Finance and Public Administration Committee [Draft]

Meeting date: Tuesday, March 5, 2024

Official Report 804KB pdf

---

Aggregates Tax and Devolved Taxes Administration (Scotland) Bill

The next agenda item is evidence on the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill. I welcome to the meeting Jonathan Sharma, policy manager for local government finance at the Convention of Scottish Local Authorities; Alan Doak, director of the Mineral Products Association Scotland; and Dougie Neill, the group general manager for NWH Group, who is representing the Scottish Environmental Services Association.

I intend to allow up to 90 minutes for the session. If witnesses would like to be brought into the discussion at any point, please indicate to the clerks and I will call you. Rather than having an opening statement, I will move straight to questions.

Mr Doak, the bill’s policy memorandum states that the proposed Scottish aggregates tax retains the fundamental structure of the United Kingdom aggregates levy and offers

“a degree of continuity for taxpayers ... while also ensuring that the devolved tax can evolve over time to support Scottish Government circular economy objectives.”

How does a tax of £2 a tonne deliver that?

It is fair to say that the £2 rate of taxation has been in place for quite a considerable number of years, through the UK aggregates levy. As part of that process, we have seen continued growth in the use of recycled materials and secondary aggregates. Current research, certainly from the Scottish Government, has indicated that something like 89 per cent of secondary and recycled aggregates are being used within the market.

You are basically saying, as you do throughout your submission, that at 89 per cent we are almost in effect reaching the optimum amount, if you like, of what can be recycled. Therefore, any additional taxation that is imposed, should the Scottish Government’s bill plan to diverge from the UKAL—it does not plan to do so at this point, as far as I am aware—will not deliver any further recycling.

I do not think that the bill clearly stipulates a rate or rates.

No, but the Government has indicated that.

I want to make a point in respect of the on-going extraction of what you might call virgin aggregate. At the moment, say that we are using 87 to 89 per cent of the recycled aggregate—I think that the figure has varied over the last couple of years in the documentation that has been produced. However, there are restrictions and limitations that mean that certain materials do not meet the criteria that are required of virgin aggregate, or the specifications for roads or other projects. There is a limit to how much recycled or secondary aggregate can be used.

I do not think that there has been any fundamental research on the availability of further markets or, indeed, on the further availability of construction and demolition waste within Scotland. That is one of the key points that I would like to try to get over. While there may be an objective for the tax to drive the greater use of recycled materials, there is perhaps a restriction—or an unknown, put it that way—with regard to what the availability and consistency of that material might be.

I will bring in Mr Neill in a minute. Last week, we visited a recycling facility and they basically said that there can be, on occasion, limitations with feedstock provision, which, again, you mentioned in your submission. They also said that something like 4 million tonnes of waste that could be recycled is being dumped into landfill and that 35 to 40 per cent of landfill is waste that could be recycled. Is that a figure that you would recognise?

That figure is not quoted in the national consultation document “Breaking New Ground?”. I do not think that there has been any detailed research on the level of availability—and that is not only in terms of the quantity of material that is available, but its quality.

I should say at the outset that, although I represent the Mineral Products Association in Scotland, our members are not interested only in the extraction of virgin aggregate. I have members who are clearly involved in recycling. They are involved in both aspects, not just one or the other. There are businesses that combine both facets and seek to maximise the amount of recycled materials that they use. As a trade association, we do similarly. For example, we wrote fairly recently to Transport Scotland about the greater use of recycled materials in the TS2010 surface course specification and guidance. We are mindful, as an organisation and as a trade body, of the use of recycled and secondary materials and so are our members.

Mr Neill, you said in your submission that the production of recycled virgin aggregate

“currently benefits from the UK Aggregates Levy. It is therefore essential that the Levy in Scotland (the Scottish Aggregates Tax) is maintained and also increased to ensure that recycled and secondary aggregates are competitive with primary aggregates in line with Scotland’s resource efficiency aims.”

That is laudable. I am just wondering about the issue that Mr Doak raised about the availability of those materials. If there is optimum utilisation—or near enough—at the moment, would increasing the levy have the impact that you would desire of creating an incentive to do more recycling? Is the resource available to do that?

