7.

asked the Minister of Agriculture and Rural Development what progress has been made in ensuring that local producers get a fair return on their produce from (a) meat processors; and (b) large supermarket chains; and to make a statement.

(AQO 1454/01)

The question of fair returns is essentially a commercial matter between producers, processors and retailers. However, the long-term interests of the industry lie in effective partnerships between all parts of the food chain. I encourage the industry to develop such partnerships to ensure that a transparent and fair price is paid for Northern Irish meat.

To help the industry obtain the best return for its output, a range of support is available to assist with improvement in quality and marketing performance. For example, to ensure that Northern Irish beef is marketed to best advantage, I have provided £1·5 million of support to the Red Meat Strategy, which was developed between all parts of the industry and the relevant Department.

An important part of the strategy is to focus on premium markets that can provide a premium return for our beef. However, to service those markets, we must produce top-quality cattle. There has been a decline in the quality of finished cattle in recent years, and to reverse that trend, I have secured £2 million a year under the Programme for Government for a Beef Quality Initiative.

Following claims that the price differential between Northern Ireland and GB pigs was due to differences in quality, I commissioned a study which showed that there is room for improvement in the confirmation of Northern Irish pig carcasses, and officials will be working with the industry to address that. Some of the funds that I have allocated to support marketing in the pig sector are being used to improve quality.

Go raibh maith agat, a LeasCheann Comhairle. Does the Minister agree that, to gain a fair price for farmers and primary producers, the implementation of the £1·5 million strategy, which includes the Beef Quality Initiative, depends on farmers getting paid for producing quality beef? They have not been paid for that until now. In the vision exercise, could further gains be made by focusing more on farmer co-operatives to increase the strength of primary producers?

There is support for farmers' co-operatives. The Department of Agriculture and Rural Development has facilitated and supported farmers' attempts to form co-operatives, and it continues to do so.

Will the Minister establish a fair-pricing investigation into the real distribution of profits in the agrifood sector, and follow up the results with a fair practice pricing code? Such a code would enable consumers to identify products that had generated a fair return for farmers and other primary producers.

Fair pricing is a reserved matter; therefore, it is not the Northern Ireland Assembly's responsibility. The Competitions Commission investigated the allegation that processors were not offering fair prices and found no evidence of what were purported to be unfair practices by them.

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8.

asked the Minister of Agriculture and Rural Development whether she has considered rewarding the owners of "closed herds" by allowing higher rates of compensation in the event of a tuberculosis or brucellosis outbreak.

(AQO 1420/01)

Under current legislation the Department can pay compensation only for animals that it slaughters because of tuberculosis (TB) or brucellosis. The Government have no provision or precedent for compensating any other losses, and I have no plans to introduce any.

Does the Minister foresee the introduction of a financial package designed to encourage the establishment of more "closed herds" in Northern Ireland? Such a package would include double-fencing to prevent contact with neighbouring herds, and assistance with trials of vaccines against bovine tuberculosis infection. Does the Department of Agriculture and Rural Development value the concept of "closed herds" as a tool to prevent the spread of tuberculosis and brucellosis?

I have no plans for such a package. "Closed herds" are not an official concept; some farmers operate them as a precaution, which I welcome. However, I urge all farmers to play their part in assisting us to fight brucellosis. Through the Department's veterinary services, the measures that it has taken and its review, it will do everything possible to reduce the incidence of brucellosis and to eradicate it. That can be done only with the co-operation of farmers.

Go raibh maith agat, a LeasCheann Comhairle. My Colleague, Councillor Mickey McAnespie, and I recently met farmers in the Carrickmore and wider mid-Tyrone area who are anxious about the unduly high incidences of TB among cattle. Local farmers believe that not enough is being done to identify and eradicate the root cause of the problem. Will the Minister meet a representative group of mid-Tyrone farmers to hear their concerns so that she can take appropriate action, or will she task her officials to do so?

I assure Mr McElduff that I am aware of the areas where there is a worrying growth in the incidence of TB.

The Department is taking the increase seriously, and a review of its policy on TB and how its eradication measures can be improved is being finalised. I meet the farming unions regularly to discuss the issue, but if Members wish to meet me to discuss specific issues, I will consider their requests.

Question 9 is in the name of Mr Gibson, but he is not in the Chamber.

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10.

asked the Minister of Agriculture and Rural Development what measures have been taken to initiate the modernisation programme in her Department; and to make a statement.

