest rate would be waived, and that is the case.
Mr. Patrick McLoughlin: Can the Minister explain why Scotland and Wales, which receive all their money via Her Majesty's Treasury, can give their local authorities a far better settlement than he can give English authorities? Has it anything to do with a Scottish Chancellor of the Exchequer and a fairly incompetent Deputy Prime Minister?
Mr. Meacher: Leaving aside the abuse—which ill befits what is a serious question—I should say that this is a matter for devolved Administrations. One of the consequences of devolution is precisely that those Administrations make their own decisions. They spend their money—they spend their taxpayers' revenues—in the way that they choose. They have done so; they are perfectly entitled to do so; and we have done the same.

Points of Order
4.37 pm
Mrs. Jacqui Lait: On a point of order, Mr. Speaker. I wish to raise the issue of the Crystal Palace Bill, presented on Tuesday 10 April, the day on which the House rose for the Easter recess. I have written to you about it, and also put a note on the board telling the hon. Member for Croydon, Central (Mr. Davies) that I was going to raise it.
The Crystal Palace Bill would transfer Crystal Palace and the park wholly to the Greater London Authority. Crystal Palace lies entirely within my constituency, although the London boroughs of Lambeth, Lewisham, Southwark and, indeed, Croydon surround the park. The hon. Member for Croydon, Central—whose Bill we are discussing—shares a boundary with me in the southern part of Beckenham but does not, as far as I am aware, share any boundary with me at Crystal Palace.
I seek your guidance on a number of matters, Mr. Speaker. I should be grateful if you could tell me what courtesies you believe should apply when a private Member's Bill affects another Member's constituency entirely, in terms of informing that Member—let alone Bromley council, which has heard nothing whatever about the Bill from the hon. Member for Croydon, Central.
More important, I understand that the Bill is potentially hybrid, because Crystal Palace park is governed by private legislation. I note, as you will have noted, Mr. Speaker, that Second Reading is due to take place on 11 May. If the Bill is likely to be hybrid—on which point I should be grateful for your guidance—will it be sent to the Examiners of Petitions? If so, will that happen before 11 May? Will the Examiners of Petitions be able to receive representations about the Bill before that date, or will Second Reading have to be postponed, whatever other external events may occur?
I am sure that you understand, Mr. Speaker, that I regard the Bill as an intolerable interference in the affairs of another Member of Parliament. I believe that it is, of itself, very complex, and should at least have warranted the giving of notice to those involved, as opposed to the total discourtesy of silence.
Mr. Speaker: I am grateful to the hon. Lady for giving me notice of her point of order. The hon. Member for Croydon, Central (Mr. Davies) was not out of order in presenting his Bill. However, now that the text has become available, it is necessary to see whether the private Bill Standing Orders should apply to it. That will be the task of the Examiners of Petitions for Private Bills, to whom the Bill is today being referred. If those Standing Orders do apply, the Bill will be a hybrid Bill. I am afraid that the hon. Lady is not able under the Standing Orders to make representations directly to the examiners, but if the Bill makes further progress, she will, of course, be able to contribute to the debate.
As to prior consultation with the hon. Lady, notice was given of the introduction of the Bill in the usual way. The House's rules do not require anything further, but it would certainly have been in accordance with the established courtesies of the House if the hon. Gentleman had given notice of his intention to the hon. Lady.
Ann Clwyd: On a point of order, Mr. Speaker. I am sure that the whole House will want

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to congratulate the authorities in Turkey on this morning successfully bringing to a conclusion a dangerous crisis involving hostages, including British hostages, without a shot being fired. However, there is another matter in Turkey. I remind the House that the Foreign Secretary has repeatedly said that the criterion for Turkey's membership of the European Union must be an improvement in human rights in Turkey. At this moment, 250 people in Turkish prisons are on hunger strike. Seventeen have died up to today. I think that we should ask the Foreign Secretary to make a statement to the House on what pressure the British Government are putting on the Government of Turkey to bring to an equally successful conclusion the hunger strike, which, obviously, should not continue.
Mr. Speaker: I am pleased that the people in the hotel in Turkey are no longer in any danger. As for the question of a statement, it is not a matter for the Chair.

Orders of the Day

  Finance Bill
  [1ST ALLOTTED DAY]
  (Clauses 1 to 3 and 16 to 53 and Schedules 4 to 11)
  Considered in Committee, pursuant to Order.
  [SIR ALAN HASELHURST in the Chair]
  4.42 pm
  Mr. Richard Ottaway: On a point of order, Sir Alan. It is appropriate to draw to your attention to the fact that we are witnessing today a historic breach of the conventions of the House, in that the timetable motion limits the flexibility of the Opposition in today's debate. May I quote briefly from "Parliament: Functions, Practice and Procedures" by J. A. Griffith, emeritus professor of public law, Michael Ryle, a former Clerk of Committees in the House of Commons, and Mr. Wheeler-Booth, Clerk Assistant in the House of Lords? It says, on page 253:
  "after second reading, which provides an opportunity for a broad debate on the Government's tax proposals against the background of the national economy, the committee stage of the bill is now divided between a committee of the whole House and a standing committee. The motion to commit certain clauses to a committee of the whole House (and sometimes new clauses on specified matters) is moved by the Government, but the choice of which matters should be considered in this way is, in practice, largely left to the Opposition."
  The timetable motion means that the Opposition have very little opportunity to raise the matters that they wish to raise. No new clauses are permitted by the timetable motion.
  All the clauses on the aggregates levy—clauses 16 to 49—are being taken on the Floor of the House, and all the serious clauses on that tax come at the beginning of the group of clauses, so have to be finished by 7 pm. The matter has not been left to the Opposition. If there were no 7 pm deadline, it would be easy to address those serious matters within the time scale. Perhaps this is a matter for the Procedure Committee to revisit, because the procedures and conventions of the House have been quite dramatically flouted today.
  The Chairman of Ways and Means (Sir Alan Haselhurst): The hon. Gentleman will understand that this is not a matter on which the Chair can rule, as it is determined by other means. I have allowed the hon. Gentleman to make his point, but it now seems to be a matter of his approaching the Chairman of the Procedure Committee if he would like the matter to be examined further.
  Mr. Edward Davey: Further to that point of order, Sir Alan. I wish to associate the Liberal Democrats with the request made by the hon. Member for Croydon, South (Mr. Ottaway). Is it possible for you to consult the Government Whips to see whether they would be prepared to reconsider their position, given the strong feeling throughout the Opposition parties that there should be a chance for other issues to be debated during the Committee Of the whole House?
  The Chairman: I am always ready to try to use my beneficial influence wherever possible in the House,

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  but what the hon. Gentleman is suggesting is outwith what I am permitted to do, especially in the absence of a Business Sub-Committee, for which no provision was made on this occasion.

Clause 16

  CHARGE TO AGGREGATES LEVY
  Mr. David Heath: I beg to move amendment No. 4, in page 12, line 25, at end insert—
  '(2A) Prior to the commencement date the Treasury shall publish a scheme of rebates to those persons charged with the levy proportionate to the environmental protection measures employed by that person in the process of commercial exploitation of aggregate, and such a scheme shall have effect on the commencement date.'.
  The points of order raised by my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) and by the hon. Member for Croydon, South (Mr. Ottaway) are relevant to the debate. A new clause has been tabled that is of direct relevance to the amendment, and common sense would suggest that they should be debated together, but the decision of the business managers means that we cannot discuss the new clause. We are discussing, at best, half the matter under consideration, and there will have to be a further debate in Committee covering very much the same issues; a debate from which, sadly—or perhaps not sadly—I will be excluded, as I will not be serving on the Committee.
  The amendment is crucial in terms of understanding the Government's intentions towards the aggregates levy, the effect on the industry and the way in which the House would wish it to proceed. I represent an area where quarrying is a major industry. It does not employ huge numbers of people, but it is significant. The Mendips—particularly the east Mendips—contain some of the most concentrated areas of production in the national limestone industry, so this matter impacts substantially on my constituents.
  Living, as I do, in the east Mendips area—not a million miles away from quarries from which some of the largest movements of material in Europe take place every day—I am aware of the pressures on the industry. There are strong reasons for providing the best possible environmental protection for the local areas in the context of national aggregates production. However, there are also strong reasons for recognising that this is an important industry which employs a great number of people locally, if not nationally, and is essential to our national well—being, as it produces—literally—the building blocks of our built environment and infrastructure.
  Getting the balance right is important; I struggled with that for 12 years as a member of the minerals planning authority of Somerset county council, when we were dealing with the matter daily. We dealt with new applications and, in the case of interim development orders, with permissions that should have expired. We tried to reconcile the interests of the local community with those of the industry, and came to a reasonably satisfactory conclusion. In the past 15 years we have made substantial progress in finding ways to accommodate the industry, which has responded to the pressures that have been put on it. The industry has sometimes resisted those pressures, but it has also recognised a wider community interest.
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  As Ministers will know, the aggregates levy has been much discussed with the industry, and it was no great surprise that provision for the levy formed part of the Bill, because it had been announced in earlier statements.
  Mr. Allan Rogers: The hon. Gentleman said that the issue had been much discussed with the industry, but that suggests that the Government listened to what was said. The proposals have not been altered in any way, and my experience of being involved in at least one discussion suggests that the Government have a closed mind on them.
  Mr. Heath: The hon. Gentleman pre-empts what I was about to say. Although much discussion has taken place, and the industry—to its credit—has gone a long way towards meeting some of the Government's objectives, its proposals have effectively been rejected and a statutory levy will be applied, irrespective of whether it will do the job that the Government, local communities and, for that matter, the industry, recognise needs to be done. We need to improve local environmental standards and procedures to achieve the best possible result, and that is the issue at the heart of the amendment.
  The voluntary proposals suggested represented a good deal for both the Government and the industry. Unfortunately, those proposals were not universally approved within the industry, because—perhaps inevitably—some did not wish to improve their working practices. However, some have already done a good job and were prepared to take on the challenge set by the Government, and to establish a sensible relationship. The Department of the Environment, Transport and the Regions is continuing discussions with the industry and recognises the moves that have been made, but sadly, that view is not shared by the Treasury, which is why we have a largely unchanged proposal that includes a half promise that, at some stage in the future, a rebate scheme will be introduced. In the meantime, the Government will apply the tax irrespective of the consequences for the industry and for local communities.
  Mr. Rogers: I hope that the hon. Gentleman will not continue to use the word "environment" when talking about this tax. He must realise that the tax will not affect the environmental position and that a regulatory framework already exists. This is a money-raising tax, and has nothing to do with the environment.
  Mr. Heath: I contend that it is possible to inject into the levy a little element of environmental protection, which it does not possess at the moment. The hon. Gentleman chides me for not being sufficiently aggressive towards Ministers early in my speech, but I wish to set out the proposals as I see them, and then to mention one way of improving them.
  Mr. Rogers: The hon. Gentleman should get it right; I am aggressive not towards my right hon. and hon. Friends on the Front Bench, but towards the tax, which is wrong and ill conceived.
  Mr. Heath: Clearly the hon. Gentleman is against the sin, but not the sinner. In my observations I will encompass both.
  Mr. John Bercow: I understand the hon. Gentleman's eminently reasonable concern that the details of the rebate scheme should be published before the commencement date of the levy, but why will he not bestir himself one little bit further and make the reasonable demand that the Government publish those details before the passage of the Bill?
  Mr. Heath: I am interested not in the passage of the Bill but in the start of this iniquitous tax. I have already voted against it in the Budget debate, so my position is absolutely clear. I am trying to get the Government out of the hole that they have dug—which is perhaps the appropriate analogy in this context. They are making exactly the same mistake as their predecessors made with the landfill tax. The way in which the tax is presented reeks of environmental rectitude, but it does absolutely nothing for the environment and hits the wrong targets.
  The great problem with the tax is that it will not work. The amendment would help it to meet at least some of the Government's stated objectives. The tax will not improve the industry's environmental performance or create a more sustainable aggregates supply. The voluntary levy forcefully advocated by the Quarry Products Association and others would have met some of the objectives.
  Crushed rock quarries have by-products, exactly as china clay quarries and others that are exempted from the provisions do. There are scalpings, overburden and washings. Scalpings make up about 40 per cent. of the material produced in a limestone quarry, but they have a very limited market. They are used for various jobs, but there is a strict limit to what people are prepared to pay for them.
  If scalpings are included in the levy, they will not be sold, and other materials will be used. Indeed, the Government have clearly stated that one of their objectives is that china clay spoil should be used as an alternative. What, though, is to happen to the unsold scalpings, which thereby become waste?
  Sir Robert Smith: They will become subject to landfill tax.
  Mr. Heath: Indeed, they could be doubly taxed if they were moved off the quarry.
  The scalpings will have to be dumped, either in piles on the edge of the quarry or impacted into the base, which effectively sterilises quality rock lower down and takes up the productive floor of the quarry, to no one's benefit. It is possible to wash scalpings and separate out the clay, but that will not be done if the aggregates levy is applied, because it will be completely uneconomic.
  The same applies to overburden, which is a substantial by-product of aggregates extraction—in a basalt quarry, for example, or when much of what is taken out is overlying jurassic oolitic limestone. That has to be taken off first if one is not to sterilise the stone that one wants, and it has to go somewhere. It has low quality uses, but if a levy is put on it, it will have no use and no market.
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  5 pm
  If there is no system of local environmental improvement and no exemption scheme, we shall effectively be removing the white hills in Cornwall that we have all seen and agree should not be there—the moonscape around St. Austell—and replacing them with piles of red earth in Somerset. People will say, "What a shame, Somerset used to be such a beautiful county and look what they have done to it." We will create a wasteland, a moonscape, simply by applying this tax. I do not think that that is the Government's intention, but it is the inevitable outcome of what they propose unless the clause is amended.
  With products that are derived from aggregates, there is a strong environmental argument that, given that we need pre-cast concrete products, the best way of producing them is as near as possible to the point of production of the stone. Otherwise, large quantities of stone are moved around the country to concrete works to form pre-cast concrete products that are then moved somewhere else, resulting in unnecessary lorry movements and adding to the environmental cost of the product for no benefit. Yet if the levy is applied in its present form to those added-value manufacturing processes, they will be priced out of the market. Producers in other countries will make those products—and although the Bill imposes a levy on raw aggregate, there will be none on manufactured produce. As a result, it will be non-commercial to use a local by-product to produce locally processed goods, and imports will be sucked in to undercut them, simply because of a misapplication of the levy.
  Mr. Oliver Letwin: Does the hon. Gentleman agree that there are two ways of solving that problem, which is obviously acute if we want to stop 10,000 or so jobs being exported unnecessarily? The Government could adopt either the very wide exemption scheme proposed in his amendment, or our proposal in amendment No. 26, which redefines aggregates in such a way as to eliminate pre-cast concrete from the levy.
  Mr. Heath: The hon. Gentleman is right. I know that I would be out of order were I to refer directly to the amendment to which he alludes. However, there are undoubtedly two ways of dealing with the problem. It is a very big issue in terms of potential employment and revenue loss. The estimated cost to the pre-cast concrete industry is £40 million; the levy will represent a 25 per cent. take on its profits. That is an unsustainable process of taxation, and it will simply drive jobs out of the country. There might be an argument for that if the levy achieved the environmental effects claimed by the Government, but it will not. It will have quite the reverse effect: it will be of disbenefit in environmental terms.
  Sir Robert Smith: I emphasise my hon. Friend's point about the disbenefit in environmental terms. Transporting such products will clearly be environmentally damaging to the communities and the environment through which they pass.
  Mr. Heath: My hon. Friend is absolutely right. He recognises the problem in his constituency, which has both aggregate producers and a thriving port. It is obvious that we must find other areas of supply.
  Mr. Andrew Tyrie: Does not the most severe environmental damage in many areas result from

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  the transport of the aggregates rather than the digging? Does that not strengthen even further the point made by the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith)?
  Mr. Heath: The hon. Gentleman, too, is absolutely right. Indeed, his point is supported by the research that the Government themselves commissioned into the environmental disbenefits of the quarrying industry. The research found that the main problem was quarry lorries going past people's doors and windows along roads that were never built to accommodate them. That is the aspect of quarrying that people find most worrying—much more so than the occasional distant thud of an explosion that everyone expects anyway, or even the holes in the ground, which are often masked. If the hon. Gentleman came to the Torr works, which is one of the biggest quarries in the country, he would not know it was there until he arrived at the gates, because a great deal of landscaping has been done to ensure that it is not evident. He would, however, be aware of the heavy transport passing through all our villages—not so much from Torr, which has provided a railhead, but certainly from many other quarries. That has a substantial effect on local communities.
  Mr. Tom Levitt: The hon. Gentleman makes a fair point about transport, but is he aware that the Government already provide schemes whereby grants can be given to quarry companies to improve rail access, as has happened with great success in some constituencies, including my own?
  Mr. Heath: I have just said that the Torr works has a railhead, as does the Hanson quarry at Whatley. Those are very welcome, but the tax could, if designed properly, encourage more companies to have one. In its present form, with no rebate scheme, the levy will discourage companies from taking steps to improve the local environment. There is no competitive benefit for them; indeed, there is no benefit beyond public-spiritedness and a good relationship with their local communities. I fear that the Bill will result in enormous environmental disbenefit in communities such as mine.
  Mr. John Burnett: Does my hon. Friend agree that many constituencies, including mine, have virtually no railways, but several quarries and utterly unsuitable roads?
  Mr. Heath: My hon. Friend is right. It was ever thus, I fear; when I was leader of Somerset county council, the minutes of the council's first meetings were kept in my office, and when I read the minutes of the very first, I found a discussion of the difficulties caused by quarry lorries in the Mendips and their effect on local roads. That meeting was held in 1889, so the issue is of very long standing.
  Mr. Alasdair Morgan: Is it not likely that the condition of the roads will be even worse once the tax is imposed, as local authorities, whose budgets will be drained by the tax, will have even less to spend on them?
  Mr. Heath: It is an interesting by-product of the levy that the cost will fall heavily on local authorities, which will be trying to repair the infrastructure damaged by heavy transport.
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  We were touching on the issue of employment loss in the concrete industry as a result of these measures. There is the same potential in the quarrying industry itself. The Government estimate that the introduction of the levy will reduce demand for aggregate by 10 per cent.—although, interestingly, not demand for the highest grade aggregate, which is the main driver of a quarry's output. The reduction will be in demand for the lower grade aggregate, and will have little direct financial benefit in terms of the demand for new permissions. At the same time, the changes in specification will increase costs for the primary producers. As a result, cost-saving will be achieved only by passing on costs to local authorities, or by reducing the number of people directly employed in the industry.
  The Government's claim for the tax is that the surplus will go into a sustainability fund. That was the way in which it was originally sold to local communities in quarrying areas. They were told that it was a great idea because some money would be taken out of the quarrying industry and put into making their local environment better. However, the proposals and the responses to the consultation on the sustainability fund do not for one moment suggest that communities local to the quarries will benefit.
  I have a great deal of time for the notion that something should be done about St. Austell, which is in the constituency of my hon. Friend the Member for Truro and St. Austell (Mr. Taylor). If money is available to do something about the China clay spoil tips, no doubt he will welcome it. However, to sell that as a direct benefit to communities affected by quarrying in Somerset is stretching the tail a little further than may be appropriate.
  When the Government's own press release of 25 August states that local communities affected by quarrying are set to benefit from environmental improvements, I have to question the good faith of those proposals. Those benefits are not in the draft proposals. Indeed, the draft seems to ignore the responses of the minerals authorities directly affected. I know that the Financial Secretary to the Treasury has received a letter from the minerals planning forum of Somerset county council stating that in terms. It appears to the forum that the views of Somerset, of Derbyshire and of Leicestershire—the key aggregate producing areas, which between them produce almost half of England's crushed rock aggregates—have been almost completely ignored in the proposals for the administration of the sustainability fund. There is a real suspicion that, in relation to their economies and the quarrying industry, much more will go out of those areas than will come back.
  That is why a rebate scheme would be of direct benefit. Such a scheme would actually specify the local environmental improvements to be undertaken by the quarrying companies, and would give them a direct commercial advantage for having done the things that we all want to be done. Indeed, the industry itself has argued strongly for that. I do not want to put words into the industry's mouth—it is clearly against the concept of an aggregates levy in toto—but having accepted that it is the Government's intention to impose such a levy, the industry is saying, in effect, "Let's have a sensible rebate scheme, and let's have it before the tax starts to operate."
  As the Financial Secretary will know, one suggestion made by the Quarry Products Association is that a benchmark might be a formal environmental management

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  system such as IS014001. That is one suggestion among many, but it would provide a framework whereby some of the benefits from the imposition of the tax would directly accrue to the communities affected; it would bring the benefits home. That sensible objective should commend itself to hon. Members on both sides of the House; indeed, I suspect that the proposal represents what the Government will eventually do.
  Mr. Tyrie: That objective is the only reason for suggesting it.
  Mr. Heath: I agree absolutely.
  5.15 pm
  My principal quarrel today is with the fact that, for reasons that escape me, the Government are going ahead with a commencement date for the aggregates levy without having in place the main objective—some may say the subsidiary objective—of the local environmental rebate, which would make the levy work in favour of local communities and drive down the environmental costs, as well as avoiding an increase in the commercial costs to the companies involved. That would be put right by amendment No. 4—in combination with new clause 1, which we are not allowed to discuss now, but which will be debated in the Standing Committee.
  Mr. Edward Davey: My hon. Friend is making a powerful speech. Will he elaborate a little on the type of environmental protection measures that he wants to be included in his rebate scheme? In particular, he referred to the environmental damage done to local communities by the noise and dust from the lorries that carry the aggregates. Does he want his scheme to include measures to tackle that problem, or should it be dealt with by separate regulations?
  Mr. Heath: My hon. Friend is right to suggest that some things are susceptible to regulation, but having wrestled with the problem for more years than I care to remember, I can tell him that it is very difficult to do by regulation all that is required. An incentive is needed for the companies to take the measures that they know they should implement if they can, because it is sometimes commercially impossible for them to do so. There is an obvious difference in attitude between the companies that take their responsibilities seriously—very often, those are the bigger companies—and those that do not. There is no "big is bad and small is good" argument here; it is often the other way around in this context.
  Many of the companies are prepared to develop the infrastructure that makes a difference. Railheads were mentioned earlier, and they make an enormous difference. If a large quantity of stone can be moved by rail from Somerset to Surbiton—which is done every day—a vast number of lorry movements in inadequate lanes are prevented, which makes a big difference to local communities. If reinstatement schemes are properly funded and made to work, a huge difference is made to the use to which the quarry is put after production.
  Many quarries use old permissions, which were granted in terms that no responsible planning authority would use at this stage in the game. Those companies will respond
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  if they are given an incentive to implement all the measures that they could, if they could afford them, and if they are not commercially disadvantaged by doing so. Their proposals show that they are willing to respond. I find it inexplicable that, because of some form of misplaced machismo, the Government are determined to go ahead with the levy without including the necessary rebate structure, which I am proposing. The rebate would make a huge difference to the effectiveness of the tax in terms of its environmental benefits, and I commend it to the Committee.
  The Chairman: May I remind the Committee that there is a limited amount of time to debate such matters, and it would be helpful if hon. Members had regard to the fact that other colleagues wish to contribute? This is not a stand part debate, and although it has ranged reasonably widely until now, it cannot be expanded into a stand part debate. Hon. Members who want to contribute to a stand part debate should bear that fact in mind in making contributions on the amendment.
  Mr. Rogers: I have a little knowledge not of the taxation system, but of aggregates. I support all the Government's efforts in raising and spending taxes in a very positive way. My constituents and many poorer areas of the country have certainly benefited enormously as a result of the Government's financial and economic policies.
  I shall not support the rebate suggestion in the amendment, because it merely tinkers with the central issue that the Committee must address. From what to what will the rebate be made? If the Government cannot get the sustainability fund that arises out of the taxation together in a proper way, I do not understand how any form of rebate system can be of specific benefit to the industry.
  We are debating not a criminal activity, but an industry that is fundamental to the economy of this country. Mineral development goes back to pre-history and the Wealden area and East Anglia contain superb examples of the restoration work that can take place after the mineral workings have gone. Such areas are now popular holiday resorts.
  Up until the industrial revolution and through to the present time, minerals have done much for the life of this country. I am sure that you, Sir Alan, got out of bed this morning in a house that was built of lovely sandstone or limestone, that you stepped out on to a path that was made of aggregates that had been extracted, and then on to a road that was also made up of aggregates. You may have even got on to a train that ran on metal that had been extracted from the earth and on a track that was bolstered by the aggregates that underlay the rails. Wherever we are and whatever we do, we desperately need to extract minerals from the earth.
  I certainly accept that, for years, extraction took place in not too nice a fashion. For example, the china clay pits near St. Austell in Cornwall brought a great deal of wealth and industry to the area, but they are considered scars on the landscape by people who do not appreciate them properly. I come from an area in which there were 63 coal mines and where there was much exploitation and dumping of colliery spoil. Much of that land has now been landscaped and is used in a practical way.
  Mr. Burnett: Will the hon. Gentleman give way?
  Mr. Rogers: No, I will not because of the shortage of time.

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  The aggregates tax is a tax on a vital industry, and it will not serve the purpose that the Government suggest that it will. My quarrel with them is not that they are taxing as such, but that they are presenting this tax as an environmental tax.
  About eight or 10 years ago, I remember sitting down with some of my colleagues when the Labour party was in opposition. One of our environmental spokesmen was terribly excited about a meeting at which a representative of Friends of the Earth had said that the extraction of material in a certain place would destroy the water table. When I had a proper job I was a geologist, so I must confess that I was a little confused and wondered how the water table could be destroyed by extraction. However, at the end of the discussion I turned round and said, "I hope that we will have a minerals policy that is not based on the views of the last lobby group to whom our spokesman talked." I fear that that has happened with this tax. It originated with a lobby group and has been dressed up even though there is no way in which it is an environmental tax. If Ministers have been convinced by their advisers or by the political input that has gone into the Department that it is an environmental tax, I am very sorry that that has happened.
  Although I accept that some people may not extract minerals in the best possible way, the industry is doing a good job because it has been regulated. Planning regulations are the way to improve the environmental standards for extraction and restoration work. If the industry does not conform to those regulations, the offending companies should be shut down. However, nearly all the companies that I know of extract in a principled manner and are only too anxious to restore. The national water sports centre in Nottingham is a classic example of effective restoration after mineral extraction. It is not necessary to tax the industry to get it to behave properly, because it is already doing that. Quarries in my area have been used for recreational activities. Companies such as Foster Yeoman—I do not know whether it operates in the constituency of the hon. Member for Somerton and Frome (Mr. Heath)—do superb restoration work. I recommend the books that it publishes, such as "Wildlife after Gravel".
  The tax is hypocritical. If money is to be raised, let it be done practically. Although not a concern for my constituency at the moment, most mineral extraction takes place in rural areas and is often the only alternative to farming. It provides much ancillary employment in the haulage industry and other businesses that supply the quarries and quarry extractors. A tax on the industry is a tax on jobs. I cannot envisage it improving the environment. The only way to do that is to impose tight planning controls, planning regulations and planning enforcement on mineral extraction.
  Mr. William Ross: The hon. Member for Rhondda (Mr. Rogers) said that the tax was a tax on jobs, but it is more than that: it is a tax on the cost of a house because a considerable amount of aggregates goes into building a home. Although I hope that we will have time to debate amendment No. 24, which relates to Northern Ireland, I shall concentrate on amendment No. 4, which refers to
  "rebates to those persons charged with the levy".
  The problem is not the detail of the tax, but its imposition. Much of what will be said will focus on its effect on the economy in general. Many people will not
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  think that the tax matters to them individually, but it will ensure an increase in the building costs of every house. An average-sized dwelling uses about 80 tonnes of building sand, 200 or 300 tonnes of hardcore and concrete bricks and blocks. That is a considerable weight and adds up to a lot of money. I estimate that the tax will place a hidden extra cost in tax alone of much more than £1,000 on the smallest house and £2,000 or £3,000 on a larger dwelling.
  We are driving up the cost of housing, and the tax will translate into a tax on all houses sold. The increase in the cost of new dwellings will increase the price of existing dwellings. When the Government consider the effect of the tax on road building, they might say, "It doesn't really matter. It's being recycled back to us in one form or another", but that is not the point. Everyone who uses aggregates in buildings and road construction puts on a percentage and the total sum at the end of the cycle will be much larger than the initial tax.
  5.30 pm
  I am aware of, and sympathetic to, the many valid arguments against the tax which will be made in the debate and to many of us individually. The Government's arguments for introducing it are pathetically weak. It has nothing to do with being green; it is simply a revenue-raising exercise that will do far more harm than good. The industry will not have significant revenue returned to it by any other means, so the tax is clearly not revenue neutral.
  The tax will not increase recycling. By and large, where it is possible to recycle materials, people will do so. The resources are finite, and so is the capacity for recycling. Substantial recycling is already being carried out and is economically viable. Without this tax, we could and would go on recycling as much as possible throughout the country. The tax is not environmentally friendly because there is no disincentive for the primary producer who removes material from the ground. He is driven by demand from other industries.
  Once again, unfortunately, it is the peripheral regions of the United Kingdom that will suffer most from the tax. In Northern Ireland, in particular, the burden will be compounded by factors that do not impact on the industry in the rest of the United Kingdom. In a letter dated 31 October last, the Financial Secretary to the Treasury said:
  "These costs will be significantly higher for the transportation of concrete blocks, as these have to be handled by a specific type of truck. Taking the levy rate of £1.60 per tonne and even assuming transport costs are no greater than 10 pence per tonne mile, it would appear uneconomical to transport the processed aggregate more than … 16 miles."
  Estimates from the industry in Northern Ireland show that it would be easy and viable to transport aggregates and their products up to 25 miles, so at least 50 per cent. of Northern Ireland is within range of the frontier, and there is no tax in the Irish Republic.
  Apart from the low value of aggregates in Northern Ireland and the distribution of the industry there, we must remember that it is the only region of the UK that shares a large frontier with another state. If the Financial Secretary examines the matter a little more closely, he will realise that such a tax was considered by other EU states and rejected, as it was confidently predicted that the

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  aggregates industry would collapse in countries such as Holland and France. In Great Britain, the effect of the tax is masked to some extent by the fact that all imported aggregates come by sea, so it is easy to control the taxation of material at ports. However, aggregates can simply be put on a lorry and driven across the frontier into Northern Ireland. It is a different ball game.
  Mr. Bercow: Further to the point that I put to the hon. Member for Somerton and Frome (Mr. Heath) earlier, does the hon. Gentleman agree that his fear of an especially adverse impact of the tax on the people of Northern Ireland serves further to underline the necessity of publishing the details of any rebate scheme not merely before the commencement date of the tax, when it will too late to debate them, but before the passage of the Bill itself?
  Mr. Ross: The hon. Gentleman is perfectly correct, and I hoped that the Government, who place so much stress on transparency, would be more than willing to produce all the facts and figures and the details of the research that has been carried out. They have lamentably failed to do so up to now. Those of us who have talked to the industry in Northern Ireland take the view that much, if not all, of the regional aggregates industry will suffer grievously as a consequence of the tax.
  The House knows as well as I do that the Government are not averse to granting regional tax exemptions that they consider necessary—for example, the exemption from air passenger duty for travel between the highlands and islands and mainland Scotland. I think that a similar exemption should have been granted for travel to Northern Ireland. I travelled here today by air and will return home in a few days by air, just like almost everyone else who travels in and out of Northern Ireland. Sea transport of human cargo is far less prevalent now than it used to be. Exactly the same argument applies to Northern Ireland as applies to the highlands and islands—however, that is a debate for another day.
  The Government have demonstrated a certain pragmatism in their approach to regional problems—the problems of being on the periphery of the kingdom—so they should have demonstrated the same pragmatism when considering the imposition of the aggregates levy in Northern Ireland. It is estimated that the industry there is worth about £35 million in tax to the Treasury. That estimate is based on the 1999 figure of 23 million tonnes of aggregates, of which 22 million tonnes would be taxed under the proposed scheme. However, it has been estimated that the imposition of the tax would cost 4,000 jobs—70 per cent. of those employed in the industry in the Province—and that it would cost the Treasury £60 million. The deal does not strike me as a good one.
  The majority of the jobs in the industry are not in extraction, but in the value-added end of the process; however, the value-added end can easily migrate to the Irish Republic—indeed, some has already done so. Raw products would continue to be extracted in Northern Ireland, but they would be taken across the border to be refined or processed, usually into concrete products, and then returned to Northern Ireland, thereby escaping most of the duty—I understand that there is no tax on imported downstream products. Therefore, the environmental tax
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  might result in up to three times more lorries on the roads of Northern Ireland, bringing the value-added products into the Province, as well as the loss of jobs in concrete manufacturing. The issue is extremely serious to those in Northern Ireland.
  In addition, it must not be forgotten that the average value of raw aggregates is £2.60 a tonne in Northern Ireland, whereas the average value in Great Britain is £6.50 a tonne. Translating the proposed tax into a percentage of value, it would be a 60 per cent. tax in Northern Ireland, but only a 25 per cent. tax in Great Britain. That disproportionate burden presents an extremely serious problem that the Government should address.
  In previous Budgets, the Government have demonstrated in small ways their willingness to consider the problems of those who are on the periphery of the kingdom—the air tax is one example. I can think of a few suitably pragmatic solutions to the obvious problem arising from the aggregates tax. I do not know whether the Government have carried out a thorough analysis of the impact on the industry in Northern Ireland—I shall not embarrass Ministers by asking—but to my knowledge none of their research was conducted in the Province, and I dispute the mythology of the contingent valuation system. I seek some rational consideration of the impact that one-way cross-border trade will have on the economy and job prospects in Northern Ireland. The Government should give at least some assurance that they will consider that problem.
  It would be possible to exempt the Province from the tax and for the Treasury to make a net saving in the process. As a lesser evil, the Government could impose the tax at a rate that fairly reflects the lesser value of raw aggregates in Northern Ireland; that could be done by setting it at a lower rate, or introducing it as a percentage of product value. The Government could at least tax imported value-added products. Those are real options and I urge the Government to consider using them to protect the industry in Northern Ireland while there is still an industry there to protect.
  Over the years, I and other Northern Ireland Members have uttered clear warnings about the effect of the steadily increasing tax on fuel. The Financial Secretary knows perfectly well about the consequences of ignoring those warnings with regard to Northern Ireland, and about the enormous loss to the Treasury that is associated with fuel smuggling, racketeering and thuggery of all sorts. Interestingly, since foot and mouth reared its ugly head, the amount of smuggled fuel seems to have fallen rapidly and has stayed down. People now seem able to seal the border to stop foot and mouth disease getting across, even though they could not seal it to stop murderers crossing. However, I let that go, as it is also a matter for another day.
  The Government have a chance to consider seriously the tax before it comes into operation, and they should give favourable consideration to the impact that it would have in the regions and, in particular, in the Province that I have the honour of representing. They must consider what will happen, unless they can achieve the miraculous feat of persuading the Republic of Ireland Government to introduce the same tax in the Republic, which would put us all on a level playing field. At the end of the day, that is all that we want, but we do not currently have it.

