05 June 2006

Key environmental fund shortchanged by government

News has reached the QPA that the Aggregates Levy Sustainability Fund (ALSF) has again been cut by the Government in 2006/7. This is in addition to cuts made by Government over the last four years, which have already left the environmental fund shortchanged by nearly 30%.

The ALSF was introduced in April 2002 alongside the Aggregates Levy. Each year, £29.3 million should be allocated in England for projects intended to benefit local communities in quarrying areas and a range of other environmental projects. The ALSF is run by Defra, which distributes funds for ALSF projects to a range of bodies such as English Nature, English Heritage and local authorities. However, in the four years from 2002/3 to 2005/6, only £83 million of the £117.2 million total ALSF provision has actually been provided by Defra. The balance appears to have been retained by the Department to finance other internal budgetary shortfalls.

These cuts are in stark contrast to claims about the ALSF made by the Treasury and Defra. The Treasury announced in the 2001 Budget that the ALSF would be funded with £35 million of aggregates levy revenues each year, equivalent to about 10% of total levy receipts. Of this £35 million pa, £29.3 million would be spent in England by Defra. The ALSF in England was heavily underspent in 2002/3 and 2003/4, and in 2004/5 Defra announced funding would be cut from £29.3 million to £20 million due to other spending priorities.

In the 2004 Budget, the Treasury confirmed that "the sustainability fund will continue with its present level of funding for a further three years", indicating that the 2004/5 cut would be recovered in 2005/6 and 2006/7. Responding to concerns expressed about the 2004/5 cut, Defra ministers said that the Department would "compensate for the cut in the overall budget in 2004/5 in the following two financial years."

However, in spite of these promises, ALSF allocations for 2005/6 only reverted to the base level of £29.3 million, and it has just become clear that the 2006/7 ALSF allocation by Defra has actually been cut from £29.3 million to £24.3 million.

QPA Director General Simon van der Byl commented: "the ALSF is the only means by which the aggregates levy generates any environmental benefits, but appears to be treated as a general contingency fund by Government and Defra in particular. In the fund's first four years of operation, only 70% of the nominal £117.2 million allocation has found its way into ALSF projects. The further cut announced for 2006/7 means that in the first five years of the ALSF at least £40 million of funds promised for environmental benefits will have been diverted by Government for other uses. Unless Government is prepared to ring fence ALSF funds for their intended use, it is inevitable that the fund will wither away, in turn again confirming that the Aggregates levy is simply another source of tax revenue and that the claims that it is a green tax are simply greenwash."

ENDS

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