(AQO 1443/01)

I announced my intention to initiate a major internal modernisation programme in the Department of Agriculture and Rural Development in my speech at the International Food, Drink and Catering Exhibition (IFEX). This will include a review of the Department's aims, priorities and structures to ensure that they are best suited to the developing needs of its customers and of society, and I have created a modernisation unit in the Department to advance it. The unit is headed at assistant secretary level and reports directly to the departmental management board.

Why has the Minister decided to initiate this modernisation programme?

The vision report, among other things, highlighted the need for the agrifood industry to change in response to current challenges and opportunities. It would be unthinkable to expect the industry to change without also examining the Department. The Department's structures and working methods have been in place for decades, during which there have been many changes in the industry and in the Department's responsibilities.

Several other strands of work are coming together that have highlighted the need for restructuring. They include the Department's commitment to e-business; the O'Hare Report on the Department's education and R&D provision; the mid-term review of the common agricultural policy; the independent review of the Department's handling of the foot-and-mouth disease crisis; and major policy reviews on tuberculosis, brucellosis, forestry and fisheries. With all of that coming together, it would not make sense for the Department to fail to determine how its structures can best suit the needs of the changing modern industry.

The time for questions to the Minister of Agriculture and Rural Development is up.

The Impact of the Aggregates Tax
on Businesses in Fermanagh and South Tyrone

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The quarry tax is one of the most substantial threats ever faced by our economy. I acknowledge the work that the current Minister of Finance and Personnel, Dr Farren, his predecessor, Mark Durkan, and the Minister of Enterprise, Trade and Investment, Sir Reg Empey, have done to find an alternative to it. The Executive have put their weight behind the effort to persuade the Treasury to rethink its position on the quarry tax in Northern Ireland. The efforts to date have achieved a deferral on processed products such as concrete blocks and ready-mixed concrete. That is a useful concession.

In Fermanagh and South Tyrone, 1,000 people are dependent on the quarry industry for their livelihoods. However, since 1 April, the quarry tax has been levied on stones, gravel and sand. The demand for those products from quarries in the constituency has dropped dramatically already. I have figures that show a drop in output of 40% in some quarries, and in one, a drop of 74%, based on an average output of the same materials over the past three years.

Traditionally, this is the time of year when the demand for quarry products increases. It is a busy time for the construction industry and on farms. Farmers buy large quantities of stone for drainage work and the construction of farm roads. Since 1 April, a great deal of the material for such work has been brought across the border. The substitution of materials from quarries in the South for those from our own quarries demonstrates how ill-advised the introduction of the tax is in Northern Ireland.

The Treasury says that imported stone is also subject to a levy of £1·60 a tonne. However, everyone knows that although that seems to be the case on paper, the reality is different. The levy cannot and will not be enforced because Customs and Excise does not have the manpower to enforce it. We know from our experience with the fuel tax that Customs and Excise does not have the resources to ensure that this tax is applied.

The aggregates tax was supposed to achieve environmental improvements. However, in our case, it will not achieve those, and it is not hard to see why the initiative will fail to have the desired effect. We know from our travels through counties across the border, such as Donegal and Cavan, that, just as there are many quarries along and close to the border on the Northern side, there are also many quarries along and close to the border on the Southern side. As the volume of material extracted from quarries on this side of the border decreases, there will be a corresponding increase in the volume of material extracted a short distance away in the South. As a result, there will be no environmental gain. In that context, the aggregates tax cannot be justified for Northern Ireland. It is a punitive measure that will lead to the closure of quarries and the loss of jobs if it is not stopped.

The Chancellor cannot ignore the wishes of the Assembly - an elected body that is accountable to the people of Northern Ireland. He cannot ignore the Assembly's concern about the effect of the quarry tax on border areas and the entire industry throughout Northern Ireland. There is a more effective way to address the environmental issues associated with the quarrying industry, and that is through North/South arrangements. There is a need for harmonisation and a level playing field for the industry, North and South. Through North/ South co-operation, we can arrive at a better outcome that will safeguard the quarry industry, protect the environment and stabilise our rural communities.

Members must remember that these border communities have not yet benefited from the peace dividend. It is well known that the fuel tax has devastated the economy in those areas. It has resulted in the closure of almost all the filling stations and many small shops in rural areas. Those areas have borne the brunt of the fuel tax, and they are now to be hammered again by an ill-conceived Treasury initiative. I ask Members for their support, and to call on Gordon Brown to abandon the aggregates tax.

