Monday, 8 April 2013

Aggregates Levy frozen after "hard" lobbying by the MPA

The Aggregates Levy was introduced in 2002, as a £1.60/tonne tax on primary aggregates, in recognition of the environmental cost of quarrying - estimated at £380m p.a. - and to encourage the use of secondary and recycled materials. Now the levy is £2.00/tonne - equating to about 20% of the average sale price of aggregates (net of VAT) - and the European Environment Agency claims it has been successful "as a stimulus towards environmental improvements". The graph shows that since 2002 there has been a further fall in primary aggregate sales, despite an increase in construction, where taxed minerals have been replaced by non‐taxed, from waste sources such as china clay and demolition. About 7% of the levy went to the Aggregates Levy Sustainability Fund, which attempted to compensate communities affected by the "negative externalities from quarry activities". The MPA had wanted "more of the fund (50%) to be allocated to local communities to create the opportunity for communities to say yes to extraction as opposed to just saying no", but the fund was scrapped in 2011.

The 2013 Budget has frozen a planned rise in the levy. "Government is clearly listening" proclaimed the MPA, who was pleased because on this issue it "has lobbied hard". Will it kickstart the economy? Unlikely - aggregates purchases typically "constitute only 2–3 % of construction costs". So who will benefit? Well, the four major aggregate suppliers representing 75% of the UK market: Cemex (Mexico), Lafarge/Tarmac (France/UK), Hanson (Germany) and of course AI (Switzerland) will more than recoup their MPA membership costs. But for everyone else there will be no further incentive towards recycled and secondary aggregates, and a loss of £70m over 5 years in tax receipts.