MPA responds to Chancellor’s Mansion House speech

Association calls for recognition of cumulative tax burden and need for urgent investment in infrastructure

IN an open letter, Mineral Products Association chief executive Nigel Jackson has responded to the speech by the Chancellor, George Osborne MP, at the recent Mansion House dinner, by welcoming measures taken in the last Budget to boost business in the UK, but emphasizing the onerous cumulative tax and cost burden which faces the industry, and encouraging government to shift current spend into here and now capital projects, particularly in construction, energy, water and transport infrastructure.

The MPA welcomed the freeze on the indexation of the aggregates levy until April 2013, which was announced in the last Budget, notwithstanding the Association’s continuing opposition to the tax; the increase in the rebate on part of the climate change levy; and the reduction in corporation tax overall.

However, Mr Jackson pointed out that, while appreciating the problems created by the lingering instability of the Eurozone, the UK still has freedom to act in those areas of budgetary management under its control.

‘Welcome as the measures above are, they need to go further,’ he said. ‘The UK economy is still dogged by too many taxes, indeed too many complex taxes and other measures which give rise to additional costs to business and which simply weaken the commitment to invest in this country.’

Many MPA members are subjected to a plethora of environmental, carbon and energy measures including: aggregates levy, landfill tax, climate change levy, EUETS, carbon reduction commitment (CRC), indirect renewables obligation costs.

Added to this are the potential impacts of the carbon price floor, uncertainty with regard to any relief that may emerge from the package of compensation arising for energy-intensive industries (EIIs), electricity market reform and the increasing cost of implementing regulations emerging from Europe.

‘It is no wonder that indigenous businesses are taking a prudent view on investment and larger international companies question their continuing presence in the UK,’ said Mr Jackson. ‘We support the CBI’s call for a review of all ‘green taxes’, which we believe will simplify the regulatory burden and aid UK industry’s competitiveness.’

The MPA states that too much of what is ‘in play’ politically, and from the media, fails to convey the ‘hard and gritty’ day-to-day realities of running businesses, whether local or global, SME or major.

As a result, the Association is in the process of preparing an evidence-based submission for Treasury which will tabulate the cumulative burden of such measures across the industry’s sectors and within MPA members’ businesses. This will be a ‘whole-business’ approach, ranging from employment and labour costs, to ‘licence to operate’, production and transport.

In addition, the National Planning Policy Framework (NPPF), which the MPA welcomes, now has to prove it can help to deliver sustainable development quickly. The cumulative housing ‘underbuild’ in the UK is now chronic and shows little sign of achieving anything like the capacity required prior to the next election.

Projects that could contribute to growth are mired in political and environmental wrangling, eg the third runway at Heathrow, the Severn Barrage, repair of the road network (now estimated as a cumulative liability of £9 billion), the need to kick-start replacement of nuclear capacity and other key energy supplies, such as clean coal, shale gas and wind.

The MPA believes that while it may be politically enjoyable to promote HS2 and additional runway capacity somewhere in the South East, in reality these are currently long-term, unfunded aspirations and cannot make any real difference to growth for five to 10 years at best. However significant and worthy these projects may be, says the Association, they are distractions from the real here and now projects listed above and many other smaller infrastructure schemes which could be progressed quickly.

The MPA supports the Government’s aims to reduce the deficit and believes that, where possible, money saved on the current account should be re-invested in infrastructure and capital projects, particularly construction, where it is estimated that every pound invested will generate nearly £3 in the economy as a whole.

The Association says the private sector must play its part too, and that to do that it needs to see a sufficiently certain operating environment to justify taking the risks to invest its hard-earned cash. After five years of austerity where it, too, has less cash, has cut its people and its costs, and has moved its operating model to reflect current demand, which remains 30% lower than in 2007 in the minerals sector, it needs encouragement and incentives and less and lower taxes and regulatory costs, not more, says the MPA.

‘We want to help government find solutions to these critical issues,’ said Nigel Jackson. ‘Delivering sound energy, transport and water infrastructure and better housing is a vital investment for the UK and, as the supplier of the largest material flow in the economy [the mineral products industry supplies 250 million tonnes of materials per annum, ie one million tonnes per working day], and the largest supplier to the construction industry, these are issues on which we think we are particularly well placed to advise.’