The Aggregate Levy and 300 to 500 jobs in Cornwall under threat!

Lord Berkeley

The Aggregate levy was introduced over ten years in order to discourage the use of primary sources of aggregates from deposits beside rivers and quarries and encourage the use of recycled or secondary materials instead. There were and are good environmental reasons for this levy but, of course, the large producers don’t like it and have been lobbying for its removal for some years.
Last year, having failed with the Treasury, they persuaded the European Commission that this levy was ‘unfair’ and should be investigated as a possible unfair state aid to those companies selling secondary aggregates and avoiding the levy. The Commission launched an investigation and, during this investigation, the Treasury decided to suspend the levy.
One of the businesses caught is the china clay industry in Cornwall, that sells secondary aggregates as a by-product of china clay production. For every tonne of china clay produced, some nine tonnes of waste have to be disposed of; most in the large tips that are a feature of the St Austell skyline. However, some of the waste can be further processed into secondary aggregates; this was used in the construction of the London Olympics at Stratford and there is a growing demand for secondary aggregates for the many building and construction projects under way, particularly in the South East, where the customer wants to demonstrate a green policy by using secondaries.
It can be transported either by rail or by sea through the port of Fowey, and it is estimated that this market could grow to over 1 m tonnes within a few years. Of course, the ‘green’ alternative must not cost more to the customer so it relies on being exempt from the £2 per tonne aggregate levy to balance the additional cost of transport.
All this is at risk if the Commission is persuaded by the major primary aggregate producers that china clay waste is not actually a waste but is mined to sell as aggregate. This is an odd argument; who would bother to mine it when there is perhaps 500m tonnes of this waste from decades of china clay production sitting in tips around St Austell?
On a visit to Brussels last week, I had a meeting with DG COMP which is responsible for the investigation; it was clear to me that they had been fed some odd and biased information about what is and what is not secondary aggregates. I hope that, when they announce their decision hopefully in the spring, this will be resolved in favour of the china clay waste continuing to be classed as exempt from the levy.
The Commission’s consultation on this closes next week; the UK Treasury has already submitted a helpful response, no doubt thinking that it is in its interest not only to retain the levy but increase it to further encourage the use of secondary aggregates.
They are right – of course! Between 300 and 500 jobs in the St Austell area are at risk if the china clay waste loses the aggregate levy exemption. Government, the local industry and supporters of jobs in Cornwall should ensure that the Commission is given the facts and that ministers lobby as hard as possible to allow this exemption to continue, both for good environmental reasons, for Cornish jobs and for more revenue to the Treasury from the primary sourced. Three wins here!

6 comments for “The Aggregate Levy and 300 to 500 jobs in Cornwall under threat!

  1. Gareth Howell
    14/01/2014 at 9:36 am

    The power of thought… or lack of it.

    I wonder how it is constituted for use in SE building projects?
    Even then it would still be rightly advantageous to be used as secondary aggregate.

    Perhaps the secondary aggregate businesses could acquire all the tips.

  2. John
    14/01/2014 at 9:48 am

    The above is very misleading indeed. Far from encouraging ‘secondary’ aggregates and recycled materials, the Levy has led directly to staggering waste, particularly in quarries that produce aggregates as by-products for animal feedstuffs, agriculture, high-specification industrial processes, etc. – because most do not have the tax breaks that make china clay so profitable, and simply have to rebury their processed material, at huge cost, because with a 40% tax ex-works, it’s essentially unsellable. By subsidising and cross-subsidising an illogical mix of products and operations with little understanding of aggregates or the industries they feed, the Treasury has created not only widespread distortion in the construction products market, to no one’s benefit (particularly the government’s, but also the wider economic recovery), but it also at times has facilitated out and out fraud. It is impossible to maintain that the Levy is a successful measure, even on its own terms: it creates additional waste; it increases road traffic; it forces quarries to broaden their footprint sooner; it sterilises permitted reserves; it forces up prices; it hammers the little guys and favours larger operators (who are not against the Levy as stated above). Indeed the idea that this is an environmental tax – or in any way represents a social good – would be laughable if it were not an sick insult to those more acquainted with the industry, and to the great number of people whose jobs depend on the Levy being either wholly reformed or scrapped.

