The Quarrying Industry

HL Deb 20 January 1998 vol 584 cc1450-66

7.55 p.m.

Lord Glenarthur rose to ask Her Majesty's Government what are their policies on the quarrying industry in the United Kingdom.

The noble Lord said: My Lords, I must declare an interest. For the past eight years or so I have worked for Hanson plc, owners of ARC, a large aggregates producer.

The quarrying industry is part of an economy on which every man, woman and child depends. There are about 1,300 quarries in this county. The material they produce—some 240 million tonnes—is sand of different sorts, gravel, rock and limestone. It is the foundation, in more ways than one, of the United Kingdom construction industry. All our homes, hospitals, sewerage and water systems and our entire transport network—road, rail and air—depend on the products produced by British quarriers. What is more, glass, cosmetics, drugs and many other things in everyday life all contain nuarry products. We tend to take them and their provenance for granted.

In his Budget last July, the Chancellor of the Exchequer announced that he would be considering whether to introduce a tax on minerals. The reason he gave was that he wanted to make the quarrying industry pay for its so-called environmental costs. And it is this subject that I wish to tackle primarily this evening.

I suspect that it is several years in government which have led me to be somewhat suspicious of the motives of the Treasury. In my experience, whatever it may say in public, the Treasury is interested in one thing more or less above everything else; that is, raising revenue.

So what about the environmental argument put forward by the Treasury? First of all, whatever the industry's failings in the past—which were no worse than those of any other industry and were, as in most other industries, the result of ignorance not malice—the modern quarrying industry is very different. At many sites over the past few years I have seen evidence that it is both responsible and acutely aware of the need to operate with care and sensitivity to the environment.

Quite rightly, the industry is tightly regulated by government—both national and local. And that system has worked well. Indeed, if she has any doubt about it, I should like to ask the noble Baroness who is to reply whether she would list all the regulations to which the quarrying industry is already subjected—or, if the list is too long, at least to give the House a flavour of its length and possibly place the full list in the Library.

But the industry does even more than is required of it by these regulations. It is in the interests of quarry operators to have good relations with their local communities. They therefore make great efforts voluntarily to minimise the environmental impact of quarries.

The industry has its own code of conduct which covers every aspect of its activities, from blasting times to the safe and clean operation of lorries, the restoration of old sites and many other aspects. Indeed, restored quarries have often been transformed into wildlife havens; some have become sites of special scientific interest, others have been converted into new leisure facilities. I shall be interested to know whether the noble Baroness can list the numbers of SSSIs that either have been, or are, quarries. Where possible, the industry carries out many voluntary environmental schemes which bring benefits to local communities living near quarries.

I would argue that there is no case for a tax to improve the behaviour of the industry. If the Government want to make the industry do more, they can surely use the tried and tested method of increasing regulation. I am sure that the industry would be happy to work with government to find ways of solving any problems. Perhaps the noble Baroness, Lady Hayman, can explain what problems the Government are concerned about.

Unlike so many other industries, quarrying does not even fail the test of sustainable development. There is a plentiful supply of natural raw materials that make aggregates. There is no question of the industry being unsustainable. Neither is the UK wasteful in its use of aggregates. We use less than any other European country except Holland. And, thanks to increased recycling and new building design technology and processes, we use them more efficiently than ever before.

The Government have said that they want to encourage more recycling of quarry products. This is an objective which the industry shares and is working towards. But do the Government seriously believe that a tax will achieve that? And how much more recycling do the Government believe is practicable? Already more than 60 per cent. of construction and demolition waste is re-used; but there is a limit to the availability of materials which can be used again. At the moment about 10 per cent. of the market is made up of recycled materials. The figure is growing every year and will double over the next 10 years. But recycled materials will never be able to meet more than a small proportion of total demand, tax or no tax. The quality of the product simply is not high enough. To use it would be at best wasteful and at worst dangerous. We have to face one stark fact: there will always be a need for what are known as virgin aggregates. Imposing a tax will not change that.

This Government, like the previous one, have said that they want to see more green taxation. I have a certain sympathy with that. The landfill tax is a prime example of a green tax which is right in principle and, with some tinkering which is going on at the moment, will be a powerful tool to improve the environment. But a quarrying tax would not be a green tax. It would not improve the environment; in fact, it could actually harm it.

I therefore offer a word of caution to the Government if they think that they can introduce this tax under the umbrella of green taxation. To do so would bring green taxation into disrepute. It would ill serve the Government if they used the cloak of green taxation to cover up something which is nothing more than a revenue-raising tax. As the Government strive to protect the environment, they must keep business on their side. They will not do so if they misuse the taxation system in this way.

