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Aggregates tax to hit local authority roads budgets

NEWS

LOCAL AUTHORITY road maintenance budgets face a £154M squeeze this year following the introduction of the aggregates tax in April, according to materials producers.

This means cash starved local authority highways departments will have even less money to tackle the £5bn road repair backlog, claimed Quarry Products Association (QPA) chief economist Jerry McLaughlin.

From 1 April, the Treasury will levy a £1.60/tonne tax on primary quarried and dredged materials. The aggregates tax will push up costs from between £5 and£6 per tonne in Scotland and between £10 and £12 per tonne in the South East.

Quarry industry profits have already been squeezed to a minimum in recent years by environmental and health and safety legislation. Higher costs - £385M for the construction industry as a whole - will therefore be passed straight to clients, said McLaughlin.

If local authorities are to continue current maintenance levels, they will have to find an extra £154M, he added.

Highlands Council head of infrastructure Dave Cotton said the aggregates tax will add £500,000 to his department's annual £7M to £8M maintenance spend, raising capital works costs by a further £500,000.

'We will be forced into doing less, ' he said.

'The tax may be the straw that breaks the camel's back.' Highlands Council has a roads maintenance deficit of £87M, excluding bridges and retaining structures.

Argyll & Bute Council head of roads services Alan MacDonald said the tax represented a 10% increase in materials costs. The council will have to cut back on resurfacing and increase patching, which will result in accelerated deterioration in the road network.

A Civil Engineering Contractors Association spokesman said the aggregates tax would trigger a fall in local authorities' workloads this year. The tax will push up total construction prices in the civils sector by 1.3% he predicted.

Councils contacted by NCE said options for further substituting cheaper recycled materials for primary aggregates were limited. QPA figures show 40Mt to 45Mt a year of road planings, crushed concrete or iron and steel process waste are used in the UK, against 200Mt of quarried or dredged materials. McLaughlin described recycling as a 'developed market'.

And the cost of recycled products is also expected to rise in line with the cost of primary materials.

A Treasury spokesman hinted that some extra money could made available to local authorities to counter the effect of the tax in the comprehensive spending review.

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