The resource rises and falls depending on the construction and demolition markets. At this moment in time, we are in a bit of a lull as regards new builds or builds being taken down to allow the material to be extracted from building sites, although I would caveat that. Apologies for going back to it, but I was sitting in for the previous agenda item when there was discussion about the landfill tax for inert waste maybe not being too high. If we have a supply of what we call feedstock, we can turn that into recycled aggregates, but if there is not a market at the other end of that, it encourages more to go into landfill, especially with a lower-rate tax of £3-something. There is no financial incentive to bring that back to be recycled, just to turn a bigger pile into an even bigger pile.

There is more that we can be doing. The recycling equipment that is available has come on in leaps and bounds in the last 10 to 15 years that I have been involved in the market. We are able to recycle more materials that would previously have gone to landfill, but it is a bit more intensive and a bit more costly to do so. The financial argument needs to be there to divert more from landfill.

You are saying that to enable greater investment in new technologies that will upgrade the quality of secondary materials, you are looking for an increase in the levy. Would I be right in saying that?

Yes, and to put that into context, our organisation has been saying that for many years. We talked about waste tourism before, but this is at the other end of the spectrum. The paper mentions that if cross-border arrangements became separated and divorced from what the rest of the UK is doing, that could lead to complexities in the application of the tax rates. I understand the need for consistency, and the bill sets out to be consistent, but if we are going to pull a lever to change behaviours, this is the opportunity that we have to do that.

Your submission talks about secondary aggregates and, in particular, incinerator bottom ash aggregate, being

“strongly reliant upon the Scottish Aggregates Tax to remain competitive in a challenging market, allowing large-scale landfill diversion and avoidance of raw material extraction.”

One of the issues that were raised during our visit last week was that, although the quality of recycled materials is improving all the time, there is still a view that they will never be as good as primary aggregates in certain areas.

11:45  

I will touch on the issue of incinerator bottom ash aggregate. Obviously, the push towards the landfill ban and the increase of what we call energy from waste plants, where we incinerate the residual waste to power the national grid, has produced the material that comes out the other end. Basically, it is ash. As yet—I know that this is probably crossing over different departments—we have failed to receive a waste classification for that material type, which makes it particularly difficult to get it into applications and to have a market for it. We are finding that a lot of that ash is just getting piled up in landfill sites.

There is a challenge around IBAA and what it can be used for. As you see in our submission, SEPA has issued what it calls a position statement, which says that IBAA can be used, but only in a very narrow series of applications. It cannot be near to a water table or close to a river and it can go down to only a certain depth. The applications are very narrow. Other countries are maybe a bit more progressive; for example, the Netherlands builds runways and roads and reclaims land with that material. There are uses for it. However, I appreciate that this committee is not advising SEPA on that. The challenge is that, if the aggregates levy is not maintained or increased, all that will happen is that, although we are doing good work diverting waste from landfill, we will end up with the secondary problem of incinerated bottom ash taking its place.

Mr Sharma, in COSLA’s submission, you ask:

“Should the intention be to increase the incentive to move away from sourcing primary aggregates to secondary recycled aggregates, then how might this impact on Councils’ ability to procure at reasonable cost?”

I take it that you are looking for a break whereby, if local authorities or other public authorities were buying aggregates, there would be a tax on primary aggregates but not on secondary aggregates. How would a bigger shift to secondary recycled aggregates have an adverse impact on COSLA?

The point has already been made that there is not necessarily a completely open market for accessing secondary recycled aggregates. The point that COSLA is making is similar to other points that it makes in its submission. Councils are substantial procurers of aggregates and run quarries, so if the aggregates tax rate per tonne goes up significantly, how will councils be able to continue to afford to do the work that requires aggregates, particularly maintenance of the road network? The question comes back to how the aggregates tax can work to encourage, and increase the supply of, recycling.

In one breath, COSLA is saying that it is not keen on the aggregates tax going up, because local authorities purchase large quantities of primary aggregates and there would therefore be an impact on their cost base, but, at the same time, COSLA wants to encourage greater use of recycled aggregates. Are those not contradictory objectives, given the fact that the levy is required in order to create a cost differential so that companies can invest more money in equipment for recycling?

There is an existing aggregates levy and, when the aggregates tax is introduced, it should be seen, at least initially, as a lever and as one of the suite of things that can be done. We do not oppose the idea of councils having to pay the tax along with other procurers. The point is that, if the aggregates tax in Scotland is going to be a bit different from the aggregates levy, there should be greater focus on the suite of measures that could be taken.