Let me turn briefly to the economic consequences of the imposition of a quarrying tax. Construction is one of the most important economic indicators of a country. In the United Kingdom it has an annual turnover of at least £50 billion, the aggregates industry's share of which is £3 billion. Its importance to the economy was recognised by the Deputy Prime Minister when last year he set up a construction task force under the chairmanship of Sir John Egan. This was a most welcome move. The remit of the group is to find ways of cutting the cost of construction by 30 per cent. That is a laudable aim, to which I am sure all of us subscribe.

How odd, then, for the same Government, though not of course the same department, to be considering a measure which would undoubtedly lead to an increase in the cost of construction. Any tax would have to be passed on by the quarrying industry to the customer. Ninety per cent. of the quarrying industry's output goes to the construction industry. Construction contributes about 10 per cent. of the country's GDP. Do the Government want to put that at risk?

On top of that, 40 per cent. of quarry products are bought by the public sector. Any rise in construction costs would have a direct financial impact on both central and local government. It is the taxpayer who would be left to pick up this bill, while the Government's own social and regeneration programmes would be put at risk.

The Government should make no mistake: if a tax is introduced, every home, school, hospital and factory would cost more to build. Inflation would be fuelled and Britain's international competitiveness harmed.

There would be another feature. The consequence of increasing the cost of home-produced products would also be to encourage cheap imports. In this case it would be not just imports of aggregates but also of products with aggregates in them, such as concrete blocks and pipes, and so on. The only way to prevent this happening would be by tight import controls, but that would be costly and complex to administer, thus reducing the revenue for the Treasury.

I would argue that, if the Government proceed with the tax, their economic logic is seriously flawed. The economic future of rural communities is a subject dear to your Lordships in many respects. The quarrying industry provides 40,000 jobs. Many of these are semi-skilled and the majority are in the countryside, where they are much needed. Any increase in the industry's costs would threaten jobs. Do the Government want to risk this?

In conclusion, I should like to ask a simple question: is this tax really worth the candle? It would increase the cost of building homes, schools and hospitals; it would damage the economy; it would fuel inflation; and it would threaten jobs. Above all, it would fail to do the one thing which the Government say they want to do; namely, to protect the environment. I ask the noble Baroness to recognise the importance of the industry and to ensure that the Government think twice before taking action which could severely undermine a British success story.

8.6 p.m.

Lord Berkeley

I congratulate the noble Lord, Lord Glenarthur, on initiating this short debate. First, I declare an interest as chairman of the Rail Freight Group.

I have a slight doubt about what is defined as quarrying. We understand about aggregates for construction materials, but I suspect that china clay in Cornwall is also classed as quarrying; I do not know whether opencast coal is; there are probably other mineral extractions which are.

I too have concerns about the proposals to tax quarrying, but from a slightly different standpoint. Mineral extraction and the transport of the product to its final destination both tend to be unpopular because they can be environmentally damaging. But they do not necessarily need to be. I should like to focus on the transport side, which has its own environmental problems. In my view, some means of transport are more environmentally friendly than others.

From some quarries—probably from most—some product has to go by lorry because there is not rail or sea transport nearby. Some of it goes along unsuitable roads. I know of a situation in Cornwall at the moment involving china clay where a proposal to rebuild a long-closed railway has been stopped and the lorries have, very responsibly, a voluntary one-way system through a village. I would not like to live in that village, but I suppose that, if I wanted to walk along a disused railway line, that is the other side of the argument.

From other quarries the product goes by sea. Most of the aggregates for the construction of the Channel Tunnel came by sea from the north of Scotland, which was very environmentally friendly.

A lot of aggregate goes by rail. It is good to be able to report that the number of aggregate trains went up from 11,000 to 14,000 last year, a welcome increase.

I should like to mention two things which are needed for rail to succeed in attracting more aggregate business, which would be beneficial from the environmental point of view. The first is a level playing-field with road transport. We have talked about it before. A 44-tonne limit for general lorry traffic would be disastrous. Rail would lose a large amount of the aggregate business to road. Secondly, aggregates for concrete works need terminal sites in major conurbations because the distribution of concrete in truck mixers is possible only over a short radius. If rail is to deliver aggregates to town centres, it has to have terminal sites.

I know of a case where a concrete and aggregates company tried to buy a site in Battersea which was rail connected. We found that Rail Property Limited, a subsidiary of British Rail, was planning to sell the site to Battersea Dogs Home in preference to the concrete plant. I saw the Minister for Transport, Glenda Jackson, who said that the Government could do nothing about it because of British Rail's obligations under the Transport Acts 1962 and 1968 to operate commercially. They could not instruct or ask British Rail to withdraw the sale.