  53
  The tax impacts differently with in Great Britain and impacts on Northern Ireland in particular, but it is a bad tax anyway.
  Mr. Levitt: A few weeks ago, The Mail on Sunday described me as sycophantic. Obviously, it had never heard me talking about aggregates tax. I am co-chairman of the parliamentary minerals group and a member of the GMB, which is the largest trade union in the quarrying industry. The Quarry Products Association was launched in my constituency in 1997. Quarrying is the largest single part of the manufacturing industry in High Peak, which has nine major quarries and many smaller ones. I lay some claim to the second runway at Manchester airport, all 2 million tonnes of which used to be located in my constituency, but were transported by rail to the site.
  In the quarries of High Peak, we have some of the best environmental practices that are used in quarries today. We have some massive quarries that are practically invisible to the outside world. Blue Circle at Hope takes some 70 per cent. of its product out by rail rather than road, and always stays one leap ahead of the law in terms of environmental emissions and so on. Some very good practices are followed not only by Blue Circle, but by Tarmac—formerly Buxton Lime Industries—RMC and Lafarge. The big names are all represented in the area, but unfortunately, so are some of the worst. In particular, a quarry at Moss Rake, next door to Blue Circle, is a disgrace. I shall say more about that very small, but highly visible, quarry in a few moments.
  My views on aggregates tax in general are well known to the Department of the Environment, Transport and the Regions and the Treasury. My hon. Friend the Financial Secretary and I have spent many happy hours debating the issues either publicly or privately. I have tabled parliamentary questions and led delegations in relation to the matter on behalf of the all-party minerals group. I am a sceptic about the aggregates levy, which is why I think it right to consider carefully the possibility of introducing a rebate scheme. That does not lead me to conclude that I shall vote in favour of the amendment, for reasons that I shall explain in a moment, but I think the tax needs improving.
  Mr. Letwin: Will the hon. Gentleman tell us whether he will vote against the clause?
  Mr. Levitt:I shall say exactly which way I shall vote, but the hon. Gentleman will have to wait for that moment to arrive. [Interruption.] I shall not change my position between now and a few minutes' time.
  Let me say why the tax needs improving. I believe that it is based on a very narrow and controversial definition of costs and benefits. It does not discriminate between existing good and bad practice. It makes the assumption that it is only improvements on the current state of play that will be taken into account. Contrary to some claims for it, I do not understand how the tax promotes recycling.
  5.45 pm
  Contrary to the comments of the hon. Member for Somerton and Frome (Mr. Heath), the landfill tax accelerated a move towards recycling. The investment of many companies in recycling building materials, the fact that some parts of the country have a greater demand for
  54
  materials while others have a greater supply, and transport costs that can militate against using recycled materials, even when companies want to, all mean that the industry is already reaching its maximum capacity for recycled materials. The supply of recycled materials is not available in the right place and at the right time to enhance further use, even if an aggregates tax provides an incentive.
  The industry remains unconvinced about the operation of the sustainability fund. I suspect that those who tabled the amendment wished to replace the tax or at least complement it with a system of rebates. At least the sustainability fund has the advantage of being proactive, whereas a rebate scheme would presumably only react to changes. The industry—certainly the Quarry Products Association—is well aware of its responsibilities.
  Nowadays, the industry cannot and must not ignore environmental interests and progress. Quarries are part of and integral to their neighbouring communities, where many of their employees live. The industry recognises that, and the fact that a clean reputation is commercially and hence economically a good asset for quarries. Good practice already exists in environmentally sound quarrying. We must not pretend that it does not, or fail to reward those in the industry who have got their act together in the past and produced some excellent environmental measures.
  Over the years, the Quarry Products Association has presented arguments on behalf of the responsible elements of the industry. However, its strategy has a major flaw. It accounts for only 80 or 90 per cent. of the industry. The remaining 10 per cent, which, by and large, comprises the smaller operators who may be represented by the British Aggregates Association, and, more importantly, those represented by nobody, do the most damage to the environment and the industry's reputation. The hon. Member for Croydon, South (Mr. Ottaway) nods. It is therefore odd that the amendment that he has tabled in the next group would exclude such cowboys and smaller operators from the Bill.
  Mr. Ottaway: I was nodding because I believed that the hon. Gentleman said that small quarries were environmentally effective. We believe them to be so.
  Mr. Levitt: I invite the hon. Gentleman to the Peak district where he can compare large and small quarries. Planning regulations are tighter in national parks than elsewhere, but he will find that the worst offenders, who are prepared not only to leave an unacceptable scar on the landscape but to raise two fingers to health and safety regulations, are the smaller operators. I do not want them excluded from the Bill. However, that is covered in the next group of amendments.
  Mr. Ottaway rose—
  Mr. Levitt: If the hon. Gentleman has something to say about my comments rather than about the next group of amendments, I shall give way.
  Mr. Ottaway: I rise because I do not believe that we shall reach the next group of amendments. The point behind them is that the smaller quarries are in rural areas. They are environmentally effective because they are dotted around the country—
  The Temporary Chairman (Dr. Michael Clark): Order. We cannot debate the next group of amendments simply because the hon. Gentleman believes that we will not reach it. [HON. MEMBERS: "The hon. Member for High Peak (Mr. Levitt) is talking about it."] If the hon. Gentleman does that, I shall check him.
  Mr. Levitt: I will not go further on the question of smaller quarries. I shall do precisely the opposite, in saying that one of the quarries in my constituency, at Tunstead, is visible from the moon. It has the largest quarry face in Europe and is in a very rural area.
  I return to my conclusion. Let me not give the impression that the Government have not been listening. I disagree with those hon. Members who have suggested that they have come up against a brick wall. There has been no such brick wall. Certainly, £1.60 a tonne is less than the amount that it had appeared might be introduced, and imported aggregates being subject to the same levy is an improvement on the original proposals.
  The fact that there are many exemptions will also be welcomed by many industries and many parts of industries, although the provisions could be incredibly complex because quarries such as the Tarmac quarry in my constituency produce materials that might be subject to the aggregate tax in certain circumstances but not in others—perhaps if they were dirty but not if they were clean—and might be subject to it at some time in their life but not at others.
  Mr. Letwin: Will the hon. Gentleman give way?
  Mr. Levitt: I want to draw to a close so that others can speak.
  It is significant that a rebate system of some sort—I do not know what—is, I believe, being discussed by the Government and the major representatives of the industry, those whom I call the responsible elements of the industry. A rebate system must take into account good practice and the current records of the companies. It must encourage progress on environmental measures and apply to the whole of the industry to be affected by the tax. However, I do not think it essential—this is the key—to include such a rebate scheme in the Bill. The sustainability fund is in the Bill, and because how it will be used is not defined, it will be able to be used in a way that could include a rebate system.
  Sir Robert Smith: Will the hon. Gentleman give way?
  Mr. Levitt: I want to conclude, if the hon. Gentleman will excuse me.
  I voted for this part of the Budget, and I shall vote for the Bill at the end of the Committee and on Third Reading, however much I think there are opportunities for improvement. The amendments before us today are at worst mischievous and opportunist, and at best—as in this case—premature and, hopefully, unnecessary. That is my objection to the amendment under discussion.
  It is three years since the aggregates tax was first suggested, and a year before it is to be implemented. Now that the basic arguments against the levy have been lost and the Government have the backing of the House to proceed along the lines that they are, this is not the time to rock the boat. It is the time to tell Ministers that the
  56
  tax is unpopular with large sectors of industry and the work force. The proposal assumes a starting point that all quarries are equally bad; it promises much to the green lobby without providing the capacity to deliver; and it is far from complete in terms of being a genuine and fair package of measures to balance the legitimate concerns on both sides of the debate. However, the opportunity for correcting those issues is still there.
  The way in which the sustainability and environmental clauses relating to the aggregates tax will be implemented will be an essential factor in the way the Government's environmental record is seen. It is important to have a very strong environmental element in the Bill, and in the levy. We must recognise and reward those parts of the industry that have already gone down that road. Without my full enthusiasm, but in opposition to the amendment and in support of the Government's position, I hope, on balance, that the Minister will take the opportunity to redouble his efforts to find an environmentally acceptable way forward in co-operation with the industry.
  Mr. Alasdair Morgan: Unlike other Members who have spoken this evening, I do not have any significantly large quarries in my constituency. However, there is a fair number of small quarries, all of which are run by large operators. The small number of jobs that those quarries provide is important in the rural context, in which it would be significant to lose even half a dozen jobs in a small village or town.
  The amendment deals with environmental protection, which is a worthy objective. However, in my four years in the House, I have not had a single complaint from any of my constituents about any of the quarries operating in my constituency. They are carrying on blithely unaware that their environment needs protection from the quarries in their midst.
  In terms of the amendment, it seems eminently reasonable that if protection measures have been taken, are being taken, or are to be taken in future, there should be some rebate to compensate the companies for so doing. However, if protection has to be put in place and measured, we need something against which to measure it. We need to be able to assess the damage that has allegedly been caused—or could be caused—by the quarries.
  Initially, when I heard about this tax, I thought, in my naïveté, that some assessment or measurement of the damage being caused had been undertaken. It was only after some probing that I came across the measurements to which the hon. Member for East Londonderry (Mr. Ross) referred, relating to the environmental costs and benefits of the supply of aggregates, which are, in effect, a glorified opinion poll asking people how much they would pay to have the quarry on their doorstep taken away.
  That reminds me of how people are asked how much they would pay for organically produced foods in their supermarkets. Of course, when they go to the supermarkets, they do not, by and large, pay the extra money for such goods. They simply take the goods that represent the best buy. That is perhaps what we should be doing with aggregates, rather than listening to this sort of nonsense. Incidentally, no survey was ever undertaken in my constituency. None of my constituents was ever asked whether they felt that any environmental costs were being

  57
  inflicted on them. In fact, only two quarries in the whole of Scotland were surveyed, and—as we heard earlier—none in Northern Ireland. It is nonsense to base any way of assessing environmental damage or environmental protection on such measures.
  The small local quarries to which I have referred produce mainly for local consumption. The aggregates produced in my constituency are not trucked long distances, except perhaps within the constituency itself, because it is more than 100 miles long and about 100 miles wide. If those quarries were closed, the product would have to be brought in from elsewhere, at greater cost to the environment. That cost would not be measured, and nothing in the Bill would prevent it.
  Where there will be environmental benefits, we should help them. However, the best protection for such benefits in my constituency would be to keep open the quarries that are currently producing there. The best way to protect the environment would be to scrap this tax. The second best way might be to pass the amendment.
  Mr. Edward Davey: If the hon. Member for High Peak (Mr. Levitt) was not guilty of sycophancy today, he was certainly guilty of casuistry in developing his case. He also made an error in saying that provision for the sustainability fund was in the Bill. It is not, and that is why the amendment—and new clause 12, tabled by my hon. Friend the Member for Somerton and Frome (Mr. Heath), which we shall debate later—are so important.
  The Liberal Democrats believe that the acceptability of the aggregates levy might live or die by whether an environmental protection scheme and a rebate scheme are incorporated in the provision at the same time. That is what the Government promised. Indeed, in the Red Book of March this year, they reiterated the promise that the rebate scheme would be introduced at the same time as the levy. Yet we are faced with a Bill that contains no such scheme.
  We have been told, when the Minister went before the Environmental Audit Committee, that the Government are finding such a scheme very complex, and difficult to design. What faith are we supposed to have in the Government if they state so openly that they are having problems drawing up such a scheme? Can we believe that they will produce one? Until they do, the aggregates levy should not be allowed to commence. That is why the amendment is so important.
  6 pm
  Sir Robert Smith: Is it not very damaging to the cause of any environmental debate that the Government should be cynical enough to be seen to introduce a tax that purely raises money for the Treasury, when they have not worked out how to give the money back?
  Mr. Davey: I am grateful for that intervention, which brings me to my next point.
  Time and again, Governments—Conservative Governments, and the current Labour Government—have introduced environmental taxes saying that they will give the money back, and have then not fulfilled the pledge. That is indeed very damaging to the cause of the environment. It undermines the faith of consumers, both individual and corporate, who, when they hear future Governments talk
  58
  about environmental tax, will think, "Oh yes—here comes another revenue-raising measure." It also undermines the whole case for environmental taxation, which is very strong if the policy is implemented properly. I do not believe that the Government are implementing it properly in this instance. Introducing the tax without a rebate scheme is bad politics; it is also bad economics.
  I support the amendment. My hon. Friend the Member for Somerton and Frome spoke with great authority; I think that those who read the report of this debate will be impressed by his grasp of the detail, and the Committee is indebted to him.
  Mr. Letwin: I intend to speak for approximately 30 seconds, owing to the constraint imposed by the ridiculous way in which the timetable motion was proposed.
  I agree, broadly, with nearly all that has been said by Members on both sides of the Committee about the desirability of an amendment of this kind if we are to have clause 16 at all, but I shall reserve virtually all my remarks for the extreme desirability of not having the clause in the first place. I shall therefore forgo my opportunity to rehearse all the arguments that have already been advanced so pellucidly.
  The Financial Secretary to the Treasury (Mr. Stephen Timms): I shall be brief and confine my observations primarily to the points made in the amendment, although we have had a rather more wide- ranging discussion. I hope that we shall have further debate once the amendment has been dealt with.
  I do not accept Opposition Members' complaints about the arrangements for the debate. It was Opposition Members who said that they wanted two days' debate on the Floor of the House, and those two days have been provided. They also said that they wanted to discuss the aggregates levy, hydrocarbons and income tax, and all those topics will be discussed over the two days.
  The hon. Member for Kingston and Surbiton (Mr. Davey) suggested that there should be a debate on new clauses at this point, but debates on new clauses always take place at the end of Finance Bill debates. That is not a feature of the timetabling arrangements; it is a long-standing arrangement in itself.
  Mr. Ottaway: Will the Minister give way?
  Mr. Timms: I will, but I want to be brief, given the other matters on the agenda.
  Mr. Ottaway: I shall certainly be brief.
  The Minister was present for my point of order at the beginning, when I pointed out that the instructions on procedures of the House written by the Clerks made it clear that new clauses could be debated on the Floor of the House.
  Mr. Timms: In the case of Finance Bills, new clauses are taken at the end of the proceedings. That has always been the case.
  The hon. Member for Somerton and Frome (Mr. Heath) made a number of wide-ranging points about, for instance, scalpings and pre-cast concrete blocks. As both issues are

  59
  dealt with in later amendments, I shall not go into detail now. He also talked about the Quarry Products Association package. At the time of last year's Budget, we had got as far as a proposal that was not supported by a significant proportion of the industry, and that was likely to be open to legal challenge from those in charge of smaller quarries who objected to the package. Because the package was not viable at that stage, we decided to proceed with the levy.
  The levy will directly help to address issues raised by the hon. Gentleman and others, in three ways. It will ensure that the price of aggregates reflects the environmental costs of obtaining aggregates through quarrying; it will give an additional price advantage to recycled aggregates; and it will provide resources for a sustainability fund.
  Mr. Rogers: My hon. Friend said that the levy is partly intended to cover the environmental cost of extraction. Can he quantify that environmental cost, say, per tonne?
  Mr. Timms: I can indeed. The environmental costs and benefits of aggregates have been the subject of extensive research published by the Department of the Environment, Transport and the Regions, which my hon. Friend may not have had a chance to see. It is probably the most authoritative study of its kind in the world. As the hon. Member for East Londonderry (Mr. Ross) said, it is a contingent valuation methodology study. It concludes that the average environmental cost is £1.80 per tonne. We have taken a prudent and cautious view, and gone for a levy of £1.60 per tonne.
  The third way in which the levy will help directly to address the issues relates, as I said, to the sustainability fund, which will deal with the impact of quarrying in the communities that are affected. Initially, it will amount to £35 million a year.
  The hon. Member for Somerton and Frome feared that some responses to the consultation had not been taken into account in the consultation summary. Owing to difficulties, some submissions, including the one from Somerset that he mentioned, did not reach officials in time to be included in the summary. However, I can reassure him that all responses received, including those received after the deadline, will be taken fully into account in decisions on how the sustainability fund will be used, and that those decisions will be announced in due course.
  My hon. Friend the Member for Rhondda (Mr. Rogers) argued that there should be further regulation. The Government are considering revising mineral planning guidance to improve the sustainability of quarrying for aggregates, and to reduce further the environmental impacts of extraction, but it is right to address cost issues as well. He spoke of a tax on jobs, but this is the opposite: the package will use the proceeds primarily to reduce employers' national insurance contributions, thus reducing the tax on jobs.
  The hon. Member for East Londonderry suggested that the package was not revenue-neutral, but it is, for the very reason that I have just given. The proceeds of the levy will be used to reduce employers' national insurance
  60
  contributions, and also for the sustainability fund. This is not a revenue-raising measure for the Treasury; there will be no net benefit for the Treasury.
  Sir Robert Smith: Does the Minister accept, however, that the package is in no way region-neutral? The charge will be levied in areas containing quarries, but the money will not necessarily go back to those communities.
  Mr. Timms: Certainly, the levy will not be neutral for particular communities, but it will be neutral nationally. It has been suggested that this is a revenue-raising measure; I simply wanted to point out that it is, in fact, revenue-neutral.
  The points about Northern Ireland raised by the hon. Member for East Londonderry will be dealt with in a later debate, but I will say now that I was pleased to hear from him that the incidence of fuel smuggling across the land border had fallen. Hon. Members will want to raise other points about Northern Ireland when we reach the relevant part of the Bill.
  The hon. Gentleman suggested that other countries were not proceeding with levies of this kind. That is not the case: there are already aggregates levies in France—one of the countries that he mentioned—Sweden and Denmark. I understand that the Netherlands is proceeding with the proposals that it has drawn up.
  My hon. Friend the Member for High Peak (Mr. Levitt) has taken a close interest in the matter. As he said, we have discussed it in a lively way on a number of occasions. Recent research published by DETR indicates that there is significant scope for additional use of recycled aggregates. The figures show that about 22.7 million tonnes of recycled aggregates are being used a year and that another 12.7 million tonnes have potential for recycling, so over half as much again is available. There is therefore a good deal of mileage in improving the price attractiveness of recycling in the way that the levy does. The figures that I have referred to do not include the use of china clay spoil, to which the hon. Member for Somerton and Frome referred, so there is a lot of scope there.
  The amendment seeks in effect to delay implementation of the levy to allow development of a rebate scheme under which persons responsible for subjecting aggregate to commercial exploitation who undertake environmental protection measures would benefit from a rebated rate of aggregates levy. That is rather narrower than a number of the points that the hon. Member for Somerton and Frome made. The proposal is that the amount of the rebate would be proportionate to the extent of the environmental improvement measures.
  We indicated in the Budget that we were attracted in principle to applying a lower rate of levy to aggregate extracted from quarries with the lowest environmental costs—so-called "green quarries." However, in discussing that matter with the industry, I have always made it clear that developing such a scheme would not be straightforward. It certainly cannot be put in place before the implementation of the levy next year. There are a number of difficulties to be overcome. There will be practical difficulties in relation to assessing compliance, defining environmental performance, the treatment of imports, EU state aid rules and UK competition policy.
  We will continue to explore how we can overcome those difficulties, but it will take some time. In any case, the actual terms of a legislative clause cannot be

  61
  determined at this stage. I am not quite sure what a "scheme of rebates" linked to "environmental protection measures" means. It was not spelled out in the hon. Gentleman's speech, but something along those lines might be one way to do it. There may be other ways, too. For example, for it to be effective, we would need to ensure that any reduced rate scheme benefited quarries with the lowest actual environmental costs. It may be that those are linked directly to location: a quarry that is well managed, but located in a densely populated area or an area of outstanding natural beauty may still have a greater impact on the environment than one that creates a lot of dust and noise, but is located in a remote, sparsely populated area. Those are all issues of which we need to take account.
  The amendment could not be implemented as it stands. It would require at the very least a significant delay in the implementation of the levy. We have had a lengthy period of preparation for the levy and I would not support a delay at this stage. I therefore hope that hon. Members will not support the amendment.
  A number of hon. Members have queried the benefits of the aggregates levy. I disagree with them. There are clear environmental benefits from the introduction of the levy. I am glad that others support that view. For example, last month, the Wildlife and Countryside Link wrote to me as the liaison body for a coalition of organisations and with the support of the Council for the National Parks and the Council for the Protection of Rural England. It expressed its strong support for the Government's proposed aggregates levy:
  "The environmental damage which the Aggregates Levy is designed to address is occurring now. WCL therefore urges the Government to introduce the Aggregates Levy as soon as possible".
  I agree.
  Mr. David Heath: The hon. Member for High Peak (Mr. Levitt) made a convincing speech, used all the right arguments and then came out with completely the wrong conclusion. The Minister used neither the right arguments nor reached the right conclusions. He totally failed to convince and I must ask the Committee's opinion on the amendment.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 149, Noes 268.

  Division No. 186]

  [6.15 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Brooke, Rt Hon Peter

  Amess, David

  Bruce, Ian (S Dorset)

  Ancram, Rt Hon Michael

  Burnet, John

  Arbuthnot, Rt Hon James

  Burns, Simon

  Atkinson, Peter (Hexham)

  Burstow, Paul

  Baldry, Tony

  Campbe11, Rt Hon Menzies (NE Fife)

  Beith, Rt Hon A J

  Bell, Martin (Tatton)

  Clappison, James

  Bercow, John

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Beresford, Sir Paul

  Blunt, Crispin

  Clifton—Brown, Geoffrey

  Boswell, Tim

  Cormack, Sir Patrick

  Bottomley, Peter (Worthing W)

  Cotter, Brian

  Bottomley, Rt Hon Mrs Virginia

  Curry, Rt Hon David

  Brady, Graham

  Davey, Edward (Kingston)

  Brake, Tom

  Davies, Quentin (Grantham)

  Brand, Dr Peter

  Davis, Rt Hon David (Haltemprice)

  Brazier, Julian

  Day, Stephen

  Breed, Colin

  Dunca, Alan

  62

  Evans, Nigel

  Michie, Mrs Ray (Argyll & Bute)

  Faber, David

  Morgan, Alasdair (Galloway)

  Fallon, Michael

  Norman, Archie

  Fearn, Ronnie

  Oaten, Mark

  Flight, Howard

  O'Brien, Stephen (Eddisbury)

  Foster, Don (Bath)

  Öpik, Lembit

  Fraser, Christopher

  Ottaway, Richard

  Garnier, Edward

  Paice, James

  Gibb, Nick

  Paterson, Owen

  Gill, Christopher

  Pickles, Eric

  Gillan, Mrs Cheryl

  Portillo, Rt Hon Michael

  Green, Damian

  Prior, David

  Greenway, John

  Randall, John

  Grieve, Dominic

  Redwood, Rt Hon John

  Gummer, Rt Hon John

  Rendel, David

  Hamilton, Rt Hon Sir Archie

  Robathan, Andrew

  Hammond, Philip

  Robertson, Laurence (Tewk'b'ry)

  Harvey, Nick

  Roe, Mrs Marion (Broxbourne)

  Hawkins, Nick

  Ross, William (E Lond'y)

  Hayes, John

  Ruffley, David

  Heald, Oliver

  St Aubyn, Nick

  Heath, David (Somerton & Frome)

  Salmond, Alex

  Heathcoat—Amory, Rt Hon David

  Sanders, Adrian

  Horam, John

  Sayeed, Jonathan

  Howard, Rt Hon Michael

  Shepherd, Richard

  Hughes, Simon (Southwark N)

  Simpson, Keith (Mid—Norfolk)

  Hunter, Andrew

  Soames, Nicholas

  Jack, Rt Hon Michael

  Spicer, Sir Michael

  Jenkin, Bernard

  Stanley, Rt Hon Sir John

  Johnson Smith, Rt Hon Sir Geoffrey

  Steen, Anthony

  Streeter, Gary

  Keetch, Paul

  Swayne, Desmond

  Key, Robert

  Syms, Robert

  King, Rt Hon Tom (Bridgwater)

  Tapsell, Sir Peter

  Kirkbride, Miss Julie

  Taylor, Ian (Esher & Walton)

  Kirkwood, Archy

  Taylor, John M (Solihull)

  Laing, Mrs Eleanor

  Taylor, Matthew (Truro)

  Lait, Mrs Jacqui

  Taylor, Sir Teddy

  Lansley, Andrew

  Thomas, Simon (Ceredigion)

  Leigh, Edward

  Tonge, Dr Jenny

  Letwin, Oliver

  Tredinnick, David

  Lewis, Dr Julian (New Forest E)

  Trend, Michael

  Lidington, David

  Tyler, Paul

  Lilley, Rt Hon Peter

  Tyrie, Andrew

  Lloyd, Rt Hon Sir Peter (Fareham)

  Viggers, Peter

  Llwyd, Elfyn

  Waterson, Nigel

  Luff, Peter

  Webb, Steve

  Lyell, Rt Hon Sir Nicholas

  Wells, Bowen

  McCrea, Dr William

  Whitney, Sir Raymond

  MacGregor, Rt Hon John

  Whittingdale, John

  McIntosh, Miss Anne

  Wigley, Rt Hon Dafydd

  MacKay, Rt Hon Andrew

  Willetts, David

  Maclean, Rt Hon David

  Willis, Phil

  McLoughlin, Patrick

  Yeo, Tim

  Malins, Humfrey

  Young, Rt Hon Sir George

  Maples, John

  Mates, Michael

  Tellers for the Ayes:

  Mawhinney, Rt Hon Sir Brian

  Sir Robert Smith and

  May, Mrs Theresa

  Mr. Bob Russell.

  NOES

  Ainger, Nick

  Benn, Hilary (Leeds C)

  Ainsworth, Robert (Cov'try NE)

  Benn, Rt Hon Tony (Chesterfield)

  Allen, Graham

  Bennett, Andrew F

  Anderson, Rt Hon Donald (Swansea E)

  Benton, Joe

  Bermingham, Gerald

  Armstrong, Rt Hon Ms Hilary

  Best, Harold

  Ashton, Joe

  Betts, Clive

  Atkins, Charlotte

  Blackman, Liz

  Austin, John

  Blears, Ms Hazel

  Bailey, Adrian

  Blizzard Bob

  Barnes, Harry

  Boateng, Rt Hon Paul

  Barron, Kevin

  Borrow, David

  Battle, John

  Bradley, Rt Hon Keith (Withington)

  Bayley, Hugh

  Begg, Miss Anne

  Bradshaw, Ben

  63

  Brinton, Mrs Helen

  Hain, Peter

  Brown, Russell (Dumfries)

  Hanson, David

  Browne, Desmond

  Healey, John

  Buck, Ms Karen

  Hendrick, Mark

  Burden, Richard

  Hepbum, Stephen

  Butler, Mrs Christine

  Heppell, John

  Campbell, Alan (Tynemouth)

  Hewitt, Ms Patricia

  Campbell, Ronnie (Blyth V)

  Hill, Keith

  Campbell—Savours, Dale

  Hinchliffe, David

  Cann, Jamie

  Hodge, Ms Margaret

  Caplin, Ivor

  Hoon, Rt Hon Geoffrey

  Casale, Roger

  Hope, Phil

  Caton, Martin

  Hopkins, Kelvin

  Chapman, Ben (Wirral S)

  Howarth, Rt Hon Alan (Newport E)

  Chaytor, David

  Howells, Dr Kim

  Clapham, Michael

  Hughes, Ms Beverley (Stretford)

  Clark, Rt Hon Dr David (S Shields)

  Hughes, Kevin (Doncaster N)

  Clarke, Charles (Norwich S)

  Humble, Mrs Joan

  Clarke, Eric (Midlothian)

  Hurst, Alan

  Clarke, Rt Hon Tom (Coatbridge)

  Hutton, John

  Clelland, David

  Iddon, Dr Brian

  Clwyd, Ann

  Illsley, Eric

  Coffey, Ms Ann

  Jackson, Ms Glenda (Hampstead)

  Coleman, lain

  Jackson, Helen (Hillsborough)

  Colman, Tony

  Jamieson, David

  Connarty, Michael

  Jenkins, Brian

  Cook, Frank (Stockton N)

  Johnson, Alan (Hull W & Hessle)

  Cooper, Yvette

  Johnson, Miss Melanie (Welwyn Hatfield)

  Corbett, Robin

  Corbyn, Jeremy

  Jones, Rt Hon Barry (Alyn)

  Corston, Jean

  Jones, Helen (Warrington N)

  Crausby, David

  Jones, Jon Owen (Cardiff C)

  Cryer, John (Homchurch)

  Jones, Martyn (Clwyd S)

  Cummings, John

  Jowell, Rt Hon Ms Tessa

  Dalyell, Tam

  Keen, Alan (Feltham & Heston)

  Darvill, Keith

  Keen, Ann (Brentford & Isleworth)

  Davey, Valerie (Bristol W)

  Kelly, Ms Ruth

  Davies, Rt Hon Denzil (Llanelli)

  Kennedy, Jane (Wavertree)

  Davies, Geraint (Croydon C)

  Khabra, Piara S

  Dean, Mrs Janet

  Kilfoyle, Peter

  Denham, Rt Hon John

  King, Andy (Rugby & Kenilworth)

  Dismore, Andrew

  Lawrence, Mrs Jackie

  Dobbin, Jim

  Lepper, David

  Dobson, Rt Hon Frank

  Leslie, Christopher

  Donohoe, Brian H

  Levitt, Tom

  Doran, Frank

  Lewis, Ivan (Bury S)

  Dowd, Jim

  Linton, Martin

  Drew, David

  Lloyd, Tony (Manchester C)

  Eagle, Angela (Wallasey)

  Lock, David

  Eagle, Maria (L'pool Garston)

  McCabe, Steve

  Edwards, Huw

  McCartney, Rt Hon Ian (Makerfield)

  Efford, Clive

  Ellman, Mrs Louise

  McDonnell, John

  Ennis, Jeff

  McFall, John

  Field, Rt Hon Frank

  McGuire, Mrs Anne

  Fisher, Mark

  MsIsaac, Shona

  Fitzpatrick, Jim

  McKenna, Mrs Rosemary

  Flint, Caroline

  Mackinlay, Andrew

  Foster, Rt Hon Derek

  McNulty, Tony

  Foster, Michael Jabez (Hastings)

  MacShane, Denis

  Foster, Michael J (Worcester)

  Mactaggart, Fiona

  Gapes, Mike

  McWalter, Tony

  Gardiner, Barry

  McWilliam, John

  George, Rt Hon Bruce (Walsall S)

  Mahon, Mrs Alice

  Gerrard, Neil

  Mandelson, Rt Hon Peter

  Gibson, Dr Ian

  Marsden, Gordon (Blackpool S)

  Gilroy, Mrs Linda

  Marshall, David (Shettleston)

  Godsiff, Roger

  Marshall, Jim (Leicester S)

  Goggins, Paul

  Marshall—Andrews, Robert

  Golding, Mrs Llin

  Martlew, Eric

  Gordon, Mrs Eileen

  Maxton, John

  Griffiths, Jane (Reading E)

  Meacher, Rt Hon Michael

  Griffiths, Nigel (Edinburgh S)

  Michael, Rt Hon Alun

  Griffiths, Win (Bridgend)

  Michie, Bill (Shef'ld Heeley)

  Grocott, Bruce

  Milbum, Rt Hon Alan

  Grogan, John

  Miller, Andrew

  64

  Mitchell, Austin

  Smith, Rt Hon Andrew (Oxford E)

  Moffatt, Laura

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Moonie, Dr Lewis

  Morgan, Ms Julie (Cardiff N)

  Smith, Llew (Blaenau Gwent)

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Soley, Clive

  Southworth, Ms Helen

  Morris, Rt Hon Sir John (Aberavon)

  Squire, Ms Rachel

  Starkey, Dr Phyllis

  Mountford, Kali

  Steinberg, Gerry

  Mowlam, Rt Hon Marjorie

  Stevenson, George

  Mudie, George

  Stewart, David (Invemess E)

  Murphy, Denis (Wansbeck)

  Stewart, Ian (Eccles)

  Naysmith, Dr Doug

  Stinchcombe, Paul

  O'Brien, Bill (Normanton)

  Stoate, Dr Howard

  O'Brien, Mike (N Warks)

  Strang, Rt Hon Dr Gavin

  Olner, Bill

  Straw, Rt Hon Jack

  Organ, Mrs Diana

  Stuart, Ms Gisela

  Pearson, Ian

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Pendry, Rt Hon Tom

  Pike, Peter L

  Taylor, David (NW Leics)

  Pond, Chris

  Temple—Morris, Peter

  Pope, Greg

  Thomas, Gareth R (Harrow W)

  Pound, Stephen

  Timms, Stephen

  Prentice, Ms Bridget (Lewisham E)

  Tipping, Paddy

  Prentice, Gordon (Pendle)

  Todd, Mark

  Prescott, Rt Hon John

  Trickett, Jon

  Primarolo, Dawn

  Truswell, Paul

  Prosser, Gwyn

  Turner, Dennis (Wolverh'ton SE)

  Quinn, Lawrie

  Turner, Dr Desmond (Kemptown)

  Radice, Rt Hon Giles

  Turner, Neil (Wigan)

  Raynsford, Rt Hon Nick

  Twigg, Derek (Halton)

  Reed, Andrew (Loughborough)

  Twigg, Stephen (Enfield)

  Robertson, John (Glasgow Anniesland)

  Tynan, Bill

  Walley, Ms Joan

  Roche, Mrs Barbara

  Wareing, Robert N

  Rogers, Allan

  Watts, David

  Rooker, Rt Hon Jeff

  White, Brian

  Rooney, Terry

  Wicks, Malcolm

  Ross, Ernie (Dundee W)

  Williams, Rt Hon Alan (Swansea W)

  Rowlands, Ted

  Roy, Frank

  Wills, Michael

  Ruddock, Joan

  Winterton, Ms Rosie (Doncaster C)

  Russell, Ms Christine (Chester)

  Woodward, Shaun

  Ryan, Ms Joan

  Woolas, Phil

  Salter, Martin

  Worthington, Tony

  Savidge, Malcolm

  Wright, Anthony D (Gt Yarmouth)

  Sedgemore, Brian

  Sheldon, Rt Hon Robert

  Tellers for the Noes:

  Simpson, Alan (Nottingham S)

  Mr. Mike Hall and

  Skinner, Dennis

  Mr. Gerry Sutcliffe.

