Annex I
ROCKY LOGIC: THE ROLE OF AGGREGATES IN THE
UK ECONOMY
EXECUTIVE SUMMARY
We were commissioned by CPRE to produce a report
on the role of aggregates in the UK economy. It had two main objectives:
— to investigate the relationship,
if any, between GDP, the level and value of construction and the
demand for minerals in the recent past; and
— to examine the likely future relationship
between these parameters in the future and how these might change.
In examining the historical relationships between
economic output, construction output and aggregates production,
it is clear that the Government's Mineral Planning Guidance note
6: Guidelines for Aggregates Provision in England, (MPG6)
published in 1994, assumed stable relationships between these
three main variables. The Government's forecasts of high economic
growth (at least +2.7 per cent per year) were thought to inevitably
result in a high growth in demand for aggregates.
These levels of demand have not materialised,
and section two of this report shows that aggregate production
has fallen in the last 10 years. Actual production of aggregates
in the UK reached a peak of 304 million tonnes in 1989 but since
then has fallen in most years. The 1997 level of production was
only 72 per cent of the 1989 figure at 220 million tonnes. This
contrasts markedly with the official forecasts of a 3.8 per cent
annual growth in demand for aggregates.
The report shows that the relationships between
economic output and construction output and between construction
output and aggregates demand have changed significantly in recent
years. The effect has been a much lower demand for aggregates
than forecast. The significant factors driving this change include:
— changes in the national economy with
the growth of industries such as financial services and information
technology which have relatively small demands for construction
material;
— changes in the civil engineering
sector, moving away from heavy aggregates use in road construction
towards railways and other utilities;
— increases in construction efficiency
by greater recycling of wastes in place of primary aggregates;
— taxation incentives to reduce waste
tipping and to re-use mining and other waste as secondary aggregate;
and
— client policies towards increasing
environmental sustainability in building contracts.
Section three goes on to discuss how these factors
may change in the future. It is believed that they will result
in a continuing decline in the demand for aggregates as these
trends develop, and new policies for managing minerals provision
and demand are introduced.
In section four, appropriate planning and other
policies are considered to encourage the existing trend towards
minerals efficiency. They include the introduction of an aggregates
tax and changes in specifications and regulations.
The final section sets out the conclusions.
These include, that future policy direction should recognise the
changed relationships between economic output and construction
output, and between construction output and aggregate demand,
and the reasons for them. This is particularly important for any
forecasts of future demand which the Government produces to ensure
that unrealistic forecasts are not set which require local authorities
to unnecessarily earmark land for quarrying.
Future policy will be increasingly driven by
principles of sustainability. EU Governments are committed to
this and the quarrying industry itself is taking on board better
environmental management systems. Recently, the Quarry Products
Association produced a package of measures for the Government
to consider as an alternative to introducing an aggregates tax.
It suggests voluntary improvements that it could make which would
reduce the impact that quarrying has on the environment. Whether
or not a tax is introduced, policy needs to recognise the potential
clean-up that the industry can achieve and extend incentives to
take this forward.
The research also concludes that an aggregates
tax could be an effective way of reducing the consumption of aggregates,
by encouraging greater efficiency in the industry and more use
of recycled aggregates. It would also send a clear signal to industry
of the need and potential to reduce the amount of primary aggregate
that is quarried.
Changes in contract specifications and regulations
could also encourage greater use of recycled material and other
secondary aggregates. Examples of the successful conversion and
re-use of historical buildings and obsolete properties mentioned
in the research demonstrate this.
Finally, we suggest that policy changes should
comprise a "carrot and stick" approach to the supply
of construction aggregates, by discouraging and increasing the
cost of primary production, whilst encouraging recycling and the
greater use of secondary materials. It is believed that these
can be achieved without adverse effects on UK economic growth.
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