I was sad about that. I made the point of how impressed I was as to the way the Battersea Dogs Home operated. However, I did not believe that it needed to be rail connected; dogs do not need rail connections and concrete aggregate plants do. I hope the Minister can look into that to see whether anything can be done.

The key is that, when giving planning permission for new sites or extensions to aggregate plants. planners can require transport by rail or sea if practicable. I suggest that one solution to the problems is that they should do that more often.

8.10 p.m.

Lord Amwell

My Lords, I should like to address the issue of an environmental tax on aggregates by considering the effects on the construction industry and its clients. I too should declare an interest. I am a civil engineer working in the construction industry and I have a close interest both in improving the productivity of the industry and in promoting greater environmental awareness among its companies.

A tax on virgin aggregates may be assumed to help in the drive towards greater recycling of materials. But the construction industry is already making great strides with recycling without the imposition of taxes. The watchwords now are "minimise", "re-use" or "recycle". Unfortunately, recycled material usually occurs in small quantities and it needs a suitable construction site reasonably close by or transport costs make re-use uneconomic.

I am not against redressing the balance of transport costs, but only if there is a green argument for so doing. Most recycled materials, because of the small quantities, are carried in polluting and generally unsustainable diesel lorries, while a great deal of the virgin aggregates, as we heard, are carried by trains to local distribution points. So a green tax which has a tendency to put more lorries on the roads would be a curious tax indeed.

Recycled materials can never be more than a small fraction of the total industry demand—we heard a figure of 10 per cent. rising maybe to 20 per cent. An aggregates tax could therefore only ever tip the scales slightly towards recycling, while making the whole of construction more expensive. And it is easy to see how a tax large enough to make a difference in recycling terms could add 3 per cent. or 4 per cent. to the cost of every construction project. That would hit all public sector projects; 40 per cent. of new construction and, for example, the 4.4 million or 5 million new homes needed over the next 15 years. There can be no doubt that inflation would increase. And all that with the most doubtful of green credentials.

There can be other surprising consequences which will not help sustainability. To give one example, building owners have recognised that air conditioning, because of its high energy use and CO, emissions, is quite unsustainable. There is a move towards what is called "natural ventilation" in buildings. That involves using the mass of a building to provide thermal stability against changes in temperature outside. That system demands heavy materials that do not conduct heat well—that means lots of concrete, brick, wood and stone.

The Government, interestingly, have been at the forefront in procuring naturally ventilated buildings. Noble Lords may know that the new parliamentary building above Westminster station has been designed in that way. If the price of aggregates is artificially raised by taxation, then progress towards more natural ventilation and all the real, measurable environmental benefits that that will bring, will take a setback. It will be one notch back in our attempts to reach the Kyoto global warming commitments.

The idea of a tax on aggregates is a poor one. It will add to inflation because it will increase the cost of all construction. It may tip the scales marginally from virgin materials to recycled, but it will only be tinkering at the edges. What is certain is that it will not be a green tax and I urge the Minister to ask her colleagues in the Treasury to think again.

8.14 p.m.

Viscount Addison

My Lords, national parks have an outstanding problem of old mineral planning permissions, many granted before or just after the parks were designated in the 1950s. During the passage through Parliament of the Environment Act 1995 I spoke urging a review of old mineral planning permissions and welcomed the provisions that were included in the Act. However, the review does not address the principle of location of permissions that would not be granted by today's modern environmental standards.

I urge the Government to look at how the review is failing, and falling short of its objectives in cases when operators fail to provide information requested from them by the mineral planning authority. I am informed by national park mineral planners that that is a practical difficulty, and there is at present no means to compel operators to provide the requested information. I suggest that the Government consider making permissions null and void if operators persistently fail or refuse to provide information requested by the mineral planning authority.

Compensation is often a subject that mineral planners and quarry operators both shy away from, but it is nevertheless important and needs to be addressed if the Government are serious about achieving sustainable development objectives in the national parks. For example, if planning authorities were to impose a time limit on working—generally 2042 for old permissions—compensation would be likely to be payable. A substantial reduction in the permitted working area, which might be desirable for reasons of landscape impact or nature conservation, would also be liable to attract compensation. Even dormant sites can be reactivated—given a satisfactory scheme of working—and any intention to re-open a site would prevent the issue of a prohibition order.

As time is short, I will write to the Minister about an example of where the old mineral provisions will fail national parks on the ground at Ribblehead quarry near Ingleborough in the Yorkshire Dales National Park. A site that has been acquired with full co-operation of the landowner, following the introduction of the Environment Act, is Winskill Stones, in the Yorkshire Dales National Park. That is a small-scale permission of 26 hectares. The site acquisition cost about £200,000, the majority of which was financed by the voluntary sector. We can see that some of the larger sites in national parks are going to run into millions of pounds' worth of compensation, should park authorities ever seek to revoke them.