  Question accordingly negatived.
  Mr. Ottaway: I beg to move amendment No. 9, in page 12, line 31, at end insert—
  '(4A) The first 250,000 tonnes of taxable output per taxable person in each accounting period shall be exempt from the levy; and for the purposes of this subsection, where a taxable person carries on business in partnership, that partnership shall be the taxable person for the purposes of the exemption.'.
  The purpose of the amendment is to help the small quarry operator—the type of operator described by the hon. Member for High Peak (Mr. Levitt) as a "cowboy". I do not accept that description, because there are many good small operators and that was an unwarranted slur on them.
  Mr. Levitt: Will the hon. Gentleman give way?
  Mr. Ottaway: I am sorry, but the timetable motion is so tight that I intend to be very brief.
  Five large companies control 80 per cent. of the aggregates market and 90 per cent. of the market in ready-mixed asphalt. The existence of the small quarry

  65
  operators maintains competition, leads to environmental improvements and provides jobs in remote rural areas, where the small operators are located. The amendment provides that the first 250,000 tonnes of aggregate would be exempt from the levy. The principle is the same as applies in personal taxation, with tax-free allowances, and in the small business rate of corporation tax, which is lower at the bottom end of the scale.
  The aggregates levy will make it harder for the smaller operators to compete. They tend to be located in the remoter rural areas, and the major operators are mainly in the south of England, where aggregates earn £12.50 a tonne. In remote areas, such as Scotland, the value of aggregates is £2.50 a tonne. The flat rate levy wi11 therefore be 12 per cent. in the south-east but more than 50 per cent. in remote rural areas. The hon. Member for Somerton and Frome (Mr. Heath) mentioned secondary aggregates; they can be worth as little as £1 a tonne, which would make the aggregates levy a huge 160 per cent.
  The second factor that will make life more difficult for the small operators is that the majors also tend to control the downstream operations in ready-mix and in asphalt. The majors will load the levy on to those products, but that option will not be available to the smaller operators. The third factor is the bureaucracy that the levy will involve. Some of the product mined will be used as aggregate for construction, but some will be used as an industrial mineral and will not attract the levy. That will lead to complex bookkeeping arrangements. In-house products, such as recycled or reclaimed products, can be blended with mined product, which will also lead to complications in bookkeeping. Complex computer systems will be needed, and the small operators doubt whether they can afford the additional cost of the software.
  The result will be that the small operators will go out of business. Jobs will be lost in rural areas and the big companies will move in and finish off the smaller guys, as they have been trying to do for some time. The environmental consequences will be serious, because customers will have to travel further to get their aggregate and it will have to be delivered further afield, with consequences for transport systems. Fewer, larger quarries will result, which will be both environmentally and commercially detrimental.
  Most small operators tend to be family-run organisations with limited staff and resources. The burden of regulation is tough enough for them, and the levy will be the last straw. The consequence will be job losses and environmental damage.
  Mr. Levitt: I wish to put it on record that I did not say that all small quarry operators were bad. However, bigger operators, which can invest in environmental measures, tend—in my experience of the quarries in my constituency—to have a better record. Some of the smaller operators are more likely to flout planning regulations and to take the least care of the environment. They also put health and safety regulations to one side and refuse trade union recognition Therefore, the special pleading on behalf of smaller operators is not justified. I would be happy to be proved wrong, and I will happily visit all the quarries in the constituency of the hon.
  66
  Member for Croydon, South (Mr. Ottaway) if he will visit all the quarries in High Peak—but I have no hesitation in opposing the amendment.
  Mr. Christopher Gill: I wish to put on record my opposition to the tax, and to express my great disappointment that the voluntary scheme proposed by the Quarry Products Association has been ignored in favour of this huge cost imposition. It will be a tax on jobs, which are very valuable in rural areas. Of course, the economy in those areas is already suffering badly as a result of the Government's mishandling of the problems caused by foot and mouth and the downturn in the agriculture sector.
  The tax will impose an additional cost burden on every construction project, from roads, railways and port facilities to housing developments, property repairs and home extensions. There are several quarries in Ludlow, some run by small private companies and some by large plcs. They quarry sand, gravel, limestone and granite. In particular, stone from Clee hill is sent to south Wales, where it is converted into rockwool, an insulating material. I hope that the Government will take some notice of my concerns about the effect on the valuable and irreplaceable jobs in my constituency, which will be prejudiced by this unnecessary and unjustifiable tax.
  Mr. Timms: I hope that the House will not accept the amendment. The package is not a tax on jobs. Indeed, I made the point earlier that it is the opposite, because the bulk of the proceeds from the levy will go on a reduction in employer national insurance contributions. The hon. Member for Ludlow (Mr. Gill) mentioned the new deal proposal by the Quarry Products Association, but one of the reasons why that was not a viable package in the end was the opposition to it from the smaller quarries, which argued that
  "The QPA new deal has been tabled as an industry-funded alternative to taxation, but heavily discriminates against the smaller independent operator."
  It is precisely the smaller quarries that felt that the package should not go ahead.
  As my hon. Friend the Member for High Peak (Mr. Levitt) rightly said, the levy is being introduced to deal with the significant environmental costs associated with quarries, and applies to all aggregates extracted from any quarry, including the first 250,000 tonnes in an accounting period to which the amendment refers. Typically, there will be four accounting periods in a year, so we are talking about quarries producing up to 1 million tonnes a year. Not only small quarries but some of significant size would benefit, so the amendment is not targeted quite as the hon. Member for Croydon, South (Mr. Ottaway) intended.
  A de minimis limit is in any case not usual with a specific, one-stage, non-deductible tax. Another serious difficulty about the amendment is that such an exemption would be seriously anti-competitive for the UK as a whole, because under EU law all imports would have to be treated as below the de minimis level and therefore exempt from the levy, which would obviously have a very detrimental impact on UK quarries that paid the levy.
  I hope that the hon. Gentleman will withdraw the amendment.
  Mr. Ottaway: I am grateful for that response, and beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Question proposed, That the clause stand part of the Bill.
  Mr. Letwin: In a rational world, we would now be beginning a significant debate on the clause, which is the single most important clause in the Bill—not a great dignity in this case, but true. However, because of the way in which the Government have timetabled the proceedings, that option is no longer available. Moreover, we will never get to debate the serious amendments tabled to clauses 17 and 18, which are the second and third most important clauses in the Bill. I do not think that there is any previous example of a Government so determined to ram through a half-baked Bill that they fail to allow any time whatever to debate its most important parts.
  To do Ministers justice, I suspect that this is a comedy of errors rather than an attempt to undermine parliamentary sovereignty. I fear that that is also true of the whole of the clause and the tax that it introduces. There are some half-good ideas sitting at the back of somebody's mind, but they have not been brought to the forefront of the lobes of the Ministers and officials involved. Still less have they been translated into a coherent regime. That is because, although it has taken three years in the gestation, the whole scheme bears all the appearance of having been concocted at the last moment without the necessary consultation.
  This is above all a tax that demanded a Special Standing Committee procedure, which would have enabled the Financial Secretary to discuss properly with the industry how it could be implemented so as to achieve the Government's aims for it. Nothing of that kind has been done, as became very clear in the response to the debate on amendment No. 4. The tax was produced by the wrong procedure, and is therefore the wrong tax.
  Mr. Edward Davey: The hon. Gentleman is making an important point. Does he agree that it would have been possible for the Government to introduce an aggregates tax with a better rebate scheme, and that it would still be possible for them, having heard the debate, to design a tax that might gain wider support?
  6.45 pm
  Mr. Letwin: Yes. We know that it would have been possible because the climate change levy, which my colleagues and I inveighed against at length, was none the less much better designed than this tax in just that respect: at least it was so constructed that it aimed to allow the arbitrary powers of the Department of the Environment, Transport and the Regions to be brought to bear on that part of industry that the Government wanted, as they put it, to reform its ways. I objected to that tax, and I object to this one. I object to that manner of proceeding, but at least it would have been a rational and coherent manner of proceeding—objectionable but rational. This tax is objectionable and irrational, because it has been wrongly introduced, just as the hon. Gentleman said.
  I want to dwell on a feature of clause 17 that we will not have time to debate. The tax is amazingly complicated to enforce. The hon. Member for Somerton and Frome (Mr. Heath) referred to the problem with scalpings,
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  and there are many similar problems, as exposed in the amendments tabled to clause 17. It is extraordinarily difficult to disentangle one item that is being extracted from a quarry from another.
  It is not only a matter of Ministers having moved too fast. Even were they to have moved at a reasonable pace, they probably would not have been able to design an easily enforced version of the tax. One of the principles of taxation should be that it is so clear that it is easy to enforce. Many theoreticians thought that the selective employment tax was wonderful. Alas, it had disastrous consequences, because it was almost impossible to enforce in any rational way. This bears all the hallmarks of being another such tax.
  At best, the tax will be highly intrusive, because the machinations required for the inspectors to enforce it properly will be horrible. Most businesses already resent the appearance of Her Majesty's Customs and Excise at their premises, partly for good reasons and partly for bad. One good reason is that they find it a distraction from their ordinary business. The distraction involved in a normal VAT inspection will be as nothing to the distraction involved in the heroic efforts of inspectors from Her Majesty's Customs and Excise to turn themselves into geological experts who can disentangle one extracted item from another, when none of the quarry operators involved find it easy to do so.
  Far worse, this comedy of errors is in fact a tragicomedy, because the Government, for some unfathomable reason, have ignored—they cannot have forgotten it, because it has been pointed out to them so frequently—the fact that, as the hon. Member for East Londonderry (Mr. Ross) said, the way in which the tax has been designed, although an improvement on the climate change levy in the respect that it allows for credits against exports and taxes imports, means that it does not tax the form of import that has been incorporated in pre-cast concrete, for example. That will prove a disastrous blow for the aggregates industry in Northern Ireland and a significant blow for parts of the industry in southern England that will face severe and unsustainable price competition from Normandy and elsewhere in northern France.
  I do not know why the Government have chosen needlessly to expose British industry in that way, putting at risk between 4,000 and 10,000 jobs, depending on which estimate one takes, but it is clear to me that it can be no part of a rational economic policy to design a tax with that effect. As the Bill is drafted, it has that effect ineluctably. Had the Government been willing to accept the exemptions proposed in amendment No. 4, some firms at least would have been able to avoid the effect, but as it is none can.
  Mr. Timms: I should like to challenge the hon. Gentleman on his point about concrete blocks. As I understand it, the current proportion of consumption in the United Kingdom of concrete blocks supplied from abroad is 1 per cent. What does the hon. Gentleman think that it will be once the levy has been introduced? His point is entirely vacuous.
  Mr. Letwin: I am surprised, because although I often disagree with the Financial Secretary, he almost always makes a powerful argument. As I understand the matter,

  69
  having talked, as he must have done, to the Quarry Products Association and the British Aggregates Association—before I go any further, I should declare an interest, because I may have one that I am not aware of—there will be the ability to import a series of substances made up from aggregates from south of the border in Northern Ireland, and concrete blocks from Normandy and northern France by ship, to substitute for what are currently used as building materials because of a huge inbuilt price advantage. If I remember correctly, the equivalent tax in France is about 5p per tonne. If there is a price advantage of £1.55 per tonne we can expect to see a change in the structure of the industry and of demand in the UK. That point must have been made to the Financial Secretary.
  Mr. Timms: The hon. Gentleman will recognise that significant transport costs must be set off against any tax differential that might exist. That is why I think that his suggestion that the introduction of the levy will result in large job losses is entirely unfounded.
  Mr. Letwin: Industry experts have gone through the cost structure of transport with us, which was alluded to earlier, and have demonstrated to our satisfaction that where demand for these products is appropriately located, as in Northern Ireland and on the south coast, and where there is a readily available means of transport, whether it be by rail or road or ship, the transport costs are not prohibitive and there will remain a significant cost advantage. If the Financial Secretary has figures showing the contrary, surely he would have been able to persuade the industry of that fact by now. There is no reason for the industry to make this argument if it is not true, because the Financial Secretary has already taken the trouble to exempt exports and imports otherwise. Surely he could now do what the industry asks in relation to fabrication.
  Mr. Timms: I will be meeting industry representatives next week and will be discussing that with them. There is an issue to do with Northern Ireland that we will come to later. However, I do not think that the hon. Gentleman's point about supplies from France to southern England is a serious concern.
  Mr. Letwin: I very much hope that the Financial Secretary is right and that he will be able to persuade the industry of that, although I am not persuaded. We will indeed come back to the question of Northern Ireland.
  I turn now to an element of mythology, which the Financial Secretary has been assiduous in peddling, if I may use a derogatory term. He and his colleagues exposed the myth in the Budget. The hon. Gentleman maintains, as he did with the climate change levy—and I do not doubt his honesty in maintaining it, but it is a myth—that it is a fiscally neutral measure. Of course, he is right—on day one, it is a fiscally neutral measure. The landfill tax was also fiscally neutral when it was introduced. This Budget increased the landfill tax. Did it increase the rebate of national insurance contributions likewise? No.
  Will we have an assurance from Ministers this evening that at no time during the lifetime of this Government, or of any Government for whom they are responsible, will there be an increase in this tax without a commensurate increase in the rebate on national insurance contributions? If we get that commitment, I will withdraw my assertion.
  70
  However, I doubt that we will. The Government have shown through their actions on the landfill tax that they have no inhibitions about increasing such taxes and removing the day one fiscal neutrality.
  If I made you the grand offer, Dr. Clark, to engage in a fiscally neutral transaction with you in which you gave me a pint of beer and I gave you an equivalent amount of whisky, but you promised me that you would give me as much beer in all the subsequent years of your life as I demanded, without my making an equivalent promise to you in terms of whisky, you would be a mug. That is what the British public will be if they are led to believe that this is a fiscally neutral measure. It is nothing of the kind. Naturally, you would not engage in such a transaction, Dr. Clark. There is no reason for anyone to believe that this is a fiscally neutral measure; it is a platform for engaging in tax raising.
  The Government have gone to considerable public expense—I cannot recall the exact figure, but I suspect that it is about £100,000—to produce a magnificent report. The Financial Secretary referred to it—indeed, he waved it around a moment ago. This magnificent report purports to show that the figure of £1.60 a tonne—or, rather, a slightly higher figure, once we allow for some fancy manoeuvres—is justified as the tax in this case because of the optimality rule. That rule states that one must always tax at exactly the cost of the externalities—the cost of the damage done.
  This is a really splendid thesis, and it is absolutely true. However, it relies on accumulating a group of human beings who are geniuses and are sufficiently talented to find out the cost of the damage. Alas, in the length and breadth of the United Kingdom, no such geniuses were to be found by Her Majesty's Government. Instead, they employed some ordinary human beings in the form of very intelligent, highly qualified consultants. You may not believe this, Dr. Clark, because it sounds as though I am making it up, but these consultants asked a large number of people who lived somewhere near quarries in various places how much they would pay, if they were given the option, to avoid having various things near them, including quarries and the trucks associated with them.
  This is a marvellous idea. We can just imagine these earnest seekers after truth wandering around the highways and byways of the areas of outstanding natural beauty where quarries are to be found and asking Mrs. Jones and Mrs. Smith exactly, to the nearest 5p or so, how much they would be prepared to pay to avoid having a quarry 300 yd from their home. Mrs. Jones and Mrs. Smith gave them the answers; they added everything up and produced, for about £100,000, a huge report for the Financial Secretary and the Department of the Environment, Transport and the Regions, which has been taken very seriously. I do not know at which point "Yes, Minister" takes over from serious government, but it took over long before the report was produced. The fact is that optimality is as much a myth as fiscal neutrality.
  We come now to the ghastly fact that this tax will be enforced by Her Majesty's Customs and Excise, notwithstanding its complexity and irrationality, and notwithstanding the fact that it will not achieve any serious environmental effect because there is no rebate scheme, which would have been necessary for it to have such an effect. There is already a serious problem about the arbitrary powers that have been allocated to Her Majesty's Customs and Excise. We spoke about that at

  71
  tedious length during the previous Finance Bill. The Conservative party has put forward a 10-point plan, which is just the beginning—the tip of the iceberg—of an attempt to constrain those arbitrary powers. Yet clause 16 provides a huge extension of the arbitrary powers of Her Majesty's Customs and Excise.
  I shall give just one example, which, again, we will not be allowed to debate. If someone appeals to the commissioners—and the system is designed so that one can appeal without having to go to court and needing lawyers—and they do not give an answer after a certain period, what does this magnificent Bill provide? One might think that the appeal would be won by the appellant if the commissioners did not reply. Not at all. Under the Bill, if the commissioners do not answer, the appeal is refused.
  Mr. Timms: Will the hon. Gentleman give way?
  Mr. Letwin: I am sorry, but I shall not give way on this occasion, as I have one minute left. However, I would be happy to allow the Minister to reply at length if his Whip will rearrange matters so that we can have a serious amount of time in which to debate this.
  In my final half minute, I want to say simply that this tax is irrational and is being introduced in the wrong way. It has the wrong powers of enforcement and it will cost jobs. Even more than all that, though, it is an empty box. Almost everything that will bring it into effect will come in a series of regulations that the House will never seriously debate. People fought and died to establish as the principal feature of our parliamentary democracy the sovereignty of Parliament over taxation. To remit the basis of our taxation to regulation is a precedent that Members on the Government Benches will live to regret as much as we do.
  It being Seven o'clock, THE TEMPORARY CHAIRMAN, pursuant to Orders [7 November and 9 April], put forthwith the Question already proposed from the Chair.
  The Committee divided: Ayes 286, Noes 126.

  Division No. 187]

  [7 pm

  AYES

  Adams, Mrs Irene (Paisley N)

  Best, Harold

  Ainger, Nick

  Betts, Clive

  Ainsworth, Robert (Cov'try NE)

  Blackman, Liz

  Allan, Richard

  Blears, Ms Hazel

  Allen, Graham

  Blizzard, Bob

  Anderson, Rt Hon Donald (Swansea E)

  Boateng, Rt Hon Paul

  Borrow, David

  Ashdown, Rt Hon Paddy

  Bradley, Rt Hon Keith (Withington)

  Ashton, Joe

  Atkins, Charlotte

  Bradshaw, Ben

  Austin, John

  Brake, Tom

  Bailey, Adrian

  Brinton, Mrs Helen

  Baker, Norman

  Brown, Russell (Dumfries)

  Banks, Tony

  Browne, Desmond

  Barnes, Harry

  Buck, Ms Karen

  Barron, Kevin

  Burden, Richard

  Battle, John

  Burstow, Paul

  Bayley, Hugh

  Butler, Mrs Christine

  Begg, Miss Anne

  Campbell, Alan (Tynemouth)

  Benn, Hilary (Leeds C)

  Campbell, Rt Hon Menzies (NE Fife)

  Benn, Rt Hon Tony (Chesterfield)

  Bennett, Andrew F

  Campbell, Ronnie (Blyth V)

  Benton, Joe

  Campbell—Savours, Dale

  Bermingham, Gerald

  Caplin, Ivor

  72

  Casale, Roger

  Hinchliffe, David

  Caton, Martin

  Hodge, Ms Margaret

  Chapman, Ben (Wirral S)

  Hoon, Rt Hon Geoffrey

  Chaytor, David

  Hope, Phil

  Chidgey, David

  Hopkins, Kelvin

  Clapham, Michael

  Howarth, Rt Hon Alan (Newport E)

  Clark, Rt Hon Dr David (S Shields)

  Howells, Dr Kim

  Clarke, Eric (Midlothian)

  Hughes, Ms Beverley (Stretford)

  Clarke, Rt Hon Tom (Coatbridge)

  Hughes, Kevin (Doncaster N)

  Clelland, David

  Hughes, Simon (Southwark N)

  Clwyd, Ann

  Humble, Mrs Joan

  Coffey, Ms Ann

  Hurst, Alan

  Coleman, Iain

  Hutton, John

  Colman, Tony

  Iddon, Dr Brian

  Connarty, Michael

  Illsley, Eric

  Cook, Frank (Stockton N)

  Jackson, Ms Glenda (Hampstead)

  Cooper, Yvette

  Jackson, Helen (Hillsborough)

  Corbett, Robin

  Jamieson, David

  Corbyn, Jeremy

  Jenkins, Brian

  Corston, Jean

  Johnson, Alan (Hull W & Hessle)

  Cousins, Jim

  Johnson, Miss Melanie (Welwyn Hatfield)

  Crausby, David

  Cryer, John (Hornchurch)

  Jones, Rt Hon Barry (Alyn)

  Cummings, John

  Jones, Helen (Warrington N)

  Dalyell, Tam

  Jones, Jon Owen (Cardiff C)

  Darling, Rt Hon Alistair

  Jones, Martyn (Clwyd S)

  Darvill, Keith

  Keen, Alan (Feltham & Heston)

  Davey, Edward (Kingston)

  Keen, Ann (Brentford & Isleworth)

  Davey, Valerie (Bristol W)

  Kelly, Ms Ruth

  Davies, Rt Hon Denzil (Llanelli)

  Kennedy, Jane (Wavertree)

  Davies, Geraint (Croydon C)

  Khabra, Piara S

  Dean, Mrs Janet

  Kilfoyle, Peter

  Denham, Rt Hon John

  King, Andy (Rugby & Kenilworth)

  Dismore, Andrew

  Lammy, David

  Dobbin, Jim

  Lawrence, Mrs Jackie

  Dobson, Rt Hon Frank

  Lepper, David

  Donohoe, Brian H

  Leslie, Christopher

  Doran, Frank

  Levitt, Tom

  Dowd, Jim

  Lewis, Ivan (Bury S)

  Drew, David

  Lloyd, Tony (Manchester C)

  Eagle, Angela (Wallasey)

  Lock, David

  Eagle, Maria (L'pool Garston)

  Love, Andrew

  Edwards, Huw

  McCabe, Steve

  Efford, Clive

  McCartney, Rt Hon Ian (Makerfield)

  Ellman, Mrs Louise

  Ennis, Jeff

  McDonnell, John

  Fearn, Ronnie

  McFall, John

  Field, Rt Hon Frank

  McGuire, Mrs Anne

  Fisher, Mark

  Mclsaac, Shona

  Fitzpatrick, Jim

  McKenna, Mrs Rosemary

  Flint, Caroline

  Mackinlay, Andrew

  Foster, Rt Hon Derek

  McNulty, Tony

  Foster, Don (Bath)

  MacShane, Denis

  Foster, Michael Jabez (Hastings)

  Mactaggart, Fiona

  Foster, Michael J (Worcester)

  McWalter, Tony

  Gapes, Mike

  McWilliam, John

  George, Rt Hon Bruce (Walsall S)

  Mahon, Mrs Alice

  Gerrard, Neil

  Marsden, Gordon (Blackpool S)

  Gibson, Dr Ian

  Marshall, David (Shettleston)

  Gilroy, Mrs Linda

  Marshall, Jim (Leicester S)

  Godsiff, Roger

  Marshall—Andrews, Robert

  Goggins, Paul

  Martlew, Eric

  Golding, Mrs Llin

  Maxton, John

  Gordon, Mrs Eileen

  Michael, Rt Hon Alun

  Griffiths, Jane (Reading E)

  Michie, Bill (Shef'ld Heeley)

  Griffiths, Nigel (Edinburgh S)

  Milburn, Rt Hon Alan

  Griffiths, Win (Bridgend)

  Miller, Andrew

  Grocott, Bruce

  Mitchell, Austin

  Grogan, John

  Moffatt, Laura

  Hain, Peter

  Moonie, Dr Lewis

  Hanson, David

  Moore, Michael

  Healey, John

  Morgan, Ms Julie (Cardiff N)

  Hendrick, Mark

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Hepburn, Stephen

  Heppell, John

  Morris, Rt Hon Sir John (Aberavon)

  Hill, Keith

  73

  Mountford, Kali

  Soley, Clive

  Mowlam, Rt Hon Marjorie

  Southworth, Ms Helen

  Mudie, George

  Spellar, John

  Murphy, Denis (Wansbeck)

  Squire, Ms Rachel

  Naysmith, Dr Doug

  Starkey, Dr Phyllis

  O'Brien, Bill (Normanton)

  Steinberg, Gerry

  Olner, Bill

  Stevenson, George

  Organ, Mrs Diana

  Stewart, David (Inverness E)

  Pearson, Ian

  Stewart, Ian (Eccles)

  Pendry, Rt Hon Tom

  Stoate, Dr Howard

  Pike, Peter L

  Strang, Rt Hon Dr Gavin

  Pond, Chris

  Stuart, Ms Gisela

  Pope, Greg

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Pound, Stephen

  Powell, Sir Raymond

  Taylor, David (NW Leics)

  Prentice, Ms Bridget (Lewisham E)

  Taylor, Matthew (Truro)

  Prentice, Gordon (Pendle)

  TemPle—Morris, Peter

  Primarolo, Dawn

  Thomas, Gareth R (Harrow W)

  Prosser, Dawn

  Timms, Stephen

  Quinn, Lawrie

  Tipping, Paddy

  Radice, Rt Hon Giles

  Todd, Mark

  Raynsford, Rt Hon Nick

  Tonge, Dr Jenny

  Trickett, Jon

  Reed, Andrew (Loughborough)

  Truswell, Paul

  Rendel, David

  Turner, Dennis (Wolverh'ton SE)

  Robertson, John (Glasgow Anniesland)

  Turner, Dr Desmond (Kemptown)

  Robinson, Geoffrey (Cov'try NW)

  Turner, Neil (Wigan)

  Roche, Mrs Barbara

  Twigg, Derek (Halton)

  Rogers, Allan

  Twigg, Stephen (Enfield)

  Rooker, Rt Hon Jeff

  Tynan, Bill

  Rooney, Terry

  Walley, Ms Joan

  Ross, Ernie (Dundee W)

  Wareing, Robert N

  Rowlands, Ted

  Watts, David

  Roy, Frank

  White, Brian

  Ruddock, Joan

  Wicks, Malcolm

  Russell, Bob (Colchester)

  Williams, Rt Hon Alan (Swansea W)

  Russell, Ms Christine (Chester)

  Williams, Alan W (E Carmarthen)

  Ryan, Ms Joan

  Willis, Phil

  Salter, Martin

  Wills, Michael

  Sanders, Adrian

  Winnick, David

  Savidge, Malcolm

  Winterton, Ms Rosie (Doncaster C)

  Sedgemore, Brian

  Woodward, Shaun

  Shaw, Jonathan

  Woolas, Phil

  Sheldon, Rt Hon Robert

  Worthington, Tony

  Simpson, Alan (Nottingham S)

  Wright, Anthony D (Gt Yarmouth)

  Skinner, Dennis

  Wyatt, Derek

  Smith, Rt Hon Andrew (Oxford E)

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Tellers for the Ayes:

  Mr. Mike Hall and

  Smith, Llew (Blaenau Gwent)

  Mr. Gerry Sutcliffe.

  NOES

  Ainsworth, Peter (E Surrey)

  Clifton—Brown, Geoffrey

  Amess, David

  Cormack, Sir Patrick

  Ancram, Rt Hon Michael

  Curry, Rt Hon David

  Arbuthnot, Rt Hon James

  Davies, Quentin (Grantham)

  Baldry, Tony

  Davis, Rt Hon David (Haltemprice)

  Beith, Rt Hon A J

  Duncan, Alan

  Bell, Martin (Tatton)

  Evans, Nigel

  Bercow, John

  Fabricant, Michael

  Beresford, Sir Paul

  Fraser, Christopher

  Blunt, Crispin

  Garnier, Edward

  Boswell, Tim

  Gibb, Nick

  Bottomley, Peter (Worthing W)

  Gill, Christopher

  Bottomley, Rt Hon Mrs Virginia

  Gillan, Mrs Cheryl

  Brady, Graham

  Green, Damian

  Brazier, Julian

  Greenway, John

  Breed, Colin

  Grieve, Dominic

  Brooke, Rt Hon Peter

  Gummer, Rt Hon John

  Bruce, Ian (S Dorset)

  Hamilton, Rt Hon Sir Archie

  Burnett, John

  Hammond, Philip

  Burns, Simon

  Hawkins, Nick

  Clappison, James

  Hayes, John

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Heald, Oliver

  Heath, David (Somerton & Frome)

  74

  Horam, John

  Randall, John

  Jack, Rt Hon Michael

  Redwood, Rt Hon John

  Jenkin, Bernard

  Robathan, Andrew

  Johnson Smith, Rt Hon Sir Geoffrey

  Robertson, Laurence (Tewk'b'ry)

  Roe, Mrs Marion (Broxbourne)

  Key, Robert

  Ross, William (E Lond'y)

  King, Rt Hon Tom (Bridgwater)

  Ruffley, David

  Kirkbride, Miss Julie

  St Aubyn, Nick

  Kirkwood, Archy

  Salmond, Alex

  Laing, Mrs Eleanor

  Sayeed, Jonathan

  Lait, Mrs Jacqui

  Shepherd, Richard

  Lansley, Andrew

  Simpson, Keith (Mid—Norfolk)

  Leigh, Edward

  Smith, Sir Robert (W Ab'd'ns)

  Letwin, Oliver

  Soames, Nicholas

  Lewis, Dr Julian (New Forest E)

  Spicer, Sir Michael

  Lidington, David

  Stanley, Rt Hon Sir John

  Lilley, Rt Hon Peter

  Steen, Anthony

  Lloyd, Rt Hon Sir Peter (Fareham)

  Streeter, Gary

  Llwyd, Elfyn

  Swayne, Desmond

  Loughton, Tim

  Syms, Robert

  Luff, Peter

  Tapsell, Sir Peter

  Lyell, Rt Hon Sir Nicholas

  Taylor, Ian (Esher & Walton)

  McCrea, Dr William

  Taylor, John M (Solihull)

  MacGregor, Rt Hon John

  Taylor, Sir Teddy

  McIntosh, Miss Anne

  Thomas, Simon (Ceredigion)

  MacKay, Rt Hon Andrew

  Tredinnick, David

  Maclean, Rt Hon David

  Trend, Michael

  McLoughlin, Patrick

  Tyler, Paul

  Madel, Sir David

  Tyrie, Andrew

  Malins, Humfrey

  Viggers, Peter

  Maples, John

  Waterson, Nigel

  Mates, Michael

  Wells, Bowen

  Mawhinney, Rt Hon Sir Brian

  Whitney, Sir Raymond

  May, Mrs Theresa

  Whittingdale, John

  Michie, Mrs Ray (Argyll & Bute)

  Wigley, Rt Hon Dafydd

  Morgan, Alasdair (Galloway)

  Willetts, David

  O'Brien, Stephen (Eddisbury)

  Winterton, Mrs Ann (Congleton)

  Öpik, Lembit

  Winterton, Nicholas (Macclesfield)

  Ottaway, Richard

  Young, Rt Hon Sir George

  Paice, James

  Paterson, Owen

  Tellers for the Noes:

  Pickles, Eric

  Mr. Peter Atkinson and

  Prior, David

  Mr. Stephen Day.

  Question accordingly agreed to.
  Clause 16 ordered to stand part of the Bill.
  THE TEMPORARY CHAIRMAN then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.
  Motion made, and Question put, That clauses 17 to 22 stand part of the Bill:—
  The Committee divided: Ayes 287, Noes 123.

  Division No. 188]

  [7.15 pm

  AYES

  Adams, Mrs Irene (Paisley N)

  Begg, Miss Anne

  Ainger, Nick

  Benn, Hilary (Leeds C)

  Ainsworth, Robert (Cov'try NE)

  Benn, Rt Hon Tony (Chesterfield)

  Allan, Richard

  Bennett, Andrew F

  Allen, Graham

  Benton, Joe

  Armstrong, Rt Hon Ms Hilary

  Bermingham, Gerald

  Ashdown, Rt Hon Paddy

  Best, Harold

  Ashton, Joe

  Betts, Clive

  Atkins, Charlotte

  Blackman, Liz

  Austin, John

  Blears, Ms Hazel

  Bailey, Adrian

  Blizzard, Bob

  Baker, Norman

  Boateng, Rt Hon Paul

  Banks, Tony

  Borrow, David

  Barnes, Harry

  Bradley, Rt Hon Keith (Withington)

  Barron, Kevin

  Battle, John

  Bradshaw, Ben

  Bayley, Hugh

  Brake, Tom

  75

  Breed, Colin

  Gordon, Mrs Eileen

  Brinton, Mrs Helen

  Griffiths, Jane (Reading E)

  Brown, Russell (Dumfries)

  Griffiths, Nigel (Edinburgh S)

  Browne, Desmond

  Griffiths, Win (Bridgend)

  Buck, Ms Karen

  Grocott, Bruce

  Burden, Richard

  Grogan, John

  Burstow, Paul

  Hain, Peter

  Butler, Mrs Christine

  Hanson, David

  Campbell, Alan (Tynemouth)

  Healey, John

  Campbell, Rt Hon Menzies (NE Fife)

  Hendrick, Mark

  Hepburn, Stephen

  Campbell, Ronnie (Blyth V)

  Heppell, John

  Campbell—Savours, Dale

  Hill, Keith

  Caplin, Ivor

  Hinchliffe, David

  Casale, Roger

  Hodge, Ms Margaret

  Caton, Martin

  Hood, Jimmy

  Chapman, Ben (Wirral S)

  Hoon, Rt Hon Geoffrey

  Chaytor, David

  Hope, Phil

  Chidgey, David

  Hopkins, Kelvin

  Clapham, Michael

  Howarth, Rt Hon Alan (Newport E)

  Clark, Rt Hon Dr David (S Shields)

  Hughes, Ms Beverley (Stretford)

  Clarke, Eric (Midlothian)

  Hughes, Kevin (Doncaster N)

  Clarke, Rt Hon Tom (Coatbridge)

  Humble, Mrs Joan

  Clelland, David

  Hurst, Alan

  Clwyd, Ann

  Hutton, John

  Coffey, Ms Ann

  Iddon, Dr Brian

  Coleman, Iain

  Illsley, Eric

  Colman, Tony

  Jackson, Ms Glenda (Hampstead)

  Connarty, Michael

  Jackson, Helen (Hillsborough)

  Cook, Frank (Stockton N)

  Jamieson, David

  Cooper, Yvette

  Jenkins, Brian

  Corbett, Robin

  Johnson, Alan (Hull W & Hessle)

  Corston, Jean

  Johnson, Miss Melanie (Welwyn Hatfield)

  Cousins, Jim

  Crausby, David

  Jones, Rt Hon Barry (Alyn)

  Cryer, John (Hornchurch)

  Jones, Helen (Warrington N)

  Cummings, John

  Jones, Jon Owen (Cardiff C)

  Dalyell, Tam

  Jones, Martyn (Clwyd S)

  Darling, Rt Hon Alistair

  Jowell, Rt Hon Ms Tessa

  Darvill, Keith

  Keen, Alan (Feltham & Heston)

  Davey, Edward (Kingston)

  Keen, Ann (Brentford & Isleworth)

  Davey, Valerie (Bristol W)

  Kelly, Ms Ruth

  Davies, Rt Hon Denzil (Llanelli)

  Kennedy, Jane (Wavertree)

  Davies, Geraint (Croydon C)

  Khabra, Piara S

  Dean, Mrs Janet

  Kilfoyle, Peter

  Denham, Rt Hon John

  King, Andy (Rugby & Kenilworth)

  Dismore, Andrew

  Kirkwood, Archy

  Dobbin, Jim

  Lammy, David

  Dobson, Rt Hon Frank

  Lawrence, Mrs Jackie

  Donohoe, Brian H

  Lepper, David

  Doran, Frank

  Leslie, Christopher

  Dowd, Jim

  Levitt, Tom

  Drew, David

  Lewis, Ivan (Bury S)

  Eagle, Angela (Wallasey)

  Lloyd, Tony (Manchester C)

  Eagle, Maria (L'pool Garston)

  Lock, David

  Edwards, Huw

  Love, Andrew

  Efford, Clive

  McAvoy, Thomas

  Ellman, Mrs Louise

  McCabe, Steve

  Ennis, Jeff

  McCartney, Rt Hon Ian (Makerfield)

  Fearn, Ronnie

  Field, Rt Hon Frank

  McDonnell, John

  Fisher, Mark

  McFall, John

  Fitzpatrick, Jim

  McGuire, Mrs Anne

  Flint, Caroline

  McIsaac, Shona

  Foster, Rt Hon Derek

  McKenna, Mrs Rosemary

  Foster, Don (Bath)

  Mackinlay, Andrew

  Foster, Michael Jabez (Hastings)

  McNulty, Tony

  Foster, Michael J (Worcester)

  Mactaggart, Fiona

  Gapes, Mike

  McWalter, Tony

  George, Rt Hon Bruce (Walsall S)

  Mahon, Mrs Alice

  Gerrard, Neil

  Marsden, Gordon (Blackpool S)

  Gibson, Dr Ian

  Marshall, David (Shettleston)

  Gilroy, Mrs Linda

  Marshall, Jim (Leicester S)

  Godsiff, Roger

  Marshall—Andrews, Robert

  Goggins, Paul

  Martlew, Eric

  Golding, Mrs Llin

  Maxton, John

  76

  Michael, Rt Hon Alun

  Simpson, Alan (Nottingham S)

  Michie, Bill (Shef'ld Heeley)

  Skinner, Dennis

  Milburn, Rt Hon Alan

  Smith, Rt Hon Andrew (Oxford E)

  Miller, Andrew

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Mitchell, Austin

  Moffatt, Laura

  Smith, Llew (Blaenau Gwent)

  Moonie, Dr Lewis

  Soley, Clive

  Moore, Michael

  Southworth, Ms Helen

  Morgan, Ms Julie (Cardiff N)

  Spellar, John

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Squire, Ms Rachel

  Starkey, Dr Phyllis

  Morris, Rt Hon Sir John (Aberavon)

  Steinberg, Gerry

  Stevenson, George

  Mountford, Kali

  Stewart, David (Inverness E)

  Mowlam, Rt Hon Marjorie

  Stewart, Ian (Eccles)

  Mudie, George

  Stoate, Dr Howard

  Mullin, Chris

  Strang, Rt Hon Dr Gavin

  Murphy, Denis (Wansbeck)

  Stuart, Ms Gisela

  Naysmith, Dr Doug

  Stunell, Andrew

  O'Brien, Bill (Normanton)

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Olner, Bill

  Organ Mrs Diana

  Taylor, David (NW Leics)

  Pearson Ian

  Taylor, Matthew (Truro)

  Pendry, Rt Hon Tom

  Temple—Morris, Peter

  Pike Peter L

  Thomas, Gareth R (Harrow W)

  Pond, Chris

  Timms, Stephen

  Pope, Greg

  Tipping, Paddy

  Pound, Stephen

  Todd, Mark

  Powell, Sir Raymond

  Tonge, Dr Jenny

  Prentice, Ms Bridget (Lewisham E)

  Trickett, Jon

  Prentice Gordon (Pendle)

  Truswell, Paul

  Primarolo, Dawn

  Turner, Dennis (Wolverh'ton SE)

  Prosser, Gwyn

  Turner, Dr Desmond (Kemptown)

  Quinn, Lawrie

  Turner, Neil (Wigan)

  Radice, Rt Hon Giles

  Twigg, Derek (Halton)

  Twigg, Stephen (Enfield)

  Raynsford, Rt Hon Nick

  Tyler Paul

  Reed, Andrew (Loughborough)

  Tynan, Bill

  Rendel, David

  Walley, Ms Joan

  Robertson, John (Glasgow Anniesland)

  Wareing, Robert N

  Watts, David

  Robinson, Geoffrey (Cov'try NW)

  White, Brian

  Roche, Mrs Barbara

  Wicks, Malcom

  Rogers, Allan

  Williams, Rt Hon Alan (Swansea W)

  Rooker, Rt Hon Jeff

  Rooney, Terry

  Williams, Alan W (E Carmarthen)

  Ross, Ernie (Dundee W)

  Wills, Michael

  Rowlands, Ted

  Winnick, David

  Roy, Frank

  Winterton, Ms Rosie (Doncaster C)

  Ruddock, Joan

  Woodward, Shaun

  Russell, Bob (Colchester)

  Woolas, Phil

  Russell, Ms Christine (Chester)

  Worthington, Tony

  Ryan, Ms Joan

  Wright, Anthony D (Gt Yarmouth)

  Salter, Martin

  Wyatt, Derek

  Sanders, Adrian

  Savidge, Malcolm

  Tellers for the Ayes:

  Sedgemore, Brian

  Mr. Mike Hall and

  Shaw, Jonathan

  Mr. Gerry Sutcliffe.