Last Friday, I heard from COSLA’s environment and economy board that, for example, there is a willingness for councils to use more secondary aggregates from building materials, but there needs to be investment, too. There is an opportunity when such a tax is introduced. Earlier, the point was made that we now have the opportunity to respond to the challenges more effectively and to recognise the circumstances more closely. We are not saying that we do not anticipate that the tax rate could go up—it is obviously up to ministers to determine whether it goes up—but we could look at things differently, and perhaps increasing recycling could be part of that.

If, as Mr Neill said, the Netherlands can build runways with recycled materials, is there no reason why roads in Scotland could not be resurfaced using recycled materials, assuming the regulations could be adapted to allow that to happen?

I am not an expert on roads, but I got the sense from the board members on Friday that, if there was a significant increase in the tax rate, road services might be affected the most. Equally, there are opportunities for recycling and to use secondary aggregates differently. We should try to encourage that alongside the incentivisation in relation to the tax rate.

Mr Doak, in paragraph 16 of your submission, you say:

“English producers may be keen to exploit any substantial increase in rates in Scotland.”

That depends on what you mean by “substantial”. What would you describe as “substantial”?

My understanding is that the Scottish Government does not intend to do this, but what if, for example, it decided to increase the rate from £2.03 per tonne, which is what it will be from April, to £3 per tonne? Given the cost of shipping or trucking aggregates, would an increase of £1 per tonne really mean that people would be shipping vast quantities of aggregates into Scotland? I would have thought that the cost of the shipments would be much higher than £1 per tonne once the fuel, the lorry driver and so on had been paid for. There are also not many highly populated areas near the border between Scotland and England; most of the cities that would use the aggregate are further south.

Therefore, would such an increase have a real impact? In other words, what is the elasticity of demand? Conversely, if the Scottish Government reduced the tax to £1 per tonne, would there suddenly be huge demand for Scottish aggregates in England? That seems a bit unrealistic—we are talking about £1 per tonne. I am struggling to see how changing the rate in either direction would have a major impact.

You are right in what you said about price elasticity. We are commenting on a bill that does not state the rate in it, and we have heard calls for the tax to be increased significantly. How far a product can travel will depend on its quality, which will have implications for transport costs. You are correct in so far as, if there is a low differential, it is perhaps unlikely that a low-value product will travel further as a consequence, and there is a greater likelihood that a higher-value product will travel further.

I think that red gravel stones are one high-value product. Are there other high-value primary aggregates that could be impacted by either lowering or increasing the rate?

A variety of products are produced at quarries, depending on the geology. We should not ignore the fact that, even at a site where higher-value products are produced, lower-value products might need to be removed in order to get to the higher-value products. Those lower-value products might then compete with secondary recycled materials, so there can be a knock-on effect.

I will touch on something that was referred to earlier. Let us focus on recycled and secondary materials and aggregates. The Scottish Government’s figures suggest that between 87 and 89 per cent of construction demolition waste is already recycled. I would argue that we do not know whether there is potential for the other material to be used, because that research has not been done. Mr Neill referred to bottom ash. That is an example of the quality of a product restricting what can be done, because SEPA has placed restrictions on it. The quality requirements that are stipulated for various projects mean that virgin aggregate cannot always be replaced with secondary or recycled materials. I am trying to get across the point about both volume and quality.

I think that you have got that point across. We all accept that that is the case in some areas. I do not want to put words in Mr Neill’s mouth, but I think that he said that, as the quality of recycling has improved, the difference between virgin aggregates and recycled material has narrowed and, in some areas, has become marginal. Am I right in saying that, Mr Neill?

Yes, I agree with that.

We see that in the marketplace at present. For a number of years, even with dry recycling, materials that have been crushed and screened have returned to sites. There has been investment in wash plants, where materials go through a secondary process, so there has been greater use of recovered materials. The point that I am trying to get across is that that flow is happening at present, with the tax at its current rate. That is probably more to do with the landfill tax than it is to do with the aggregates tax.

Thank you. Incidentally, Gillian Mackay has had to leave to attend a meeting of the Parliamentary Bureau. She gives her apologies.

I have one further question for you, Mr Doak, before I open up the discussion to colleagues round the table. In the first paragraph of your written submission, you say:

“Extraction of ... aggregates in Scotland as in the rest of the UK is well-managed and heavily regulated. The industry has a strong environmental track record”.