This is a big issue, and it has been going on for a while now. When I was the Minister of the Environment, I remember writing to the Chancellor of the Exchequer, as the issue is an environmental one. I also met some quarry owners and the secretary of their association at the Killyhevlin Hotel in Enniskillen last year. The impact of the aggregates tax will be devastating, and I am glad, therefore, to see this Adjournment debate take place. I look forward to seeing some positive action being taken to address the problem.

The matter can be approached from both an economic and an environmental point of view, which I shall endeavour to do. First, I shall set the scene. Quarry producers have lobbied for a long time on the issue, and many meetings have taken place between our Ministers and the Treasury in London. Despite gallant efforts, the tax was introduced, albeit with a tax break for one year, which is a slight easement. However, the industry is a significant exporter to the Republic of Ireland, with as much as 90% of production from some plants being sold across the border. Export markets account for one third of asphalt produced in Northern Ireland, 50% to 70% of pre-fabricated concrete, and 30% to 40% of production from firms on the border, which can rise as high as 90% at times.

I have statistics for one company in Belcoo, County Fermanagh. In May 2001, its quarry was outputting 627 tonnes, but this year the figure has reduced dramatically to 119 tonnes - a decrease of 508 tonnes. That figure accounts for only one month. It is estimated that hundreds of jobs are at risk - up to 1,000 jobs in Tyrone and more than 700 in Fermanagh could be lost. To develop Northern Ireland's economy, the industry is essential for construction, housing, and road construction, on which we are embarking. Over one year, it is estimated that the tax will reduce the output of aggregate from this quarry by more than 100,000 tonnes.

The aggregates tax, which was only introduced on 1 April 2002, is already having a major impact on the industry, and, as a result, job losses will follow. This Belcoo firm has predicted that up to 15 workers will have to be made redundant, which is a lot of people in a small rural area. Many of those jobs are located in rural communities that are designated as TSN areas. The problem lies in the fact that buyers are now going to quarries across the border to avoid paying the £1·60-a-tonne aggregates tax.

One quarry firm, Acheson & Glover, estimate that between 400 and 500 tonnes of aggregate material is to be moved from the Republic into Northern Ireland via Belcoo every week. Surely the Government can see the grave effect that that has on the industry. Quarries from the South of Ireland are supposed to register with Customs and Excise; however, that is not happening and they are avoiding paying the tax. Therefore, a main issue is the fact that a level playing field does not operate - there is unfair competition. The situation would be eased if quarries in the South had to pay the tax, because it would mean that buyers would not have the advantage of crossing the border to purchase aggregate.

I shall now approach the debate from an environmental perspective. The Treasury claims that the main purpose behind the tax's introduction is to address the environmental costs associated with quarrying operations, such as noise and dust. That objective cannot be faulted. However, when one looks at the effect that the tax is having, one will see that, environmentally, the situation is deteriorating. We may ask how that is the case. As more buyers travel to the Republic of Ireland to buy their materials, it means that transportation takes longer. As a result, there will be an increase in CO₂ emissions and, therefore, atmospheric pollution. Moreover, additional health costs may be incurred as the number of asthma sufferers in the rural border regions increases.

The second environmental point to note is that Northern Ireland cannot generate large volumes of recyclable material compared with Great Britain. The vast majority of available construction waste is recycled in an effective manner. Therefore, it is clear that the environmental argument for this tax being in place is nonsense when its impact is examined carefully.

I want to take this opportunity to urge Departments to encourage major public buyers of these materials to buy only from bona fide suppliers - those who have paid the aggregates tax. If that were to happen, it would transform the situation overnight and safeguard thousands of jobs in my constituency.

With a tax rate of £1·60 a tonne, Republic of Ireland producers will be able to haul their product 20 to 25 miles to compete on a local producer's doorstep. Republic of Ireland product will flood any area within 20 miles of the border. Exports from Northern Ireland to the Republic, which once flourished, will become a thing of the past. Our Government must take cognisance of this frightening imposition, which is disastrous to the quarry industry.

I seek Government change in this process; otherwise, we lose an industry that has contributed so much to the economy over many years. I support the aim of asking the Government to appreciate the difficulties of a land boundary. Across the water it is not appreciated that we have a land boundary with another state and, therefore, the situation is not understood. This tax is a real burden; there must be another way. I support Mr Gallagher on this issue.