  NOES

  Ainsworth, Peter (E Surrey)

  Brooke, Rt Hon Peter

  Amess, David

  Bruce, Ian (S Dorset)

  Ancram, Rt Hon Michael

  Burns, Simon

  Arbuthnot, Rt Hon James

  Clappison, James

  Atkinson, Peter (Hexham)

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Baldry, Tony

  Beith, Rt Hon A J

  Clifton—Brown, Geoffrey

  Bell, Martin (Tatton)

  Cormack, Sir Patrick

  Bercow, John

  Curry, Rt Hon David

  Beresford, Sir Paul

  Davies, Quentin (Grantham)

  Blunt, Crispin

  Davis, Rt Hon David (Haltemprice)

  Boswell, Tim

  Duncan, Alan

  Bottomley, Peter (Worthing W)

  Evans, Nigel

  Bottomley, Rt Hon Mrs Virginia

  Fabricant, Michael

  Brady, Graham

  Fraser, Christopher

  Brazier, Julian

  Garnier, Edward

  77

  Gibb, Nick

  O'Brien, Stephen (Eddisbury)

  Gill, Christopher

  Öpik, Lembit

  Gillan, Mrs Cheryl

  Ottaway, Richard

  Green, Damian

  Paice, James

  Greenway, John

  Paterson, Owen

  Grieve, Dominic

  Pickles, Eric

  Gummer, Rt Hon John

  Prior, David

  Hamilton, Rt Hon Sir Archie

  Randall, John

  Hammond, Philip

  Redwood, Rt Hon John

  Hawkins, Nick

  Robathan, Andrew

  Hayes, John

  Robertson, Laurence (Tewk'b'ry)

  Heald, Oliver

  Roe, Mrs Marion (Broxbourne)

  Heath, David (Somerton & Frome)

  Ross, William (E Lond'y)

  Horam, John

  Ruffley, David

  Jack, Rt Hon Michael

  St Aubyn, Nick

  Jenkin, Bernard

  Salmond, Alex

  Johnson Smith, Rt Hon Sir Geoffrey

  Sayeed, Jonathan

  Shepherd, Richard

  Key, Robert

  Simpson, Keith (Mid—Norfolk)

  King, Rt Hon Tom (Bridgwater)

  Smith, Sir Robert (W Ab'd'ns)

  Kirkbride, Miss Julie

  Soames, Nicholas

  Laing, Mrs Eleanor

  Spicer, Sir Michael

  Lait, Mrs Jacqui

  Stanley, Rt Hon Sir John

  Lansley, Andrew

  Steen, Anthony

  Streeter, Gary

  Leigh, Edward

  Swayne, Desmond

  Letwin, Oliver

  Syms, Robert

  Lewis, Dr Julian (New Forest E)

  Tapsell, Sir Peter

  Lidington, David

  Taylor, Ian (Esher & Walfon)

  Lilley, Rt Hon Peter

  Taylor, John M (Solihull)

  Lloyd, Rt Hon Sir Peter (Fareham)

  Taylor, Sir Teddy

  Llwyd, Elfyn

  Thomas, Simon (Ceredigion)

  Loughton, Tim

  Tredinnick, David

  Lyell, Rt Hon Sir Nicholas

  Trend, Michael

  McCrea, Dr William

  Tyrie, Andrew

  MacGregor, Rt Hon John

  Viggers, Peter

  McIntosh, Miss Anne

  Waterson, Nigel

  MacKay, Rt Hon Andrew

  Wells, Bowen

  Maclean, Rt Hon David

  Whitney, Sir Raymond

  McLoughlin, Patrick

  Whittingdale, John

  Madel, Sir David

  Wigley, Rt Hon Dafydd

  Malins, Humfrey

  Willetts, David

  Maples, John

  Winterton, Mrs Ann (Congleton)

  Mates, Michael

  Winterton, Nicholas (Macclesfield)

  Mawhinney, Rt Hon Sir Brian

  Young, Rt Hon Sir George

  May, Mrs Theresa

  Michie, Mrs Ray (Argyll & Bute)

  Tellers for the Noes:

  Morgan, Alasdair (Galloway)

  Mr. Peter Luff and

  Norman, Archie

  Mr. Stephen Day.

  Question accordingly agreed to.
  Clauses 17 to 22 ordered to stand part of the Bill.

Clause 23

  WEIGHT OF AGGREGATE
  Question proposed, That the clause stand part of the Bill.
  Mr. Letwin: Clause 23 is remarkable. Clause 23(1) states:
  "The Commissioners may make regulations for determining the weight of any aggregate for the purposes of aggregates levy."
  Forgive me for being personal, Dr. Clark, but if I were to propose to weigh you, I doubt whether it would be necessary for me to make regulations for determining the weight; I would instead employ some scales. The matter would be straightforward; the weighing would be objective, so why is it necessary for the commissioners to make such regulations?
  Of course, the answer is that it is not simple and objective to weigh aggregates; it is not just a matter of finding the aggregates and popping them on to some
  78
  scales. Those involved must work out what they are weighing and which bits they do not want to weigh. That is why clause 23(3) states:
  "The regulations may, in particular, … include rules about—
  (a) the method by which the weight is to be determined;
  (b) the time by reference to which the weight is to be determined;
  (c) the discounting of constituents".
  As I said during the previous debate, we must imagine the good folk of Customs and Excise posing as geological experts and, in this case, as weighing experts, and working out how to discount constituents, such as water, and how to find the right time to weigh so as not to weigh the right thing at the wrong time—as bad as weighing the wrong thing at the right time.
  All that will be determined by regulations which we have not seen, and I speculate that the Financial Secretary has not seen them either. Of course, I may be wrong, and if he would like to explain the regulations and how the Government will determine how to weigh the aggregates, I should be happy to admit at once that I am wrong to speculate that he has not the foggiest clue about the answer to that question. In the absence of such an assurance, I suggest that he imagines that someone will eventually produce some regulations for him, that the commissioners will be given those regulations and that they will send out the troops of Customs and Excise to apply them.
  The general observation that I made in the debate on clause 16 applies in this case: this is not a simple matter. As we traverse the remainder of part II at unholy and unnecessary length, given the way in which the timetable motion was constructed, we shall find that there are many such instances. I hope that the Financial Secretary will be able at least to explain how he envisages the process working in practice, but I fear that it will be a long time before we see the regulations themselves. It will be even longer before someone works out in which of the many respects they are wrong and how they need to be revised ex post facto once it turns out that large parts of the industry have been driven mad by Her Majesty's Customs and Excise weighing things incorrectly. Appeals will be made, letters will be written and efforts will be made to reverse the mistakes that have been made.
  7.30 pm
  Mr. Edward Davey: Would the hon. Gentleman like to speculate further about the regulations that are mentioned in the clause? Does he think that there will have to be regulations for each type of mineral and each type of aggregate because of their differing relationships with water? Presumably, minerals and aggregates come in different shapes and forms and contain differing proportions of water.
  Mr. Letwin: The honest answer is that I do not know how the regulations will be formulated or how specific they will be. They will obviously have to ensure that, each time something is weighed, it is a relevant substance in the normal layman's sense and that it is not a relevant substance under the terms of clause 18(3). If any of the relevant substances in that subsection have been admixed with anything that is to be weighed, the substance will not be an aggregate under the terms of the Bill and should not be subject to the levy. The weighing system will have to ensure that anhydride, ball clay, barytes, calcite, china

  79
  clay and so on are not weighed by mistake. Some fancy footwork may therefore be required to ensure that they are not.
  It will be interesting to discover whether the Financial Secretary knows the answer to these questions, but I speculate that he does not. More importantly, I speculate that, when the regulations are made, it will turn out that those who have framed them do not quite know the answers. Only later, by a process of error, will people discover what should have been in them in the first place. That illustrates the general point that this is a hugely intrusive tax.
  Mr. Timms: This is a very conventional clause that does not contain any surprises. The aggregates levy is calculated by reference to weight rather than selling price, because the levy is designed to address the external environmental costs of the extraction of the aggregate and that can be done fairly only by reference to a more constant and uniform factor. Weight is such a factor.
  As the hon. Member for West Dorset (Mr. Letwin) said, the clause will enable Customs to draft regulations that cover the details of how and when the aggregate is to be weighed. It is important that there be clarity on that because the levy will be £1.60 per tonne, so weighing correctly will be important. The clause will give Customs the power to make different rules to cover different circumstances; and where possible, there will be clear and widely applicable regulations for determining weight.
  The practicalities of the task and the differences in methods and equipment within the industry make it unlikely, however, that a universally applicable method can be set out in the regulations. The clause therefore provides that regulations may permit agreements to be drawn up between Customs and individual businesses regarding methods of recording by weight.
  The hon. Gentleman has referred to the alleged complexity of the measure, but in point after point, what is being introduced for the aggregates levy follows precisely the approach taken over the landfill tax which was introduced by the previous Government. Of course, the landfill tax is also based on weight, so regulations had to be made on how landfill material is weighed. The wording used in that instance is precisely the wording used in this clause. No doubt I shall have the opportunity to repeat that point later in the debate, because many of the clauses that the hon. Gentleman criticises for their complexity follow word for word the provisions enacted for the landfill tax, which was enacted by the previous Government whom he and his hon. Friends supported.
  By attacking the character of an environmental tax measure that mirrors and is based on the principal environmental tax measure that the previous Government introduced, the hon. Gentleman raises an interesting question as to whether Conservative Members have changed their minds about whether it is right to take steps, as the previous Government did, to safeguard the environment. I shall certainly listen with interest to what he says on that point.
  Mr. Letwin: I apologise to the Minister for asking him a detailed question rather than allowing him to dilate further on the general principles, but will the system for
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  weighing be so designed that clause 18(1)(b) will be applied in such a way as to mean that the dust that results when aggregates have been produced as part of a process that is exempt will be weighed as part of the aggregate?
  Mr. Timms: The hon. Gentleman needs to wait until the detailed regulations are consulted upon, and then he will see the answer for himself. However, I reassure him that Customs will consult widely with industry at every stage in the run-up to the introduction, and in the finalisation, of the regulations. The central point is that the clause does exactly what was done for the landfill tax. That is what needs to be done to ensure the successful introduction of the levy. I have no doubt that that will be the consequence.
  Mr. Letwin: I am grateful to the Financial Secretary for giving way again with his typical courtesy, but he has restated the thesis that the levy somehow draws on the landfill tax. Where in the landfill tax legislation is there any mention of the discounting of constituent parts such as water?
  Mr. Timms: The point is that there are already regulations about weighing. The form of words used to give Customs the power to issue those regulations is the form of words that has been used in this clause.
  Question put and agreed to.
  Clause 23 ordered to stand part of the Bill.

Clause 24

  THE REGISTER
  Question proposed, That the clause stand part of the Bill.
  Mr. Ottaway: The clause relates to registration and is one of those clauses that appear under the heading "Administration and enforcement".
  Subsection (1) will impose a duty on the commissioners of Customs and Excise
  "to establish and maintain a register of persons who are required to be registered for the purposes of the aggregates levy."
  The clause then lists the people who are required to be registered and they include those who carry out "taxable activities". It would help if the Financial Secretary explained how Customs and Excise will organise itself to do that; I imagine that it will recruit people who are experts in minerals. People whom one would not normally expect to work for Customs and Excise will specialise in this subject; but will he explain how such expertise will be provided?
  In particular, the clause goes on to say:
  "a person carries out a taxable activity if a quantity of aggregate is subjected to commercial exploitation".
  What does "commercial exploitation" mean? I am sure the Minister is aware that many people in the industry are concerned about the ability to identify and register everyone involved. Does he expect people to come forward to register for a voluntary code? What happens when someone does not expect to be in the aggregates business, but a by-product pops up which the Minister would describe as aggregate? I know that ignorance of the law is no excuse, but how would that business man know that he has to declare that he is producing aggregate?

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  I hope the Minister appreciates that many people have doubts about the register. Their concern is justified. Many non-mainstream and fringe operators might evade the aggregates tax and disadvantage responsible operators. How will he police the register and ensure that it is an accurate document that reflects the activities of the entire industry?
  We know that the Treasury is discussing the implementation of the register with the industry, and phrases such as commercial exploitation and construction use of aggregates have been clarified. However, is there a minimum level? I am not alluding to thresholds before the levy is imposed, which I raised when we discussed the previous amendment, but if a person produces a de minimis quantity, is he expected to register? Will the regulations—of which the Minister may or may not be aware—address that problem?
  I understand that secondary legislation will be introduced later this year to make the measure workable, but perhaps the Minister can give an idea of his approach, because we need the matter clarified. Although the clause heading is simply "The register", the clause itself goes to the heart of what is workable. If there is any doubt about that, will the Minister recognise the industry's concerns and consider delaying the introduction of the levy until the serious concerns on the register are addressed?
  Mr. Edward Davey: I shall be brief. As the hon. Member for Croydon, South (Mr. Ottaway) said, the administration of the register could give rise to costs as it is set up and rolled out. I understand that a compliance cost assessment has been made. What are the costs estimated to be? Although there is a great deal of detail about who is to registered, how they will be registered and how the commissioners should keep such information, the commissioners are not obliged to minimise the compliance costs on the industry and are given a fairly free hand in going about the registration process. How do the Minister and his Department intend to keep the administration costs that will be imposed on business to the minimum necessary to collect the levy?
  7.45 pm
  Mr. Letwin: I want to raise two specific issues. The first relates to clause 24(2), which tells us:
  "A person is required to be registered for the purposes of aggregates levy if he … carries out taxable activities".
  That takes us to the heart of the problem: who is such a person and how does he know that he is such a person? My hon. Friend the Member for Croydon, South (Mr. Ottaway) referred to that issue.
  Clause 18 is relevant in determining whether someone should be registered under clause 24(2)(a). Let us take the example of a sole trader who is principally engaged in an exempt process, such as rock cutting, to produce what is described in clause 18(2)(a) as "dimension stone". If I have correctly understood the enormously intricate articulation of clauses 17 and 18, that is not, according to clause 18(2), a taxable activity. A person engaged in that activity would not be caught by clause 24(2)(a) and thus would not have to register. However, if the exempt process produces what is described in clause 18(1)(a) as
  "spoil, waste, off-cuts or other by-products",
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  then, according to the definition in the governing clause, 18(1), those items would be classed as aggregate and thus subject to the levy under clause 16.
  So a cutter of rock—let us call him Mr. Jones—quietly sets himself up to produce dimension stone. He merrily imagines that he is not in any sense a taxable person under the Bill, but suddenly discovers that by virtue of some of the spoil, waste, off-cut or other by-product, he has become taxable. What is to become of poor Mr. Jones? At what stage is he breaking the law? What should he have known in advance? How will Customs and Excise deal with him if it discovers ex post—as he may discover ex post—that he was in breach of clause 24(2)(a)?
  My second concern relates to value added tax legislation. Much of what we are about to consider in laborious detail is a set of standard clauses derived from such legislation. No doubt the Government will recognise that. Alas, the clauses are nastier forms of the standard, which in itself is nasty. Both governing parties must take joint responsibility, over the past half century, for that. VAT legislation is an abomination to mankind. I take no pride in being a member of a party that played its role in that. However, this Government have done nothing to remedy the problem; instead, they have made it worse.
  Clause 24(6) proposes something that is worse than most other measures in similar legislation. No doubt if the Minister reflects on it, he will agree that it is intolerable. I have just exposed the genuine doubt of Mr. Jones who does not know whether he is conducting a taxable activity. However, we learn in subsection (6) that
  "where it appears to the Commissioners"—
  note, Mrs. Heal, that it simply has to appear to them—
  "that any person is operating or using any premise"—
  I do not quibble with that—
  "or intends to operate or use any premises … for winning any aggregate",
  then, in principle, he can be caught by the tax.
  Mr. Jones has not even got to the stage of setting up his business; much less has he produced the dust that may or may not be weighable—the Minister was unable to tell us—as a spoil, waste, off-cut or other by-product captured by clause 18(1)(a). There is no dust or stone on the premises; there is only Mr. Jones on the premises. However, he made the mistake of trying to raise money for his business by issuing a prospectus to various of his friends suggesting that they join him in his venture. For all I know, and for all the Minister knows, it may appear to the commissioners that Mr. Jones intends to operate the premises for the purpose of producing a taxable substance, but that is not the purpose at all. The purpose is to produce, by an exempt process, an item that is not taxable—but the by-product is taxable because the Minister's drafting seems to make it so. I do not know whether or not it is taxable because I cannot really understand the Bill, and I do not suppose that the Minister can either. In any case, it may be that the Bill makes the dust taxable—hence it presumably appears to the commissioners to constitute Mr. Jones's intention to operate or use premises for winning aggregate.
  We have reached the limits. I understand that Customs and Excise is, thank God, run by British civil servants, who are, on the whole, reasonable people. On the whole, therefore, they will probably administer this appalling, tyrannical legislation in a rather less than appalling and

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  tyrannical fashion. However, that is merely probabilistic. The House should not be passing legislation that permits commissioners to determine whether a person intends to do something which he could not possibly know that he intends to do, because he would not have had the slightest reason to find out whether the legislation applied to something that he could not have been expected to expect it to apply to. That is appalling indeed.
  I do not suppose that politicians in the Treasury today have any more intention of producing such legislation than they ever did, but someone has come up with this wonderful drafting. No doubt it was drawn from some obscure part of the arcana imperii of VAT legislation or, for all I know, the legislation on the landfill tax. The Minister thinks that he can taunt me about that tax, but I intend to disillusion him on that point. I was not in Parliament to vote for the landfill tax and I would not have voted for it if I had been. The landfill tax stands as a token of only one thing—the Minister's mythology when he says that these measures are fiscally neutral. He is the representative of a Government who raised the landfill tax without raising national insurance contributions. Whatever the origins of this provision, Conservative or Labour, and whether it is intended for long-term or short-term misuse, I care not—it is wrong and indefensible and it ought not to be in the Bill.
  I turn now to clause 24(8), which is also very interesting. It tells us:
  "Where any entry in the register at any time specifies that any premises registered under a person's name as a registered site are to be taken to be the originating site of"—
  there follows a list of several things—
  "any question for the purposes of this Part as to the boundaries at that time of the originating site … shall be conclusively determined in accordance with that entry."
  Let us return to Mr. Jones. What is his situation? The prospectus issued by Mr. Jones seems to the commissioners to make him a taxable person because he intends to do something that, unknown to him, may produce a by-product that is an aggregate for the purpose of the levy, and so he has to register. The area that he registers conclusively determines the boundaries of his action. When he intends to begin his operation, his intentions may relate to a place different from the one where he will actually operate.
  I do not see how subsection (6) combines with subsection (8) to produce anything other than the most unholy and arbitrary mess. I may be wrong about that. There may be a long tradition of such statutory construction in other Finance Acts. The Financial Secretary may be able to explain to us how a definitive boundary, established on the basis of an intention as it appears to the commissioners, but which is not yet represented by an actuality of production, can nevertheless be treated by the courts as a reasonable proposition. My mind boggles at that, but it may be the case, and I look forward to hearing from the Financial Secretary how subsection (8) will interact with subsection (6).
  Mr. Timms: The clause sets out the requirement to register for the aggregates levy. It brings into effect schedule 4, which in turn gives further detail on the required procedures and conditions. A business has to register if it is responsible for the "commercial
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  exploitation" of aggregates in the UK. That phrase is defined in clause 19. The businesses that will be most affected are those that extract aggregates, but the clause may also affect those businesses on whose premises rock is crushed or an exempt substance, usually a mineral, is extracted from a quantity of aggregate that has been transported there from its originating site.
  Some businesses are not necessarily concerned with extracting and supplying aggregates to the construction industry, but supply other industries such as glass making or metallurgy. The Bill will assist those businesses where possible by exempting them from registration and minimising the administrative burden. The hon. Member for Kingston and Surbiton (Mr. Davey) asked whether that would be the case, and I can certainly give him that assurance. Those companies will need to demonstrate that they do not supply or otherwise exploit any aggregate for a purpose that is neither exempted nor relieved.
  Customs and Excise is given powers to decide the boundaries of any premises for registration purposes to safeguard against avoidance of the levy by businesses that might otherwise locate taxable activity outside previously agreed boundaries. The hon. Member for Croydon, South (Mr. Ottaway) asked several questions about how that will work. What is being described is very much the core, day-to-day activity of Customs; it is the sort of activity in which it excels. I agree with the hon. Member for West Dorset (Mr. Letwin) about the quality of civil servants in the UK. There is nothing qualitatively new about what is required of Customs in the Bill. It is merely the circumstances that are different.
  The obligation is on the taxpayer to register. There is not a de minimis level, but certain activities are exempt. If there were a de minimis level, the environmental cost of extraction would not be addressed equally by all businesses and the levy could be considered unfair, as I pointed out earlier. Everything set out in the clause is workable and straightforward. It presents no novel or insuperable difficulties for Customs and Excise.
  I did not understand the hon. Gentleman's difficulty with subsection (6), which states:
  "In particular, where it appears to the Commissioners that any person … intends to or operate or use any premises … they may, if they think fit, register those premises".
  That is entirely reasonable. If the commissioners read a prospectus, such as that to which he referred, that indicates that there may be some extraction of aggregates, they may, if they think fit, register those premises. I am not sure that he drew attention to any substantial difficulty.
  8 pm
  I do not think that identifying the individuals concerned will be especially difficult. A statutory declaration is already made for the requirements of the annual minerals raised inquiry. As the information is already gathered by the Government, we will have a pretty good idea of the organisations involved, so compiling the register will be relatively straightforward. The list drawn up for the purposes of the levy will be slightly different because of the exemptions, but compiling the list of who should be affected will not be difficult.
  Mr. Letwin: Will my Mr. Jones issuing his prospectus for rock cutting to produce dimension stone appear to the commissioners to constitute grounds for his being registered?
  Mr. Timms: If Mr. Jones is only producing dimension stone, no; if he intends commercially to exploit aggregate, which is a by-product of that process, yes. That is the straightforward position.
  Mr. Letwin: The Financial Secretary's use of words was interesting: he referred to the position if Mr. Jones "intends commercially to exploit" an aggregate. However, that is not what Mr. Jones does; he wants to cut rock to produce dimension stone, which is exempt. That brings us back to the core question. If he also produces
  "spoil, waste, off-cuts and other by-products",
  he is taxable. If his intention is to operate the premises to produce cut rock, may it appear to the commissioners that he falls under subsection (6), despite the fact that his prospectus contains nothing about exploiting aggregates?
  Mr. Timms: That is a matter for the commissioners. The issue is whether an individual appears in a register, not whether that individual pays tax. Does the hon. Gentleman assume that anyone thought fit to be included on the register would automatically pay tax? That is not so: the tax will be based per tonne on aggregate commercially exploited. If the individual involved commercially exploits—sells—aggregate produced as a by-product of his primary activity, that will be taxed, as it should be.
  Mr. Letwin: Is the Financial Secretary saying that in the case of Mr. Jones and similar cases it is possible that someone who will never be taxed will nevertheless be registered and, presumably, inspected? Is it possible that people who never produce anything taxable and never intended to produce anything taxable but who appeared to the commissioners to be intending to produce something taxable will be subject to intrusive inspection?
  Mr. Timms: It is certainly conceivable under the terms of subsection (6) that someone who is thought by the commissioners to be intending commercially to exploit aggregate will be included in the register but never pay tax because he does not commercially exploit aggregate.
  The hon. Member for Kingston and Surbiton anticipated correctly that there would be a regulatory impact assessment. It is available for inspection—I think that it is on the web. The analysis set out in some detail therein indicates that the total set-up costs to the industry will be approximately one ha'penny per tonne extracted; and total recurring costs will be roughly equivalent to 0.3p per tonne extracted. Those are modest sums. I assure him that our aim in all the consultations with the industry as the regulations are drawn up will be to ensure that the burden imposed by compliance with the requirements is minimal.
  The hon. Member for West Dorset appears to have explicitly repudiated the landfill tax. We are witnessing a significant change in the Conservatives' position on environmental taxation. Leading figures in past Conservative Governments believed that there was a role for environmental taxation and most people believe that
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  the landfill tax has been a success. However, those who are in the ascendant in the internal Conservative party disputes of which we are currently hearing a great deal may well be of a different school and not believe that measures such as the landfill tax are appropriate. To the hon. Gentleman and all his hon. Friends who take a similar view, I say that people throughout the country think that there is a role for taxation in addressing environmental issues, and they strongly support measures such as the landfill tax and the aggregates levy.
  It is unusual for me to be able to quote in support of the Government's actions the Council for the Protection of Rural England, but its position is clear. It strongly supports the proposed aggregates levy and the steps that we are taking to use the tax system to promote environmental benefit. The CPRE says that the aggregates levy will help to ensure that the price of primary aggregates
  "better reflects the environmental costs of extraction"
  and that it will help to achieve the Government's goal of prudent use of natural resources. It says that the environmental damage that the aggregates levy is designed to address is occurring now and urges the Government to introduce the levy as soon as possible.
  Many people, including those who support the Conservative party, agree with that view. I urge the hon. Gentleman to be cautious about repudiating environmental tax measures introduced by the previous Government, because many feel that they were appropriate and that others, such as the aggregates levy, are needed.
  Mr. Letwin: I am astonished and delighted by the latitude that has been allowed to the Financial Secretary and me to range way beyond the scope of clause 24. It would therefore be wrong of me to dilate at length now, but I want to respond to the general points that he has just made and then return to the points that relate more narrowly to the clause.
  The principle of environmental charges—genuine charges that are not mishandled into pieces of taxation behind which lies a fiscal aim—is one thing. There is much to be said for making polluters pay through charges that are genuinely not abusable into fiscal measures. However, as the Government's actions in respect of the landfill tax clearly show, that is not the position when a Government enter power who intend to use every means of taxation at their disposal and to invent means of taxation not hitherto at their disposal. I again remind the Financial Secretary that he did not reduce national insurance contributions when he increased the landfill tax.
  However, whatever else one thinks of the landfill tax, given that it was a tax—the thing to which I object—as opposed to a charge, it was at least fairly clear and transparent. That is a major difference between the landfill tax and the legislation before us now. It is a principle of taxation that it should be simple, clear and transparent, but this measure is not simple, clear or transparent.
  Mr. Timms: The hon. Gentleman is shifting his ground. He told the House that he would not have voted for the landfill tax.
  Mr. Letwin: I would not have done so because it was a tax and because I knew that a Government would come along who would use it as a tax, as the current

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  Government have done. Had it been a charge, I would have supported it. That is a critical difference and one that the current Government have brought to light, even though they have been at pains to obscure it because they do not want to admit that in the climate change levy, the aggregates tax and a series of parallel threatened taxes, such as banking levies and the like, they intend to find new sources of revenue. That is not a reputable proceeding in terms of the environment. If the Government were serious about environmental charges or genuine environmental taxes, they would not have reversed VAT on fuel or produced the moratorium on gas-fired combustion in power stations. The fact is that they have not been an environmentally sensitive Government. On the whole, they have sought means of raising tax where they think that they can get away with doing so. That is the principle to which I object.
  Mr. Edward Davey: Does the hon. Gentleman agree that it would be possible for the Government to hypothecate all revenues from the tax to a fund or to rebates? They could make it clear in the Bill that they have no intention to raise revenue from the tax.
  Mr. Letwin: That is an ingenious suggestion, although my hon. Friends and I have not had time to reflect on it. The proposal may have occurred to the hon. Gentleman as an inspiration of the moment. It would involve a sort of Rooker-Wise amendment to environmental taxes, which would turn them by law into crypto-charges. We might be beginning to get somewhere with such a proposal, which could provide some common ground. I do not know whether it will do so, as we need to think about it, but I assure him that the Financial Secretary will not support an amendment that would introduce such a change. It would be more than his job is worth to do so. He would be out of Great George street before he could say "Jack Robinson", or, indeed, "Geoffrey Robinson".
  Mr. Tyrie: He wants the money.
  Mr. Letwin: Exactly. My hon. Friend is right: the Financial Secretary wants the money, and he wants a lot more of it later, when he wants to claim that he is doing something innocuous in relation to something for which legislation has already been introduced. In this case, it is called the aggregates levy, but there is also the climate change levy and so on. The hon. Member for Kingston and Surbiton (Mr. Davey) is lobbing a huge grenade into the Government's programme. I look forward to debating in Committee a series of amendments such as that which he proposes. In fact, if we put our minds to the proposal, we might spend most of the Committee stage debating it. I think that that would be much better than discussing most of the rest of the Bill.
  I apologise for that intrusion on your good will, Mrs. Heald. Having responded to the Financial Secretary's goading, I shall return to his remarks about the clause. I am genuinely perplexed about the register. I did not understand how perplexed I was until I heard his remarks. I do not know why the register is being introduced, and he did not tell us why, although he suggested that it was entirely innocuous. He did not say that a person's inclusion on the register has no impact on
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  whether he is taxed, although that was his implication. If that is genuinely the case, I suggest that the register is a bureaucratic apparatus that should be obliterated.
  However, let me deal with the more charitable hypothesis that, despite the Financial Secretary's unguarded remarks, the register has a purpose and is not being introduced merely to create an extra clause. If that is the case, we must speculate on its purpose. I do not know about that, although I take it that the point of including people on a register is to get them into the Weberian grip of bureaucracy. Bureaucracies are about information, and that is what registers provide. Once people are on the register, they are in the hands of the bureaucracy. In other words, one is a datum on the bureaucracy's data sheets. It knows about us. What is the consequence of the bureaucracy's knowing about people? It comes to visit them. It inspects and looks into them. They are part of what it regards as the possibly taxable community.
  8.15 pm
  How does Customs and Excise operate in relation to people who are part of the possibly taxable community? It presumes that those who are on its registers and who enter into its data should be taxed. If they turn out not to be paying tax, it will send out into the highways and byways experienced, powerful-minded individuals who will come to find out why they are not doing so. That is what is worrying me, as I expect the Financial Secretary knows.
  Mr. Timms: Can the hon. Gentleman give any examples of taxes for which there is no register of taxpayers?
  Mr. Letwin: As a matter of fact, I do not know whether there is a register of income tax payers. If the Financial Secretary's implication is correct, however, he is rather arguing my way. If the point of registers is to tax people, and if registers are generally attached to taxes, his accusation that I was making an elision in supposing that inclusion on the register related to paying tax is false. If he is correct that taxes are generally accompanied by registers, I am right to suggest that inclusion on a register is generally accompanied by taxation. That is the point of being on a register. The point about a person being expected to be taxed is that Customs and Excise will presume that that person should be paying tax. If a person should be paying tax, Customs and Excise will come down like a ton of bricks if he or she is not doing so.
  I shall return to Mr. Jones, who is doing his stone cutting and appears to the commissioners to be somebody who intends to do something that might be taxable, poor man, but then turns out not to produce any product that he recognises to be an aggregate. He is not doing anything that he recognises as commercially exploiting a material, but he will be visited by Customs and Excise, which will ask why no tax is being paid. Instead of cutting stone, Mr. Jones will be involved in weeks or months of intensive negotiation with various levels of Customs and Excise. Not least, he will perhaps eventually be involved with the commissioners, who do not even have to respond to him. If they do not do so, they are taken to have judged against him—a point to which we shall return later. The process will be a huge intrusion.

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  If none of that is true, and the Government do not intend to create circumstances in which there is a presumption of guilt—an assumption that people should be taxable once they are on the register—I do not see the need for the register. The Financial Secretary has not explained that need, unless the register is an attempt to create a presumption that somebody who is included on it should be paying the tax, so that the bureaucracy can visit, inspect and pursue. Of course, that is fine with regard to people who are genuinely liable for tax because they are carrying out the activities in question. However, introducing arrangements for somebody who merely appears to the commissioners to intend to carry out such activities seems part of a slippery slope towards an unintended tyranny.
  Mr. Timms: I must respond to the hon. Gentleman's remarks, even though they were expressed in a somewhat amusing tone.
  Of course, somebody who is included on the register can be issued with an assessment for tax, if that person is making taxable supplies. That is the purpose of the register. If the individual does not need to be registered, he can inform us of that fact. If Customs and Excise is satisfied that he is not commercially exploiting aggregates and does not intend to do so, he will be deregistered. That is extremely straightforward and conventional, and I think that the hon. Gentleman's concerns about slippery slopes to tyranny can be set to one side.
  Question put and agreed to.
  Clause 24 ordered to stand part of the Bill.