I think that we recognise that. However, concerns have been raised about unregulated quarriers and so on. How big a problem or issue is that? Would you like the bill to tackle that?

To jump back a small step, the approach that we took in our engagement on and response to the bill was to ask for the establishment of a technical advisory group, which was subsequently set up. On the point about a distinctive tax that is potentially different from the UK aggregates levy, we called for greater transparency—if I can put it that way—through the register of sites and how they are monitored and policed. We even took that to the point of suggesting that there is a role beyond the implementation of the tax for a working group with Revenue Scotland to ensure that the system is almost self-policing.

Whatever the rate of tax is, our members are keen to ensure that there is a level playing field across the sector and that it is well enforced to ensure that those who should be paying their tax are paying their tax.

12:00  

I think that we would agree with that. Whether it is £1 or £2 or £3, we want to make sure that everybody is paying it and that your members are not being disadvantaged by paying it while their competitors 10 miles up the road are not regulated or licensed and are undercutting you.

Exactly.

I will open up the discussion to colleagues round the table.

On the question of definitions, such as the meaning of “commercial exploitation”, we are sticking closely to the UK rules. Are you all comfortable with that?

Yes.

Yes.

Yes.

There was a suggestion from at least some people who wrote to us that the definitions could be wider and that products are being missed and are not being taxed under the current definitions. Does any of you feel that that is the case?

No. We will not be taxpayers under the bill, so our members chose to answer only a few of the questions that were posed. We have not seen anything, or I cannot recall anything, that should definitely be included in the taxable element of the bill. Therefore, I do not have anything to say on that.

Mr Doak, you are not all that enthusiastic about the tax, anyway, so I presume that you do not want anything to be added.

The UK aggregates levy—with the exemptions, the reliefs and the process—has been in operation for 20 years, and we have seen a drive towards recycling while it has been in place. From that point of view, it is business as usual for our members.

So you are not arguing that a particular product should be taken out or anything like that.

That is right.

Mr Sharma, COSLA argues that there should be certain exemptions for local authorities.

Yes—I was going to mention a couple of things. One is that we were on the expert group that considered the options for devolving the tax. Those who were round the table certainly understood why we would want the new tax to be stable and not to cause huge disruption initially. However, the discussions involved a range of points, some of which were about the definitions. One issue that I raised was that, where local authorities have to use virgin aggregate for roads maintenance and so on—we have talked about the availability of recycled and secondary aggregates—in many cases that is providing a public benefit, widely speaking.

There is also an issue about other environmental measures that are being undertaken within the circular economy principles and priorities. For instance, if it becomes more expensive for councils to complete active travel projects, more funding will have to come from the Scottish Government. Obviously, a substantial amount of capital investment in active travel is coming from the Scottish Government, even as we speak, and councils are also having to put in their own resource.

I argued that there might be scope to look at not necessarily removing the tax, but having some sort of recognition, if you like, of the reason why primary aggregate is being used.

Would you go as far as to say that we could have different rates? Say in the Western Isles, if virgin material has to be used, there could be a lower rate whereas, in the central belt, where there is a choice, it should be a higher rate?

There is merit in having discussions on that. Introducing the tax will be the first thing to do. We are already engaging with the Scottish Government and officers, and with other stakeholders. We plan to have a local authority workshop to talk through some of the issues.

So you have no position yet on whether you want a national rate or local rates.

We do not have a position at this point.

Fair enough.

I will move on to an issue that I was initially surprised about but that I am perhaps understanding now. I thought that the tax would have been applied at the point of production at the quarry, rather than when the material is put into use. Obviously, it would cause a huge problem with the rest of the UK if we had different systems, but what is the logic of having the tax at the point of use or commercial exploitation, rather than at the source?

As I said, the tax has been in place for 20 years at the point of commercial exploitation. If it was at the point of production, I suspect that that would cause cash flow issues. You would be looking to tax material that is perhaps sitting in the quarry or on the deck and that has not even been sold yet. You would get into a whole debate as to whether materials will go out the gate or not. Lower-quality material might end up being left and used in the restoration of the site, so people would be paying tax on material that has not been exploited.

There are a number of reasons, so I can see why, for 20 years, the tax has been on commercial exploitation, which is basically at the point of sale.