I too give my support. I thank Tommy Gallagher for having the foresight to bring the matter before the Assembly today. It is an emotive issue across Northern Ireland but especially in border areas. Those of us who live in, and represent, those constituencies have first-hand knowledge of the impact that the implementation of this aggregates tax will have.

Throughout Northern Ireland, the aggregates industry employs around 6,000 people. Potentially, up to 1,000 of those jobs could be lost as a result of the implementation of the aggregates tax. It is completely out of proportion, because the impact will be felt most strongly in the border constituencies, especially Fermanagh and South Tyrone, as Tommy Gallagher has rightly said.

I listened carefully to Mr Gallagher; he called for co-operation with the South on this matter. However, when the issue is examined more closely, it will be found that the real competition comes from the South of Ireland. I am sure that Mr Gallagher is aware of that. Our jobs and our industry will be lost to the South of Ireland if something is not done.

This is not a devolved matter. I am delighted to see the Minister here today. I thank him for taking an interest in the matter, and I have no doubt that he will adopt a hands-on approach to do what he can. The Assembly will be grateful to him for doing so and for the attitude that he has adopted. Nevertheless, it must be recognised that even if he wanted to do something tomorrow - and if it were entirely in his control and brief to do so, he undoubtedly would - unfortunately, he could not do so. This is not a devolved matter; it is a matter for London. If I can say anything constructive about that, I ask the Minister to continue to make representation to ensure that the impact that will be felt here is minimised as much as possible.

Sam Foster quoted some accurate figures about job losses and the potential loss in Northern Ireland, especially along the Fermanagh and Tyrone border. The average daily output for April was 401 tonnes in 1999, 2000 and 2001. However, in 2002, even before the real impact of the introduction of this tax has been felt, that has reduced to 252 tonnes. The reduction is well over 40%, and the impact on a constituency already facing difficulties will be a loss of jobs and revenue.

The average daily output for May in 1999, 2000 and 2001 was 627 tonnes. In 2002 it is 134 tonnes. That graphically illustrates the extent of the problem. It has been said that much finance will be generated by the introduction of this tax, but that does not tell the whole story. We were told that Northern Ireland would generate £35 million for the Treasury. With a potential loss of 1,000 jobs, £35 million is a hefty price to pay: the net gain will be virtually nothing, and the revenue to those towns and villages along the border will also be affected, particularly in Fermanagh and south Tyrone.

This is an emotive issue. We must plead with London and explain that this is not a level playing field and that work will be diverted across the border where it will be cheaper. It is reckoned that when the aggregates tax is fully introduced, it will put about £2,000 on the price of a new house.

The knock-on effect will be devastating. It will have an impact on road-building schemes, and Departments will have to compete in an unfair way. Sam Foster referred to that when he said that London does not fully realise that there is a land border, and the implications and impact that that will have in the coming years will be devastating. I agree with what has been said.

Go raibh maith agat. I too agree with all that has been said. It will bring to the attention of the Minister and others that, although they cannot do something directly about it, they cannot allow the case to be lost by default. It must not become less important - it is very important for the reasons given.

Those problems are of primary importance in areas such as Fermanagh and Tyrone where there is an abundance of quarries and great dependence on such industries. Those areas depend heavily on agriculture and tourism, both of which have been in decline in the last couple of years - especially agriculture. This is important to those who live in that part of the North. Last year the Assembly voted unanimously for Ministers to make representations to the Treasury to try to prevent the tax. It has been said that the tax would raise £35 million at the cost of 1,000 jobs. The derogation is only putting off the evil day for a short time for those involved.

The aggregates tax is designed to ensure that the negative environmental impacts of quarrying are reflected in the price, and to encourage producers to use recycled materials. Members have said that we do not have an abundance of materials to recycle and that we have not been using aggregates to any great extent compared to England, where the tax has been brought about by the green lobby. Our difficulties have been outlined. There is unfair competition across the border, which goes directly against the objectives of the tax, and the green lobby should take that into account.

It does not take that into account when writing to us or when making representations. The lobby hopes that the Ministers, and others, will stand to on the matter and that we will be forced to deal with it ourselves.