Schedule 4

  AGGREGATES LEVY: REGISTRATION
  Question proposed, That this schedule be the Fourth schedule to the Bill.
  Mr. Ottaway: I shall make only a couple of points about the schedule. My hon. Friend the Member for West Dorset (Mr. Letwin) brilliantly exposed the flaws and weaknesses in the introduction of the register. The first few lines of the schedule, which are at the heart of the matter, state:
  "An unregistered person who … has formed the intention of carrying out the taxable activities … shall notify the Commissioners of that fact."
  My hon. Friend ruthlessly exposed the flaws in the use of the word "intention". Whose intention is required? The schedule refers to an "unregistered person", but who decides what the intention is? The Financial Secretary rightly looks puzzled, as this is a serious question. However, as any lawyer in his first year of law will know, the question concerns the difference between mens rea and actus reus—the difference between "Does he have the intent?" and "Is he deemed to have had the intent?" The Minister laughs, but I shall provide an analogy from criminal law. If a man sets out to kill someone, that is classed as mens rea, and he is charged with murder. However, if a man drives a car dangerously and accidentally kills someone, that is manslaughter, and is classed as actus reus. That is a fundamental principle of law.
  Let us relate that to the aggregates levy. The question of intention is fundamental because the schedule provides for substantial fines. Someone can be fined up to 5 per
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  cent. of the relevant levy. However, let us consider the other end of the spectrum. The Financial Secretary said that there was no de minimis provision—no minimum tonnage to qualify for the levy. Yet there is a minimum fine of £250. If aggregates are 12.50 a tonne, that fine applies to anyone who produces 20 tonnes of aggregates, which would probably be approximately the size of the Table before us. That is not much; as a by-product, it is insignificant.
  Someone who produces something that is not taxable, but has a by-product, may have no intention of evading the aggregates levy. There may be a little mound of some substance around the place that makes him liable for a fine. I assume that that attracts a criminal record. The amount is not great, and the Financial Secretary is right to smile. However, there is an important point about intention; its determination is important.
  My hon. Friends may wish to raise other points, but I want to discuss only one further matter, which relates to the Data Protection Act 1998. The schedule gives commissioners the power to publish specific information from the register. The interaction with the Data Protection Act is serious and could involve criminal activity. The commissioners could be guilty of that unless their actions complied with the Act. It would therefore be helpful if the Financial Secretary could give some idea of the way in which the information will be published, and deal with the serious points about criminality and intention.
  Mr. Tyrie: I want to concentrate on paragraph 7, which is entitled "Publication of information on the register". Following the comments of my hon. Friend the Member for Croydon, South (Mr. Ottaway), it is interesting that sub-paragraph (3) states:
  "Information may be published in accordance with this paragraph notwithstanding any obligation not to disclose the information that would otherwise apply."
  I presume that that is a waiver of the Data Protection Act 1998. If not, I should like to know what it means.
  I shall comment on some of the points that my hon. Friend the Member for West Dorset (Mr. Letwin) made about the reason for the register. I agree that perhaps the tax deserves a register, but I am not convinced that it needs to be published. I should be grateful if the Financial Secretary explained the reason for its publication. I understand the reason for a register of companies, and why the public should be able to consult it. I notice that the Financial Secretary feels the need for some advice, and I look forward to hearing it; I shall keep going for long enough for him to receive it. Is the VAT register publicly available as a consultable document? I do not know the answer. Clearly, there should be a VAT register, but is it publicly consultable? Does Customs and Excise have the discretionary power to publish information on it? Do clause 24 and schedule 4 thus follow precedent?
  What information should be published? Paragraph 7 states that the commissioners
  "may publish … any information which—

  (a) is derived from the register; and

  (b) falls within any of the descriptions set out below."

  In other words, the commissioners may publish only information that falls into both categories. Is that interpretation correct, or may they publish any information derived from the register, with (b) as an additional clarification? What is the limiting factor on the amount of information that may be published?

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  Why is the power to publish discretionary? The wording makes it clear that that is the case. Paragraph 7 states:
  "The Commissioners may publish, by such means as they think fit, any information",
  and so on. If some information is to be in the public domain, would not it be sensible to establish what information is to be placed there, provide a list and state that that will be done at a given time—perhaps once a year, or more frequently on the internet?
  I do not follow the logic of the provision. As in so many measures introduced by the Government—and, occasionally, by previous Conservative Governments—the provision is unnecessarily wide. It grants a huge amount of power to the commissioners. I should be grateful if the Financial Secretary answered my points. Why do the commissioners need to publish? Why not list the information that is to be published? Why not remove the discretion from the commissioners? Does the provision follow a precedent set by the VAT register and others?
  Mr. Timms: I do not understand the difficulty with paragraph 1, which is clear. If the individual does not intend to sell the aggregate, he is not required to register. If he intends to sell, he should register. That seems straightforward to me. I do not share the difficulty that the hon. Member for Croydon, South (Mr. Ottaway) has with that.
  Now let me deal with some of the other points. The names and business addresses of people who exploit aggregates commercially are already in the public domain. I refer to the statutory declaration that is already required. Customs and Excise will produce a consolidated list of those people whose details are already available, which should not give rise to any alarm.
  8.30 pm
  Mr. Letwin: Perhaps what the Financial Secretary has just said shows that I have entirely failed to understand the articulation of clause 19. Certainly either I have done so, or he has. Clause 19(1)(a) seems to make it clear to the ordinary reader that a quantity of aggregate is subjected to exploitation if
  "it is removed from a site falling within subsection (2)".
  Sites included in subsection (2) include
  "the originating site of the aggregate".
  There is nothing in the provision about selling the aggregate. If the concept of "removal" will do, the Financial Secretary has just given a misdescription of his own Bill and his own tax.
  Mr. Timms: The position is as set out in clause 19. Normally, commercial exploitation will involve selling. There might be occasions on which that is not the case, but normally it will be.
  Mr. Letwin: That really will not do. This is not some sort of general discussion about how to run a kindergarten. This is the law of the land, and if the Bill becomes law, it will say that a quantity of aggregate that is removed from a site is, ipso facto, commercially exploited. If it is thereby commercially exploited, it is prima facie the case
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  that if someone intends to cut rock to make dimension stone, with a by-product that he never expected but which, nevertheless, exists under the definition of aggregate, and he removes it from the site simply to rid himself of the stuff, he is commercially exploiting it. That is not what the Financial Secretary said, and I do not think that it is what he intends to achieve. The problem of intention here is the mismatch between the Financial Secretary's intention and the words of the Bill.
  Mr. Timms: The circumstances that the hon. Gentleman is seeking to construct, in which some unfairness would be perpetrated as a result of the measure, do not exist. Clause 19 sets out what constitutes commercial exploitation, and that is the way in which Customs and Excise will apply the requirements.
  The reason why a register is needed is that customers of those in the aggregate industry have a right to know whether the person supplying aggregate to them—and possibly increasing the price accordingly—is registered for the purposes of the levy. Even without that provision, they would be able to ask Customs and Excise whether a particular person was registered, and Customs and Excise would tell them. That is the position that currently applies with the landfill tax, which, even if it was not supported by the shadow Chief Secretary, was introduced by the previous Government.
  The time and manner of notification, and the information contained in it, will be prescribed in the regulations and will also be set out in a public notice prior to the commencement date. I say to the hon. Member for Chichester (Mr. Tyrie) that that is an entirely conventional procedure, exactly following those relating to the landfill tax. Indeed, a large part of the wording in the schedule and in the other technical parts of the measure is taken word for word from the measures that deal with the landfill tax.
  Mr. Tyrie: Perhaps some mistakes were made in the drafting of the landfill tax legislation—who knows? I do not know, because I was not around. Before the Minister finishes, will he answer the questions that I asked? Why has a discretionary power been given, rather than an order to publish the lists, if the reason given is that customers need to consult the lists to ensure that they are dealing with bona fide suppliers? Are there Data Protection Act implications, and does paragraph 3 act as a waiver to that Act? Why are we not setting out in the Bill what information is to be provided, rather than allowing the commissioners to make up their own minds what information to put into the public domain?
  Mr. Timms: As I said earlier, much of the wording in the schedule was taken from the legislation dealing with the landfill tax. I imagine that similar circumstances will almost certainly apply in this instance, although I will check that and drop the hon. Gentleman a line addressing that point and the others that he has raised.
  Let me say a little more about commercial exploitation, because some misunderstanding may be creeping in here. As the hon. Member for West Dorset (Mr. Letwin) said, clause 19(1) says that aggregate is subjected to exploitation if it is removed from a site. However, aggregate is commercially exploited only if the conditions in clause 19(3), too, are met. In all those circumstances a

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  person might be registrable, but if it is clear that no tax will be due, despite all that, Customs and Excise will not need to include the individual on the register.
  Mr. Letwin: I am afraid that that does not answer the question either. The Financial Secretary should look at clause 19(3). Incidentally, it is not clear whether paragraphs (a), (b), (c), (d) and (e) are, as it were, exclusive, but I assume that there is, in conceptual terms, an "or" after each paragraph. There is neither an "and" nor an "or" in my text.
  Mr. Timms: In fact, there is an "and" at the end of paragraph (d).
  Mr. Letwin: Indeed there is. Perhaps this is helpful. Is the Financial Secretary telling us that commercial exploitation of something that is exploited under clause 19(1) occurs only if all the conditions in paragraphs (a), (b), (c), (d) and (e) of subsection (3) apply simultaneously?
  Mr. Timms: Yes.
  Mr. Letwin: That is genuinely helpful.
  Question put and agreed to.
  Schedule 4 agreed to.
  Clause 25 ordered to stand part of the Bill.

Clause 26

  SECURITY FOR LEVY
  Question proposed, That the clause stand part of the Bill.
  Mr. Letwin: I am sorry that we must return to some of the debate we have just had, but I am glad that we are doing so in that, following the Financial Secretary's helpful clarification, it is clear to me—after another look at clause 19(3)—that my point has not been answered.
  Clause 26 reveals the next feature of the scene. Subsection (1) tells us that a person who is registered may be required by the commissioners to give security. It is not just that my poor Mr. Jones has to appear on the register. It is not just that—as was pointed out by my hon. Friend the Member for Croydon, South (Mr. Ottaway)— if he does not make the right noises, attract the attention of Customs and Excise and find himself on the register, he may pay a fine that may be 5 per cent. of what would have been his levy, or £250 if that is the lesser sum. It is not just that Customs and Excise can visit him, inspect him and presume him to be guilty—to be someone who should be paying tax, but is not. He can be required to give security: to lend Customs and Excise money, so to speak. That is the next purpose of his being on the register.
  We discover from line 14, the second line of clause 26(1), that a person does not need to be on the register to be required to give security; he can simply be "required to be registered". Whoever drafted the clause had very much in mind precisely the case of my Mr. Jones. We are talking about someone who, it appeared to the commissioners, had the intention—who had not thought himself that he had the intention, and had not asked to be on the register, but has been required to be registered and must now give security.
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  We return to the question of what intention this person must appear to the commissioners to have had in order to find himself in the invidious position of being presumed guilty, inspected, fined if he does not go on to the register and, under clause 26, required to give security. The answer is that he must have had the intention of exploiting commercially. The Financial Secretary thought that he had found a way out of that by explaining—very helpfully—that, under clause 19(3), to be commercially exploiting, someone who is exploiting under clause 19(1), whose definitions of exploitation include simply removing aggregate from a site, must simultaneously fulfil the conditions of paragraphs (a), (b), (c), (d) and (e) of subsection (3).
  Let us have a look at those paragraphs. Is any of them, in layman's terms, a normal measure of exploitation—or, to put it another way, selling? That is the word that the Financial Secretary used—incautiously, because it betrayed his real intention, which, unlike the clause, was perfectly rational. The answer is no.
  Let us look at subsection (3)(a). It is commercial exploitation if, as part of the phenomenon, the thing in question
  "is subjected to exploitation in the course or furtherance of a business".
  Clearly, my Mr. Jones is in the course or furtherance of a business and so will everyone else who is relevant be. Subsection (3)(b) says that it is commercial exploitation if
  "the exploitation to which"
  the thing
  "is subjected does not consist in its removal from one registered site to another".
  Mr. Jones is in no such position: he has only one site. Subsection (3)(c) states that it is commercial exploitation if the exploitation
  "does not consist in or require its removal to a registered site".
  Of course, that will not be the case because, again, he has only one site. Subsection (3)(d) states that it is commercial exploitation if the exploitation does not
  "consist in or require its removal to any premises for the purpose of having china clay or ball clay extracted"—
  that is not his business; it is not relevant. Subsection (3)(e) states that it is commercial exploitation if the exploitation is not such that
  "as a result and without its being subjected to any process involving its being mixed with any other substance or material (apart from water), it again becomes part of the land".
  Again, that is not the case with Mr. Jones and his dust.
  Therefore, Mr. Jones can, I fear, be judged by the commissioners in their wisdom to be intending to be commercially exploiting some dust. I speculate; I do not know. The Minister does not know. He cannot tell me whether dust is included, but I think that it might be—some dust that comes about when Mr. Jones is engaged in the admittedly exempt process of cutting some stone to produce some rock to produce some dimension stone. He is not selling the stuff. He is not intending to sell the stuff. The Bill does not ask him to prove that he is selling the stuff, or otherwise. It makes no reference to selling. It must be the case that he fits within subsections (1) and (3) of clause 19, taking 19(3) to mean 19(3)(a) to (e) simultaneously applied.
  My Mr. Jones could well fit in exactly that category. What does he have to do? He has to put down security under clause 26. He has to pay a fine if he does not register.

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  He has to permit the Inland Revenue, presumably, to inspect his premises as someone who is registered. When it does, it will undoubtedly ask why on earth he is not paying the tax.
  This is a poor situation. Again, I am more than happy to acknowledge my error if I have made one, but, as far as I could make out, the Financial Secretary genuinely thought, as a normal and intelligent person might have, that clause 19, with the various other clauses that we are discussing, including clause 26, would have the commonsensical effect of clobbering all those people in all those ways only if they were intending to sell something. However, that is not what the Bill does. It is very surprising that the Financial Secretary should come here and talk about selling when that is not what the Bill does, unless I have missed something else.
  Mr. Timms: Clause 26 allows the commissioners to request a payment from a person where they think that that might be necessary to protect the Revenue. The provision is common to other taxes and duties under the care and management of Customs and Excise. The commissioners have the power to decide how much and in what manner such a security must be paid, and may apply penalties in the event that a requirement to provide security has not been complied with.
  The security can take the form of a bank guarantee, a bond or indeed a cash deposit. It is a sensible precaution. We need the power to be able to protect the Revenue. We do not intend routinely to ask for security. The powers will be used by Customs only where they are necessary, and where there is a chance that levy that has been collected from customers will not be accounted for.
  There is the availability of the commissioners' review and the independent appeal procedures, provided for in clauses 40 and 41. Any appeal against requirement, or the amount of security can be heard without payment or deposit of the disputed amount of security, so the usual safeguards are all in place. These arrangements appear elsewhere in the tax system. I hope that the Committee will not find difficulty with them.
  Question put and agreed to.
  Clause 26 ordered to stand part of the Bill.
  Clause 27 ordered to stand part of the Bill.

Schedule 5

  AGGREGATES LEVY: RECOVERY AND INTEREST.
  Question proposed, That this schedule be the Fifth schedule to the Bill.
  8.45 pm
  Mr. Ottaway: Paragraph 10 of schedule 5 would impose a swingeing level of penalty interest at some 10 percentage points above the rate applicable under the Finance Act 1996 which, I imagine, is the base rate or something similar to it.
  The situation is exacerbated by paragraph 10(5), which cuts out a number of the mitigating factors that might have been taken into account in terms of a failure to pay the levy. The swingeing rate is imposed when there seem to be perfectly good reasons for not paying the levy, such
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  as insufficiency of funds. Paragraph 10(5)(b) deals with the question of losses, while (c) concerns whether or not the person has been acting in good faith. If someone acting in good faith fails to pay the aggregates levy and finds himself hit by the base rate plus 10 percentage points, that will be draconian. I would be grateful if the Minister could throw some light on the thinking on this point.
  Mr. Timms: The schedule contains provisions for the recovery of debts, assessments and interest as a necessary part of the arrangements. It provides that the commissioners may, in certain circumstances, make an assessment of the amount of levy due and, having so notified the person concerned, recover the amount as a debt due to the Crown.
  The schedule details the circumstances in which an assessment may be made and specifies other conditions concerning the operation of assessments, including time limits within which an assessment may be made. The power to make an assessment of levy due within the boundaries established by law is an important element of an effective control regime for any tax. It is entirely sensible that, where necessary—for example, because a registered person has failed to make any returns as required by law and thus has not paid the levy due—there should be a means by which Customs can act to recover the levy. The schedule provides an effective and reasonable means for Customs to use its best judgment to collect levy which is due but has not been declared, and it is an essential control measure to deter abuse.
  Clause 27 and schedule 5 provide for penalty interest to be imposed in certain circumstances; for example, some failures to pay the levy by the due date. Again, this is a conventional arrangement. Penalty interest is compound interest, calculated— as the hon. Member for Croydon, South (Mr. Ottaway) says—at the penalty rate of 10 percentage points above the ordinary rate. Generally, penalty interest is imposed on outstanding debts and is at a higher rate because it represents ordinary interest plus a penalty.
  Again, I underline the fact that all these provisions are already in force in other regimes and, to my knowledge, are not causing any difficulties within them. I do not think that there are any exceptional circumstances here which mean that different arrangements should apply.
  In all these matters, taxpayers have the right of appeal to an independent tribunal following a review by the commissioners. That is set out in clause 40. The interest is calculated daily but is added to the principal once a month. The rate of 10 percentage points to which I have referred is calculated on the rate for ordinary interest that is applicable under section 197 of the Finance Act 1996. This is a conventional arrangement and I hope that the Committee will find no difficulty with it.
  Question put and agreed to.
  Schedule 5 agreed to.
  Clause 28 ordered to stand part of the Bill.

Schedule 6

  AGGREGATES LEVY: EVASION, MISDECLARATION AND NEGLECT
  Question proposed, That this schedule be the Sixth schedule to the Bill.
  Mr. Ottaway: Again, I wish to probe the Minister's thinking on what seems to be a heavy hand in the drafting.

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  I accept his claim that schedule 5 follows past precedents. None the less, I would be surprised if that were the case with schedule 6, which creates a new series of criminal offences in relation to evasion of the aggregates levy. That appears to be a massive overkill, given that the Crown can already prosecute for conspiracy to defraud or for the common law offence of cheating.
  Paragraph 3 of part I is especially offensive, because it states that
  "A person is guilty of an offence under this paragraph if his conduct during any particular period must have involved the commission by him of one or more offences under the preceding provisions of this Schedule."
  That is tantamount to guilt by mere submission and could lead, in this case, to a prison sentence of up to seven years or an unlimited fine. The test of guilt must be much tighter, because we cannot have people subject to such penalties on the suspicion that they must have been involved in the commission of an offence.
  Mr. Timms: The schedule covers procedures for evasion, misdeclaration and neglect, and specifies several offences and the related penalties. It deals, therefore, with the criminal offences and the sentences regime for the aggregates levy. Breaches of most of the requirements stemming from the law or regulations are covered by a civil penalty regime, but criminal sanctions are still needed for serious cases of fraudulent evasion of the levy and other serious offences. Effective punishment must be available for those who break the law or who seek to evade payment of the levy.
  The schedule also provides for a civil penalty for fraudulent evasion of the levy. As is common practice in other tax areas, it allows Customs and Excise the discretion to deal under the civil penalty regime with an offence that would otherwise require prosecution as a criminal offence. That point may be of some reassurance to the hon. Member for Croydon, South (Mr. Ottaway). The provision is an incentive for the taxpayer to co-operate with Customs and Excise once the fraud has been discovered and also prevents needless expense being incurred by prosecuting offences involving small amounts through the criminal courts. That allows some flexibility, which I hope that the hon. Gentleman will welcome.
  I did not entirely follow the difficulty that the hon. Gentleman has with paragraph 3(1), because it is a straightforward statement that breaches of the provisions set out earlier in the schedule constitute an offence.
  Mr. Ottaway: The Minister is going right to the point. The words are "must have": no evidence needs to be produced. There need only be suspicion, and in my judgment that is not good enough, when there are such heavy fines or a seven-year prison sentence.
  Mr. Timms: I do not think that that is what is envisaged. The normal arrangements for evidence and court process will of course apply. I see no particular cause for alarm. If I am missing something, the hon. Gentleman might drop me a line and I will be happy to pursue the matter further. Again, I think that this is an entirely conventional arrangement.
  Schedule 6 agreed to.
  Clause 29 ordered to stand part of the Bill.
  Schedule 7 agreed to.

Clause 30

  CREDIT FOR AGGREGATES LEVY
  Question proposed, That the clause stand part of the Bill.
  Mr. Letwin: I shall limit myself to a minute and a half, to enable the hon. Member for Somerton and Frome (Mr. Heath) to have his say.
  The mechanism in the clause is probably the right mechanism for solving part of the problem that we will debate later in relation to pre-cast concrete. I see no reason why exports, and import substitution, which we will come to later, cannot be subject to exactly the same regime, regardless of whether we are dealing with raw aggregates or the fabricated material. I hope that, when we come to that debate, we can look back at this clause and see an exact parallel that will enable us to resolve the problem of pre-cast concrete and safeguard the jobs that are at stake. I will not dwell on the subject now, as we will have plenty of opportunity to debate it later, but I wanted to ensure that we have a hook on which to hang those remarks.
  Mr. David Heath: There is the age-old question whether, in subsection (1), the "may" should be a "will". I believe that it should.
  The hon. Member for West Dorset (Mr. Letwin) referred to exports. There is a strong argument for using this mechanism for pre-cast concrete, which represents about 3 per cent. of UK sales, and 9 per cent. in the case of paving. There is clearly a problem.
  It is hard to understand why the processes referred to in subsection (1)(c) are not listed, even in rudimentary form, especially as in clause 18(3) relevant substances are listed exhaustively.
  Finally, under subsection (2)(c), it is hard to see why no interest is to be added if repayment is in the form of a refund, given that provision is made later in the clause for interest to be added to a credit. I ask the Minister to look at that anomaly.
  Mr. Timms: We will be looking at the main points raised by the hon. Member for Croydon, South (Mr. Ottaway) and for Somerton and Frome (Mr. Heath) later.
  It being Nine o'clock, THE DEPUTY CHAIRMAN, pursuant to Orders [7 November and 9 April], put forthwith the Question already proposed from the Chair.
  Clause 30 ordered to stand part of the Bill.

Clause 31

  REPAYMENTS OF OVERPAID LEVY
  Question proposed, That the clause stand part of the Bill.
  Mr. Ottaway: Clause 31 should, in truth, be considered with clause 32. It deals with repayments of overpaid levy. It provides that when a person has paid an amount to the commissioners by way of aggregates levy that was not levy due to them, they should he liable to repay the amount. That amount is repaid only on the making of a claim.

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  It would be helpful if the Minister spelled out his thinking with regard to the clause. How does he see it working, and under what circumstances are people likely to pay a levy that was not due? Will it be as a result of overcharging by Customs and Excise, in which case it would be an error on its part? Will it be repaid with interest under those circumstances?
  Under what circumstances does the Financial Secretary envisage that a claim will be made? What would happen, for example, if Customs and Excise realised that some poor chap had overpaid the levy without realising it? Is it under an obligation to repay the money? Under clause 31(2), that does not seem to be the case. Will the Minister consider what would happen in the event of an error being made of which the levee was not aware? There is a three-year time limit under clause 32, which we can perhaps deal with later, along with schedule 8. It would assist the Committee if the Minister could enlighten us with regard to these important administrative points.
  Mr. Timms: The clause provides for the repayment of overpaid levy. It enables Customs and Excise to prescribe in regulations the form and manner of claims for repayment. The measures allows for adjustments once errors of this nature are identified. It is clearly a necessary component of any fair tax and, as with so many other measures that we have been discussing, is a replication of measures that apply widely across the tax system and work well.
  It will not be difficult for people to claim repayment. The hon. Gentleman referred to clause 31(2). The procedure will be kept as simple as possible. Details will be published in a public notice prior to the commencement date so there should be no difficulty about how to do that. The system will be designed to be fair; Customs and Excise will require evidence of any overpayment that is claimed. That will be specified in regulations and in the public notice. There will, of course, be the right of appeal against an initial decision by Customs and Excise, as is conventional, in the form of a review by Customs and Excise and, if the party is still unsatisfied, by appeal to an independent tribunal. These established and familiar arrangements work well elsewhere, and I hope that the Committee accepts that they will do so in this instance.
  Mr. Ottaway: I am grateful for that, but the Minister has not dealt with my central point. What would happen when the person levied—the payer—had not made a claim because he was unaware that he had overpaid? Would Customs and Excise be under a duty to repay or to notify the person on whom the levy had been laid? The point applies in several areas. I have often wondered what happens in the Inland Revenue. If, for example, the Minister had inadvertently overpaid tax, I am sure that he would expect the Revenue to notify him if it knew about it. The same should apply here. The point is unclear, and I wonder whether the Minister might think about it and return to it on Report.
  Mr. Timms: I shall be happy to reflect on the point. I do not believe that the Bill contains anything novel by comparison with arrangements that apply elsewhere. The position on liability and responsibility is set out in
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  clause 31(2), which compares with what happens elsewhere in the tax system. I have no doubt that if the commissioners became aware of overpayment, they would take steps to put it right.
  It would be unusual for the commissioners to be aware that tax had been overpaid if the person who had paid the levy was not aware of it. I cannot think what circumstances might give rise to that, but if the hon. Gentleman wants to raise any variations on that theme, I shall be happy to think about them.
  Question put and agreed to.
  Clause 31 ordered to stand part of the Bill.

Clause 32

  SUPPLEMENTAL PROVISIONS ABOUT REPAYMENTS ETC.
  Question proposed, That the clause stand part of the Bill.
  Mr. Ottaway: Having just about heard an "Aye" out of the less than massed ranks on the Government Benches for the previous clause, I shall raise a point already alluded to in the previous debate. Does the three-year time limit stem from the knowledge of overpayment or from overpayment itself? If a chap had overpaid but did not become aware of it for a year, would the three years begin then or would it have begun at the date of overpayment?
  My only other point relates to the terribly subjective reference to unjust enrichment in clause 32(2), which states:
  "In the case of any claim for a repayment of an amount of aggregates levy other than a claim to a repayment to which a person is entitled by virtue of tax credit regulations, it shall be a defence to that claim that the repayment of that amount would unjustly enrich the claimant."
  Why should that be a defence? What does the Minister have in mind in referring to unjust enrichment? He may be satisfied with enrichment, but not with unjust enrichment. What does he mean by unjust, and what precedents and criteria are being applied?
  One assumes that the decision would be taken by the commissioners, and I hope that the Minister will confirm that there will be a right of appeal. Perhaps that appeal should be beyond the appeal procedure set out in the Bill.
  We are well aware that the concept of unjust enrichment is set out elsewhere, but I should be grateful if the Minister could tell us to what extent it applies in this provision. Perhaps the Minister may draw some comfort from subsection (4)(b), which deals with the extent to which
  "any enrichment of the taxpayer would be unjust".
  Obviously, much thinking has gone into the nature of justness or unjustness. Perhaps the Minister could tell us which criteria would be involved.
  Mr. Timms: The clause does indeed contain further provisions about repayment of the levy. The time limit of three years is set for claiming repayment of overpaid levy; that will be three years from the overpayment occurring, I think, but I may well want to return to that point before we conclude our consideration of the clause.
  Non-payment of claims is provided for if that is considered to result in unjust enrichment. The circumstances that we have in mind are when an amount of

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  levy is due for repayment to the claimant, but another person has in fact borne the cost. In that situation, unjust enrichment would occur.
  The time limit is to establish reasonable control over the levy. It is similar to other time limits in Customs legislation. The three years run from the making of the claim—that is set out in 32(1). The measure allows for repayment of additional costs incurred, if they are sufficiently quantified. That relates to a point made earlier by the hon. Member for Croydon, South (Mr. Ottaway) on interest payable by Customs when levy has been overpaid. Interest is payable by Customs as long as an error by Customs led to the overpayment.
  Mr. Ottaway: May I press the Minister on the point about the three years from the making of the claim? Once the claim has been made, what is the relevance of the three-year period? Can the claim relate back only three years, or do the commissioners have three years in which to make the payment? That would be ludicrous. The clause refers to an amount paid
  "three years before the making of the claim",
  so I repeat my question: does the three-year period start to run from the moment that the overpayment is made or in some other circumstances?
  Mr. Timms: It is the former—it relates back.
  Question put and agreed to.
  Clause 32 ordered to stand part of the Bill.

Schedule 8

  AGGREGATES LEVY: REPAYMENTS AND CREDITS
  Question proposed, That this schedule be the Eighth schedule to the Bill.
  Mr. Ottaway: Schedule 8 relates to aggregates levy repayments and credits and the reimbursement arrangements. As the schedule is detailed, long and extensive, it would be helpful to the Committee if the Minister could briefly set out his thinking on it.
  Mr. Timms: I do not have a great deal to add to what I have already said on the subject. My remarks on clause 32 apply equally to schedule 8. I do not apologise for repeatedly making the point that all these arrangements are wholly conventional and reproduce arrangements that work well elsewhere in the tax system. We need provisions on repayments. Such provisions are set out in the schedule. They work well elsewhere, and I have no doubt at all that they will work extremely well in this measure.
  Question put and agreed to.
  Schedule 8 agreed to.

Clause 33

  APPOINTMENT OF TAX REPRESENTATIVES
  Question proposed, That the clause stand part of the Bill.
  9.15 pm
  Mr. Letwin: I should like to begin by asking the Financial Secretary to confirm that clause 33 replicates the standard VAT provisions. I wonder whether he can give us an idea of how far the clause will apply. That is relevant in the context of the debate that we shall have on the serious matter of job exports. So far as the Government are aware, what is the structure of the industry's non-resident holdings? Are there significant non-resident holding companies with significant subsidiaries that operate or—to revert to our earlier discussion—could appear to the commissioners to be intended to operate in a taxable domain in respect of the aggregates levy?
  Has the Financial Secretary discussed the European Union aspects of the clause in relation to any such non-resident holding companies and their subsidiaries? Has he received legal advice on that? Is he aware of the legal challenges to the proposal and its effects currently being contemplated and mounted by various people in the domestic industry under EU law? What advice has he had about that? It would be helpful to understand those points, which relate to clause 33, although their importance will become evident when we debate clause 48—the substantive debate that we need to have in the time remaining this evening.
  Mr. Timms: Clauses 33 and 34 are technical provisions, the purpose of which, in common with the other indirect taxes, is to provide special treatment for non-resident companies to protect the Inland Revenue. The great bulk of the provisions is based on those for the landfill tax, much of which was, in turn, drawn from the arrangements for VAT, as the hon. Gentleman suggests. However, the provisions are not intended to address non-resident holding companies; they are essentially intended to deal with importers who do not have a permanent base in the United Kingdom. Air passenger duty is an example of the need for such provisions.
  I do not have the information that the hon. Gentleman requests, and I have received no representations about a legal challenge. Of course, EU state aid arrangements will need to be discussed, and those discussions will take place in the usual way.
  Mr. Letwin: I am grateful to the Financial Secretary for that response. I am sorry, but I seem to have misunderstood the point that he made about the purpose of the clause. Is he saying that the purpose is to catch the importer who could otherwise avoid the import form of the levy?
  Mr. Timms indicated assent.
  Mr. Letwin: That clarification is very helpful. In that case, I shall ask a question different from the one I misguidedly asked in the first place. How will non-resident holding companies with substantial subsidiaries in this country be affected? Will the domestic subsidiary simply be treated as an ordinary domestic company for the purposes of the tax?
  Mr. Timms indicated assent.
  Mr. Letwin: I am grateful for that clarification. In that case, I have a further hypothetical question, because I do

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  not imagine that there will be many imports of pure gravel. However, when an import qualifies for the levy because it appears in the taxable form of gravel and not as prefabricated concrete, I understand that it will be subject to the levy exactly as if it had been moved from a UK quarry. Under the terms of clause 19, it will be treated as if it had been commercially exploited. If that is the case, presumably there is a clear argument for parity of treatment between the domestic and the imported product.
  I take it that no state aid issue will result from such parity, but does it not follow that an odd and negative state aid issue will arise in relation to an import that escapes the levy because it has been cloaked in the form of prefabricated concrete? If the same object is produced by a domestic subsidiary of a non-resident holding company, it would be subject to the levy because it is produced domestically. Has the Financial Secretary received any advice on that matter?
  Mr. Timms: I have been involved in several discussions with Brussels about state aid matters, and I do not envisage any concerns being raised about the point to which the hon. Gentleman has drawn attention.
  Question put and agreed to.
  Clause 33 ordered to stand part of the Bill.
  Clause 34 ordered to stand part of the Bill.

