MPA writes to Chancellor ahead of Spring statement

Chancellor urged to act on infrastructure delivery, red diesel and energy costs in Spring statement

UK producers of construction and industrial mineral products have called on Chancellor of the Exchequer Rishi Sunak to level the playing field with EU competitors, reduce energy costs, and increase certainty to boost investment ahead of his Spring forecast statement on 23 March 2022.

The Mineral Products Association (MPA), whose members produce 400 million tonnes of materials for UK building and manufacturing each year, has written to the Chancellor in a last-ditch attempt to delay in the removal of the red diesel rebate, as well as calling for urgent action on soaring energy costs, and transparency on delivery of the Government’s infrastructure plans.

On 1 April mineral products companies are expecting to lose their right to use lower-tax red diesel, but with no low-carbon alternatives for the heavy machinery the industry uses, removing the rebate will achieve no reduction in carbon emissions for years to come. And given the rising levels of inflation, MPA has asked for the tax change to be delayed until new alternative equipment becomes available.

That appeal comes in the context of extremely volatile global energy markets following Russia’s invasion of Ukraine, exacerbating prices that were already approaching record highs. According to the MPA, the UK’s energy-intensive industries face higher costs than EU competitors because of policy choices made by the UK Government and Ofgem.

As a member of the Energy Intensive Users Group, the MPA has been calling for action for months to tackle the domestic policies that push UK prices well above those in the EU, threatening the competitiveness of producers in the UK. The Association has repeated its request for the Chancellor to place UK industry on a level playing field with its European competitors.

Turning to the mineral products industry’s essential role in supplying the lion’s share of raw materials needed for major infrastructure, the MPA has also reiterated its longstanding call for greater transparency and better delivery of government-backed construction projects.

Citing the DfT’s faltering Road Investment Strategy 2 (RIS2) programme as an example, the letter reiterates the link between construction and its supply chain, pointing out that nothing gets built or made without mineral products, and that the closer to home those materials are sourced, the better for the economy and the environment. The MPA has also reiterated its welcome for the freeze in the Aggregates Levy announced in the Budget last Autumn and would like to see this extended beyond 2023.

MPA chief executive Nigel Jackson said: ‘The high ambitions the Government has set out for the UK’s infrastructure and housing rely on our members’ ability to supply aggregates, asphalt, cement, concrete, and other essential materials. You can’t build with thin air – construction needs materials and producing materials requires long-term planning and investment, so our industry needs clarity on what’s in the pipeline for the next 10 or 20 years, not the next 10 months.

‘There is a widely recognized maxim ‘if you can’t grow it, you have to dig it’, clearly this is not as recognized by government given the exemptions and subsidies some other industries enjoy. We also provide high-skill, well-paid jobs in regions most in need of economic growth.

‘However, for this year’s Spring Statement, the priority must be the urgent measures to tackle domestic policy drivers of the UK’s high energy costs. The Chancellor has solutions in his power to place UK industry on a level playing field with European competitors and we urge him to act decisively this month. Our overriding aim is for our sector to deliver for the UK by having economic conditions that reduce uncertainty and boost confidence to encourage investment for growth.’

Commenting on the red diesel rebate, the MPA’s director of public affairs, Robert McIlveen, said: ‘Throughout the consultation on red diesel we made the case that there were no carbon emission savings available until equipment is in the market at the level of power, range, and cost to replace diesel, and when the associated infrastructure needed is available. These conditions are nowhere near being met.

‘With inflation a growing worry, now is a dreadful time to increase the costs of essential materials for UK construction and manufacturing supplied by MPA members, so we are calling for a delay to the removal of the red diesel rebate.’