The tax is unlikely to have significant use. The difficulty is that we do not use the alternatives - unlike large urban areas in Britain, which have large brownfield sites, abundant demolished material and a different landscape to ours.

No business can make strategic plans on the basis of what is essentially a one-year stay of execution. Adequate breathing space must be given if jobs are not to be lost. Quarry owners must invest and work proactively, even though the threat of the tax and the uncertainty that surrounds it will deter them from doing so. That will cost jobs, regardless of what happens. We can do nothing about that; we can only say that we will fight on and that the fight is not over. The lack of ongoing investment in lorries, and so on, has negative effects on the environment. Roads are negatively affected when upgrading does not take place.

The Quarry Products Association (QPA) highlighted that the tax of £1·60 per tonne would raise £35·2 million a year in the North, but the potential losses total £61·4 million. That could mean the loss of as many as 4,000 jobs in the North. The ripples caused by the proposed tax levy could impact on all levels of construction. The public will be left to pick up the tab. The introduction of the tax may not simply result in the loss of 1,000 jobs; many quarries, some of which are heavily dependent on aggregate sales, may have no option but to close.

The ripple effect may be felt not only by construction workers but by subsidiary industries, including engineering, that are involved in the quarry industry. All those industries have been severely affected by the agricultural decline in the past few years. Companies such as Finlay Concrete Products, and Acheson & Glover, who supply up to 50% of their products to customers south of the border, will immediately find the market difficult - that is how they will get bitten by the tax. Quarry owners here will point out that they are already subject to the strictest environmental legislation in Europe. There is no significant problem with the quarry industry, despite the fact that one was perceived by green pressure groups such as the Council for the Protection of Rural England, and Friends of the Earth.

Over time, the Government aim to shift the burden of tax from "good" issues, such as labour and capital, to "bad" issues such as pollution. Environmental taxation must meet the general tests of good taxation. It must be well designed and meet objectives without causing undesirable side-effects.

The introduction of the aggregates tax here will not fulfil the objectives of the environmental tax; rather, it will have a detrimental impact on the environment. Extra miles will be travelled, as lower-cost products will be sourced from the South, which will have an impact on the environment. If those building houses or tendering for roads or large projects begin to source aggregates from across the border everyone here will suffer severely. The overall cost of products will be also raised massively for councils, local Departments and those living in border areas who are most dependent on the industry. I support Mr Gallagher on the issue. Go raibh maith agat.

I have heard nothing with which I disagree in the debate; everything that I have heard I could have said myself. There are several quarries in my constituency of South Down, and they face the same threat as those in Fermanagh and South Tyrone. Quarries in County Louth and County Monaghan are only a short distance away, and there is no doubt that the business will go in that direction if the aggregates tax is introduced.

Quarry owners mainly employ rural people whose wages and salaries go back into the rural economy. I can think of several part-time farmers in my constituency who take up quarry work. The reverse can also be the case. Those jobs go hand in hand, and the people who fill them are good employees. The same families have been employed in those businesses for generations. That goes back to the 1950s, and young men are still going into the industry. That tradition would be broken if the aggregates tax were introduced. Any tax on sand, gravel or stone will result in job losses.

I often wonder about the attitude of decision makers in Westminster towards Northern Ireland. Do they act as if we did not exist, or do they impose taxes upon us regardless of the consequences? Do they adopt a "like it or lump it" attitude? They do not consider the land frontier or the threat that such taxes pose to those trying to make a living on this side of the border, and where it would drive customers.

I thank those Members who stayed for the debate and Tommy Gallagher in particular for introducing it. I commend his efforts since the dreaded aggregates tax was first mooted.

Much of what I have to say is repetitive; but as a former schoolteacher, I believe that repetition helps to hammer the message home. I thank Mr Gallagher for raising this matter, and I am glad that so many Members from the Fermanagh and South Tyrone constituency have stayed for the debate. I welcome the debate and support its intention.

I understand the thinking behind the Government's scheme. Its aim is to reduce waste and carbon dioxide emissions and to lessen the impact on the environment. However, like many well-intentioned Government schemes, it is flawed. The aggregates tax was set at £1·60 a tonne in an attempt to persuade the businesses concerned to adopt a recycling agenda and to reduce the extraction of virgin aggregates.

This tax may help businesses in England, Scotland and Wales to think seriously about recycling that does not have an adverse effect on their profits. However, Northern Ireland's case is completely different. This is the only part of the United Kingdom that has a land border with another European country. That has affected our economy in many ways; its detrimental results have included livestock and fuel smuggling. This tax will put another nail in the coffin of our businesses and industry.