Clause 35

  GROUPS OF COMPANIES ETC.
  Question proposed, That the clause stand part of the Bill.
  Mr. Letwin: The Committee will be grateful if the Financial Secretary can confirm that the clause will lead to the same treatment for groups as in other indirect taxation legislation, such as that for VAT.
  Will the Financial Secretary also say something about clause 35(2)? It states:
  "Any aggregates levy with which a body corporate is charged in respect of aggregate subjected to commercial exploitation at a time when the body is a member of a group shall be treated for the purposes of this Part as if it were the representative member for that group (instead of that body) which is charged with the levy."
  If we ignore the words "subjected to commercial exploitation" and substitute them with the word "sold"—which the Financial Secretary unguardedly used earlier and tried to apply to clause 19, even though it does not apply—clause 35(2) would be a standard provision. It would operate in the same way as any other legislation on indirect taxes, and quite rightly so. It would be a straightforward anti-evasion measure that was designed to prevent corporate reorganisations resulting in the evasion of tax.
  To return to the issue of commercial exploitation, however, I persist in not understanding, among other things, how clause 19 will work from a sheer practical point of view, even if we leave aside the particular problems that would emerge from the case of Mr. Jones, about which I speculated earlier. Clause 35(2) exposes the issue beautifully and, under it, we must ask when commercial exploitation has occurred—and "when" is the
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  all important issue. It is not enough to know whether commercial exploitation occurred; what matters is when it occurred.
  Let me consider the matter in the reverse order of logic. I persist in believing that after we have completed the tests in clause 19(3), which determine whether the exploitation is commercial and which have, according to the Minister, to be taken simultaneously, we still have to ask at what moment that exploitation occurred. For that, we must look to clause 19(1), which tells us nothing about when that might have been—perhaps it is not meant to. I remember lecturing about such "if, and only if" clauses at Cambridge. They are jolly good for some logical purposes, but are of no use for temporal purposes.
  It is clear that paragraphs (a), (b), (c) and (d) of clause 19(1) are followed by an implicit "or"—indeed, paragraph (c) has an actual "or" after it. If the Minister is using the method of statutory construction in which the "and" in clause 19(3)(d) implies that paragraphs (a), (b), (c), (d) and (e) have to be taken together, then the "or" at the end of clause 19(1)(c) must imply that aggregate is exploited if it comes under paragraphs (a) or (b) or (c) or (d).
  Clearly such activities could occur at different times. If the quantity of aggregate is subjected to exploitation when it is removed from a relevant site, that will not necessarily happen at the same moment as the aggregate
  "becomes subject to an agreement to supply it to any person",
  as set out in clause 19(1)(b). Neither of those moments is likely to happen at the same time as the aggregate is used for construction purposes, as set out in paragraph (c). That is likely to be later on in the day; for all I know, it may occur at a different time from when the aggregate
  "is mixed"—
  except in permitted circumstances, on which we need not dwell—
  "with any material or substance other than water",
  as set out in paragraph (d). So there are three or possibly four moments, any one of which would qualify as exploitation: hence—as the tests in clause 19(3) have hypothetically been simultaneously satisfied—the aggregate is deemed to have been commercially exploited.
  Clause 35 deals with groups of companies and with evasion. Subsection (2) states:
  "Any aggregates levy with which a body corporate is charged in respect of aggregate subjected to commercial exploitation at a time when the body is a member of a group".
  When is that time? Let us suppose that the body was a member of the group when the product was removed from a site falling within subsection (2), under clause 19(1)(a), but was not a member when it became subject to an agreement to supply it, or when it was used for construction, or when it was mixed other than in permitted circumstances and so on. What is the relevant time?
  There might be a clear explanation of that, and it would be nice to know what it is. We have a series of tests for exploitation, none of which has anything to do with anyone's ordinary understanding of the term. In addition, they are connected with tests of commercial exploitation which have nothing to do with the understanding not just of an ordinary person, but of an extraordinary person—namely, the Minister. He thought that the crucial test is the time of the sale, but it is not.
  We are left with a genuine question about the time. My guess is that we do not know the answer and will have to wait and see how the courts deal with the problem, which

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  may differ over the years. I leave that speculation on the table in the hope that I can withdraw it after the Minister has cast light on that interesting question.
  9.30 pm
  Mr. Timms: These are technical provisions. Their purpose, in common with similar measures on other indirect taxes, is to provide for special treatment for groups of companies to protect their revenue and facilitate the administration of the tax.
  As the hon. Member for West Dorset (Mr. Letwin) suspected, the clause is based on the arrangements for VAT, but it is not exactly the same because under VAT provisions Customs and Excise can insist on grouping as an anti-avoidance measure. That is not needed in the case of the aggregates levy. This is an entirely voluntary and facilitative arrangement. The clause says that two or more bodies corporate are eligible to be treated as members of the same group for the purposes of the Bill. The fact that the arrangements are not the same as those for VAT may limit the force of the hon. Gentleman's questions.
  When we were discussing clause 33, I rightly repeated that the bulk of the provisions are drawn from the arrangements for the landfill tax, which were drawn from those for VAT. I ought to make it absolutely clear that clause 33 itself is based on the arrangements for air passenger duty, which was also introduced by the previous Government.
  The hon. Gentleman asked about the timing of commercial exploitation. It is determined by whichever activity is the earliest of those listed in clause 19(1)(a) to (d). Clause 19(7)(a) makes it clear that, once commercial exploitation has taken place, it cannot take place again with the same aggregate.
  Mr. Letwin: The Financial Secretary is very helpful. He said that we discover in clause 19(7) the deep truth that it is the timing of the first activity that applies. I see nothing in that subsection that serves the purpose, so to give him time to consider the matter, I shall read it out:
  "For the purposes of this section a quantity of aggregate is mixed with a material or substance in permitted circumstances"—
  that appears to deal only with subsection (1)(d)—
  if … the material or substance with which it is mixed consists wholly of a quantity of taxable aggregate that has not previously been subjected to commercial exploitation … and … the mixing takes place on a site which, in a case where it falls within subsection (2) above in relation to any part of the aggregate included in the mixture, so falls in relation to every part of it."
  I see that that has the effect that mixing, which subsection (1)(d) is concerned with, does not itself constitute a basis for double taxation under the levy if the item in question has previously been taxed under the levy, that is, under paragraphs (a), (b) or (c). I cannot see how subsection (7) in any way tells us which is the relevant date if there is a conflict of dates between subsection (1), paragraphs (a), (b) or (c).
  Last Thursday morning, in a rather unpleasantly spent hour, I went back and looked through clause 19(4), (5) and (6) for an answer to that question. For a brief, glorious moment, I thought that I might have found the answer in subsection (6), which says:
  "For the purposes of this section a quantity of aggregate becomes subject to an agreement to supply it to any person"—
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  the reference to subsection (1)(b)—
  "except to the extent that it is not separately identifiable at the time when the agreement is entered into … and … to that extent, at the time when it is appropriated to the agreement."
  However, I then realised that that is limited to telling us about subsection (1)(b); it tells us nothing about the conflict of timing in paragraphs (a), (b) and (c). Secondly, it tells us nothing about timing anyway. It tells us only something about what is and what is not something subject to an agreement to supply.
  I am bound to say that I cannot see anything in clause 19(4) or (5) that resolves the problem. Clearly, there is nothing in clause 19(1), and the Minister has already told us about clause 19(3), so we are left with clause 19(2), but that tells us exclusively about sites. I am at a loss.
  Mr. Timms: I might be able to help the hon. Gentleman. I apologise for having given him the wrong reference. I should have referred him to clause 17(2)(c), which covers the point he seeks.
  Mr. Letwin: I am grateful to the Financial Secretary. I may have misunderstood. I understand that clause 17(2)(c) has an effect that relates to the point about not subjecting something to double taxation under the levy. I shall explain shortly why I do not think that it solves the problem arising in respect of clause 19(1)(a), (b) and (c)—conflicts of time in relation to clause 35—although I may be mistaken about that.
  Clause 17 states:
  "For the purposes of this Part any quantity of aggregate is, in relation to any occasion on which it is subjected to commercial exploitation, a quantity of taxable aggregate except to the extent that … it is or derives from any aggregate that has already been subjected to a charge to aggregates levy".
  That clearly states the excellent principle that something cannot be taxed twice. However, to return to 19(1)(a), (b) and (c), which are the cause of the problem in relation to clause 35, it could be that the quantity of aggregate involved in relation to the company which was, but is not, part of the group—the issue dealt with under clause 35—was at a certain time "removed from a site", at another time
  "subject to an agreement to supply",
  and at yet another time "used for construction", but at no time "subjected to a charge". It might not be subjected to a charge for some time to come, beyond any of those events.
  I do not see how clause 17(2)(c), which appears to be a general prohibition on double taxing—and is admirable as such—handles the problem of the conflict of times that arises from a problem identifying, not the moment at which the thing was subjected to a charge, but the moment at which it became eligible to be subjected to a charge, which is a different matter altogether. I may be wrong about this and I shall be delighted if the Minister can assure me that the principles of statutory construction in some way determine that clause 17(2)(c) answers the question of which of the times set out in clause 19(1)(a), (b) and (c) is relevant for the purpose of grouping or ungrouping.
  Mr. Timms: I think that it does. I was trying to follow the hon. Gentleman's argument about eligibility for liability for a charge. The point made in clause 19 is that

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  the aggregate becomes liable for levy in the circumstances set out therein, and the impact of clause 17(2)(c) is that it is the first of the "experiences" of a given quantity of aggregate that causes the liability to be incurred. That is the point at which the liability arises.
  Mr. Letwin: I am grateful to the Financial Secretary for saying that. Under Pepper v. Hart, his comments may help the courts by providing some clue of what he is trying to achieve. I cannot see how on earth the wording achieves the effect that he describes, however. I say that not as a lawyer, but as an ordinary human being who is trying to be a legislator. However, he has clearly stated his intention, so I hope that that may guide the courts and provide a perfectly sensible resolution of the issue.
  Let us assume that that is the intention—we must hope that it is also the effect—and consider what will happen if the degrouping to which the clause relates does not lead to avoidance of the tax. I think that the Financial Secretary said that the first of paragraphs (a), (b), (c) and (d) to clause 19(1) would apply before the degrouping. A degrouped company may have removed some relevant substance—in the technical terms of the Bill, it will be an aggregate—from the site, but it will have been covered by 19(1)(a) before the degrouping. Even if the company only later becomes subject to the agreement to supply—in layman's terms, the sale will therefore occur later—and the proceeds go to the degrouped organisation, will not the liability nevertheless arise in relation to the group and not the degrouped entity?
  I cannot believe that that is what the Financial Secretary intends. I think that I understand the purpose of clause 19(1)(a), which is, incidentally, jolly odd. The provision is intended to try to allow Customs and Excise to exercise the maximum leverage. Indeed, that is the spirit of the aggregates levy. One does not have to prove that the material has been sold or that it has ever been used or commercially exploited in any terms that the Financial Secretary or I would ordinarily use as ordinary human beings. One has to prove only that the stuff was taken off the site and did not appear at another registered site. That is easy to prove; it is about the most objective fact that one can get at. I think that clause 19(1)(a) was drafted to make it as easy as possible for Customs and Excise to ensure that it gets the levy.
  That intention gives rise to the oddities that I described in relation to Mr. Jones and his dimension stone cutting, but it also produces oddities in relation to grouping. The construction of the provisions shows that somebody has said, "How can I make dead sure that Customs and Excise can grab the items in question and tax them?" I do not think that that person has asked to a sufficient extent whether it is fair to add such provisions to the mix of criteria for eligibility for the tax. Nor has it been asked whether it would be reasonable to apply the test of clause 19(1)(a) in all the circumstances that may arise.
  This is very complicated terrain, and I do not think that either the Financial Secretary or I have reached the bottom of the matter. Notwithstanding his brave remarks and his splendid Pepper v. Hart explanation of his intentions regarding 17(2)(c), I think that we have probably identified a lacuna in terms of the interaction of clause 35 and clause 19(1). My fear is that there are dozens of other lacunae and that my feeble intellect has not revealed them
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  all in the short time that has been allowed to us. I am afraid that all sorts of similar problems will creep out of the woodwork as this horrible tax is applied. I think that the provision was constructed by somebody who was very attentive to the question of how to grab the tax, and that it was drafted far too quickly to enable a proper investigation of whether all the interactions had been identified so as to ensure fair and sensible results in all cases.
  9.45 pm
  Mr. Timms: The hon. Member for West Dorset (Mr. Letwin) flatters me by suggesting that courts will pore over my words in the debate for years—indeed, centuries—to come. However, we are considering obscure circumstances that the courts will not study frequently.
  The hon. Gentleman is right about the purpose of the element of clause 19 to which he referred. However, I do not believe that the problem that he fears will arise. If the party has moved the aggregate, it is commercial exploitation and tax is due unless we are dealing with an exemption. If commercial exploitation has occurred, and no tax is due, but a second, taxable commercial exploitation takes place, liability arises at that point.
  I shall reflect further on the hon. Gentleman's points. I do not believe that there is a problem, but he is right that the subject is complex. It may therefore be appropriate to reflect further and ascertain whether there is a difficulty. If there is, I shall revert to the subject. I hope and believe that there is no difficulty, but the matter is worth further thought.
  Question put and agreed to.
  Clause 35 ordered to stand part of the Bill.
  Schedule 9 agreed to.

Clause 36

  PARTNERSHIPS AND OTHER UNINCORPORATED BODIES
  Question proposed, That the clause stand part of the Bill.
  Mr. Letwin: Again, I begin by asking the Financial Secretary to confirm that the provision parallels standard clauses in previous legislation. How will that work in the case that we are considering? Representatives of the industry have told me that several people would be caught by subsection (1)(a) and (b). They include sole traders who busy themselves with a quarry; some of them carry out their business in partnership. I stand to be corrected, but I believe that subsection (1) has a wide application to the smaller end of the industry. That is not true of the great aggregates companies—the half dozen or so that comprise the great bulk of production—but of the tail, which must never be forgotten or ignored if we care about our economy. The tail includes many traders who would be caught by subsection (1).
  It is therefore unsatisfactory that we are told only:
  "The Commissioners may by regulations make provision for determining by what persons anything required to be done under this Part is to be done where, apart from those regulations, that requirement would fall on"
  people who are caught by subsection (1)(a) or (b). The position would be less unsatisfactory if the Financial Secretary could give us some idea of the contents of the

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  regulations. The smaller businesses have no idea of
  them or their potential effect. That is bad enough for big businesses. Indeed, the levy's effect on big business is a large part of the problem. For small business, the worst thing will be uncertainty about the regulations, and not knowing what is about to hit it. I hope that the Financial Secretary will give us a clear idea of what the regulations will look like, and of how those who are unincorporated or carrying on a partnership, or both, will be treated.
  In particular, it would be good to know what will happen in the odd cases, and how they will be dealt with. The Minister will, of course, tell us that such cases are very unlikely to occur and highly hypothetical. However, let us suppose that two people, both unincorporated, are knocking away at two parts of the same quarry. When we come to the interesting question under clause 19(1) of when the exploitation occurs or to the difficult questions about which substance we are concerned with when mixtures of substances occur in complicated ways and some materials are encased in others, how will we know which party involved is responsible for what? How will the regulations produced by the commissioners deal with such cases?
  Those are not straightforward cases. We are dealing with complex processes, in which the levy forces a disentangling of substances and times from one another that is unprecedented and that has been unnecessary for other purposes. The regulations will, therefore, have effects that similar regulations relating to most other taxes would not be expected to have. Will the Minister, therefore, give us a clear guide as to what he expects the regulations to look like? Perhaps he might care to deposit a draft of them before the House, before the end of the deliberations in Standing Committee.
  Mr. Timms: These provisions have a great deal in common with other indirect taxes, on which they are based. The wording is lifted directly from the provisions in the legislation for the landfill tax and for VAT. I do not have data about the number of businesses in this sector to which the provisions will apply. However, I do not accept—although this might be splitting hairs—that it is important to get the provisions right only if many businesses are involved. Even when only small numbers of people are affected, the provisions can have a considerable impact on them. It is therefore important to get them right, and that is the view that we take in this case.
  Just as the clause is taken directly from the arrangements for landfill tax and for VAT, so I expect the regulations to look like the regulations that apply to partnerships and other unincorporated bodies in the case of landfill tax and VAT. I would advise the hypothetical individuals to whom the hon. Gentleman referred to look at those regulations. They can be pretty confident that these provisions will look rather like them.
  Question put and agreed to.
  Clause 36 ordered to stand part of the Bill.
  Clauses 37 and 38 ordered to stand part of the Bill.

Clause 39

  TRANSFER OF A BUSINESS AS A GOING CONCERN
  Question proposed, That the clause stand part of the Bill.
  Mr. Letwin: I do not want to detain the Committee long on clause 39. We have a major issue with clause 40, which
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  we want to move on to, but I want briefly to ask a question. There is a perfectly reasonable requirement in clause 39—perhaps the Financial Secretary will confirm that this is in common with much previous legislation—that if one is going to hand over one's business to someone else, one has to tell Customs and Excise about it. I should put it another way: rather unfortunately, the clause allows the commissioners to make regulations that will have that effect. Let me make a general point, and say that throughout the Bill, as in a good deal of other legislation, there is reference to far too much regulation on the part of the commissioners—but that is an overall feature of indirect taxation, for which the Financial Secretary and his colleagues should not be blamed personally.
  I am concerned about a specific matter. If the Financial Secretary will forgive me, I shall return to the hypothetical case of Mr. Jones. Mr. Jones did not think that he was in the business; he thought that he was in another business, which was exempt. The commissioners judged him to be intending to be in a business that would qualify.
  Let us move the story on a bit. Mr. Jones had to register—if he had not, he would have been fined—and he had to deposit a security. As it turns out, that was for nothing, because Mr. Jones has never produced anything taxable. He has never produced anything that, on detailed inspection, could be shown to be an aggregate for the purposes of the Bill. I think that there will be many such cases: by the time it is found that those concerned are not caught by the legislation, they will have been subjected to a huge amount of intrusion.
  Does clause 39 constitute the next intrusion? Let us suppose that poor Mr. Jones, having at last—or so he thinks—reached the end of all that unnecessary and unjustified intrusion by Customs and Excise, wants to sell the business because he is so fed up, or for some other reason. Will he then—because he has been registered under the regulations for which clause 39 provides—have to inform Customs and Excise that he has sold the business, so that the next person along the line may be subject to exactly the same unnecessary harassment, or will the regulations at least prevent that from happening if the person in question, although registered, has never had to pay any of this wretched tax?
  Mr. Timms: The hon. Member for West Dorset (Mr. Letwin) is right again. Clause 39 is a technical provision, securing continuity when a business is transferred from one person to another as a going concern. This is common practice in the case of other indirect taxes.
  I do not know the answer to the hon. Gentleman's specific question, but perhaps I can drop him a line.
  Question put and agreed to.
  Clause 39 ordered to stand part of the Bill.

Clause 40

  REVIEW OF COMMISSIONERS' DECISIONS
  Mr. Ottaway: I beg to move amendment No. 22, in page 33, line 33, leave out "confirmed" and insert "revoked".
  The Chairman of Ways and Means (Sir Alan Haselhurst): With this it will be convenient to discuss amendment No. 23, in clause 41, page 34, line 2, leave out from "above" to end of line 3.
  Mr. Ottaway: Clause 40 applies to
  "any decision of the Commissioners",
  and to powers to review any of those decisions and to appeal. Subsection (1) lists a number of matters relating to the commissioners' powers, while subsection (2) states:
  "Any person who is or will be affected by any decision to which this section applies may by notice in writing to the Commissioners require them to review the decision."
  The commissioners make a decision, but, under certain circumstances, a person who feels affected or aggrieved has a right of appeal and the commissioners look at the decision again—so far, so good.
  10 pm
  Under subsection (3), the appeal is allowed if the notice requiring the review is given before the end of the period of 45 days—again, so far, so good. The grounds for appeal are set out in subsection (5). The facts to be considered by the commissioners have to be new facts. The ground cannot be gone over again—again, so far, so good.
  At that point, having considered the new facts, the commissioners can withdraw, vary or confirm the decision that has been reviewed. This is where the clause comes unstuck. When they have reviewed their decision, they may decide to withdraw, vary or confirm it. If they do not, within the period of 45 days beginning with the day on which the review was required, give notice to the person requiring it of their determination,
  "they shall be deemed to have confirmed the decision."
  Therefore, a chap appeals, he produces new facts and if, after 45 days, nothing is said, that is it. He is not informed. He is not told whether there has been an error or whether something has been missed out. If no one tells him anything, the original decision is confirmed.
  It is clear what has gone on. The Minister has a busy life. He has an extensive Bill. I think that he has done pretty well tonight in dealing with all the points that have been raised, but he may have missed this point. The provision is designed to cover some official who perhaps fails to notify the person of the decision of the commissioners that the original decision stands. It does not deal with the point that there may be an error, that the commissioners may decide to vary their original decision and that, if someone forgot to tell the chap, that effect would be negatived because they would be deemed to have confirmed the original decision. The amendment changes the word "confirmed" to "revoked" to deal with that situation.
  I draw the Minister's attention to the front cover of the Bill, which says,
  "European Convention On Human Rights
  Mr Chancellor of the Exchequer has made the following statement under section 19(1)(a) of the Human Rights Act 1998:
  In my view the provisions of the Finance Bill are compatible with the Convention rights."
  The Chancellor is a busy chap. I suspect that he has not spotted that particular line because, if ever there was a blatant breach of the European convention on human rights, this is it.
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  If I, any of my colleagues or Labour Members were to raise a point of order with you, Sir Alan, they would expect you to respond. They would not expect you just to sit there, thinking that, if you said nothing, it should be assumed that your original decision stood. They would want a response. Anyone who has an appeal wants to hear what the outcome of the review is.
  This is a flagrant breach of natural justice. It involves not only the European convention on human rights, but principles of natural justice going back to the origins of the British legal system. People are entitled to an explanation of the reasons given by the commissioners.
  Mr. Michael Jack: Will my hon. Friend comment on clause 40(4), which states:
  "it shall be the duty of the Commissioners to give written notification of any decision to which this section applies to any person"?
  Does my hon. Friend think that that in any way contradicts the argument that is being advanced?
  Mr. Ottaway: My right hon. Friend has picked up an important point. What's good for the goose should be good for the gander; if there is written notification in subsection (4), why can we not have it in subsection (8)? That is the inconsistency, and I am pretty sure that there has been an error.
  There are two strands of thinking. The first is whether this is a breach of the European convention on human rights; the second is whether it is a breach of a long line of judicial review cases that oblige authorities to give reasons. It is right that I should explore both avenues.
  Article 6 of the European convention provides anybody with the right to a fair trial. The convention refers to a criminal case, whereas what we are discussing does not, although someone who does not pay the right levy will be a criminal. None the less, article 6(1), which refers to civil rights—it is not just a question of criminal cases—states:
  "everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly".
  That article, which has been incorporated by the Government into English jurisdiction, sets out in some detail the circumstances in which that should happen.
  The Financial Secretary has to say why everybody else is entitled to have a public judgment but, under the aggregates levy, there is no right to public judgment. The learned work "Human rights Law and Practices", edited by Lord Lester and David Pannick—two distinguished authors—sets out the criteria for a reasoned judgment, stating:
  "It is a requirement of a fair trial in both civil and criminal matters that a court should give reasons for its judgment.
  For recent consideration of the duty to give reasons both at common law and under the Convention see Stefan v. General Medical Council … where the Privy Council referred to 'the possible reappraisal of the whole position (in relation to the duty to give reasons) which the passing of the Human Rights Act 1988 may bring about', and commented that the provisions of article 6 'will require closer attention to be paid to the duty to give reasons, at least in relation to those cases where a person's civil rights and obligations are being determined'."
  I do not think that we could have a clearer exposition of what is the law and why the proposal is in breach of it.

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  The book states:
  "The extent of the duty to give reasons may vary according to the nature of the decision"
  and sets out a number of cases, such as Ruiz Torija v. Spain and Georgiadis v. Greece. This concerned a
  "violation where court found applicant guilty of 'gross negligence' without particularising matters said to constitute such negligence."
  The book also refers to a series of cases that set out the need for a reasoned judgment.
  That is not the only work that supports my argument. "A Practitioner's Guide to the European Convention on Human Rights" by Karen Reid states:
  "Article 6, paragraph 1 has been interpreted as obliging courts to give reasons for their decisions though this does not require a detailed answer to every question."
  So the courts do not have to go into great detail, but an answer is required. The guide continues:
  "The Convention organs' resistance to constituting a fourth instance leaves in practice little scope for attacking the adequacy of the reasons given in judgments. There has been no development under Article 6 as in the context of Article 8, 9 and 10 that decisions must necessarily be supported by relevant and sufficient reasons."
  No mention is made of the argument that there is no need to give reasons, although the commissioners could note that there is no requirement for the reasons given to be sufficient.
  The guide continues:
  "Lack of reasons in a decision was taken as an aspect of procedural safeguards … In that case, the Bar Council's procedure was open to criticism in two respects: lack of public hearing and the lack of precision in rules or case law as to the meaning of the 'exceptional circumstances' condition required for reinstatement to the Bar."
  It went on to criticise the Bar Council for not giving its reasons.
  I hope that the Committee takes my point that the case law on the issue is well established. On the issue of reasoned judgment, the work "Human Rights and the Courts: Bringing Justice Home", which has a foreword by Lord Irvine of Lairg, the Lord Chancellor no less, states:
  "Article 6(1) provides a general obligation on courts to give reasons for their judgements. This is so that, in the spirit of a fair trial, both the defendant and the public at large may know the basis of the decision."
  There is a clear body of case law and authorities that suggest that the commissioners are obliged to give their reasons and that their judgment should be pronounced publicly.
  The reason for such requirements is to curb the power of the state. It is not acceptable for commissioners to be able to hear an appeal and say not a word. They are obliged to say something of their reasons and must not act with impunity or indiscriminately. Individuals' rights must be clear. If the Government cannot accept the amendment, I hope that they will give it serious consideration. Today, we have discussed many issues of varying importance, but this issue is important and the Minister should give it due consideration—as he usually does.
  Mr. Edward Davey: I rise briefly to support the amendments. The hon. Member for Croydon, South (Mr. Ottaway) made a powerful speech, including long and detailed references to human rights legislation and commentators thereon. My point supports the substance
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  of his argument more prosaically, because clause 40 reveals—yet again—how the Government always try to tilt the balance of tax legislation in favour of the state and against the taxpayer.
  In clause 40(3), for example, the taxpayer has only 45 days to request a review. If a taxpayer misses that date, the right of appeal is gone. However, if the commissioners miss the 45-day deadline, it does not matter, and their original decision is deemed to have been upheld. The imbalance is obvious: a requirement is placed on the taxpayer, but no such requirement is placed on the commissioners. That is unjustified. It gives the commissioners an incentive for lethargy, but they ought to be required by legislation to act competently.
  10.15 pm
  Let us reflect on the fact that this is a new and complicated tax. We do not yet know how complicated, because even Ministers and civil servants do not know yet exactly what the status and shape of the new regulations will be. It is asking a lot of the industry to get to grips with such complicated legislation—and ever-changing regulations, no doubt. This will be virgin territory even for tax advisers. Surely the balance should be the other way, giving the taxpayer a better chance of getting to grips with the legislation.
  Mr. Bercow: We are all enthused by the hon. Gentleman's position on the subject, as well as by the juridical exegesis by my hon. Friend the Member for Croydon, South (Mr. Ottaway). I do not in any way cavil at the perfectly sound points that the hon. Gentleman has made, but what assessment has he made of the limited scope of the commissioners' discretion in modifying financial liability under subsection (9)? Is it too limited, not limited enough, or about right?
  Mr. Davey: From my detailed study of the subsection, my instinctive reaction would be that it is not limited enough. That is the problem: there are not enough limits on the commissioners, who are given the benefit of the doubt, while the taxpayer is not. I would be surprised if the taxpayers charter, which is much talked about but less kept to, would allow such legislation if it were properly applied to the clause. That is why the amendments have some validity.
  The Government could think of other ways of dealing with the problem. Perhaps they could decide that the 45-day period given to the taxpayer to request a review should be lengthened, allowing fuller consideration of whether such a review would be worth while. That might be a sensible compromise. I am not sure whether-Conservative Members would agree, but the Liberal Democrats would consider that a good alternative.
  The Government have said in justification of the levy that it is not a revenue-raising measure. We question whether that is the case, but to stay faithful to that view, they should not put such a limitation on the taxpayer. They should say that there is no need for restrictive anti-avoidance measures and give the taxpayer the benefit of the doubt, extending the period and allowing some flexibility.

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  I wish that the Government would both accept the amendment and extend the period for the taxpayer. That would prevent the tax from becoming even more burdensome than it will already be.
  Mr. Jack: I seek clarification from the Financial Secretary. Subsection (4) says that when the commissioners first encounter an appeal, there is to be written notification of any decision that they reach—but if I have understood the matter correctly, my hon. Friend the Member for Croydon, South was right to say that if someone challenges that first set of decisions, they simply get a decision without reasons. That is an inconsistency.
  This is important, as the Financial Secretary will appreciate, because decisions do not necessarily stop with the commissioners. In subsection (1) are listed the areas that can be the subject of challenge. Some of those refer to the way in which other parts of the tax will operate. The hon. Member for Kingston and Surbiton (Mr. Davey) rightly drew our attention to the fact that this is a new and untested tax. Subsequent court proceedings could follow from this secondary area of challenge, in which there is no need for a written description of a decision. Yet in the first instance there is a requirement for a written decision.
  In these days of transparency and openness, I worry greatly about not having such information available for public scrutiny. For example, there is a case of a judge-made decision that affects every Member of the House, yet the reasoning behind it does not appear in the public domain. I refer to the case of Lord Levy, whose tax affairs appeared in the public prints. When that was challenged, the judge was supposed to have said that anybody in public office was fair game when it came to publishing such details. However, no reasons were given as to why that decision was reached. We have no idea, individually or collectively, how vulnerable we are to private information entering the public domain.
  People may wish to challenge for a second time the various ways in which the tax operates, yet any decision that may arise concerning this novel form of taxation is without explanation. That is dangerous, particularly if someone subsequently takes the matter on through the courts, and, possibly, to the House of Lords.
  Mr. Timms: I think that I can give some reassurance on these points, particularly to the hon. Member for Croydon, South (Mr. Ottaway). The provisions have been designed to meet in full the requirements of the Human Rights Act 1998. My right hon. Friend the Chancellor of the Exchequer was therefore able to sign the statement on the front of the Bill with complete confidence.
  These are important provisions. We have referred to them a number of times already because they are mentioned at various points in the Bill. Under different parts of the legislation, the opportunity of review, and then appeal, is available.
  The key point, which the hon. Member for Croydon, South missed—or at least, did not refer to—is that there are two stages to the process. The right hon. Member for Fylde (Mr. Jack) picked that up. There is the review, dealt with in clause 40, and there are the appeals against reviewed decisions, dealt with in clause 41, to which amendment No. 23 refers. I do not think that that
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  amendment has been mentioned in the debate, but it is grouped with amendment No. 22. There may have been a misunderstanding about how those two elements relate to each other.
  I make the point again, as I have done frequently throughout the debate, that these provisions are in keeping with those relating to other taxes such as the landfill tax, introduced by the previous Government. In practice, Customs and Excise will respond to all requests for review. However, the provision that failure to reply will be taken as confirmation of the original decision is, in reality, a safeguard. If that provision were not in place, it would be possible for Customs and Excise to delay giving an answer to a review—although I am sure that it would not do so—thereby delaying the appeal, which is the next stage in the process to which taxpayers have access.
  Under the Bill, if Customs and Excise did not respond within the 45-day period, there would be a full appeal to a tribunal, as set out in clause 41(1)(a), which is in the interests of the taxpayer.
  Mr. Letwin: I am grateful to the Financial Secretary. Perhaps he was merely being witty, but surely he recognises that our amendment would provide a safeguard, and that, unlike his safeguard, ours would be a real one. It would ensure that the commissioners had to produce an answer or end up revoking their original decision. There would then be no need for a tribunal, with all the expense to which that would put the taxpayer.
  Mr. Timms: The amendment is pretty meaningless. An assessment will be made and a review requested, normally on the grounds that the amount of money required should be reduced. The hon. Gentleman suggested that the decision would then be revoked, but what does that mean? Would the taxpayer have no liability? "Revoked" is not an appropriate word in this context, as it does not give a satisfactory outcome to the process. I do not agree that the amendment is helpful or in the interests of the taxpayer.
  Mr. Davey: In the process described by the Minister, the tribunal could go ahead with no indication from the commissioners as to why they took their original decision. The process is therefore flawed, because we need a cut-off point by which the commissioners should give their justification so that the tribunal can go ahead on the basis of that reasoning.
  Mr. Timms: It will be in the interests of Customs and Excise to give its reasons so that the tribunal can consider them. That is why Customs and Excise will, in practice, respond within 45 days. The measure as drafted clearly protects the interests of the taxpayer by ensuring that there is no delay in proceeding to the appeal, at which the tribunal can consider the matter. That is completely consistent with the Human Rights Act.
  The hon. Member for Kingston and Surbiton (Mr. Davey) queried the appropriateness of the 45-day period within which a request for a review must be made. A balance must be struck, but the Bill gets it about right, and reflects arrangements elsewhere in the tax system. The period of 45 days—a bit more than six weeks—is enough to enable research to be undertaken, but not long enough for people to become complacent or dilatory. A person need not necessarily deposit all the grounds for

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  review within the 45 days in every case. If a case were complex, Customs could take a sympathetic view, while still guarding against the frivolous attempts to delay proper administration of the tax that occur from time to time.
  Mr. Jack: Will the Minister address my point? Subsection (4) deems it necessary for it a written decision to be given in the first instance. Subsection (5) reminds us that new information may be considered in a second or subsequent challenge to the first decision. In spite of that, however, when a decision is reached at the later stage, nothing is required in writing. Why is there that difference?
  Mr. Timms: In practice, there would be written notification of the decision. My reading is that written notification would, in fact, be required. I shall reflect on the point, and if I am mistaken, I shall come back to it—but I think that written notification would be given in practice, as it should be.
  I hope that I have persuaded the Committee that this measure is in the interests of taxpayers and protects their position. It is wholly consistent with the Human Rights Act, and I hope that the Opposition will not press it to a vote.
  10.30 pm
  Mr. Letwin: I do not know whether my hon. Friends were persuaded by the Financial Secretary—[HON. MEMBERS: "No."] He certainly did not persuade me. In response to my intervention a few moments ago, he said that the whole idea of maintaining the principle that if the commissioners delay, their decision is revoked, was "meaningless", because one would not know what to do with a provision that forced one to revoke a decision.
  Let us consider the decisions in question—those specified under subsection (1), paragraphs (a) to (1). It is clear what is going on. In paragraph (a), we are told that the decision might concern
  "whether or not a person is charged in any case with an amount of aggregates levy".
  That means that the commissioners would have decided that a person is to be charged with a certain amount of aggregates levy.
  A provision specifying that if after a certain number of days the commissioners had said nothing, that would effectively confirm their decision, would mean that the person would be charged with the amount. He would then have to hire some lawyers to go to a tribunal and engage in great expense to take on the august machinery of government. However, if the amendment were accepted—so that if the commissioners said nothing, they would implicitly have revoked their decision—the meaning is equally clear: the person would not be charged with an amount of aggregates levy in that case. That is perfectly clear.
  Subsection (1)(b) relates to a decision on
  "the amount of aggregates levy charged in any case and the time when the charge is to be taken as having arisen".
  If the commissioners had made a decision about the amount of aggregates levy charged in any case, and that decision was revoked, the person would obviously have no liability. That is a strong incentive for the
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  commissioners not to allow the matter to lie fallow for 45 days—otherwise they would effectively quash the decision to raise a certain tax.
  The effect of the amendment is clear, as is the effect of the drafting of the current provision: again, the commissioners could say nothing and rely on the fact that the poor old company or individual would have to hire lawyers and go to a tribunal. It would be tedious to go through paragraphs (c), (d), (e), (f), (g), (h), (i), (j), (k) and (l), but if the Minister wants me to do so, I am prepared to continue.
  Mr. Timms: I am not surprised that the hon. Gentleman does not want to go beyond paragraph (b), because at that point his argument collapses. It would be wholly inappropriate for a notice along the lines of that paragraph—the amount of aggregates levy to be charged in a particular case—to be revoked. Where would that leave everybody? How much money would be outstanding? Nobody knows. Under the clauses that we have dealt with already, the liability to the levy stands; only the decision would be revoked. The meaning of that would be unclear. The amendment would give rise to a wholly unsatisfactory situation that is without precedent in the tax system; it makes no sense at all.
  Mr. Letwin: I shall go on past paragraph (b), if only to disprove what the Financial Secretary says—but as he referred to paragraph (b), I shall return to that first. What he says is clearly wrong. It is clear what would happen if the decision were revoked. Customs and Excise would be precisely nowhere; there would be no levy. The commissioners would have to start all over again. It is perfectly possible for them to do that. The Financial Secretary is right when he says that the law would still apply, so any liability duly arising would still duly arise; it would be for Customs and Excise to start again and recalculate it. That is an incentive for the commissioners not to sit on their hands and wait for the 45 days to pass. That is perfectly reasonable.
  The Financial Secretary thinks that problems will arise for me beyond paragraph (b), so let us consider paragraph (c), which deals with decisions on registration. We had an extremely long discussion about registration a few hours ago. It is clear that the commissioners have to make certain decisions—for example, whether it appears to them that an individual has an intention to produce something that qualifies as an aggregate for the purposes of the levy. Under amendment No. 22, if such a decision had been made, someone had sought a review, and the commissioners had not made a decision in 45 days, the decision to force a registration would be null and void and the commissioners would have to tell Customs and Excise to start all over again, or else desist.
  Again, that would be a perfectly workable arrangement under amendment No. 22. Under the Bill, the difference is that the luckless individual would have to take his case to a tribunal, which would involve him in costs. There is no need to go through paragraphs (d), (e), (f), (g), (h), (i), (j), (k) and (l), but I say again that I am more than willing to do so if necessary. It is perfectly clear that there is a difference.
  The Financial Secretary has said one thing that is absolutely true: unfortunately, similar provisions have repeatedly appeared in legislation. However, I am

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  astonished that a person of his integrity and intelligence rests behind the cloak of that dreadful argument. The fact that we have got something wrong for many years does not mean that we are justified in getting it wrong again.
  Mr. Bercow: Does my hon. Friend agree that the Financial Secretary's reply to my right hon. Friend the Member for Fylde (Mr. Jack) seemed positively Wodehousian? Was he not implying that in practice, notification would be given, and that it was very important that it should be given? Indeed, so important was it that notification should be given, that apparently the clause should not require it to be given.
  Mr. Letwin: My hon. Friend is entirely right, as he so often is. The Financial Secretary offered a case of what one can only call PG Tips, and he has been doing so consistently this evening. The general structure of his argument has repeatedly been that he is trying to create a perfectly sensible outcome; he thinks that he is dealing with a tax that will be levied when the stuff is sold—but actually, he is not. That is not what the Bill states, but that does not worry him, because he is sure that sooner or later, someone will do something reasonable. He used that argument again in response to my right hon. Friend the Member for Fylde (Mr. Jack), saying that the fact that the tax would be reasonably administered was a good reason why we did not need to worry about whether the Bill ensured that it would be reasonably administered.
  It is clear that with subsections (7) and (8)—which, in essence, represent the provisions that amendment No. 22 would change—we are dealing with a problem that has persisted in our legislation, and the time has come to put a stop to it. There is no basis at all for commissioners to be able to decide not to bother to produce a review, in the certain knowledge that only those who are very rich and powerful will be able to challenge that decision at a tribunal. That is the wrong way to structure our tax law, and now we have a good opportunity to change it, especially with a tax that is likely to be subject to greater review than almost any other, because it is so complex, so arbitrary and so difficult to enforce.
  Mr. Tyrie: I can only reinforce what has just been said by asking the Financial Secretary a couple of questions. First, if a decision is deemed to have been confirmed under subsection (7), but it is appealable under clause 41(1), as he said in his defence, why are not the commissioners at least required to explain that decision? Why should they simply be able to go ahead when the decision has been deemed to be confirmed without having to give any reason at all? I can find no justification for that, and the Financial Secretary certainly has not given any this evening.
  The second question is pertinent to what my hon. Friend the Member for West Dorset (Mr. Letwin) has just said. Does not the Financial Secretary realise that the current proposals leave the man who has the liability with a huge hill to climb if he wants to challenge the assessment? Either he accepts the decision, or he has to pay all the expense of fighting the case at the tribunal, and he must do so without knowing what those on the other side feel is their case. He has no idea whether, unbeknown to him, the commissioners have a good point.
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  They may be right but will not have bothered to explain their case, so perhaps that man should not go to appeal and waste all that money in a tribunal. However, he will have no way of knowing whether his judgment is correct because the commissioners will not supply him with the necessary information.
  It is eminently sensible that explanations should be provided. They will not be provided under the Bill as it stands but I hope that, after a moment's reflection, the Financial Secretary might say that it is possible that he has not got the clause absolutely right and that he will return with a minor amendment to improve it.
  The Financial Secretary may be right to say that amendment No. 22, which would replace the word "confirmed" with "revoked" in subsection (8), is not perfect. However, surely it is not beyond the wit of man to include a sentence that would force the commissioners to supply an explanation for their decision within a given time.
  Mr. Timms: I certainly did not intend to sound Wodehousian in my remarks: I think that I have made the case very fully. If the concept of revocation were to be adopted, as the hon. Member for West Dorset (Mr. Letwin) said, things would return to square one. Another assessment would be raised and the process would start all over again and that would cause further delay and uncertainty for taxpayers. That is certainly not in their interest.
  The hon. Member for Chichester (Mr. Tyrie) rightly said that the word "revoked" is not perfect. Although I would go further than that, I can agree with him on that point. The current wording is certainly preferable.
  In response to the hon. Gentleman's question, it is clearly in the commissioners' interests that the decision should be made and communicated, and that is what will happen in practice. It is in the interests of taxpayers that there should not be any unnecessary delay before matters move to appeal. That should take place expeditiously, and arrangements in the Bill will allow that to happen.
  Mr. Ottaway: My hon. Friends have made a perfectly genuine and feasible case, but the Financial Secretary has failed to address their good arguments. However, we have only an hour and a quarter of the debate left and many clauses and amendments remain to be considered. We feel strongly about this issue and we hope that the Financial Secretary will reconsider our arguments. However, under the circumstances, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 40 ordered to stand part of the Bill.

