Scottish Aggregates Levy: evidence review and policy options

Appendix 2: Phase 1 Modelling

Primary Aggregates

Our modelling approach for primary and secondary aggregates are described separately here due to the distinct datasets and methodologies required.

Domestic Production Data

The main data source used for understanding historic aggregates flows is the 2012 Scottish Aggregates Survey (SAS) though, for various reasons, this was not published until 2015.^[62] This survey gathers together information on the production, distribution and reserves of material produced and available from Scottish quarries in 2012, and is the most recent source of this data. The survey was sent to all known operators of quarries in Scotland. The survey outputs provide a breakdown by region of the total production quantity of aggregates. Data is also provided on the destination of the material, that is, whether it is retained in the region, exported to another Scottish region, or exported outside Scotland to either the rest of the UK or overseas.

The quantities reported in the survey and based on survey responses only. Accordingly, aggregates production by businesses who chose not to respond is not reported and therefore the survey results are an underestimate of the true totals. This is stated in the report:

The total amount of production in 2012 recorded by SAS was 14 million tonnes (mt) of crushed rock and 4.5mt of sand and gravel. The equivalent figures in ONS's 2012 Business Monitor PA1007 was 20mt for crushed rock and 5.7mt for sand and gravel. This represents a return rate, based on output, of 70% and 77% for the Scottish Survey. The discrepancies between the two Surveys and the level of non-responses in particular areas will be a significant limiting factor in drawing useful conclusions from the data.

For our study, we assumed that the overall distribution of aggregates flows (i.e. the relative amounts produced by each authority and the destination of the material) for all businesses was equal to the distribution in data reported by survey respondents. We therefore factored up all reported data by the amount required for the total production figures to match those reported in the Office for National Statistics (ONS) business monitor data.^[63] The only exception was that production of crushed rock in the Highlands and Moray was excluded from the factoring up process. Due to the unique nature of crushed rock production in the region, other data (port statistics for Glensanda) was used to validate the 2012 SAS figures for Highlands and Moray. In reality, as quoted above from the report, there are more non-responses in certain areas and therefore the survey sample distribution will differ from the true data distribution. However, without further data, a more sophisticated approach to modifying survey data is not possible.

It should also be noted that the SAS conceals a number of data points in reporting to preserve confidentiality. This affects two (out of a total of ten) planning authorities for hard rock data and three planning authorities for sand and gravel. To compile a full dataset for modelling it was necessary to estimate the missing data. For hard rock, any missing material was distributed in equal proportions between authorities with missing data. A similar approach as taken for sand and gravel, with some additional corrections made to achieve the correct mass balance of exports to other Scottish authorities.

Imports of Primary Aggregates

In addition to modelling rock produced in Scotland, as described above, we also estimated the quantity of material imported to Scotland. Based on the data presented in Table 16, Scotland imported 16,000 tonnes (0.8% of total production) of crushed rock and 83,000 tonnes (1.6% of total production) of sand and gravel from England and Wales in 2014. Without having any other reliable data sources for import of aggregates, we have used the above percentage shares of import for crushed rock, and sand and gravel in 2014 to estimate the import of primary aggregates for other years.

Moreover, without any data on import of primary aggregates in Scotland from Northern Ireland and other also countries outside the UK, we have assumed these imports to be zero though in practice there is likely to be some smaller scale importing of the more specialist aggregates.

Forward Projections

The comprehensive 2012 dataset was projected forward to 2030 various datasets and estimates which are described here. We have assumed that the distribution of data, i.e. the relative quantities produced by each authority and the destination of the material will stay the same in future years. This is a reasonable assumption give that, if the rate of tax is a key driver of market behaviour, this is assumed to stay constant across Scottish planning regions.

For the period from 2012 to 2014, growth rates were based on production quantities reported in the ONS business monitor survey. This survey was discontinued following the publication of 2014 results and since then there is no consistent official set of aggregates data in Scotland. For the period from 2015 to 2017, growth rate estimates were instead based on data from the Mineral Production Association (MPA). MPA carries out a quarterly survey of members' sales volumes in GB, based on a sample of MPA members. The MPA data collection does not include all members of MPA Scotland and the survey excludes aggregates sold for use outside of GB. The MPA survey has been operating for many years with a broadly consistent sample of companies contributing. As such it provides a good indicator of changes in annual industry sales volumes of primary aggregates. The survey results for 2015 to 2017 were calculated by applying market movements recorded by MPA to the earlier ONS data. As such it is not a consistent data series but the use of the MPA survey results enables the production of a time series which reasonably reflects more recent market movements.

For 2018 onwards, growth rates are calculated using econometric forecasts based on the log of hard rock / sand and gravel demand since 1980.^[64]

Secondary Aggregates

For secondary aggregates we used waste data to understand the quantity of mineral waste in the C&D waste stream and the extent of recycling. C&D waste data is reported annually in Scotland by SEPA in their Waste Data from All Sources report for 2017.^[65] This study reports total generation of 1.6 million tonnes of mineral waste.^[66] However, after excluding waste collected as mineral waste but which at the treatment stage is reclassified as a different waste type (e.g. metallic wastes), the recalculated generation quantity is 1.2 million tonnes. The reported quantity of recycling is 1.05 million tonnes, and so the overall recycling rate is estimated at 87.2%.

For future years have assumed that growth rates are calculated using a moving average calculation i.e. the growth rate for any given year is assumed to be equal to the average growth rate over the five preceding years.