01 April 2005

DEFRA's £9 Million U-Turn on Environmental Funding

The Quarry Products Association has identified another funding U-Turn made by DEFRA following the announcement of this year's £29 million pot for the Aggregates Levy Sustainability Fund. Following a widely publicised 30% cut in DEFRA's programme in 2004 (from £29.3m to £20m), the department has failed on its commitment to compensate for the cut in this year's Budget. There are no indications from DEFRA that the £9.3m deficit will ever be recovered, which will be at the expense of valuable environmental work in local quarrying communities.

The Aggregates Levy Sustainability Fund was established in April 2002, when the Aggregates Levy was introduced, to fund environmental and local community projects. The annual funding was set at £29.3m.

However, a year ago DEFRA announced that ALSF funding for 2004/5 will be cut to £20m to finance other spending commitments. After the reduction was announced, DEFRA committed to making up the 2004/5 cut in ALSF funding for 2005/6 and 2006/7. The £29m announced for 2005/6 brings the ALSF budget back to the original funding level, but the £9.3m cut in the previous year has not been recovered.

In the DEFRA-commissioned Mid Term Evaluation of the Aggregates Levy Sustainability Fund*, the report stated that:

"A robust economic case can be made for the continuation of the Aggregates Levy Sustainability Fund (ALSF) as a targeted government intervention to address the environmental costs of aggregates extraction. The Aggregates Levy alone will not achieve this outcome."

It is clear that not only are the intended green benefits of the Levy failing to materialise, but that the Government is adding further insult by reducing the environmental funding which it uses to claim that the Levy is an environmental tax. It is increasingly obvious that the Levy exists for revenue requirements rather than any persuasive environmental considerations.

Simon van der Byl, Director General of the QPA, said: "DEFRA has clearly not honoured its commitment to reimburse the ALSF for last year's cut. This is further evidence, if it was in any way needed, that the Aggregates Levy is not an environmental tax, but just another means of raising tax revenue. "

ENDS

Notes to editors

1. During 2004, The DEFRA Ministers responded to MPs concerned about last year's cut in ALSF by stating that DEFRA would "compensate for the cut in overall budget in 2004/5 in the following two financial years". Not only has this intention not been fulfilled, but there is no indication from DEFRA that next year's pot will in any way redress the balance.
2. December 2003 Pre-Budget Report, paragraph 7.68: 'DEFRA has completed a review of the Aggregates Levy Sustainability Fund. This concluded that there are strong economic arguments to support the continuation of the Fund as a targeted intervention to address the environmental costs of aggregates extraction. In its first year, the Fund distributed £29.3 million to help finance over 200 environment, heritage and access projects. The Fund will therefore be continued for a further three years with the current level of funding, with a review to be carried out in the final year. The existing bodies will be used for distributing the Fund for 2004-05 and the option of additional organizations for future years will be considered further.'
3. * Reference to DEFRA report 'Mid Term Evaluation of the Aggregates Levy Sustainability Fund' September 2003 (published on December 10 2003).

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