Clause 41

  APPEALS AGAINST REVIEWED DECISIONS
  Question proposed That the clause stand part of the Bill.
  Mr. Letwin: I do not intend to detain the Committee long on this point but, following the previous debate, the Financial Secretary should tell us whether the Government are willing to consider how smaller operators in the industry will be attacked by the tax. They will go through the processes outlined in these clauses, will not

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  receive the courtesy of an answer from the commissioners and will have to go to tribunal. How will their costs be dealt with?
  10.45 pm
  We are dealing with a serious problem of justice involving people who, by the definition of the case, have not had an answer. As my hon. Friends explained, those people will not know the grounds on which they have not received an answer. They will be put to expense and, presumably, might have to bear the expense of others. What defence does the Minister envisage they will have against the possibly disastrous effects of those costs on their business?
  Mr. Timms: I make the point again that the arrangements are precisely those that apply elsewhere in the tax system—in most instances under provisions introduced by the previous Government—and they work well. I see no reason why they should not do so in this case. They have been structured in a similar way to those that apply to other indirect taxes.
  It is part of the normal relationship between the taxpayer and tax collector to engage in meetings and correspondence to resolve disputes. It is incumbent on the taxpayer to resolve disputes and satisfy the relevant authorities that revenue is secure, accounts and records are accurate and proper duty of care is exercised. That formal review stage exists to resolve disputes. It is not intended to be burdensome or to impose additional costs on the taxpayer. The arrangements work well elsewhere and will work well in these circumstances.
  Question put and agreed to.
  Clause 41 ordered to stand part of the Bill.
  Clause 42 ordered to stand part of the Bill.

Clause 43

  ADJUSTMENTS OF CONTRACTS
  Question proposed, That the clause stand part of the Bill.
  Mr. Ottaway: I have a small point to make. I am grateful to the Royal Institution of Chartered Surveyors for highlighting a concern that has no doubt been drawn to the Minister's attention. The clause deals with contracts that are in existence at the commencement date. On subsection (2), the institution states:
  "While we appreciate that this provision must be read with the wide definition of 'agreement' set out in clause 48(1), we remain concerned that certain arrangements reached before the commencement date may not be covered by the clause."
  The implication is that there is a hangover after commencement date. It continues:
  "The kind of arrangements which we have in mind are: options to extend either the leased area or the term/duration of a mineral working lease … options or conditional contracts to acquire interests in mineral working land, conditional on the grant of planning permission … way-leave agreements in respect of haulage of minerals extracted from third party land'.
  I hope the Minister gets the message that several agreements relating to leases, land and long-running mineral rights might overlap the commencement date. The RICS believes:
  "All of these arrangements fall within normal commercial dealings",
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  the implication being that they are quite common. In its opinion, they should
  "be brought within the scope of the provision."
  I am not making a political point. The Conservative party does not want more people to be covered by the tax, but it seems that a loophole exists. How does the Minister intend to deal with that?
  Mr. Timms: The clause provides for the adjustment of contracts in two types of case to take account of agreements made prior to the commencement date of the levy, and to allow for the levy to be accounted for after the commencement date, where that is appropriate. Where an agreement is made to supply aggregate before the commencement date, any levy due after that date will be payable not by the supplier of the aggregate, but by the recipient. Where an agreement regarding the use of land is made before the commencement date, the cost of the aggregates levy may be ignored in calculating the turnover or the price of the land.
  We are aware of the point that has been raised by the Royal Institution of Chartered Surveyors. Our initial view is that there is not a problem, and that the clause can deal with concerns that will arise. As the hon. Member for Croydon, South (Mr. Ottaway) raised the matter, I will reflect on it further. If we conclude that we need to take action to tackle it, we will do so at a later stage.
  Question put and agreed to.
  Clause 43 ordered to stand part of the Bill.

Clause 44

  DESTINATION OF RECEIPTS
  Question proposed, That the clause stand part of the Bill.
  Mr. Tyrie: I want to raise a brief point that caught my eye as I was reading the clause. I cannot work out why on earth
  "All money and securities for money collected or received for or on account of aggregates levy shall … if collected in Great Britain, be placed in the general account of the Commissioners kept at the Bank of England",
  but,
  "if collected or received in Northern Ireland, be paid into the Consolidated Fund".
  That is incomprehensible. I have no doubt that the Minister will say, as he has in response to every other point made this evening, that the practice has been used in all legislation for the past 200 years, but I do not recall seeing a similar provision in other legislation.
  While I am giving the Minister a moment to think about that, I point out that it would be extremely helpful if he could explain to us the so-called explanatory notes. The note for the clause says:
  "This clause provides for the destination of all monies collected or received for or on account of aggregates levy in Great Britain, and in Northern Ireland."
  Just a paragraph of explanation would have saved us the time that we are taking up in the Committee.
  Mr. Jack: My hon. Friend the Member for Chichester (Mr. Tyrie) has aroused my interest in the clause, because I am intrigued by the fact that money collected or received in Northern Ireland shall
  "be paid into the Consolidated Fund of the United Kingdom in such manner as the Treasury may direct."
  The mind boggles at the prospect of Treasury Ministers daily pondering imaginative ways in which the money collected in Northern Ireland might be paid into the Consolidated Fund. I am sure that there is a completely rational, logical explanation for the wording, and I would be grateful if the Financial Secretary explained what is likely to be the normal way in which the money should be paid, why it is necessary to have the variation on a theme that Ministers may direct alternatives to the norm and what they might be.
  Mr. Timms: My answer to the points made by the hon. Member for Chichester (Mr. Tyrie) is precisely as he anticipated. In common with all the other provisions that we have been discussing, the clause is entirely in line with—and, in this case, lifted word for word from—provisions for other indirect taxes. I was rather hoping that the right hon. Member for Fylde (Mr. Jack), drawing on his experiences as a Treasury Minister, might shed some light on the matter, but sadly he did not. The money will be placed in the Bank of England or, in the case of Northern Ireland, the Consolidated Fund. That is in keeping with the treatment of moneys received from other taxes and duties.
  Mr. Bercow: I am grateful to the Minister, who is always very courteous, for giving way, but I am afraid that his response to my right hon. Friend the Member for Fylde (Mr. Jack) and the Committee simply will not do. My right hon. Friend rightly drew attention to the quizzical attitude, at least among Conservative Members, about the expression, "in such manner". Seeking to justify his position on the basis of past legislative precedent, is the Minister arguing that that apparently permissive element of the clause, allowing different mechanisms to be deployed, has, to adapt Bagehot, in the past been only a dignified rather than an efficient part of those earlier statutes, or is he arguing that differential application has applied? If so, will he give us chapter and verse on that point?
  Mr. Timms: My point is that the arrangements have worked perfectly well at many points throughout the tax system. If the hon. Gentleman can draw the House's attention to instances of problems arising from the arrangements, he should do so.
  Mr. William Ross: I do not know how far back the provision dates, although I suspect that its genesis can be found in 1920. However, we have come a long way from the Government of Ireland Act 1920, and since that time, several attempts have been made to set up devolved institutions in Northern Ireland, and devolved institutions have successfully been set up in Wales and Scotland. If the provision has for a long time applied to Northern Ireland, why does it not now also apply to Scotland and Wales? If it does not apply to Scotland and Wales, there can be no good reason for its continuing to apply to Northern Ireland. Given that we now have uniform systems in the three devolved regions, is it not time that all parts of the kingdom were treated exactly the same in terms of the collection of taxes?
  Mr. Tyrie: This is probably—almost certainly—a minor matter, but we are not absolutely sure. The Minister does not know and nor do I. Will he undertake to drop me a line giving an explanation?
  Mr. Timms: I shall be delighted to drop the hon. Gentleman a line.
  Mr. Letwin: I hope that it will not be regarded as churlish if I follow up a point that is necessarily retrospective. This year's Finance Bill, like last year's, contains many clauses—other than those that deal with the aggregates levy—in respect of which the notes on clauses are genuinely helpful and explanatory. However, it is symptomatic of the way in which the aggregates levy has been presented that, in addition to the drafting of the provision being—perhaps necessarily—dense, the notes on clauses are a masterpiece of the gnomic. There is nothing that explain, anything that cannot be seen on the face of the Bill—indeed, I venture to say that they are a genuine waste of paper.
  I imagine that that regrettable situation is rooted in the same cause as the provisions as a whole—namely, that the measure has been produced on the trot and as a result of some late decision taken, much to the industry's surprise, suddenly to implement the aggregates levy. Presumably, there was stuff sitting on a shelf somewhere ready for production after the announcements made in previous Budgets, and when someone suddenly said that the provision was to be introduced, it was taken down at high speed. That is the charitable explanation for the fact that the notes on the clauses dealing with the levy, unlike those on many of the other clauses, tell us nothing. It might also be the charitable explanation for the fact that, even though it was the only new tax that he was introducing, the Chancellor did not mention it in this year's Budget statement.
  Question put and agreed to.
  Clause 44 ordered to stand part of the Bill.
  Clauses 45 and 46 ordered to stand part of the Bill.
  Schedule 10 agreed to.
  Clause 47 ordered to stand part of the Bill.

Clause 48

  INTERPRETATION OF PART
  11 pm
  Mr. Ottaway: I beg to move amendment No. 26, in page 38, line 25, at end insert—
  'except that, when any tangible moveable property which would not be regarded as aggregate for the purposes of this Part is imported, it shall be aggregate to the extent determined in regulations by the Commissioners.'.
  The First Deputy Chairman of Ways and Means (Mrs. Sylvia Heal): With this it will be convenient to discuss amendment No. 24, in page 39, line 35, at end insert—
  '"United Kingdom" means the United Kingdom except Northern Ireland.'.
  Mr. Ottaway: The amendments go to the heart of the consequences of the aggregates tax, which will lead to the exportation of jobs overseas.

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  Amendment No. 24 would exempt Northern Ireland from the tax. I have no doubt that my Friend the hon. Member for East Londonderry (Mr. Ross) will have something to say about that. Aggregate is taxed in its basic form when it is used for commercial exploitation in this country. It is also taxed in its pure form when it comes into this country to be used for that purpose. However, it is not taxed when it is imported in products such as pre-cast concrete. We are concerned that pre-cast concrete will be made in the Republic of Ireland and then imported easily into Northern Ireland without liability in respect of the aggregates levy.
  Pre-cast concrete is only in small part cement, but it contains a large proportion of aggregate, so the House should be under no illusion but that a substantial amount of aggregate is involved. The same applies to ready-mixed concrete, which has a life of about an hour and a half, so its range of movement is about 20 miles by road. One can therefore assume that the entire 20-mile strip along the Northern Ireland border will become an aggregate-free zone, as pre-cast and ready-mixed concrete is imported from the Republic.
  Amendment No. 26 seeks to draw attention—I confess that it does so fairly deviously—to the importation of asphalt from Normandy. As I said, ready-mixed concrete has a shelf life of about an hour and a half. Asphalt has a life of about 36 hours, and is rather like ready-mixed and pre-cast concrete, as it comprises a small amount of bitumen that glues together a large amount of concrete. It is used for making roads. We are advised that it is perfectly feasible for asphalt to be made in northern France and shipped into this country with substantial savings. Indeed, we are told that that already occurs.
  The Financial Secretary said earlier that the transport costs would offset the impact of the levy, but that will certainly not be the case in Northern Ireland. He hinted that he would say something about Northern Ireland, and I hope that he will do so. We are also advised that if sufficient quantities of asphalt are imported from northern France, it will be far more economical to use such materials than to pay the tax in this country.
  Mr. David Heath: Although the amendment rightly deals with imports to the United Kingdom, does the hon. Gentleman accept that exactly the same arguments apply to exports of concrete products? There is a double effect in relation to such products, as not only the levy but the transport costs to which he referred must be paid. That causes a distinct competitive disadvantage.
  Mr. Ottaway: The hon. Gentleman is absolutely right. If I remember correctly, the matter to which he refers was dealt with in an amendment that will not be considered because of this stupid guillotine business to which we have been subject. There is no credit when aggregate is exported in pre-cast concrete products.
  I am sure that my hon. Friend the Member for West Dorset (Mr. Letwin) will have much to say about these matters, and I hope that the hon. Member for East Londonderry will also make some comments. As time is short, I shall sit down and make way for others to speak.
  Mr. Letwin: I begin by clarifying in slightly more detail than my hon. Friend the Member for Croydon, South (Mr. Ottaway) the reason for the construction of
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  the amendments and by elucidating their drafting. We were bound to table them in their current form because of the absurdities of today's timetable. The issues that they cover could not be debated before 7 pm; we did not have time to debate important issues that relate to clause 17. We therefore had to find a method of debating them at the end of the proceedings and thus benefit from the excessive amount of time that had been allowed for boilerplate clauses. Consequently, as my hon. Friend put it, slightly oddly, amendment No. 26 would amend an interpretation.
  The amendment refers to the definition of aggregate. It states that aggregates should be construed in accordance with clauses 17(1) and 18,
  "except that, when any tangible moveable property which would not be regarded as aggregate for the purposes of this Part is imported, it shall be aggregate to the extent determined in regulations by the Commissioners."
  "Tangible moveable property" refers to items such as those to which my hon. Friend referred. They include pre-cast concrete and asphalt. We do not want the commissioners to determine the matter, as the amendment would provide.
  It was almost impossible to include our intentions in an amendment to an interpretation. That is a ridiculous way in which to proceed with such an important matter. We would have liked to debate a new clause which set out our intentions properly. However, the Government decided to timetable the proceedings, and we have therefore had to use the device in the amendment. I hope that the Financial Secretary will not stoop to claiming that a problem arises from the odd casting of the amendment. That is his responsibility, not ours. We do not stand by the amendment's words; if he wants to take away the point and include it in another provision, that is fine. We are trying to protect many jobs, and I shall discuss that shortly.
  The same points apply to amendment No. 24. It is obviously bizarre to define the United Kingdom as
  "the United Kingdom except Northern Ireland."
  I hope that my Friend the hon. Member for East Londonderry (Mr. Ross) will not interpret it to mean that the Conservative party has taken leave of its senses and supposes that Northern Ireland is not part of the United Kingdom. At this stage of our proceedings, as opposed to the stage when we should have debated the point, during our consideration of clauses 16, 17 and 18 or of a new clause, there is no way of introducing an exemption for Northern Ireland. My hon. Friends would support such an exemption. Again, I hope that the Minister will not quibble with the method of solving the problem, because his timetable motion created the need for it.
  I want to explain the reasons for the problem. The hon. Member for Somerton and Frome (Mr. Heath) rightly pointed out that we are dealing with a symmetrical problem of export and import. We are also tackling the problem of competing with imports—import substitution—and the ability of our exports to compete with home-produced items elsewhere in the word—export substitution.
  The amendments deal with only half the problem, as the hon. Member for Somerton and Frome (Mr. Heath) said and my hon. Friend the Member for Croydon, South acknowledged. It is clearly our intention, and it ought to be the Government's intention, to deal with the whole problem.

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  The problem is acute, but I get the impression from the responses that we have received from the Financial Secretary throughout the evening that he does not think that that is the case. He is not given to the practice, to which some Ministers and other hon. Members are occasionally given, of making things sound as though they are all right when he does not think that they are. I have, therefore, a real worry that he is being completely honest when he says that he does not think that there is a problem. I think that he is wrong, and if he is convinced that there is no problem, it is unlikely that he will change the text, however wrong it is.
  I hope that I can begin to open the Financial Secretary's mind sufficiently, so that the discussions with the industry to which he referred will be treated by the Government not in the spirit of an annoying delegation that needs to be batted away, but a genuine inquiry to discover whether the industry passionately believes, as I do, that there will be a real problem, and whether the industry is probably right because it has done its sums.
  Mr. Edward Davey: The point made by my hon. Friend the Member for Somerton and Frome (Mr. Heath) about exports could be dealt with if the Government extended the list of relevant substances. They could add to the list the requirement that aggregates used in manufactured products should become a prescribed industrial process. The Government could, therefore, find a way of getting round the problem by providing a new regulation, as they are empowered to do in the Bill. I still think, however, that, in relation to the hon. Gentleman's amendment, the problem would not be addressed through that prescribing process.
  Mr. Letwin: The hon. Gentleman may be right, and there may also be other means of achieving the desired effect within the scope of the Bill. While we are at it, there may be other means of achieving what we are trying to achieve more elegantly, as I have mentioned. I hope that the Government will see that my remarks are aimed at the essence of the measure, rather than at mere accidents of phrasing.
  Why is Northern Ireland a particular problem? First, there are lots of small quarries in a highly competitive marketplace. As I understand it, the average sale price of concrete in Northern Ireland is such that the effective sale price of the aggregate is only about £3 a tonne, which is rather less than twice the proposed tax. The tax will, therefore, impose a huge mark-up on the aggregate component cost of concrete in Northern Ireland.
  The second reason Northern Ireland is particularly exposed is that it is very close to southern Ireland. There is, no doubt, already a problem due to exchange rates. I do not want to engage in hyperbole, and I do not claim that the entire Northern Ireland concrete industry will suddenly relocate to southern Ireland overnight—that is not so. However, on a rather longer time scale than overnight, such relocations might persistently occur. Northern Ireland is not a part of the United Kingdom that has had particularly good luck with employment. According to estimates provided by the industry, about 4,000 jobs could be affected. The Province can ill afford to lose those jobs.
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  Nothing that the Financial Secretary has said so far suggests that the transport cost argument—which has been his main argument to counter assertions that there is a real problem here—would apply in Northern Ireland. I shall come to the case of mainland Europe in a moment. However, in the case of Northern Ireland and southern Ireland, there will be opportunities for the relocation of production to places only slightly further away from the scene of their deployment than is already the case in Northern Ireland. In many cases, merely moving south of the border will involve a very small distance, and we see no reason to doubt the assertion that it will be possible to wipe out large parts of the Northern Ireland industry.
  11.15 pm
  In the context of mainland Europe, the Financial Secretary, as I have said, relied on transport cost arguments. We understand that there are considerable opportunities for coastal quarry exports from, for example, Norway. There is no reason why such coastal quarries—in Norway or, indeed, Holland, Belgium or France—cannot be used to meet UK, particularly southern UK, pre-cast concrete requirements. Shipping is a perfectly feasible means of transport and, especially when demand for the product is close to our coast, we may see a significant switch.
  If the Financial Secretary is saying that the industry has not provided him with an adequate cost breakdown showing the economics of such an exporting of jobs, it would be helpful if he stated that in terms. I am sure we can arrange for the industry to present him with costed examples showing that there is a real problem. As I said earlier, I think that the Government already accept the logic of protecting against the exporting of jobs. That is why they have provided for raw aggregates, when imported, to be subject to the levy. There cannot be an objection in principle.
  There is a possibility that the Financial Secretary is right, and a possibility that the industry is right. Let us suppose that the Financial Secretary applies the levy to the import of pre-cast concrete and other fabricated substances, and disapplies it to the exporting of those substances. If he is right, it will make no difference: nothing will be lost, and nothing gained. If the industry is right, he will have saved between 4,000 and 10,000 British jobs. Why take the risk? What possible reason is there for neglecting to make some slight drafting changes to the Bill, if the possibility is either that no damage will be done or that great good will be done, with no downside risk? I cannot for the life of me understand why the Financial Secretary should resist that argument.
  We are not talking just about the problem of pre-cast concrete, or, indeed, that of asphalt. I am sorry to harp on about dimension stone, to which I referred at length when giving the example of Mr. Jones. The fact is, however, that dimension stone itself will be exempt, but all the waste and secondary aggregates will not. As I said earlier, we do not really know what will count as not being exempt, but clearly a lot of stuff that comes out when the rock is cut to make the dimension stone will not be exempt.
  United Kingdom dimension stone will be competing with dimension stone from other European Union countries that do not suffer from the same disadvantage. The production of dimension stone in those countries

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  is presumably accompanied by roughly the same by-products, which can be sold without the disadvantage of the aggregate levy—or in the case of France, if I remember rightly, a levy of about 5p rather than £1.60 a tonne. Our dimension stone industry, which is not a big part of the industry as a whole, is headed for the rocks—if I may use an infelicitous metapho.
  The UK limestone industry will be crippled. I understand that it can take up to six tonnes of feed material to produce one tonne of industrial-grade limestone. As the hon. Member for Somerton and Frome pointed out, scalping must remove all the weak and impure stone as part of the process. All those scalpings will be subject to the tax. As the hon. Gentleman mentioned in his speech on the initial amendment hours and hours and hours ago, if that scalping is taxed, a place for it will have to be found. If it is left in the quarries, the limestone extraction from those quarries will become uneconomic and virtually technically impossible, so it will have to be moved. If it is moved, it will be taxed and that will render the economics decidedly disadvantageous.
  The hon. Gentleman mentioned that simply as a disadvantage for the industry and it is, but it is not just that, because there is cross-elasticity: there will also be a severe competitive disadvantage for our industry—the imported variety will not face the tax. In addition, exporters of the material will be at a severe competitive disadvantage.
  Mr. Nicholas Winterton: I have been listening to my hon. Friend's case with much sympathy. Can he explain why the Government want to increase the cost of construction, to put jobs at risk in an industry in which I worked for many years, and to make this country less competitive than those countries that are close to us and part of the economic community? It seems nonsense that the Government emphasise the importance of competitiveness and then reduce the competitive nature of the UK construction industry.
  Mr. Letwin: I think that the only honest answer to my hon. Friend in relation to the question about competition is that this is, as we said at an earlier stage in the proceedings, a comedy of errors. I do not think that the Government intend that result, or the sequence of results that we have been describing. I think that they have simply produced these provisions at too great a rate without full and proper consultation with the industry and have missed a major set of points, o, at best, so to speak, they have missed the danger that these circumstances will arise. Therefore, there is not a reason, there is only a cause for the problem—and the cause of the problem is negligence. However, there is an opportunity, as my hon. Friend will surely agree, for the Government to make up for that. They just need to correct these serious lacunae. That will not make the tax perfect. It will still leave a tax that we would far rather were not on the statute book, but at least it would resolve a problem of between 4,000 and 10,000 jobs potentially leaving this country. The Government have the opportunity to solve that problem.
  Speciality aggregates have not been mentioned so far in our debates. The Government may be resting under the misapprehension that they have solved the problem in relation to speciality aggregates. They may think that, because the export is exempt from the tax, all is well, but the lesser-quality secondary aggregates that are produced
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  at the same time as the speciality aggregates—we face the same problems here as in many other cases—will not be exempt. The average cost of the production of speciality aggregate will again be greater than the cost encountered by international competitors.
  We see that pattern over and over again. It is either that the substance itself, in the case of pre-cast concrete or asphalt, is not being properly exempted when it is imported or exported; or it is that something is being exempted, but some other things that are produced when the thing that is exempt is produced are not being exempted and are raising the average cost of the production of the so-called exempt item. Therefore, across a wide range of products, and hence a wide part of the industry as a whole, UK jobs, completely needlessly, are being put at risk.
  I go back to the question to the Financial Secretary: why take that risk? If I am wrong, nothing will be lost by making the changes to exempt those items. The fiscal effect on the Financial Secretary's own logic will be zero because he will not reduce NICs by a slightly smaller amount. In the first year—unlike all subsequent years—I agree that there will be a neutral effect. Meanwhile, he may be protecting British jobs. If I am right, he will be. This is a bet that he can make with sublime confidence, and he ought to be making it now. Otherwise, if we come back in a year or two and discover that large parts of the British industry have been wiped out needlessly, he will not be forgiven.
  Mr. William Ross: I am deeply grateful to the hon. Member for Croydon, South (Mr. Ottaway) and his hon. Friends for tabling amendment No. 24 which—albeit not very elegantly—intends to disapply the tax to Northern Ireland, for the very good reason that Northern Ireland is the only part of the UK that faces competition across a land frontier.
  We all know that the one outstanding feature of aggregates is that they are heavy stuff; we are looking at one tonne per cubic yard. They are also not of very high value. If there is a tax and the material has to be carted around the country for any great length of time, the price rapidly goes up. In terms of direct competition with producers in the Irish Republic—some of whom already operate across the frontier—we will tip the balance decisively in their favour.
  The Financial Secretary said that the distance that a lorry can travel economically into Northern Ireland is about 15 miles. The industry in Northern Ireland thinks it is considerably further, and I agree. The one thing that the Government have left out of their calculations is the vast difference in the cost of fuel between Northern Ireland and the Republic, which means that someone can pick up a load in the Irish Republic and travel a long way with it—much further than the Government believe.
  There are large deposits of sand and gravel in the Province and in the Republic, many of which are exploited. Some firms own gravel pits on both sides of the frontier and operate, as commercial advantages dictate, across it. In some cases, the stuff is taken a long way: for example, from the Limavady district to Belfast, which is 60 miles.
  The situation will get a great deal worse, because the people concerned are experienced in the field on both sides of the frontier. They know exactly where the

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  financial advantage will lie. They can close their operation in Northern Ireland down to a low level, produce the vast majority of the material in the Republic, take it across to Northern Ireland and sell it there. They will still make their money and will have no problem with tax.
  The Financial Secretary will try to tell me that if the material is imported, the tax can be charged. There is a slight difficulty with that. He will recall that, earlier this year, I asked him:
  "how much aggregate, broken down by type, was (a) imported to and (b) exported from the United Kingdom by (i) land transport and (ii) sea transport, indicating his estimates of the value of such materials, in the current year and each of the previous three years.
  The Minister replied:
  "Data on exports and imports of aggregate are published annually in the British Geological Survey's United Kingdom Minerals Yearbook. It is not possible to break this down between land transport and sea transport."—[Official Report, 26 February 2001; Vol. 364, c. 516W.]
  In plain terms, that answer means, "I don't know how much aggregate is crossing the frontier into and out of Northern Ireland." If aggregate is put on a ship, one has some idea of how much is involved, but if it is put on a lorry, it cannot be traced in these days of open frontiers across Europe; so we face a decided disadvantage.
  11.30 pm
  If the Financial Secretary does not know the figures—and he cannot in this case because the records are non-existent—he will be proceeding blindly, but the industry in Northern Ireland knows what the inevitable consequences of the tax will be for the industry in the Province. I shall spell those consequences out to the Financial Secretary.
  For a start, only a certain amount of primary production will take place in Northern Ireland. The sand and gravel will be produced there, it will cross the frontier where it will be manufactured into a concrete product, and then it will come back again. The jobs in the concrete industry will migrate from the Province to the Republic. The industry will need to move only 100 yards across the frontier, set up its equipment to manufacture pipes and concrete beams, and 4,000 jobs in Northern Ireland will disappear in a short time. Once they are gone, and even if the tax is removed in two or three years' time, it will be too late and the damage will be done. Once folk have built up their operations in the Republic, they will have no good reason to bring them back to Northern Ireland.
  When I raised the matter with the Financial Secretary earlier, he said that other countries in the European Union were introducing the tax. The hon. Member for West Dorset (Mr. Letwin) mentioned France; if several EU countries introduce the tax, it will have to be the same to maintain a level playing field. Dublin certainly has no intention of introducing any tax because it is to its commercial advantage to capture as many jobs as possible, and devil take the hindmost—in this case, Northern Ireland.
  This is a serious issue that could have a tremendous effect on the cost of building a house. A normal-sized house takes 80 tonnes of building sand. Those of us who are not involved in the industry might think that that is a heck of a lot of sand, but all the walls need plastering and
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  the mortar contains sand. Added to that is the hard fill, and 200 or 300 tonnes could be needed per house, depending on the site. Aggregate is also needed for the concrete bricks or blocks. People complain about the price of houses, but this hidden tax will shove up the price by £2,000 or £3,000 because everybody will work on a percentage all the way down the supply chain.
  This is a mad tax that will do no good to the country at large, and if applied to Northern Ireland it will do much damage. Of course, aggregates can be replaced in some cases. Bricks can be made out of clay, and that is done in Northern Ireland. Clay tiles can be used for roofs. Most of the tiles used in Northern Ireland are imported from Great Britain, and they are no cheaper for being put on a boat and taken across the Irish sea. In fact, they are much pricier than concrete tiles. Many people prefer a slate roof, but few can afford such roofs nowadays. Asbestos is cheaper but carries environmental concerns. We surely have environmental concerns about asbestos nowadays.
  Pipes used to be made of clay. Now the smaller diameters are made of plastic, but beyond a certain size the only materials with the necessary structural strength are concrete or steel. We make a lot of concrete pipes in Northern Ireland, and certainly some very large ones. Concrete is a useful and effective material, and we are cutting the feet from under people who make it. That is completely wrong.
  We make large concrete beams for bridges. The hon. Member for South Antrim (Dr. McCrea) has a firm in the constituency where he lives—the owner is my constituent—that exports very large concrete beams. It can do so only because of the low cost of the material in Northern Ireland. The only alternative material is steel, and I am not sure that that is considered all that environmentally friendly these days.
  There are at least seven relatively large firms making concrete products in my constituency, and there are several one, two, three or five-man operations giving employment in the area. They will all be forced out of business if the tax goes ahead. I fear that the Government intend to plunge ahead with this tax throughout the United Kingdom. They will not only do a great disservice to Great Britain but create a disaster in Northern Ireland. That is why, although I would normally be horrified by such amendments, I see good reasons for this one.
  I hope that the Minister will listen. He told me earlier that the tax was neutral and would be redistributed, but it will not necessarily be redistributed to the areas from which it is levied—it will be distributed far wider than that. The areas where many of the relevant activities take place tend to be isolated, with relatively few employment opportunities. Such activities provide employment, as well as a vital material for the whole construction industry.
  However we look at it, all we are going to do is increase the cost of constructing buildings, roads and bridges. What on earth is the benefit supposed to be? The Government went down this road without thinking it through. The more people examine the proposals, the more concerned they become. I hope that that increasing concern will be felt by Treasury Ministers, even if they

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  are not prepared to say it now. Perhaps they will carefully consider the peculiar and difficult circumstances that the tax will create for the producers of Northern Ireland.
  Mr. David Heath: I strongly agree with the points made by the hon. Member for West Dorset (Mr. Letwin). The amendment is very convoluted, as he readily admitted, but its intentions are good.
  The hon. Member for East Londonderry (Mr. Ross) touched on the commercial effect of substitution in the domestic market and the consequent lack of competitiveness for companies competing against imports. That will be a significant factor in the pre-cast concrete industry, as other fabrics will be used, without any clear environmental benefit.
  The Government are guilty of muddled thinking. They have exempted some industries that require aggregates in their production processes, for no reason except that they were the ones that they first thought of. They appear not to have considered the position of the pre-cast concrete industry at all. They are prepared to accept that there may be substitution with steel and with clay, particularly for roofing products and paving materials. What is the environmental advantage of stopping aggregates being dug and increasing the digging of clay? I say that there is none.
  Profitable companies will be seriously compromised by this measure without further thought from the Government. I urge them, even at this late stage, to think very carefully about what they propose.
  Mr. Timms: Let me first respond to the points of the hon. Member for West Dorset (Mr. Letwin) about timetabling. It has been made clean to him, and it should also be made clear to the House, that if the usual channels on his side had last week sought a change to the order of the discussions this evening, we would willingly have made that change.
  Mr. Letwin: I have checked with my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) as to the exact order of events. We requested that we debate clause 16 alone among the aggregates tax items, followed by clause 79 and some new clauses. That was rejected, despite this request having been communicated by the usual channels, at the highest level, and despite a subsequent conversation between the Financial Secretary and me.
  When that request was rejected, this timetable motion was brought forward. In our anxiety, we did not at that stage notice that our original proposition had been rejected. However, the effect of the timetabling, with time slots up to 7 pm, 9 pm and midnight, was to shove all the important parts of the aggregates tax discussion into the first three hours. There is no reason on earth for the Government to have done that, except by mistake. I take the Financial Secretary's honest word for it that it was not intentional, but it was clearly an error. I admit that we were in error in not spotting that it should have been corrected, but the fact is that this was done not by us but by the Government.
  Mr. Timms: The hon. Gentleman rightly and generously accepts that the responsibility for the matter lies on his side, and that it could have been put right if the usual channels had taken steps to do that.
  Sir Robert Smith: Will the Minister give way?
  Mr. Timms: No, I will not give way again on this. It is important that the House recognise the reason for the difficulty that the hon. Member for West Dorset and his right hon. and hon. Friends have faced tonight.
  Sir Robert Smith: Will the Minister give way?
  Mr. Timms: No, time is getting on, and I need to address a number of points.
  The hon. Members for East Londonderry (Mr. Ross) and for West Dorset suggested that there had been some haste about the process. I assure the House that that is not the case. The draft clauses were first published two years ago, in April 1999. Following extensive discussion and consultation, a second set of draft clauses was published in June last year—these clauses have not been put together in haste. The whole process has been one of careful consideration, consultation and modification, and this is a well designed measure as a result.
  We could have some fun with the wording of amendment No. 26. The hon. Member for Croydon, South (Mr. Ottaway) disowned the wording. He said that he and his right hon. and hon. Friends had tabled a new clause on the subject. Presumably we can expect to debate that at a later stage in our proceedings. However, the wording of amendment No. 26, which allows the commissioners to deem anything, effectively, as aggregates for the purposes of the levy, would not command wide support.
  11.45 pm
  To help to maintain a level playing field for UK aggregates companies, any import of aggregate that would be taxable if it had originated in the UK will be subject to the levy on first sale or use in the UK. Under European Union law, we are bound not to tax imported products to a greater extent than domestic ones. That means that any aggregate that would normally be taxable in the UK will be taxed on first sale or use in the UK after importation from another country. Similarly, any imported material that would not normally be taxable if it had originated in the UK will not be subject to the levy.
  Concern has been expressed that the levy applies to imports of aggregate in aggregate form. There is concern that the UK's pre-cast concrete sector will be damaged by the importation of tax-free processed products. We have considered that issue in detail. Officials have met the British Precast Concrete Federation, and I shall meet representatives of the federation next week. As a result of a great deal of reflection, we have concluded that we do not expect a significant impact on that sector because international trade in its products is limited by weight and transport costs.
  Imports currently represent only 1 per cent. of total pre-cast concrete industry sales because of the substantial cost of shipping pre-cast concrete.
  Mr. Tyrie: Will the Minister give way?
  Mr. Timms: Given the lateness of the hour, I shall not.