The aggregates tax will be detrimental to businesses in Northern Ireland. The strategy to reduce any environmental impact in this sector of business should be left to the Assembly. Sales of aggregates rocketed in March in an attempt to store up stones and avoid the extra cost. Northern Ireland quarry businesses are doing much to address environmental issues. The quarry industries in Northern Ireland had the highest uptake of any industry of the ISO 1400 environmental standard.

In 2000, there were 1,700 confirmed cases of water pollution. However, only 11 were associated with quarrying.

The quarry business has produced a good code of environmental practice. The majority of available construction waste in Northern Ireland is being recycled. Recycling took place on site for the Odyssey project, for Belfast City Airport and at the Sirocco Works. Our quarry industry should not be penalised for environmental reasons when it has tried its best with environmental initiatives. The Government wish to be assertive on environmental issues but they are ignoring the efforts that our quarry industry has made.

The consequences of the tax must be highlighted: potential clients will seek aggregates products from quarries in the Republic of Ireland because of price and currency differentials. Some quarries in Northern Ireland are within 25 miles of the border, and they will be forced out of business just as petrol stations were. Many jobs will be lost because of that knock-on effect. Grocery stores will be affected if people move when they lose their jobs. The loss of employment will have a detrimental effect on the local economy of Fermanagh because, over the past few years, it has lost much of its industry and its economy has been affected. We must do all we can to retain what is left there.

There will be added effects and costs to departmental schemes, and that was mentioned by Mr Morrow. The projected costs for road maintenance will rise by 4%, and road capital schemes will potentially rise by 17%. The environmental cost of the tax will also be high. Quarries in Northern Ireland are close to their markets, and they have an average delivery range of about 10 miles. It has been estimated that that delivery range will double, at least, if customers order from quarries in the Republic. That upsurge in road traffic will increase, not reduce, CO₂ emissions and will put more stress on our road infrastructure.

One of the stated aims of the tax was that there would be no effect on the competitiveness of Northern Ireland quarries in international markets. The reverse is the reality. The tax will affect their competitiveness and will encourage increased importation of quarry products from the Republic of Ireland.

The tax discriminates against quarries in Northern Ireland. I urge the Government to abandon this course of action, as it is contrary to the interests of a devolved region of the UK. If the Government want environmental targets to be reached, I hope that it will afford the Northern Ireland Assembly the opportunity of working with the quarry industry to do just that. The issue affects all of Northern Ireland, not just Fermanagh and South Tyrone. It should be within the remit of the Assembly to redress the problem. I support the intention behind the debate.

The Minister of Finance and Personnel (Dr Farren): I compliment Mr Gallagher for tabling the Adjournment debate, and for raising the important issue of aggregates tax again. I am fully conscious of the interest and concern that he and other Members have in the tax, and particularly in its impact on the local economy. I acknowledge the points that Members have made as regards the impact on the local economy especially in border areas.

I recognise that border areas such as Fermanagh and South Tyrone are at the forefront of problems in price levels and trade flows, given their location and the distortion caused by the tax. However, I wish to highlight some of the progress made on aggregates tax since the issue was first raised in the House in December 2000 and then move on to the nature and direction of future work. It is important to outline some contextual points first.

Aggregates tax is only one of several fiscal measures that have been introduced throughout the United Kingdom. However desirable Members may find it to have discretion over such issues, taxes are an excepted matter. As a result, our ability to influence versions of taxes that reflect the unique circumstances of Northern Ireland is limited. It is critically important that the Executive are engaged from the outset when tax measures that could affect Northern Ireland disproportionately are being considered. I could extend that to all tax measures, insofar as it is possible to include us, because sometimes it is not possible to assess the effect of a tax.

Regrettably, in the instance of the aggregates tax, the interests of Northern Ireland were ignored at the outset. Much effort has been expended to recover the situation, and there is still a long way to go. I am reflecting views that were communicated to officials when it was realised that the aggregates tax would have a negative impact on Northern Ireland. We were not on the radar screen as far as considering the tax's impact was concerned; we were ignored because we were not considered relevant in any impact assessment.

