Treasury unable to add up

The Treasury has been accused of being incapable of "doing simple sums" that will result in a shortfall of £164m in the funds made available over a five year period to pay for environmental improvements.

The claim has come from the Quarry Products Association in response to the Chancellor's announcement in the March Budget that a tax of £1.60/t will be levied on aggregates production from April 2002.

QPA claimed the tax will not be able to finance a Government Sustainability Fund to pay for environmental improvements. The Treasury said the tax will generate revenue to pay for a 0.1% reduction in employers' National Insurance charges and the new sustainability fund.

QPA said the Treasury's calculations revealed that the cost of reducing NI charges will amount to £350m per annum. Quarry producers argue that raising money from the aggregates tax will amount to £330m in 2002/03, based on current levels of aggregates demand. This will leave a shortfall of £20m in the first year of the tax.

Further shortfalls of £36m will accrue during each of the following four years, until 2006/07, and leave the Treasury facing a deficit of £164m for its sustainability fund.

QPA director general Simon van der Byl said if the Government had accepted the association's "New deal" package, it would have received a surplus of £25m per year to pay for environmental improvements - giving a surplus of £125m over the five-year period.

Van der Byl said: "Government has made the wrong economic and environmental decision in rejecting the QPA's package in favour of an aggregates tax.

"It is now apparent that the Treasury is incapable of doing simple sums and has massively over-committed aggregates tax revenue. Local communities have lost the £25m of funding proposed by the QPA and gained a new Sustainability Fund which has no prospect of funding.

"This financial mess typifies the superficial and misguided approach of the Treasury in rejecting the QPA proposals which would have delivered real environmental benefits to local communities."