MPA responds to chancellor’s speech, UK

MPA responds to chancellor’s speech, UK
Published: 29 June 2012


In an open letter MPA’s Chief Executive has responded to the speech by the Chancellor, George Osborne MP last week, in which the Chancellor highlighted measures taken to boost business in the UK, by welcoming recent measures taken in the last Budget, but emphasising 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.

MPA welcomes 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, Nigel Jackson, Chief Executive MPA, pointed out: “Whilst 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. 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.”

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.

Mr Jackson said: “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. 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.”

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 NPPF, which 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.

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

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.  It is estimated that every pound invested will generate nearly £3 in the economy as a whole.

The private sector must play its part too, the MPA said. "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 sector, it needs encouragement and incentives and less and lower taxes and regulatory costs, not more," the MPA notes.

MPA wants to help Government find solutions to these critical issues. Nigel Jackson explained: “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, and the largest supplier to the construction industry, these are issues on which we think we are particularly well placed to advise.”