In practice then, what are park authorities to do? Should they sanction development that would in principle be in conflict with national park purposes, or severely jeopardise their own existence and viability by compensating operators in return for park protection?

In view of the legacy of old permissions that national parks face, it would seem sensible and fair that any tax should be structured so that there was a premium rate for extraction in sensitive areas, including national parks. The moneys that that would generate could then be used to compensate operators for some of the more damaging permissions in the parks as well as funding research into alternatives to primary aggregate use and the principle of demand management.

Finally, standstill budgets of the national park authorities in England in 1998-99 will mean a reduction in services in some of the parks and fall way short of the recommendation about park funding by the 1991 National Parks Review Panel. The choice for the Government is either to increase the budgets of national park authorities so that they can address the legacy themselves, or ensure that they have the necessary financial tools to address the problem through other means, such as a tax.

8.18 p.m.

Baroness Nicol

My Lords, I declare an interest as a vice- president of the Council for National Parks. I am well aware of the importance of the quarrying industry and the noble Lord, Lord Glenarthur, pointed out that old quarries can be valuable wildlife sites. But the problem within the national parks is different.

We have strong policies on quarrying in national parks because of the irreversible landscape changes to areas to which successive governments have given the highest status of landscape protection. The difficulty is that the strong policies on quarrying in national parks are defeated by the interpretation of those policies by planning authorities, planning inspectors and by the practice of quarrying companies.

The policies are set out in Mineral Planning Guidance Note No. 6. I only have time to refer to a small extract. Of those areas it says, The Government considers that major developments should not take place in these areas and the New Forest. save in exceptional circumstances … and all mineral developments should be demonstrated to be in the public interest before being allowed to proceed". In the next paragraph, it states, any detrimental effect of the proposals on the environment and landscape and the extent to which that should he moderated;"— these are the matters to which regard must be paid— and in the case of extensions to existing quarries, the extent to which the proposal would achieve an enhancement to the total landscape". An enhancement may be too much to hope for, but we can at least hope to preserve what is already there.

The intention is that major aggregates developments should not take place in national parks, save in exceptional circumstances, but there is a loophole with regard to extensions to existing quarries which means that in practice extractions are being allowed which conflict with the test. Recent examples, which the noble Viscount, Lord Addison, was able to quote, include quarries in the Yorkshire Dales and the Peak national parks. There is no mechanism to address the historical legacy of supply for national parks, and the amount of aggregate being extracted and sold from a number of parks is at odds with present government policy. I know that the present Government are keen to adhere to the policies of MPG6 and clearly this loophole must be tackled.

I give as an example the case of the North York Moors Park which has been the subject of a recent public inquiry. So far this park has escaped large scale damage, but there has been an application for a major extension to one of its quarries at Spaunton. near Appleton-le-Moors. I know that, because of the public inquiry, my noble friend will not be able to comment at this stage. But the case of Spaunton illustrates the fact that, although the application had neither national need nor lack of alternatives as its driving force, nevertheless it was able to proceed to this extent.

The future could prove devastating if the loophole is not addressed. The level of permitted reserves in national parks is in some cases quite astonishing. For example, the permitted reserves in the Yorkshire Dales park at the end of 1996 amounted to 203 million tonnes. This represents a landbank of over 44 years. Surely it is time to look again at this policy so that parks can opt out of maintaining a landbank where they wish to do so. I hope my noble friend will be able to give a sympathetic answer to these points.

8.21 p.m.

The Earl of Dundonald

My Lords, I declare an interest as a director of Anglo-Pacific Resources. We have a fairly substantial quarry in Scotland which extracts silica sand. I should like to address myself purely to that industry. I have a series of questions to put to the noble Baroness in the time allotted.

First, do the Government consider silica sand to be an industrial mineral or an aggregate? In the event of it being an industrial mineral, will it be exempt from the proposed tax if it comes about? If the former, the rest of my points are irrelevant, but I suspect that the Government have not yet made up their mind. Are the Government committed to a policy that values silica sand as a scarce natural resource? This has been recognised by successive governments since the war and as recently as 1966, under the Minerals Guidance Note 15, it was strongly recommended that planners allow the workings of silica sand. Is the proposed imposition of the tax expected to increase recycling or is it simply a way of raising further taxation at the same time as increasing the inflationary pressures in this country? Do the Government believe, as I do, that recycling can be best achieved by further waste package legislation from Europe? Are the Government committed to continued support of import substitution; and are they aware that a tax, at whatever level, will erode this very substantially in the industry? If an aggregate tax is imposed on silica sand, this will simply increase import penetration and prevent the industry from exporting the mineral to Scandinavia, Continental Europe and Ireland, markets currently served by Continental companies such as Sibelco, which have very predatory sights on the UK and Ireland.

