Fund for green aggregates quietly killed

The government has abolished, sotto voce, a fund which helped the aggregates industry toward sustainability, angering the industry and environment bodies.

Shortly before Christmas, a small change on a remote page of the environment department’s (DEFRA’s) website let slip the decision that the aggregates levy sustainability fund (ALSF) will be scrapped from the end of March.1

The cut will swell government coffers by perhaps £20m a year, but will kill a respected scheme which has funded everything from research on reducing aggregates’ carbon footprint to improving biodiversity around quarries.

The aggregates levy was set up in 2002 to offset some of the environmental costs of extracting sand, gravel and stone and to encourage use of secondary, recycled materials. Currently set at £2 per tonne of virgin aggregate, it raises £270-340m a year.

But the levy was always intended to be revenue neutral. The costs to business were to be offset by a 0.1% cut in employers’ national insurance contributions and by the ALSF, which accounts for about 7% of the amount raised.

The fund, which has disbursed £65m over the past three years, is delivered by partners including the Carbon Trust, the Environment Agency, Natural England and the Waste & Resources Action Programme.

Topics supported include improving biodiversity in and around quarries and pits, studying the impacts of marine aggregate extraction and work on secondary aggregates to keep construction and demolition wastes out of landfill.

Industry body Mineral Products Association (MPA) condemned the decision. Chief executive Nigel Jackson said ending the fund was “an enormous own goal for DEFRA and government, as it runs contrary to the key objectives of empowering local communities through the ‘localism’ concept and improving biodiversity and conservation.”

The levy itself is to rise by 5% in April, the MPA says, meaning more funds will be available and the fund could continue.

The RSPB’s head of countryside conservation, Darren Moorcroft, said the fund had been useful in restoring wildlife to quarries and constructing paths to allow the public to enjoy wildlife. “This represents a move away from localism, a move away from ‘big society’ and a move away from the ‘greenest government ever’.”

A recent evaluation by DEFRA has shown the fund has given good value for money, with monetary benefits exceeding the investment by a factor of 9.5.2

The loss of the ALSF turns the levy into a pure ‘green’ tax with none of the revenue used directly to benefit the environment. It follows the coalitions’s decision on the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, which also became an energy tax when its revenue recycling component was scrapped last October (ENDS Report 429, p 3).

What next?

Environmental groups are now asking whether the landfill communities fund will be the next victim. The fund, administered by Entrust, allows landfill operators to donate up to 5.5% of their landfill taxes to bodies carrying out environmental projects. These vary from biodiversity improvements to village hall remodelling.

Meanwhile, the government is starting to deliver on its promise to “increase the proportion of tax revenue accounted for by environmental taxes”, set out in the coalition agreement. Electricity market reform proposals released in December include ending the exemption from the climate change levy on fossil fuels granted to coal, oil and gas-fired power stations.

The aim is to top up low EU carbon prices for generators, providing a steadily rising carbon price which is higher than the low market prices prevailing in the EU emissions trading scheme (ENDS Report 431, p 5). Electricity consumers would face higher prices as a result.

This month the Treasury held meetings on green taxation with business, industry and non-government bodies. However, it has issued no consultation document.

Subjects include using fiscal instruments to change people’s behaviour at home, in business and travel, with the Treasury keen to hear views on fairness and how to encourage optimum behaviour on carbon, resources use and risks.

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