Has the experience been that any material has gone missing between the point of production and the point of exploitation? I am an accountant, so it seems neater to me to use the point of production, because you know where the quarry is. When something leaves the quarry, that is easy to measure, but goodness knows where it might go for exploitation.

To my knowledge, that has not happened. I do not think that there have been any investigations. Certainly, I am not aware of any investigations by His Majesty’s Revenue and Customs on that issue.

Do you have views on that, Mr Neill?

I can see why you would ask the question. As I said, we are not taxpayers of the aggregate levy at this time, but I agree with Mr Doak that the taxation at the point of sale is very important, for the reasons that he gave.

Thank you. I will leave it at that.

I start from the position of wanting to make sure that the tax is as simple as possible for business across the board, and that we should differentiate things as little as possible. However, at the same time, we want to maximise the recycling rate. That is the tension that we are trying to investigate through various questions.

From the evidence so far, it strikes me that the tension is probably in two different areas. One is about expanding the marketplace. That might be done through price competition so that recycled aggregate is more competitive on price—in essence, it is cheaper because you do not have to pay the tax—or through broadening the use through the classification of aggregates and where they can be used.

I want to push you a bit on what the convener asked about at the start. How much more could we actually achieve? Given both of those variables, how much more is out there for us to try to put in place a policy regime to advance the cause of maximising recycling? Mr Neill said that we are in a lull at the moment but is this an infinite process in that, as long as the price conditions are there, we could just keep finding material? What is realistic when it comes to how much we could push up our recycling rate and get the environmental benefits of that? I will start with Mr Neill.

I will explain my point that we are in a bit of a lull. Obviously, to recycle material, you need feedstock material. As I said, a significant amount of that goes into landfill at the moment. From my company’s perspective, we are currently producing three days a week, so we have an extra 40 per cent capacity to produce more aggregates, but there is not a financial reason to do that.

The market is a bit depressed in terms of the sales that are available, and it is hotly contested. That is not just the recycling market but the primary aggregate market. When fewer sales are available, prices come down and competition increases. From my point of view in the recycling market, there is feedstock available to us. If the financial conditions were right, there is capacity in the system to produce more.

I hope that that answers your question.

So the issue for you is more about demand rather than the supply side of your business.

Yes.

If the marketplace is there, you will be able to get more supply and you will be able to sell it.

Yes. There are a couple of points on that. The classification of the waste when it comes to incinerator bottom ash is quite a big topic. There is an issue about SEPA’s role and the applications that the material can be used for. We can do more to broaden the scope for using recycled materials, which would help to push on our sustainability and circular economy aspirations.

I mentioned the increasing sophistication of the technology that is being used. Bearing in mind that companies are having to make multimillion-pound investments to achieve that, we need to set the foundation stone for a market that looks first at the secondary aggregate market before it looks at the primary market.

Just to challenge a little what Mr Sharma said, we are having direct engagement with some local authorities that are not that many miles from where we produce the material but that are taking the view that primary aggregate is not much different, so they will just use that, because they know that it is safe. We are currently trying to open negotiations to say, “Come and see the plant and see the quality that is being produced.” I know that the committee has visited a plant.

There is sometimes a stigma attached because, 20 years ago, someone on site said, “That recycled material is not of the quality we would expect.” However, things have come on so much. We need to change the perception of the industry that uses the materials while creating new opportunities to drive up that number. I suppose that the new tax is a lever that we can pull to try to do that.

We saw some excellent sand last week.

I have got that much, I am selling it.

On that visit, we also heard that it is about distance, because much of the carbon impact comes from transport. Mr Sharma, will you respond to that point about the balance between where you source the material versus the kind of material? How is your local authority balancing that in considering its carbon impact?

Obviously, I cannot speak about those specific circumstances, but the feedback that I got last Friday from the environment and economy board members was that councils are actively looking at alternatives. I heard that they are looking at how to make better use of their own building materials, for instance. The message is—this is the point that I made earlier—that, if the tax is coming in, that is one lever but let us not bring it in just as one thing. If that sort of situation is happening, or if there are blockers to do with what councils feel that they can do legally, let us explore that and see where we can go. I think that there is a willingness to do that.

Mr Doak, I want to bring you back to my original question. That was a bit of a segue and we went back and forward, but it was about the capacity or potential. Do you have a sense of the scale of potential growth in the area?