The price of silica sand is rock bottom at present. If a tax were imposed, the glass companies, which are in the throes of a very considerable reorganisation, as the Minister may be aware, may consider either moving offshore or purchasing from outside the UK, as relative merits of supplies are now driven primarily by haulage rates. A tax would imbalance this. At the same time it goes without saying that there would be a considerable number of jobs at stake not only in the aggregate part of the silica sand industry but also in terms of the knock-on effect if certain companies chose to relocate their businesses elsewhere.

The environmental argument for not imposing the tax is extremely strong. More imports with longer hauls to customers will increase congestion and create more pollution. I hope that the Government will think again on the whole issue of aggregate tax and, if not, will exclude silica sand from the tax on the basis that it is an important and strategic industrial mineral which successive governments since the war have valued.

8.25 p.m.

Lord Howie of Troon

My Lords, the House will be well aware of my long-standing connection with the construction industry. I do not know whether that is an interest as I am partly retired; but, arising from it, I approve of quarries and am pleased that the noble Lord, Lord Glenarthur, has initiated this short debate. When I say "quarries", I include almost any hole in the ground. I mean quarries providing stone, slate, sand, gravel, china clay, open-cast coal, and others which I may have forgotten. I regard all of those as quarrying and all of them are crucial.

Almost everything I want to say has already been said except for one thing. I am going to refer to the comment made by the noble Lord, Lord Amwell, a fellow civil engineer, when he drew attention to the 4.5 million houses which are proposed to be built—I wonder whether it is a dream or a reality—in the next 15 years. That means more concrete in foundations, in road kerbs, road paving, buildings and road bottoming. All of those things mean more quarries, despite the efforts the industry has made over many years in recycling. We have already heard how marginal is the effect of recycling. It is important, and no doubt it will increase, but the effect is marginal. There is no doubt that any kind of building programme over the next 15 years will require more quarries of the type I have listed.

There is an environmental problem here. It was well stated by my noble friend Lady Nicol, who worries a great deal about these matters, and by the noble Viscount, Lord Addison. I take a fairly robust view of environmental matters. I regard a quarry as part of the environment—and sometimes a useful and desirable part of it. The problem with environmental people is that they tend to panic and take a short-term view. Changes to the environment and changes in the landscape, to which my noble friend Lady Nicol referred, are long term changes. They begin with a scar on the landscape and then the landscape recovers in the fullness of time. It does not quite revert to nature but it reverts to somewhere between what it was at one time and where it now is, if that makes sense.

I wish to draw attention to two or three examples of this. They are drawn largely from areas which will be familiar to the noble Lord, Lord Glenarthur, and the noble Earl, Lord Dundonald. They may be familiar with a quarry at a place called Craiksland. It is near Symington, which is midway between Kilmarnock and Ayr. The quarry was abandoned 60 years ago and it is now part of the natural landscape. It was used for military purposes during the war but it has been out of action for quite a long time. It has returned to nature and is an attractive part of the country. One would never think it had been a quarry. Just on the other side of the Dundonald hill there is a shale quarry which is a repository for fossilised shells. What fossilised shells are doing 250 feet above sea level, I do not know, but no doubt geologists would tell me.

Lastly, I wish to draw attention to a large china clay pit near St. Austell which is still working but which will be the site of the Eden Project. That is one of the millennium projects in which a very large greenhouse will be built. As a structural engineer, I can say that it will be built along the geodesic forms of Buckminster Fuller. It will provide a very interesting botanical experience. If it were in a different place it could fit into the millennium dome, but I do not suppose it could be shipped from St. Austell to Greenwich. That is a use for a disused quarry.

8.30 p.m.

Lord Islwyn

My Lords, quarrying produces minerals, which are fundamental to our standard of living and way of life. Therefore, I was concerned when I heard the speculation about possible taxation on quarrying. The question arises of what would be the considered purpose of such taxation. Is it to do with the green argument and in order to protect the environment? Personally, I cannot accept the validity of that reasoning because the materials produced by quarrying would still be needed. Surely, the environment objective could be sensibly realised through more stringent planning regulations. We need to consider that the United Kingdom is essentially a road-based economy. There is a need to produce the minerals which are essential in the construction of roads and in the maintenance of the existing road network.

