A preliminary assessment by the UK’s Mineral Products Association (MPA) has identified high and rising regulatory costs imposed by government, It has also revealed a broadening range of regulatory charges and regulatory processes which are “duplicated, inconsistent and disproportionate.” Examining only planning and environment-related regulation, 228 laws and regulations were identified which have to be managed by the mineral products sector. The aggregates levy, landfill tax and energy and climate change
A preliminary assessment by the UK’s Mineral Products Association (MPA) has identified high and rising regulatory costs imposed by government,
It has also revealed a broadening range of regulatory charges and regulatory processes which are “duplicated, inconsistent and disproportionate.”
Examining only planning and environment-related regulation, 228 laws and regulations were identified which have to be managed by the mineral products sector.
The aggregates levy, landfill tax and energy and climate change taxes and other planning and environmental measures currently have an estimated cost of £400 million (€498 million) annually and the potential impact of both new and existing measures could increase these costs to £750 million (€935 million) each year by 2020.
This is in addition to other regulatory and tax costs such as fuel duties, net VAT and employers’ National insurance which currently cost the sector over £900 million (€1.12 billion) each year.
There is said to be a widening scope of lower level charges from regulators which are adding significant sums to the planning and development process, including planning application costs, pre-application and consultation charges and the costs of duplicated Environmental Impact Assessments.
MPA says survey data shows the operation of the planning system still remains too slow. There are too few plans, low aggregate landbanks, diminishing mineral replenishment rates, increasing costs and planning inertia all fuelling uncertainty, as lack of demand masks underlying supply problems for the future.
It claims there is significant degree of inconsistency, lack of proportionality and duplication in regulatory processes. Associated costs can be difficult to quantify but involve substantial industry resources to implement and manage.
Regulation in Europe or the UK may be introduced for the best of motives but achieving the best environmental/sustainability outcomes can be compromised by inflexible and ‘awkward’ implementation. Economic impact assessments carried out by government are inadequate as they are carried out for individual regulations but do not address cumulative impacts.
The net result is the imposition of excessive regulatory costs which feeds through into the costs of doing business in the UK. For mineral product businesses still operating at market levels 30% below those in (pre-recession) 2007, these costs and regulatory overload inhibit investment by SMEs and raise questions about the relative benefits of investing and operating in the UK by international minerals and mineral product businesses.
Research by Capital Economics has identified that the mineral products industry is one of the most important production and manufacturing sectors in the UK, with a turnover of £9 billion (€11.2 billion), a GVA over £4 billion (€5 billion) and supplying industries with a combined turnover of £400 billion (€498.5 billion) and employing over 2.5 million. Costs imposed on the industry therefore work their way through a significant proportion of the UK economy, impacting on competitiveness and jobs.
Nigel Jackson, chief executive MPA, said: “There needs to be a genuinely radical rethink of the cumulative impact of regulation and taxation on our sector. In too many cases costs have been imposed on our industry without sufficient consideration of economic or environmental outcomes. This must change. The cumulative impact of regulation from different and uncoordinated regulators on sectors such as mineral products needs to be recognised, assessed and managed better by government:
currently there seems an assumption that industry can absorb any expansion of costs and burdens imposed by public agencies. This too must change: we are now at the limit of what we can absorb. With demand continuing to roll along the bottom and our members focussed on survival something new and radical has to be done to address these real but unseen cumulative impacts.
“We have submitted our evidence to the Treasury and BIS (Department for Business, innovation and Skills) and hope that this contributes to the forthcoming [UK government] Autumn Statement and current regulatory reviews. We are ready to help unpack these complex issues to help get the urgent growth that we all want to see happen.”