  3. Westley
    16/01/2014 at 11:12 pm

    There has been little innovation in the aggregates market as it is not in the interests of major aggregate producers who operate concrete plants cement plants and asphalt plants for its outlet for aggregates creating a massive barrier to entry for new entrants in an attempt to protect their assets. Millions of tonnes of waste are created annually from construction and industrial processes in the UK and still sent to landfill ( the tax exempt ones to fill primary aggregate quarries for profit) or used for low value fill materials if the aggregate levy was to increase it would create a new sustainable aggregates and building materials market to meet the demands of sustainable building initiatives and there would be little need for minerals planning for new quarries across the countryside. Landfill tax has has created an industry where the UK has embraced new technologies for recycling and energy plants with landfills closing non of which would have happened was it not for a environmental escalator. The aggregates sector needs an environmental escalator as a push to provide the green building materials the construction and building sector now demands. Without this there is little incentive for major investment in a new industry which would create thousands of new jobs. Why create more quarries when billions of tonnes of waste from industrial processes and construction is already there to be used. An aggregates tax escalator like landfill tax would soon change mindsets and promote environmentally friendly alternatives. Our waste is a resource and we should use every single ounce of it before even considering using our natural resources. We just need to embrace it, its the right thing to do. Aggregates tax is an environmental tax its just not high enough and has been stifled through misinformation from the aggregate producers that its increase will affect the construction market. Did landfill tax affect the construction market? No…… it shifted a change for construction companies to recycle wood, plastic, paper, etc? Prior to landfill tax everything went to landfill. I hope in 10 years time when government sees the benefits I will say something similar with aggregates! A sustainable future where recycling and secondary aggregates is the norm and primary aggregates are used as a last resort.

  4. Paul Thompson
    17/01/2014 at 2:24 pm

    What a staggeringly misinformed and ill researched article this is. For a start it’s not the major producers who have been persuing this ill judged tax but the smaller independent producers, they’ve been challenging it in the courts since it’s introduction and well done them. What this tax does is skew the market in favour of secondary aggregates such as china clay so that they are then competitive enough to be dragged the length and bredth of Britain by train or boat (with added environmental impact) to be used in low grade applications in the construction industry. I suppose the argument is that by using secondary aggregates quarriers will not dig quite as many holes in the countryside as they might’ve done. Well guess what. The construction industry still needs quarrying to produce the high grade material that secondary aggs can’t and don’t replace, stone is still quarried, except since this unjust tax was introduced the market for the arsings (the lower grade stuff that was previously used in similar applications to those of secondary aggregates) has all but disappeared because of the state funding allowed to the secondary aggregates sector. If the aggregate tax is such a barnstorming green levy then why is it not applied to dimension stone quarries (those places that produce the stone used to clad some if our most famous buildings – the House of Lords for instance)? Why do they escape any levy ? Quarries that produce material for the chemical industries are also exempt. Why? They’re still holes in the ground with presumably the same environmental impact that irks so much.
    Now after much misinformation and sitting on hands at the Teasury (most of it during the Labour years) the unfair absurdity if this tax has been recognised by the courts and the Treasury is terrified. All the independent quarriers want (and once again I stress this is a battle that has been fought since 2000 by the industry body representing independent quarriers – not the big companies at all but local suppliers employing local people) is a level playing field.
    2/10 for effort

  5. Brian
    17/01/2014 at 8:18 pm

    The fact that secondary aggregates exists in such large quantities means it isn’t being utilised or adopted, more often the material is landfilled and leads to the question of quarry companies protecting their quarry assets rather than use of alternative resources. If we truly want to be a sustainable and responsible industry then we must seek inovation in secondary aggregates. Quarry’s will always be in existence, that’s not in doubt, scarse resource of primary aggregates and digging bigger holes are also a fact. Your point reference fairness is valid, therefore an aggregates tax escalator is the answer, secondary aggregates used and utilised in place of primary aggregates should always be the option, this would reduce landfill and make a greener industry – fact. At last… I fully support Lord Berkeley’s article and at last somebody in parliament has taken the time to fully realise the benefits of using secondary aggregates and that these resources are there to be used.
    It’s a myth that secondary aggregates can not be used in place of quarried high grade aggregates. Every year high grade aggregates are wasted from millions of tonnes of spent rail ballast and road plannings with a high proportion of this used as low grade fill in an attempt by primary aggregate produces to protect their assets and profit margins. These companies have had these materials available to them for decades to re-use in concrete and asphalt and the small proportions used to date are purely lip-service to be seen to be green. The negative comments above relating tomLord Berekeley’s article shows a complete lack of understanding of the current UK aggregates, concrete and asphalt market which the vast majority is controlled by only a few players, which is evident from various Competition Commission findings over the past few years.
    The secondary aggregates market at last has a voice and change is inevitable.

  6. Gareth Howell
    14/02/2014 at 10:18 am

    Cornwall is not the only neighbourhood, not to have dealt with its tips, as well as Wales have done with theirs.
    The city of Donetsk,founded, by John Hughes, the Welshman in 1869, and formerly known as Yuzovska (ie hughesovska), still has 120 tips in its hinterland.

    If Lord Berkeley is intent on building another railway track to serve the far south west of England, I wonder whether the white tips of Cornwall can be used for the purpose of infill there of?

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