Is the intention to make this vital work more costly? I remind noble Lords that I am a believer in the old adage that when you put up the cost of transport you put up the cost of just about everything. Transport is only one aspect. What about the construction industry generally? We should think of all the new housing that is required besides more hospitals, schools and improvements to the existing buildings. So many other improvements are required to the infrastructure, and for their completion they need a ready supply of aggregates. If we follow the speculation at the present time, then the likely outcome is that ultimately the customer will pay the tax. Furthermore, such a tax would be likely to help fuel inflation. The customer is largely government, whether it be local or national. Ultimately, such cost increases could result in a cutback in projects. Such a programme of events would be detrimental to the Government's aim of renewing and improving schools, hospitals, housing and the infrastructure generally.

The final point I wish to make and to express my concern about is the possibility of increased imports. In order to be meaningful, I understand that the tax levied would need to be in the region of £2 to £3 per tonne for aggregates. I am informed that at the present time imports of cement are in the region of 7 per cent. of the total usage. If taxes were imposed, would we not be in danger of turning that figure into a flood of cheap imports? Our overseas competitors would simply clap their hands. In turn, such a development could well have an adverse effect on the numbers employed in quarrying and related industries. I suggest that such an outcome is one that we could well do without. I am sure that the Government will consider the matter carefully before going down such a dangerous path, for there could be detrimental consequences for the quarrying industry and for the economy as a whole.

8.34 p.m.

Lord Inglewood

My Lords, I begin by declaring an interest. I have some mineral rights, but since nobody has ever expressed the slightest serious intention of giving me any money for any of them, I suppose that it is hardly a financial interest although hope springs eternal.

We have had a good debate and I am grateful to my noble friend Lord Glenarthur for introducing it. I do not want to go over old ground. We have heard about the significance of the quarrying industry—using those words in their most extensive sense—and the importance to the economy of the country as a whole. It may be obvious to say this, but we are still living in the immediate aftermath of the last general election. We have now for the first time a Labour Government in almost 19 years. When governments change, policies change. That is why the electorate puts in the new government and removes the old one.

The question that we need an answer to is this: what is the attitude of the new government to this important industry? In that context, it is worth remembering that the administration we now have is, in many characteristics, very different from the previous Labour Government of the 1970s. Do the performance and the record of the previous Labour Government provide an appropriate and sensible signpost to the attitudes and actions of the present Labour Government?

Quarrying is an important activity, which puts great stresses and strains on the planning system. A number of noble Lords have mentioned it. I was chairman of the planning committee in the Lake District National Park for a number of years and I am fully aware of it. Quarrying is large scale. It is often required to take place in areas about which people care a great deal. As the noble Lord, Lord Howie, said, its short-term impact and its long-term impact may be rather different. Equally, the interests of people in the immediate locality can be very different from those who are further away from a proposed or existing site.

A balance has to be struck, and as was pointed out by the noble Baroness, Lady Nicol, policies made by the previous government as to how that balance should be struck are in place. The question that needs answering is whether, with a new government, we are going to see an evolution or a revolution in planning policy guidance that is going to come from the centre. Once a quarry is permitted, there is then a further set of regulations as to how it can be operated. That was referred to by my noble friend Lord Glenarthur. Are we going to see the status quo or are we going to see changes?

Once a quarry is either completely or partly worked out, various conditions will be imposed, normally through the planning consent granted, as to what should be done with it. All these affect the economic viability of the industry. That is significant when we look at the role and significance of this industry in the wider economy.

To turn to questions of more general taxation interest, I agree with my noble friend that the Treasury has an inordinate love of riches, particularly other people's riches. It looks at this industry as a source of additional revenue. In that context, I want to be clear of two slightly different things. First, there is the taxation of the value of the material to be extracted; and, secondly, there is the taxation of the process and associated activities involved in taking the material from the ground and finally delivering it to its place of final consumption.

If any particular activity or product is seen—and forgive the pun—as a quarry for the Treasury, that puts up prices. If the kind of taxation that we saw for development land tax is imposed on economic activities, it makes them more expensive. If heavy taxation is imposed on activities that are also required to carry out extensive works to try to remedy the inherent environmental damage that they do, it makes the quality and extent of the ability to carry out those works thoroughly and properly in the public interest that much less easy.

Finally, the final cost to consumers of the products of the quarrying industry depends on the relationship between taxation, price and the conditions imposed by government. That not only affects the end user, but also jobs and the balance of payments as to whether or not there is going to be import substitution. These are wide-ranging and important questions. I have said already in my remarks this evening that I believe that these are questions on which the House, the industry, those involved in administering the planning system, environmentalists and the country as a whole, should have guidance from the noble Baroness.

