Select Committee on Environmental Audit Minutes of Evidence

Annex I



  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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