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  There are substantial barriers to international trade because of the costs of shipping pre-cast concrete from Norway, France and elsewhere. Such imports as exist are largely in high-value products, the proportionate prices of which would be affected only slightly by the addition of the levy. Our considered view is that there will be no problem.
  We are prepared to continue to examine the issue in the run-up to the levy's introduction, and I shall hear the industry's concerns next week. No figures given in the debate have made me question the conclusion that we have drawn so far, but I shall listen carefully to what the industry has to say.
  The suggestion made in the debate that 4,000 to 10,000 jobs might be at stake is simply absurd. The pre-cast concrete industry should have the same incentives for efficiency and increased use of recycled aggregates as others will experience as a result of the levy. The aggregates sold for that purpose should contribute to the sustainability fund that will be available to help communities to address the problems arising from quarrying.
  The hon. Member for West Dorset told the Committee that he would not have voted for the landfill tax introduced by the previous Government. Even now, some members of his party want the Government to take steps to protect the environment, as we are doing. His party does itself no favours in its current troubled circumstances by lurching to the right in the way that he has done tonight, by repudiating an environmental tax measure introduced by the previous Government.
  Amendment No. 24 addresses issues in Northern Ireland, and the hon. Member for East Londonderry made several important points. We have listened carefully to arguments about the implications of the aggregates levy for Northern Ireland. The industry there will be generally protected because imports of aggregate will be subject to the levy and exports will be relieved. Opportunities to smuggle aggregates into Northern Ireland will be pretty limited because of the bulky nature of the products involved and their low value. Customs operational staff have much experience of dealing with such matters. I am confident that, combined with the legitimate quarrying industry, Customs will combat the potential for smuggling across the Northern Ireland land border.
  The main concerns expressed relate to the impact on the pre-cast concrete sector. That merits careful consideration. I point out to the hon. Member for East Londonderry and to the Committee that, at this stage, I have seen no convincing evidence—facts and figures—to suggest that there will be a significant impact on Northern Ireland firms; international trade in those products is limited by weight and by transport costs.
  We are nevertheless prepared to continue to assess with the Northern Ireland Executive the implications of the levy. The Executive have raised concerns about that and have done some work. We shall be happy to continue that assessment during the run-up to the introduction of the levy, and to consider evidence submitted by the industry on the issue. There may be an issue that we need to address, but at present there is no convincing evidence of it. I ask the Committee to resist the amendment.
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  The measure is important and will bring significant environmental benefits in its wake—by ensuring that the price of aggregates reflects the environmental costs incurred in obtaining them; by increasing the price advantage for recycled aggregates; and by contributing to a sustainability fund that can be used to address the problems caused by quarrying in affected communities. I urge the Committee to resist the amendments.
  Mr. Ottaway: The Minister's response to the arguments was wholly unsatisfactory. Powerful arguments have been made about the damage that will be caused to the British economy and to the British aggregates sector. In those circumstances, we shall divide the Committee.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 137, Noes 255.

  Division No. 189

  [11.52 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Hayes, John

  Allan, Richard

  Heald, Oliver

  Amess, David

  Heath, David (Somerton & Frome)

  Arbuthnot, Rt Hon James

  Heathcoat—Amory, Rt Hon David

  Ashdown, Rt Hon Paddy

  Horam, John

  Atkinson, Peter (Hexham)

  Howard, Rt Hon Michael

  Baker, Norman

  Howarth, Gerald (Aldershot)

  Baldry, Tony

  Jack, Rt Hon Michael

  Bercow, John

  Jenkin, Bernard

  Beresford, Sir Paul

  Key, Robert

  Blunt, Crispin

  King, Rt Hon Tom (Bridgwater)

  Boswell, Tim

  Kirkwood, Archy

  Bottomley, Peter (Worthing W)

  Lait, Mrs Jacqui

  Bottomley, Rt Hon Mrs Virginia

  Leigh, Edward

  Brady, Graham

  Letwin, Oliver

  Brand, Dr Peter

  Lewis, Dr Julian (New Forest E)

  Brazier, Julian

  Lidington, David

  Brooke, Rt Hon Peter

  Lilley, Rt Hon Peter

  Bruce, Ian (S Dorset)

  Livsey, Richard

  Burns, Simon

  Lloyd, Rt Hon Sir Peter (Fareham)

  Burstow, Paul

  Llwyd, Elfyn

  Campbell, Rt Hon Menzies (NE Fife)

  Loughton, Tim

  Luff, Peter

  Cash, William

  Lyell, Rt Hon Sir Nicholas

  Chidgey, David

  McCrea, Dr William

  Clappison, James

  MacGregor, Rt Hon John

  Clarke, Rt Hon Kenneth (Rushcliffe)

  McIntosh, Miss Anne

  Maclean, Rt Hon David

  Clifton—Brown, Geoffrey

  McLoughlin, Patrick

  Cormack, Sir Patrick

  Malins, Humfrey

  Cotter, Brian

  Maples, John

  Curry, Rt Hon David

  Mates, Michael

  Davey, Edward (Kingston)

  Mawhinney, Rt Hon Sir Brian

  Davis, Rt Hon David (Haltemprice)

  May, Mrs Theresa

  Dorrell, Rt Hon Stephen

  Norman, Archie

  Duncan, Alan

  O'Brien, Stephen (Eddisbury)

  Fabricant, Michael

  Ottaway, Richard

  Fallon, Michael

  Paice, James

  Flight, Howard

  Paisley, Rev Ian

  Fraser, Christopher

  Pickles, Eric

  Gale, Roger

  Portillo, Rt Hon Michael

  Garnier, Edward

  Prior, David

  Gibb, Nick

  Randall, John

  Gidley, Sandra

  Redwood, Rt Hon John

  Gill, Christopher

  Rendel, David

  Gillan, Mrs Cheryl

  Robathan, Andrew

  Green, Damian

  Robertson, Laurence (Tewk'b'ry)

  Greenway, John

  Robinson, Peter (Belfast E)

  Grieve, Dominic

  Roe, Mrs Marion (Broxbourne)

  Gummer, Rt Hon John

  Ross, William (E Lond'y)

  Hamilton, Rt Hon Sir Archie

  Ruffley, David

  Hammond, Philip

  Russell, Bob (Colchester)

  Hawkins, Nick

  St Aubyn, Nick

  137

  Sayeed, Jonathan

  Tredinnick, David

  Shephard, Rt Hon Mrs Gillian

  Trend, Michael

  Shepherd, Richard

  Tyler, Paul

  Simpson, Keith (Mid—Norfolk)

  Tyrie, Andrew

  Smith, Sir Robert (W Ab'd'ns)

  Viggers, Peter

  Smyth, Rev Martin (Belfast S)

  Waterson, Nigel

  Soames, Nicholas

  Webb, Steve

  Spicer, Sir Michael

  Wells, Bowen

  Stanley, Rt Hon Sir John

  Whitney, Sir Raymond

  Streeter, Gary

  Whittingdale, John

  Willetts, David

  Stunell, Andrew

  Winterton, Mrs Ann (Congleton)

  Swayne, Desmond

  Winterton, Nicholas (Macclesfield)

  Syms, Robert

  Yeo, Tim

  Tapsell, Sir Peter

  Young, Rt Hon Sir George

  Taylor, Ian (Esher & Walton)

  Taylor, John M (Solihull)

  Tellers for the Ayes:

  Taylor, Sir Teddy

  Mr. Stephen Day and

  Thomas, Simon (Ceredigion)

  Mr. Owen Paterson.

  NOES

  Adams, Mrs Irene (Paisley N)

  Cousins, Jim

  Ainger, Nick

  Crausby, David

  Ainsworth, Robert (Cov'try NE)

  Cryer, John (Homchurch)

  Allen, Graham

  Cummings, John

  Anderson, Rt Hon Donald (Swansea E)

  Dalyell, Tam

  Darvill, Keith

  Atkins, Charlotte

  Davey, Valerie (Bristol W)

  Austin, John

  Davies, Rt Hon Denzil (Llanelli)

  Bailey, Adrian

  Davies, Geraint (Croydon C)

  Banks, Tony

  Dean, Mrs Janet

  Barnes, Harry

  Denham, Rt Hon John

  Barron, Kevin

  Dismore, Andrew

  Battle, John

  Dobbin, Jim

  Bayley, Hugh

  Dobson, Rt Hon Frank

  Begg, Miss Anne

  Donohoe, Brian H

  Benn, Hilary (Leeds C)

  Doran, Frank

  Bennett, Andrew F

  Benton, Joe

  Dowd, Jim

  Best, Harold

  Drew, David

  Betts, Clive

  Eagle, Angela (Wallasey)

  Blackman, Liz

  Eagle, Maria (L'pool Garston)

  Blears, Ms Hazel

  Edwards, Huw

  Blizzard, Bob

  Efford, Clive

  Boateng, Rt Hon Paul

  Ellman, Mrs Louise

  Borrow, David

  Ennis, Jeff

  Bradley, Rt Hon Keith (Withington)

  Field, Fit Hon Frank

  Fisher, Mark

  Brinton, Mrs Helen

  Flint, Caroline

  Brown, Russell (Dumfries)

  Foster, Rt Hon Derek

  Browne, Desmond

  Foster, Michael Jabez (Hastings)

  Buck, Ms Karen

  Foster, Michael J (Worcester)

  Burden, Richard

  Gapes, Mike

  Butler, Mrs Christine

  George, Rt Hon Bruce (Walsall S)

  Campbell, Alan (Tynemouth)

  Gerrard, Neil

  Campbell, Ronnie (Blyth V)

  Gibson, Dr Ian

  Campbell—Savours, Dale

  Gilroy, Mrs Linda

  Cann, Jamie

  Godsiff, Roger

  Caplin, Ivor

  Goggins, Paul

  Casale, Roger

  Golding, Mrs Llin

  Caton, Martin

  Gordon, Mrs Eileen

  Chapman, Ben (Wirral S)

  Griffiths, Jane (Reading E)

  Chaytor, David

  Griffiths, Nigel (Edinburgh S)

  Clapham, Michael

  Griffiths, Win (Bridgend)

  Clark, Rt Hon Dr David (S Shields)

  Grogan, John

  Clarke, Charles (Norwich S)

  Hain, Peter

  Clarke, Rt Hon Tom (Coatbridge)

  Hall, Mike (Weaver Vale)

  Clelland, David

  Hanson, David

  Clwyd, Ann

  Healey John

  Coffey, Ms Ann

  Henderson, Doug (Newcastle N)

  Coleman, Iain

  Colman, Tony

  Hendrick, Mark

  Connarty, Michael

  Hepbum, Stephen

  Cook, Frank (Stockton N)

  Heppell, John

  Corbyn, Jeremy

  Hewitt, Ms Patricia

  Corston, Jean

  Hill, Keith

  138

  Hinchliffe, David

  Mowlam, Rt Hon Marjorie

  Hodge, Ms Margaret

  Mudie, George

  Hoey, Kate

  Mullin, Chris

  Hood, Jimmy

  Murphy, Denis (Wansbeck)

  Hope, Phil

  Naysmith, Dr Doug

  Hopkins, Kelvin

  O'Brien, Mike (N Warks)

  Howarth, Rt Hon Alan (Newport E)

  Olner, Bill

  Howarth, George (Knowsley N)

  Organ, Mrs Diana

  Howells, Dr Kim

  Pearson, Ian

  Hughes, Ms Beverley (Stretford)

  Pike, Peter L

  Humble, Mrs Joan

  Pond, Chris

  Hurst, Alan

  Pope, Greg

  Hutton, John

  Pound, Stephen

  Iddon, Dr Brian

  Prentice, Ms Bridget (Lewisham E)

  Illsley, Eric

  Prentice, Gordon (Pendle)

  Jackson, Helen (Hillsborough)

  Primarolo, Dawn

  Jamieson, David

  Prosser, Gwyn

  Jenkins, Brian

  Quinn, Lawrie

  Johnson, Alan (Hull W & Hessle)

  Raynsford, Rt Hon Nick

  Johnson, Miss Melanie (Welwyn Hatfield)

  Reed, Andrew (Loughborough)

  Robertson, John (Glasgow Anniesland)

  Jones, Rt Hon Barry (Alyn)

  Jones, Helen (Warrington N)

  Roche, Mrs Barbara

  Jones, Jon Owen (Cardiff C)

  Rooney, Terry

  Jones, Dr Lynne (Selly Oak)

  Ross, Ernie (Dundee W)

  Jones, Martyn (Clwyd S)

  Rowlands, Ted

  Jowell, Rt Hon Ms Tessa

  Roy, Frank

  Joyce, Eric

  Ruddock, Joan

  Keen, Alan (Feltham & Heston)

  Russell, Ms Christine (Chester)

  Keen, Ann (Brentford & Isleworth)

  Salter, Martin

  Kennedy, Jane (Wavertree)

  Savidge, Malcolm

  Khabra, Piara S

  Sheerman, Barry

  Kidney, David

  Simpson, Alan (Nottingham S)

  Kilfoyle, Peter

  Skinner, Dennis

  King, Andy (Rugby & Kenilworth)

  Smith, Rt Hon Andrew (Oxford E)

  Lammy, David

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Lawrence, Mrs Jackie

  Lepper, David

  Smith, Jacqui (Redditch)

  Leslie, Christopher

  Smith, John (Glamorgan)

  Levitt, Tom

  Smith, Llew (Blaenau Gwent)

  Lewis, Ivan (Bury S)

  Southworth, Ms Helen

  Lloyd, Tony (Manchester C)

  Spellar, John

  Lock, David

  Squire, Ms Rachel

  Love, Andrew

  Starkey, Dr Phyllis

  McAvoy, Thomas

  Steinberg, Gerry

  McCabe, Steve

  Stevenson, George

  McCartney, Rt Hon Ian (Makerfield)

  Stewart, David (Inverness E)

  Stewart, Ian (Eccles)

  Macdonald, Calum

  Stoate, Dr Howard

  McDonnell, John

  Strang, Rt Hon Dr Gavin

  McFall, John

  Stuart, Ms Gisela

  McIsaac, Shona

  Sutcliffe, Gerry

  McKenna, Mrs Rosemary

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Mackinlay, Andrew

  McNulty, Tony

  Taylor, David (NW Leics)

  Mactaggart, Fiona

  Temple—Morris, Peter

  McWalter, Tony

  Timms, Stephen

  McWilliam, John

  Tipping, Paddy

  Mahon, Mrs Alice

  Todd, Mark

  Mallaber, Judy

  Trickett, Jon

  Marshall, David (Shettleston)

  Truswell, Paul

  Marshall—Andrews, Robert

  Turner, Dennis (Wolverh'ton SE)

  Martlew, Eric

  Turner, Dr Desmond (Kemptown)

  Maxton, John

  Turner, Neil (Wigan)

  Meacher, Rt Hon Michael

  Twigg, Derek (Halton)

  Michael, Rt Hon Alun

  Tynan, Bill

  Michie, Bill (Shef'ld Heeley)

  Wareing, Robert N

  Milbum, Rt Hon Alan

  Watts, David

  Miller, Andrew

  White, Brian

  Mitchell, Austin

  Wicks, Malcolm

  Moffatt, Laura

  Williams, Rt Hon Alan (Swansea W)

  Moonie, Dr Lewis

  Morgan, Ms Julie (Cardiff N)

  Williams, Alan W (E Carmarthen)

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Wills, Michael

  Winnick, David

  Mountford, Kali

  Winterton, Ms Rosie (Doncaster C)

  139

  Woodward, Shaun

  Tellers for the Noes:

  Woolas, Phil

  Worthington, Tony

  Mr. Kevin Hughes and

  Wright, Anthony D (Gt Yarmouth)

  Mrs. Anne McGuire.

  Question accordingly negatived.
  Clause 48 ordered to stand part of the Bill.
  Clause 49 ordered to stand part of the Bill.
  To report progress and ask leave to sit again.—[Mr. McNulty.]
  Committee report progress; to sit again tomorrow.

  Overseas Nurses
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. McNulty.]
  12.8 am
  Mr. Paul Burstow: I am grateful for the opportunity to raise the recruitment of overseas nurses to the United Kingdom. There is no doubt that we need to recruit nurses and midwives from overseas. Indeed, the demographic time bomb planted by the previous, Conservative Government means that there is a serious shortage of home-grown nurses and midwives. With something like one in four nurses on the register of the United Kingdom Central Council of Nursing, Midwifery and Health Visiting aged over 50 and the average retirement age at about 55, the shortage of nurses is likely to get much worse before it gets better. Over the next four years, it is estimated that the shortfall of nurses will range between 20,000 and 60,000. It could be even more, depending on how the independent sector develops in the next few years and what implications the new standards for care homes and other institutions will have for additional staffing requirements.
  Last year, 10,000 overseas nurses were recruited to this country and registered with the UKCC. I want to make it clear from the outset that I very much welcome the contribution that those nurses and midwives make to this country's health care system, whether in the independent sector or the NHS. Nursing is an international profession, and nurses should have the right to broaden their experience by working in other health care systems.
  My purpose in this debate is to highlight two concerns and to try to offer solutions. First, there is growing evidence that for some overseas nurses who come to this country to do a job and provide support and care in our health service, particularly in the independent sector, their experience is one of exploitation. Secondly, despite clear requests from a number of developing countries not to recruit their nurses, the UKCC's figures reveal an accelerating rate of registration of nurses from those countries.
  I shall deal first with the exploitation of overseas nurses. There is growing evidence from Unison and the Royal College of Nursing of appallingly poor employment practices in this country. I stress that the problem appears to be concentrated largely in the independent sector and, on the evidence that I have seen, particularly in care homes. Unison tells me that even before arriving in the UK, nurses from the Philippines and other countries find that the recruitment agency that they use to find jobs in this country charges them to be recruited. On top of that, if the recruitment is ultimately to an NHS trust, the trust is asked to pay the agency as much as £1,500 per nurse. The nurses themselves can pay nearly double that, and may be asked to sell their homes, land and other property to finance their move to the UK.
  In some cases, agencies charge nurses for UKCC registration guidance, which is free. That is appalling exploitation, and it clearly breaches the Department of Health's guidelines. In some horrific cases, employers go even further, holding on to passports, work permits and UKCC registration cards. They offer misleading and even intimidating immigration advice, such as saying that nurses cannot change employer and will be deported if

  141
  they do. In addition to those practices, overseas nurses suffer restrictive contract terms and conditions that are less favourable that those of their UK counterparts. They are paid less than UK nurses in the same institutions.
  Worse still are misleading contracts. The RCN has examples of cases in which nurses have been sent contracts for prestigious specialist acute hospitals in London, but when they arrive they are carted off to work in an elderly persons' care home. They do not necessarily have the experience of providing geriatric care that is needed for that job. That is a cause for concern. It exploits not only the nurses but those who are receiving care. Both parties lose out. Finally, it takes some overseas nurses an unacceptably long time to secure their registration. They find themselves stuck in limbo, working without registration, particularly in the independent sector, and as a result there is even more pressure on them and they are further exploited.
  My second concern is the criticism by the World Health Organisation and several Governments of developing countries that the UK is damaging their health care systems through its recruitment of health care staff. Last year, almost one in five new overseas registrations were from South Africa and the West Indies. The Minister will know that there are serious shortages of nurses and midwives around the world. That was the subject of a seminar organised by the World Health Organisation last November that examined the problem of nurse shortages not only in the UK but throughout the world, in developed and developing countries.
  One of the factors identified as driving the problem is the demographic time bomb ticking away in many developed countries' nursing systems—not only our own, but those of countries such as Canada, the United States of America and Australia. In a statement about the shortages, WHO says:
  "Skills drain, where nurses are recruited into developed countries from developing countries, exacerbates the situation. For example, the number of overseas nurses coming to the UK has risen by 48 per cent. in 12 months."
  In a report on the globalisation White Paper published last month, the Select Committee on International Development states:
  "At the same time, the Secretary of State for Health has also acknowledged that the Department of Health is not responsible for the actions of private recruitment agencies".
  It quotes the Secretary of State telling the Committee: "Sadly, I do not run the nursing agencies that are responsible for such conduct".
  The Committee added:
  "However, we do not believe that we should rob developing nations of the medical and clinical staff that they desperately need … Throughout the NHS, Trusts, desperate to fill vacancies, turn regularly to private agencies to supply. We recommend that the Government, in its response, provide the Committee with details of how guidelines can be extended to cover the activities of private recruitment agencies."
  In her evidence to the Committee's inquiry, the Secretary of State for International Development confirmed that private nursing agencies cannot be prevented from recruiting overseas nurses from developing countries that are experiencing acute shortages. However, she said:
  "It would be immoral, would it not, if all the nurses and all the doctors were recruited by the National Health Service, leaving none of those skills in countries like Trinidad and Tobago, Jamaica and so on."
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  Those comments were made despite nursing recruitment from the West Indies almost doubling in one year.
  Given the high rates of registration from developing countries, the NHS self-denying ordinance not to recruit actively from such countries is clearly not sufficient. It leaves a loophole through which nursing agencies can drive a coach and horses. The UK is the only country that has a director of international nurse recruitment. That role has the potential to be very positive and I welcome the establishment of the post. It could and should be used to stamp out poor practice and ensure ethical standards of recruitment, but that would require a more ambitious approach on the part of the Government. I shall propose some potential solutions that I hope that the Minister will consider. I believe that we need an ethical recruitment policy that covers not only where we recruit nurses, but how we recruit them.
  First, I join Unison in calling for action to tackle the exploitation of overseas nurses by establishing some sort of taskforce comprising representatives from the Department of Health, the Department of Trade and Industry—which has a clear interest in terms of the registration of employment agencies generally—the Home Office, the Overseas Labour Service, the UKCC, the RCN, Unison and independent sector organisations, and others. The taskforce should work to ensure that consistent practice is adopted throughout the entire UK health care system—not only in the NHS, but across the piece. That is not least because of the fact that in our care homes, more than 53 per cent. of all placements are state funded. Public money is being used to pay for the nurses who come to work in those homes and who, all too often, are exploited. It is appropriate that the state is involved in ensuring that good practice and standards are applied.
  Secondly, the Department of Health should issue clear instructions to trusts that no agency that charges the individual nurse who seeks to be recruited to work in the NHS should be used. It is one thing to charge the NHS for the use of its service, but quite another to charge the individual nurse for it as well.
  Thirdly, the Department should implement a kitemark scheme for nurse agencies, so that the NHS is in no doubt that agencies are in compliance with NHS guidance on recruitment. Those measures would go some way toward addressing the International Development Committee's proposals that guidance should be made broader to include the independent and private sectors.
  In conclusion, overseas nurses make a valuable contribution to our health care system. However, there is undoubtedly growing concern not only about the exploitation of nurses, but about the way in which this country is doing harm to developing countries, which have told us clearly that we should not actively recruit from their health care systems because of the damage that that is causing. Recruitment of overseas nurses is not a new phenomenon; what is new is the sheer scale of the recruitment that is taking place and the dramatic increases in the numbers that are being recruited. Given the worldwide shortage of health care professionals, overseas recruitment cannot be a long-term solution to the UK's nursing shortage. At best, it is a sticking plaster and a stop-gap measure while we establish the extra training places and grow our own nurses so that we can fill the vacancies in the NHS. I hope that Ministers will not

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  lightly dismiss the Government's responsibility to ensure ethical recruitment practices and zero tolerance of exploitation of health care workers in this country.
  12.21 am
  The Minister of State, Department of Health (Mr. John Denham): I congratulate the hon. Member for Sutton and Cheam (Mr. Burstow) on obtaining this debate on the recruitment of nurses from overseas. It gives me an opportunity to set out the Government's position on the expansion of the nursing work force in the NHS and the role that international recruitment can play in that process. I want to speak about the Government's plan for investing in NHS staff, and to describe the contribution that international nursing recruitment has made and will continue to make to the delivery of high quality clinical services to patients. I hope that in doing so, I can deal satisfactorily with the hon. Gentleman's major points.
  NHS staff are a precious resource. They are what makes the health service tick. The biggest constraint that the NHS currently faces is no longer a shortage of financial resources, but a shortage of human resources. It is doctors, nurses, therapists and other health professionals who, together with support staff, keep the service going day in, day out. The massive improvements set out in the NHS plan will, over time, bring an end to years of underfunding and the consequent low morale among key health care professionals.
  It is important to understand that the decisions made in the early 1990s, which the hon. Gentleman mentioned, are one of the reasons for the shortfall in the number of nurses. Those decisions drastically reduced the number of student nurses in training. Overall, the number of available training places fell by 28 per cent. When we were elected, it was clear that too few nurses had qualified, and would qualify, as fully trained registered nurses in the next few years. There had been serious damage to the overall nursing work force, which in turn posed a considerable threat to the standards and safety of care afforded to patients.
  In addition to saying that such cuts must never happen again, we have established plans to expand the number of health care professionals. They include plans for 20,000 more nurses, as set out in the NHS plan. The recruitment and retention strategy that has been developed to achieve that target will include improved retention of staff, return-to-practice programmes, more training places, and international recruitment.
  We have already made progress. Between 1997 and 2000, the number of qualified nurses in the NHS increased by more than 17,000. From September 1999 to September 2000 alone, there was an increase of 6,300 nurses. We will build on that, and increase the number of nurses by 20,000 by 2004. In addition, we expect that by 2004, as a result of the increased number of training places, more than 45,000 new nurses and midwives will come out of training, alongside 13,000 therapists and other health professionals.
  So there is an increase in the number of nurses coming into the NHS, and it will continue in future. That is backed by an expansion of nurse training places. By 2004, 5,500 more nurses, midwives and health visitors will be trained each year than are being trained today. In itself,
  144
  that is an improvement on the position when we were elected, but it takes three years to train a nurse, and a further two years to achieve an experienced and qualified intensive care nurse. That is one of the reasons why we want to attract returners to the profession. Almost 7,000 qualified nurses have returned to the NHS since February 1999, and another 2,000 are preparing to return.
  While we await the benefits from the increased number of student nurses, and attract returners to the NHS, international recruitment will provide an invaluable resource, bridging the gap during the years of training, education and gaining clinical expertise.
  The NHS has a long history of recruiting from abroad, and there are already many networks throughout the world for good co-operation and exchange of health care personnel. International recruitment by NHS organisations has been especially useful in areas where recruitment has proved difficult or where new developments require new or extra staff.
  It is essential to ensure that effective and appropriate international recruitment is perceived as a direct benefit not only to NHS patients but to the employing organisation, the individual nurse, colleagues in the rest of the team and the recruit's home country.
  Let me give a couple of examples that are relevant to the hon. Gentleman's constituency. They show that we acknowledge some of the problems that he raised. The Epsom and St. He lier NHS trust has undertaken international recruitment, mainly by recruiting nurses from the Philippines and Finland. In October 2000, the trust asked three commercial international recruitment organisations to advise on the number of nurses who could be appointed to the trust on short-term contracts of between six months and two years. The purpose was to ensure that the trust could provide 102 extra beds in preparation for the winter. The trust selected the recruitment organisation BUPA, which provided nurses from the West Indies and South Africa. In response to concerns raised by the trust about recruiting from those areas, BUPA reassured it that the nurses had already been selected and were "on its books" before the publication of the Department of Health's guidance for international nursing recruitment in November 1999.
  The nurses arrived at the end of 2000, and I understand that they provide high standards of care to patients. The regional recruitment and retention co-ordinator has subsequently worked directly with the trust to ensure that international recruitment is managed according to the guidance. The trust has also appointed a senior nurse for recruitment and retension. Although international recruitment allowed considerable expansion of services to patients throughout the winter, nurse recruitment now focuses on the local labour market.
  St. George's Hospital NHS trust, which is also in the hon. Gentleman's constituency, discovered that a Filipino nurse was asked to pay a £1,000 fee directly to a commercial recruitment organisation in the Philippines. St. George's, in my view rightly, decided that it would not use that organisation again.
  Mr. Burstow: The Minister is right that St. George's was correct to cease using that agency. However, would it not be better for the Department to issue clear instructions to trusts to do likewise in all cases?
  Mr. Denham: I want to speak about the policies that are already in place and the further policies that we will

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  introduce to deal with the problem. I shall briefly explain the current system, whereby nurses come to work in the United Kingdom. First, they must register with the United Kingdom Central Council for nurses, midwives and health visitors. During the year that ended in March 2000, there were more than 17,000 applications to the UKCC, of which 1,416 were admitted to the professional register from the European Community, and just under 6,000 from countries outside Europe. In the previous year, there were fewer applications.
  It is important to stress that the successful applications to join the UKCC register do not necessarily represent nurses in employment in the UK. They include people who have never taken up employment here—those who take up temporary work, for example, in the working holiday arrangements, as well as those who take up full-time employment in the NHS and the independent and voluntary sectors.
  As the NHS has expanded the number of nursing posts in line with developing service for patients, the opportunities for international recruitment have increased. That development formed the basis for the publication of the guidance on international nursing recruitment in the NHS in 1999. It made it clear that international recruitment should be cost-effective, based on good practice, and undertaken only on an ethical basis. The guidance specifically states that NHS employers should not actively recruit from developing countries that are experiencing nursing shortages. The only exceptions to that policy are nurses who seek an opportunity for development as part of a recognised programme approved by the relevant Government authorities in the country concerned, and employers who consider an unsolicited application directly from an individual potential recruit.
  The hon. Gentleman asked about applications to the UKCC since 1999. When the guidance was published in 1999, some NHS employers would already have had international recruitment campaign commitments and established contracts with commercial recruitment organisations. Inevitably, there was a time lag between the publication of the guidance and its impact on the international recruitment policies of individual local NHS employers, and I gave the hon. Gentleman an example of that. This meant that nurses may have taken up their job offers in the UK up to a year after being appointed.
  As the hon. Gentleman recognised, in January the Department of Health appointed a director of international recruitment to oversee the application of the guidance. The job of the director will be to co-ordinate the international recruitment efforts throughout England's eight regions, ensuring consistent standards and cost-effective best practice in employment. She will also develop agreements between Governments, ensuring international co-operation and the recruitment and exchange of health care professionals. Finally, an extremely important part of her remit is to ensure that developing countries are protected from targeted recruitment, and that the NHS does not actively recruit from, for example, the Republic of South Africa or the West Indies.
  The director of international recruitment is working with the leaders of the professions and with other Departments to ensure that international recruitment in the NHS not only meets the Department's guidance but tackles service priorities and complies with NHS quality standards. The Department's guidance is intended to
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  ensure that international recruitment fulfils its proper role in staffing the NHS, and that it is done on a proper, ethical basis.
  There is cause for serious concern that some commercial agencies have targeted developing countries for international recruitment. The Department has been working with NHS employers and reputable commercial recruitment organisations to produce a code of practice that reinforces the requirement that international recruitment must never be carried out against the interests of host countries. A wide consultation involving NHS employers, professional bodies, trade unions and, specifically, commercial recruitment organisations is nearing completion. The Government will expect all recruitment organisations to adhere to the code of practice. In addition, I believe that the independent and voluntary sectors will wish to join forces with the NHS to ensure that agencies who engage in unscrupulous or poor practice are forced out of the market.
  The code will require NHS employers to have proper plans in place to decide which countries they may recruit from, and which they must not target. The code will also state strict rules for commercial recruitment organisations that have contracts with the NHS. That means that in future, NHS employers will not contract with agencies that actively recruit from developing countries such as South Africa and the West Indies. It is worth pointing out that we are, I believe, the only developed country—indeed, the only country in the world—that has a policy on international recruitment that reflects ethical considerations, as well as those based on value for money and good practice. That is a significant achievement for Britain.
  We must not forget that health care professionals have always been a highly mobile and marketable work force. Many professionals, including nurses, travel abroad of their own volition, some coming to England and many to other parts of the world. The NHS needs to respond appropriately to applications from such individuals. The Royal College of Nursing has expressed its concern about policies that infringe nurses' freedom to work where they like. The RCN has recommended that guidance should not stop individual nurses from coming to work in the UK should they wish to do so. Our guidance endorses that approach.
  The hon. Gentleman mentioned exploitation in the private sector, and I have already said that we believe that the development of the code of practice in conjunction with the reputable organisations in the field will do much to raise standards right across the spectrum of international recruitment, whether to the NHS or to the independent sector, and to put a considerable degree of pressure on the independent sector to abide by similar standards.
  I would need to look in detail at the points raised by the hon. Gentleman, and he may wish to write to me. Several of the instances that he mentioned certainly sounded, at first hearing, like clear legal breaches and not just poor conduct. They sounded, to me at least, like abuses of some of the work permit regulations, and I would be happy to consider whether what is needed is simply more effective enforcement, or whether wider measures need to be addressed. Clearly, we do not wish to see exploitation of nurses coming to work here from overseas. I too acknowledge the valuable role played in

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  the NHS by those who have come here in recent years. We wish to ensure that theirs is a positive and valuable experience.
  I want to mention the success of our Government-to-Government agreement within Europe—the Anglo-Spanish programme. The pilot programme in the north-west of England followed an agreement reached with the Spanish Government, enabling the NHS to employ some of Spain's surplus nurses and doctors. Currently 87 nurses from Spain are working in the NHS, and about 35 more are working in the private sector. The programme is being rolled out to London and the south-east, and we hope to recruit a further 500 nurses from Spain as soon as is practicable.
  Many NHS employers have established mutually beneficial links with countries that are developing their health care systems. We are keen to encourage schemes
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  enabling staff from many countries to benefit from spending two or three years in the NHS. The contribution that such staff make is often outstanding, and goes a long way to promote personal development, as well as the nursing profession as a whole.
  I hope that I have described adequately the effective measures that we have in train to tackle the issues raised by the hon. Gentleman, and made clear the important role that international recruitment will play in ensuring that the NHS and its patients have the staff that they need. I hope that I have also made clear the Government's commitment to expanding the training and supply of nurses, so that we shall no longer be in the position that we have been in during the past few years as a result of the cuts in nurse training made under the previous Government.
  Question put and agreed to.
  Adjourned accordingly at twenty-four minutes to One o'clock.