8.39 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)

My Lords. I am grateful to the noble Lord, Lord Glenarthur, for raising this issue and for giving me the opportunity to tell the House about the Government's policies as they are currently being applied to the quarrying industry. Many specific questions have been asked during the debate. I shall do my best to respond to all of them, but there may be some technical points on which I shall need to write to noble Lords who have asked specific questions.

This is an opportunity to make the Government's position clear and in some ways, I hope, to reassure those noble Lords who have been concerned. As the noble Lord, Lord Inglewood, said, it is a question of balance. The United Kingdom is rich in mineral resources and quarrying for these has been a traditional industry for many years. Inevitably there is disruption which imposes some costs on those living nearby and often damage to the environment where quarrying takes place to win the sand, gravel and crushed hard rock and other minerals required to supply industry with materials. As has been recognised by the industry and successive governments, it is important to minimise any environmental harm that may be caused by quarrying.

The noble Lord, Lord Glenarthur, stressed the undoubted economic and social need for minerals and quarrying. However, the extraction of aggregates—the essential raw material for the construction industry—is a major planning issue because of its volume (over 200 million tonnes per annum) and its environmental impacts. Most other minerals, although mainly extracted in relatively small quantities, give rise to planning issues because of their specialist uses and relatively limited occurrence, though any proposals to extract them can also raise environmental issues. Indeed, the issue of the national parks was raised by both the noble Viscount, Lord Addison, and my noble friend Lady Nicol.

The noble Lord, Lord Glenarthur, asked about the regulations which apply to the quarrying industry. Quarrying is no different from other industries inasmuch as any development is subject to planning law and to appropriate environmental protection and health and safety legislation. It is, however, different from most other development inasmuch as it is not static. My noble friend Lord Howie of Troon referred to both the short-term and long-term effects. Quarries tend to become deeper and more extended with time. They impact on both the environment and the landscape, as my noble friend Lady Nicol said.

The law which has developed under successive governments over the years reflects that. In particular. several pieces of recent legislation—the Town and Country Planning Act 1990, the Environment Act 1995, the Town and Country Minerals Regulations 1995 and the Compensation Regulations 1997—deal with the issue of ensuring that the operation of quarries with old mineral permissions is brought up to modern standards.

I endorse the extract from Minerals Planning Guidance Note No. 6 which was read out by my noble friend Lady Nicol. New quarrying should, indeed, be the exception. With regard to extensions, MPG6 raises the question of compensation for existing, committed quarrying rights. It is fundamental to the principle of property law that compensation is payable, but there is the question of the land bank. Perhaps that may be addressed in the review of MPG6 to which I shall refer in a moment.

The noble Viscount, Lord Addison, referred to a review of old mineral permissions. It is the Government's understanding that the powers of the national parks to review old permissions are adequate if used properly and with sufficient vigour. However, I look forward to seeing the letter which the noble Viscount has said that he will send to me. I shall certainly read it carefully and consider the circumstances. I am sure that my right honourable friend the Chancellor of the Exchequer will read with great care the proposals for a higher rate of tax for the national parks, were such a tax to be introduced.

The noble Lord, Lord Glenarthur, challenged us with regard to the environmental effects. Regardless of the efforts that have been made, which are welcomed, and the fact that some disused quarries have over the timescale referred to by my noble friend Lord Howie been turned into environmental sites which have been developed, quarries are not often sought-after neighbours because of the noise, dust and transport movements. Their effects on the amenity of an area, despite the benefits to the local economy and increasingly good restoration, need to be taken into account. Even when great efforts have been made to reduce a quarry's environmental impact, some disamenity will often remain. A large hillside quarry cannot be completely concealed from public view.

The principles underlining the minerals planning policy framework are broadly similar throughout the United Kingdom. I hope that noble Lords will understand if I focus on the guidance for aggregates planning in England. The previous government's policy towards mineral planning in England is set out in MPG6, to which reference has been made. We intend to look again at all the policies set out in MPG6, starting later this year. The review will be undertaken with wide public consultation, during which many of the issues raised tonight by noble Lords may be addressed. I should advise my noble friend Lord Berkeley that that guidance includes the policy that planning authorities should make efforts to safeguard existing railhead facilities in urban areas and to identify further potential sites. The onus is on the planning authorities. However, I am sure that that point, together with those raised by my noble friend Lady Nicol, will be considered with great care during the review.

The noble Lord, Lord Inglewood, challenged me to come up with New Labour's policy towards the aggregates industry. We made it clear before the election that, although we accepted the continued need for an appropriate quantity of aggregate extraction, we would want to look again at the forecasts and projections on which the previous government's policies were based. We are concerned that there should not be unrestricted growth in quarry capacity through the planning system, particularly of aggregates, to meet projections of demand that are not based on the principles of sustainable development. We do not think that we should quarry new material where it is not necessary. The Government want to see as much use made of secondary and recycled materials as possible, as I am sure do all noble Lords who have participated.