My predecessor, Mr Durkan, and I have stressed in correspondence with the Treasury that the argument for introducing uniform taxes throughout the United Kingdom is not well founded and that the vision of those in Whitehall must extend beyond the Greater London area. As part of my responsibilities, I have pressed the point, on several occasions, that Northern Ireland shares a land border with another state that is now a member of the euro zone. In the Republic, there is no environmental tax, and that point has been driven home in almost all the contributions.

We have had some success in pressing home our arguments to the Treasury, and I welcome recent comments made by the Financial Secretary to the Treasury that there is a need for specific Northern Ireland research on aggregates tax. Of course, it would have been much better to conduct the analysis before the implementation of the tax.

Another indication of progress is that last November the Treasury announced in its annual pre-Budget report that, for Northern Ireland only, it intended to phase in over five years the introduction of tax on aggregates used in processing.

I am pleased to inform the Assembly that the measure was recently given state aid approval by the European Commission. It is important to recognise that it is not only London that has to be convinced of our arguments, but Brussels, because Northern Ireland is working increasingly within frameworks that are set down by the European Union, especially with regard to the environment and other matters that I referred to in my statement.

As industry representatives said at the time, that was only a small step, but it was a step in the right direction. Although the Assembly and the Executive can rightly claim some credit for that measure, Members should be reassured by the fact that by no means do my officials or I intend to rest on that point. Much work remains to be done. It is imperative that the Assembly and the Executive act collectively to address urgently the issues at hand.

I want to concentrate now on the present position and on what I hope to achieve in the coming months with regard to the aggregates tax. In welcoming the pre-Budget report measure, I am also aware that the main beneficiary is limited to aggregates used for processing, and that the five-year digressive approach may not be the best for the industry. A working group led by departmental officials has been established. It is engaged in detailed discussions with industry representatives on alternative options. The Minister of the Environment and I had a useful meeting earlier this afternoon with a delegation from the Quarry Products Association. The meeting had already been arranged for today and, therefore, coincided nicely with the debate. Meetings have taken place recently, and they will continue. I am aware from those meetings, and from talking to the delegation earlier today, that the Quarry Products Association appreciates its need to contribute to the protection of the environment. It seeks to work with the Assembly to ensure that those environmental objectives, which we all subscribe to and want to see promoted, can be achieved.

Although wished for by many in the House and outside, complete derogation from the aggregates tax for Northern Ireland appears to be an improbable and unrealistic outcome. Therefore, the Assembly must work within existing parameters. The Treasury has stressed that point on several occasions. The solution will be a matter of balancing the interests of the industry with legitimate concerns about the long-term protection of the environment. That will not be easy. It will involve compromise and a willingness to accept that environmental damage must be mitigated effectively. However, I am encouraged by the willingness of quarry owners to work with the Assembly to ensure that environmental protection measures are put in place.

I continue to acknowledge the real concerns, especially in border constituencies such as Fermanagh and South Tyrone, that have arisen since the introduction of the aggregates tax in April 2002. I have asked departmental officials who lead the aggregates tax working group to continue to monitor the situation and to keep me fully abreast of developments, especially in relation to distortions to trade flow and potential job losses. The aggregates tax is an important Executive priority, and will remain so until a satisfactory solution is found.

As the analysis of the working group identifies a possible way forward, I intend to correspond further with the Financial Secretary to the Treasury to help achieve a version of the tax that better reflects the realities of our circumstances, both economic and environmental. What we have achieved to date, however limited it may be, is further evidence of the Assembly and its Executive effecting change for the better. Our combined efforts, together with those of the industry, have enabled us to make a strong case to the Treasury that has had to be answered.

I take the point about engaging with the North/South Ministerial Council, and I will seek advice as to how best we can combat the aggregates tax in that context. I will take an early opportunity to at least raise the issue with whoever is appointed to the finance portfolio in the new Administration in the South. I will meet that Minister in the context of the North/South Ministerial Council's meeting on European Union programmes in June.

The issue of the responsibility of Customs & Excise was implicitly raised by some Members. I underline the fact that we do not have responsibility for Customs & Excise. The duty of Customs & Excise is to monitor the impact of the tax in Northern Ireland, especially in border areas. Any evidence of tax not being levied on imported aggregate from the South is certainly a worrying development. My officials should be given that information so that they can take it forward with Customs & Excise.

I have addressed most, if not all, of the main points in my response. If other points escaped me, I will respond to Members in writing.

Adjourned at 4.53 pm.