Whitehall funds bid to halt quarry tax

TWO Government departments are paying for the quarrying industry to mount a public relations campaign later this month designed to stop the Treasury taxing it.

Money from the Department of Trade and Industry and the Department of the Environment, Transport and the Regions is funding a series of newsletters, an Internet web site and a publicity guide for quarrying companies taking part in Minerals 98, a hectic week of conferences, receptions and open days. The aim is to deliver the message that digging stone, sand, gravel and clay out of the ground is a good thing.

The campaign is aimed at giving the public a better understanding of minerals and their essential role in our lives - but also, the organisers admit, at proving to the Chancellor, Gordon Brown, that he does not need to impose an environmental tax on the industry.

Such a levy, proposed by Mr Brown in his first budget last July, could take hundreds of millions of pounds from the profits of the big building materials firms such as Tarmac, ARC, Redland and RMC, some of whose shares dipped sharply the day after the announcement. The industry is going to great lengths to prove it can set its own environmental house in order without the Treasury snapping at its heels.

The industry is getting a significant helping hand from other government departments, acting as the industry's Whitehall sponsors: the DTI is providing pounds 64,000 for the newsletters, the website and a conference, while the DETR is providing pounds 8,000 for a publicity pack sent to all quarry companies, showing them how to organise open days.

"It's quite unacceptable," said Norman Baker, the Liberal Democrat MP for Lewes whose parliamentary questions brought the figures to light. "This takes the rivalry between the Treasury and other Government departments to new heights. The Government's left hand doesn't know what its right hand is doing."

Minerals 98 was originally conceived of two years ago as a meet-the- public exercise, but the event has taken on new and urgent significance for the quarry companies in the light of the tax proposals. Last July, Mr Brown told the Commons that the purpose of the tax he had in mind, on aggregates - sand, gravel and crushed rock - would be to deter the "significant environmental costs and damage to the landscape" involved in their extraction.

It could do so, economists believe, by encouraging more recycling, and also by raising the basic price of aggregates, which environmentalists contend are ludicrously cheap. The Government is pressing ahead with research and by the end of the year will indicate whether it will go ahead with an aggregates tax.

Not the least of its attractions for the Treasury is that, whether or not it succeeded in changing the behaviour of the quarrying industry, it would still raise huge sums in revenue.

Quarry fear, page 20