Some noble Lords referred to the barriers to recycling some materials. Those barriers are being addressed. Initiatives to exploit recycled materials are themselves often not forthcoming since primary aggregates are relatively cheap both in terms of the overall costs of construction and in comparison with recycled materials. It is in that context that the introduction of a tax on primary aggregates might help to level the playing field, as has been suggested.

The noble Lord, Lord Amwell, asked whether we thought that an aggregates tax would achieve more recycling. Research so far suggests that there is scope for further recycling and that a tax would be one way of achieving that. The current review of the effects of the landfill tax, especially in respect of recycling, must also be taken into account. Of course, there will be upper limits beyond which recycled material cannot be obtained and used, and we must bear in mind the costs of recycling and that recycling activities can themselves have environmental impacts. That point was made by the noble Lord, Lord Amwell. We must also ensure that the market can be exploited up to those limits. That means that newly dug sand, gravel or rock should not always be the easy first choice.

Plainly, from the speeches made tonight by noble Lords on all sides of the House there is concern in the minerals industry about the possibility of a quarrying tax. I stress again that while it is under consideration no decision has yet been made. In his Budget Statement last July the Chancellor of the Exchequer expressed the Government's determination that the environment should be central to the tax system. He noted that the extraction of aggregates involved significant environmental costs and damage to the landscape and he said that he would return to this issue in his next Budget following work on the environmental costs of quarrying. Results of this work will inform whether there is a case for measures, which could include tax measures, to ensure that environmental costs are reflected in prices. This work is in hand and the Chancellor will consider this and all the other factors, including the representations made to him by the quarrying industry and environmental lobbies, in making any decisions. Referring to the question of silica sand raised by the noble Earl, Lord Dundonald, I shall ensure that the Chancellor looks carefully at the comments that have been made about the coverage of non-aggregate minerals if he decides in principle to introduce an aggregates tax.

The question has been raised of the aggregates industry's support for the objectives of the Construction Task Force recently set up under Sir John Egan. The Government do not wish to threaten the achievement of these objectives. Following the Latham Report the construction industry recognises that there are more fundamental barriers to its success than the cost of individual materials and components. But on figures to which I believe the quarrying industry would subscribe the present cost of aggregates accounts for only some 2 to 3 per cent. of construction costs. Without anticipating the Chancellor's decision, any plausible level of tax is hardly likely to undermine the Egan drive to reduce costs by inducing greater efficiency in the construction process.

Noble Lords have expressed concerns that a quarrying tax may threaten semi-skilled and unskilled jobs and that a tax may be an even greater threat to our minerals industry if imports are not subject to the tax. The issue of imports was raised quite strongly. These points will need to be borne in mind by Treasury Ministers in looking at the potential scope of any tax should the Chancellor decide to introduce one. However, as I have said, no decision has been taken yet on a quarrying tax—this is ultimately a decision for the Chancellor—but if there were to be such a tax we have given undertakings to the industry that there would be full consultation on its implementation.

I turn next to the environmental effects of transport dealt with by my noble friend Lord Berkeley. It is absolutely true that the environmental disruption associated with quarrying is often caused by the movement of the materials from the quarry by road, often on narrow country lanes with the associated danger to local residents and others. Much of the industry relies on short haul of materials where there is usually no alternative to road transport, but where it is practical and economically viable the movement of materials by rail is definitely the preferred option. I note the point raised by my noble friend about 44-tonne lorries, with which I am familiar. I also note that many of the larger quarry operators who have to transport their materials over long distances to supply the south-east market already use rail. To encourage the switch from road to rail the Government make available grants towards the costs of rail facilities where there are demonstrable environmental and wider benefits. I encourage the minerals industry to consider this option.

I am grateful to the noble Lord for raising this matter and giving me the chance to set out the Government's position on quarrying, particularly with regard to the possibility of a quarrying tax. I hope that he and other noble Lords who have contributed are reassured that the policy objective of striking the right balance between the supply of primary materials to meet industry's needs while taking full account of the environmental consequences of quarrying is the right one and that we should explore the fullest range of ways in which to achieve this. Regardless of the final decision on whether a quarrying tax is introduced, the review of MPG6 starting later this year will provide the opportunity to debate all the relevant issues surrounding the planning of aggregates supply.

Lord Hoyle

My Lords, I beg to move that the House do now adjourn during pleasure until 8.55 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.53 to 8.55 p.m.]