12:15  

At the outset of the discussion, I made a point about the lack of research that has been done on the availability of secondary and recycled materials. To repeat, we are using 87 to 89 per cent of construction demolition waste, but there are also secondary materials that we are touching on. However, we do not have full understanding or knowledge of the potential of that material to be used, from both an availability and a quality point of view, as we have touched on.

In Scotland, we produce somewhere between 20 million to 30 million tonnes of aggregate per annum—it can vary depending on the market. The figures that I have seen on construction demolition waste are nowhere near that. The consultation document on the proposed tax suggested that the figure is just over 1 million tonnes. The convener referred to a slightly higher figure, but it is not anywhere near 20 million to 30 million tonnes.

Please do not get the impression that I am suggesting that we should not recycle or should not have the tax. We are looking at the bill from one side, but we do not have the information from the other side, on the availability of alternative materials. That is the point that I am trying to make.

From my perspective, there is 20 million to 30 million tonnes of material, and we have a list of potential objectives for the country as well as the national planning framework. Those include offshore wind and hydro schemes that have a potentially huge demand for aggregate.

To perhaps jump on to one of the other questions, if the bill is designed to minimise or reduce the use of aggregate and the revenue that is derived from it, that seems to me counterintuitive, given the potential future demand for the materials for the economy.

That is useful. It feels like there is a reasonable amount of consensus. The question seems to be more about classification and use cases rather than price point.

On differentiation, there are lots of different products. Some of the virgin aggregates that we are talking about, whether it be red chips or others that are specific to the geology of Scotland, have a greater export value and it is worth shipping them long distances to neighbouring areas. There is an aggregate that we can export that has a higher price or value. Is there any case for saying that we should intervene more directly to protect those export or long-distance markets versus something that is more localised?

I know that that is partly about the price elasticity in transport. However, should we make the differentiation more pronounced? Should we say that Scottish red chip has a high price point and it is something that we can use, but the bill should differentiate between some of those classifications? Putting aside how difficult that would be, do you think there is a case to say that there should be more direct differentiation in the bill?

Our position has always been that there should be one tax and one tax rate. Even though the consultation was on the possibility of different tax rates within different geographical areas, we see that as being difficult and open to potential exploitation.

My final question is about capital expenditure and capital investment in the user case side of things.

Mr Neill, the facilities and technology that you want to put in would increase quality and assure the marketplace that you have a high-quality product, and it would open up new possibilities, but it will require additional investment from the industry. At the moment, your model for that is that if you can sell more, then you can invest back. It feels to me as thought that is not necessarily something that we will do at pace. Is there more of a case for saying that we would be better off with a tax credit against the landfill tax that might be against the residual, unprocessed part of that waste?

The quarry that we visited last week spoke about the significant amount of money that it had to pay to put a residual amount of waste into landfill. I am just wondering whether there is a different mechanism that we could advocate for. It might not necessarily be in the bill, although it could be, but is there a different mechanism that would help you to make that capital investment more quickly?

That is a good question, but I cannot form a quick answer. The company that I work for recently spent £4.5 million on a new plant, which was, at the time, the largest plant in Europe for recycling materials. The other parts of our business that supported the generation of feedstock allowed us to do more, because our previous plant had a certain capacity per hour to produce aggregates. Therefore, as soon as the pile got so big that it made no sense to bring it to recycling, we just took it to the local landfill tips that could take it. We increased our capacity by putting that investment in, but not all members of SESA have got that level of capital expenditure available to them.

When the market improves and people can see a return on their investment of that kind of money, then anything that will encourage and support investment in the technology should be encouraged, whether that be a credit system or something else. I am not sure if you are suggesting offsetting the aggregate tax or if this is additional to that or what it might be. We are more than happy to engage with whatever that might look like in order to keep the foot pressed on the gas pedal in this area.

This is just an opportunity to put these things to the Government and ask it what its thinking is about how we can make sure that the acceleration is there. I take on board colleagues’ points about my predilection within this issue, but we need to make sure that the system is as simple as possible and that it can be cross-border and clean while thinking about what we can do to accelerate it.

I have just one small question, which arguably follows on from those of the convener and Michael Marra. Mr Doak, in your submission, you noted that

“Significant behaviour change is unlikely unless the Scottish Government decides to change the rate drastically, and even then there isn’t an obvious supply of alternative materials available.”

