Mineral Products Association rues missed opportunity to boost investment and growth
THE Mineral Products Association (MPA) has responded to the Spring Budget by calling for clearer action to accelerate investment, green growth and infrastructure delivery, compared with what it describes as the relatively patchy and underwhelming agenda set out by the Chancellor.
The Office for Budget Responsibility’s revised growth projection of –0.2% for 2023, despite avoiding a ‘technical recession’ over two quarters, is a poor performance, albeit better than their previous forecast, says the Association.
The confirmation that the Aggregates Levy will be frozen for 2023–24 is a source of relief, although the MPA is concerned that the Government plans to increase the Levy in line with Retail Price Index from 2024-25 onwards and will push for this to be considered over the next year.
The decision to extend the 5p cut in fuel duty is also welcome, although the industry continues to endure the c. £100 million cost of the removal of red diesel last year. The £20 billion over 20 years for carbon capture, usage and storage (CCUS) is a positive step towards industrial decarbonization. The Chancellor declared this was ‘paving the way to CCUS everywhere across the UK’, which is welcome news for sites that are not in easy reach of the CCUS clusters.
While the end of the ‘super deduction’ is regrettable, full expensing on plant and machinery investments is a welcome move that will go some way towards mitigating that, and the MPA hopes it will be made permanent. However, the confirmation that Corporation Tax will still rise by six percentage points is disappointing and will hinder the Chancellor’s stated ambition to spur investment.
The creation of Investment Zones and the forthcoming call for evidence aimed at addressing nutrient neutrality issues may help improve growth in construction activity and the MPA awaits further detail and delivery in both cases. However, these measures do not compensate for the recently announced tranche of delays to infrastructure projects, including HS2 and multiple strategic road network schemes. Putting the brakes on these projects will increase costs, cause uncertainty for industry, and deter investment. Earlier this week, the MPA wrote to the Chancellor and the Transport Secretary outlining the impact these delays will have on the supply chain and its ability to attract investment.
The MPA believes further action will be needed to attract investment in British businesses, facilitate the construction and infrastructure projects necessary for future economic growth, and ensure that energy-intensive industries remain competitive during the net zero transition.
Jon Prichard, chief executive of the MPA, said: ‘The Chancellor’s announcement on funding for CCUS is welcome and important for the UK’s cement and lime producers. But, following on from last week’s announcement of infrastructure delays, this Budget was a missed opportunity and does little to tackle Britain’s longstanding challenges on delivery of transport projects and housing.
‘The MPA’s key ask in our Budget submission was to focus on making the UK a competitive proposition for investment. Full expensing of investment partially softens the blow of increasing Corporation Tax and removing the super deduction, but it is still, overall, a move in the wrong direction.’
Aurelie Delannoy, director of economic affairs at the MPA, said: ‘On balance, today’s Budget provides patchy support to growth. Full expensing is welcome although it is concerning that it is only in place for three years. In any case it does not fully compensate for the uncertainty created by weak economic activity, rising costs, the 6p increase in Corporation Tax, and wavering commitment to infrastructure.
‘The announcement that the Aggregates Levy will return to being increased with inflation is unwelcome. There are weak environmental justifications for this tax, let alone increasing it, and increasing it will simply increase costs for housing, infrastructure and other construction projects.’
Rick Green, chair of the Asphalt Industry Alliance (AIA), a partnership between the MPA and Eurobitume UK, said: ‘The additional £200 million one-off payment for local roads in England is welcome, but is a fraction of the amount local authorities have reported over decades that they need to keep their networks to target conditions, let alone tackle the backlog of carriageway repairs.
‘The Chancellor is right to recognize that potholes on our local roads are a curse, but the key thing is they are not inevitable, they are the symptom off a network underfunded for many years. Unlike other transport networks, there is no visible long-term investment plan for local roads and without one, road users won’t see any real improvement in structural conditions on the roads they use every day and on which all other locally provided services rely.
‘It will be interesting to see how the findings from our 2023 Annual Local Authority Road Maintenance (ALARM) survey Report, to be published next week, build on the previously reported trends between underfunding and the declining conditions of our local roads.’