An independent survey, ‘The foundation for a strong economy’, by Capital Economics, conducted on behalf of the Mineral Products Association, reveals the true extent of the contribution the aggregates sector, makes to the UK economy.
Nigel Jackson, chief executive of the Mineral Products Association, says the contribution of the sector is not recognised because there is not a national shortage of the raw materials in question at present.
“We are lucky in this country to have access to economically recoverable resources, we just need to make sure we allow the industry to access them and provide a steady and adequate supply.
“These bulk commodities feed virtually a third of the economy every day of every year”, he says.
Jackson maintains that there are only very small “pockets of recognition” within government, rather than a “widely held appreciation” of the significance of the sector.
Drawing on the findings of the report, Jackson says the Mineral Products Association was “surprised” at the contribution of the sector in terms of GDP.
Rather than providing the UK economy with £9 billion a year, Jackson said they have always thought of themselves as more of a “£4-5 billion industry”.
“That was a surprise in terms of the mathematics, although our instincts told us that it had to be pretty significant.
“We are well aware that we are construction's biggest supplier but I think what’s also important is the amount of our material that finds its way into other non-construction sectors, which is very substantial in many supply chains worth £400Bn”, he said.
One reason for the sector being overlooked is that it is not a huge employer, with only 70,000 people both directly and indirectly employed within the sector.
However there are 2.5 million people employed within the supply chain.
One factor of significance Jackson notes, is that the sector does provide the majority of its jobs in the rural economy.
“We are a very significant employer in agricultural areas,” says Jackson.
The research itself contains a hypothetical scenario to look at the cost to the economy of importing mineral products, if we were not able to access our own indigenous supply.
It finds that relying on imported aggregates would have led to a loss of UK GDP of £20billion, over a fifteen year period.
The findings “put to one side”, Jackson says that there isn’t enough wharf capacity, port capacity and logistics connected to the wharves to be able to push such a high quantity of material through the ports.
Therefore, Jackson notes “an import model is not an option”.
With the UK being the only country in Europe to have an aggregates levy at £2 per tonne, compared to “pence in the pound elsewhere”, Jackson is keen to ascertain that we should play our part in the “decarbonisation of Europe” but that it should not “be at the expense of our own enterprise.”
“We are lucky in this country to have access to economically recoverable resources we just need to make sure we allow the industry to access them and avoid being overtaxed and overegulated.
On the localism agenda, Jackson notes that the sector is not against it, but that changes to the planning system create uncertainty, and when you have uncertainty “you don’t get investment”.
"There is a high risk of more inertia which could act as a drag on growth.
“I think it would have been better to modify the previous system. And maybe bring in legislation at a later date.
“I don’t think it was a clever move to change the planning system when you are looking for growth, because just the change in itself works against growth as it takes time to come in and bed down”, he says.
On infrastructure investment, Jackson calls it a “no-brainer”.
“I think we need to get away from the dithering and indecision on infrastructure particularly transport and energy infrastructure, whether rail or air, nuclear or wind, we will need them all and should stop talking and get on with it where we can”, he says.
Although Jackson maintains that the more “glamorous” medium and long-term projects are of obvious importance, he would like to see some so-called “shovel ready projects in the short-term”, as repair and maintenance is a "quick way to boost demand".
“With nearly £9 billion of road repairs not being funded at the moment and the state of the roads with all the pot holes we think that there is a lot more that needs to be done there, that would act as a stimulus to our sector and other sectors that are dependent on good logistics”, he says.
With the construction sector suffering a very protracted recession, Jackson says he cannot see it “picking up significantly this year, or next year”.