I know that Mr Marra has been touching on this, but I am still not sure that I have clear sense of it. Mr Marra made a good point about red chips and aggregate that is specific to Scotland, but I am still not clear on the detail of different aggregate types and what overall potential price increases they could stand, although, as everyone has said, there are no plans for that on the table.

I wonder whether you could help me understand a bit more. As you point out correctly, English producers might be keen to exploit any substantial rate increases in Scotland; we all understand that. However the devil surely must be in the detail. I know that we have danced around the issue a bit with two separate questions, but if you could help me understand a bit more, that would be helpful.

I am not sure whether we are mixing up two points on the issue and whether there is more to go at. I was referring to recycled and secondary aggregates, and the position that we have adopted on taxation is that it should be consistent across all products.

You are talking about secondary aggregates. That is what I was misunderstanding.

The point that I was trying to make about not knowing what to go at is the point that I have made a few times now. At the moment, we are looking taxation on primary aggregates and the suggestion that perhaps we increase recycled and secondary aggregates without having that detailed knowledge about what that pot looks like and what it can satisfy with quality, availability and consistency. That is the point about what more we can go at. Does increasing the tax change the pot on a site or the quality and availability?

You are correctly introducing another complexity for the bill, but that is good because that is what we want to tease out. Have we got the data to draw on to arrive at some of these decisions? I am not sure what data your members will routinely gather and submit as part of the existing processes that teases out all the different areas that the Scottish Government will have.

Again, I do not want to give the wrong impression that we are not encouraging recycling. The MPA website gives a list of recycled materials and our estimates of the figures. Our members are heavily involved in recycling as well as virgin aggregate extraction. As I said, as a trade association, we will seek to encourage recycling using the influence of British standards or Transport Scotland. We will try to do that. I am not sure if that answers your question.

Maybe it does. I am not trying to get to any slam dunk; I am genuinely trying to understand. You have given me more helpful insight, although I suspect that I have further to go to bottom out some of this stuff. Thank you.

Can I make a slightly different point? Forgive me if I go off at a tangent. One of the things that we are suggesting—although not necessarily in response to the bill—is the establishment of a Scottish minerals forum, which we think will be very useful, particularly in relation to the point that I touched on earlier about the potential demand for aggregates going forward. There is a real need for them, which you will see if you look at the national planning guidance on regulation and how it talks about maintaining land banks for 10 years. We would like to see a strategic thought process beyond 2045 with NPF4.

There is nothing to stop that type of forum including bodies such as Heads of Planning Scotland, the Scottish Collaboration of Transportation Specialists, the Convention of Scottish Local Authorities, the Scottish Environment Protection Agency, and so on. Issues with recycled materials could be brought to the fore and discussed in such a forum to ensure that, as a country, we can look at a circular economy. That links back into the consultations that are out on the circular economy, which we again have made representations on, and that makes similar points.

That is helpful. Thank you.

Mr Sharma, I have a final question for you. You are a member of the expert group, which began in January last year, and has met on five occasions. Which other organisations are on that expert group?

I probably cannot tell you off the top of my head. The group is made up of range of people from the business community who work in the area. I can provide a list from the minute of the most recent meeting if that is helpful.

Do you consider it to be a balanced group that has all points of view?

We were invited on to the group and we obviously take a local government point of view. The group is primarily a consultation entity with a range of stakeholders and it probably does reflect the business community to a significant extent. However, that does not mean that we are not able to get our points across. They have heard some of them previously.

I have a copy of one of the sets of minutes. It includes the Chartered Institute of Taxation, the British Ceramic Confederation, the Mineral Products Association Scotland, the Chartered Institute of Building, SESA, the British Geological Survey, COSLA, British Glass, Transport Scotland, the British Aggregates Association, the Institute of Chartered Accountants, SEPA, Zero Waste Scotland and obviously Revenue Scotland and the Scottish Government. That is a list of who was at that meeting.

it is therefore fully comprehensive. That was what I wanted to confirm. No wonder you could not remember it off the top of your head, Mr Sharma.

Thank you all for your evidence today. The committee has an open mind, certainly on the bill, so we will see where the evidence that we take in future sessions takes us. The next evidence session is next Tuesday. Thank you for your time.

That ends the committee’s deliberations today, so I close the meeting. Thank you all.

Meeting closed at 12:30.