Research by Capital Economics has highlighted that the mineral products industry, which typically supplies more than 1m tonnes of material per day and 250m tonnes per year, makes a gross value added contribution to the UK economy of over £4bn per annum – greater than the creative industries and not far short of the automotive and aerospace industries.
- Strong contribution to the construction industry
- The need for government action
- Relaxing the regulatory burden to meet demand
Mineral products is the largest material supplier to the construction industry and could be a key element in returning the sector to strength.
The mineral products industry is an essential and major primary producer in its own right, but it is also vital to a whole host of other important industries. It incorporates aggregates, asphalt, cement, concrete, dimension stone, industrial and agricultural lime, silica sand and mortar.
Strong contribution to the construction industry
The industry generates an annual turnover of £9bn and is the largest material supplier to the £120bn construction industry. It pays more than £1bn of taxes annually, has labour productivity 2.5 times higher than the national average and provides 70,000 jobs.
It is also estimated that the sector supports more than £400bn in terms of turnover in industries it supplies and more than 2.5m jobs in the economy as a whole.
In 2012, the Department for Business, Innovation and Skills identified construction in its new industrial strategy as a crucial “enabling” sector that can contribute to economic recovery.
As the largest element of the material supply chain for construction, the mineral products sector is clearly vital to the UK industrial strategy.
The need for government action
Government has a critical role to play through financing and creating the right conditions to enable construction projects to proceed, whether public or private.
Consequently, the additional roads investment the government announced in the autumn statement is very welcome, given the £10bn backlog of work needed to repair and maintain our worsening road network.
“Government must focus more on accelerating devliery of publicly and privately funded infrastructure projects”
The Mineral Products Association also welcomed the Budget, which is net positive overall and will help boost the outlook for the mineral products and construction sectors, albeit mainly post-2014.
The disappointing first quarter MPA sales survey results, however, reflect the reality that construction activity remains depressed.
The government must focus more on accelerating delivery of publicly and privately funded infrastructure projects and converting well-intentioned announcements into increased cashflow throughout the supply chain.
Relaxing the regulatory burden to meet demand
The MPA has repeatedly urged the government to minimise the cumulative tax and regulatory burden on the industry and free up the planning system and create conditions that genuinely support investment.
“The mineral products industry is essential to the economy and our quality of life”
We are now at the limit of the regulatory and environmental costs and burdens we can absorb, particularly those relating to carbon and energy which could drive carbon leakage.
The mineral products industry is essential to the economy and our quality of life, and the MPA remains committed to working with the government to help secure the sustainable growth we need to turn the economy around.
With the continuing cumulative ‘underbuild’ of housing, the continuing failure to replace our energy supply capacity and the inertia surrounding transport infrastructure, the pent-up demand is huge and releasing it will transform supply and deliver the latent growth we all seek and need.
Nigel Jackson is chief executive of the Mineral Products Association.