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Budget needs to support mission-critical industries for growth and decarbonisation

Joseph Hackett, Public Affairs Manager

Joseph Hackett, Public Affairs Manager | Mineral Products Association

5 min read Partner content

Throughout its first three months in office, the new Government has focused on its “five missions for national renewal”, which were a key plank of Labour’s general election campaign.

Next week, Rachel Reeves has the chance to accelerate the Government’s delivery of two of those missions: kickstarting economic growth, and making Britain a clean energy superpower.

These are, arguably, the two most important missions of all. In what Reeves has repeatedly said is a tight fiscal environment, economic growth is the most obvious source of funding for the public services that underpin Labour’s other missions relating to crime, education, and the NHS.

Affordable, reliable energy is essential for growth. This is particularly true of energy-intensive industries such as cement and lime, which have endured higher energy prices than their international competitors for years, but also applies across the economy.

The Budget, therefore, is an opportunity for the Government to put itself on a path to achieving its missions, by supporting the industries that can facilitate them. Ahead of the Budget, the Mineral Products Association has made a series of recommendations to the Treasury, calling on Reeves to back foundational industries which can help deliver green growth.

The mineral products sector is the largest supplier by volume to the UK construction sector, underpinning the housebuilding and infrastructure projects that will drive growth today and in the future, and supplying the green energy projects necessary to decarbonise the grid by 2030.

Many of the policies that would help the sector facilitate the Government’s ambitions would not require massive injections of public spending.

Reeves could help businesses invest with greater confidence, for example, by making the infrastructure pipeline more transparent and realistic, and breaking the cycle of major projects being over-promised only to be delayed, cut back, or cancelled later. Requiring major projects to produce material supply audits at an early stage would further help businesses and planning authorities plan ahead.

The Government has already taken much-needed action to reform the planning system, but the housebuilding and infrastructure they want to see will only happen if the construction sector can draw on a sustainable supply of building materials. At present, permitted reserves of aggregates are dwindling due to unnecessary cost, delay, and bureaucracy in the planning and permitting systems.

Ensuring regulators have capacity to issue the necessary permits would remove one of the more frustrating blockages faced by businesses. Alongside reforming the mineral planning system, and following through on ensuring that local planning departments are properly resourced, this would help strip away that cost, delay, and bureaucracy, and help ensure that builders continue to have the materials they need to build. Freezing the Aggregates Levy would also send the right message that the Government wants to encourage, not penalise, construction activity.

Building new infrastructure is important, but growth also relies on existing infrastructure being well-maintained. New MPs’ inboxes will doubtless already be full of complaints about local potholes, and Reeves can help local highways authorities tackle the pothole plague by giving them clarity about future funding.

Under the previous Government, local highways authorities were often making the best of short-term ad-hoc funding packages. Reeves can give them the certainty they need with a five-year funding settlement.

In addition to promoting growth through construction activity, more homes, and better infrastructure, these policies would help deliver the green energy infrastructure, such as floating offshore wind, which would help make Britain the clean energy superpower that ministers want it to be.

The Budget is an opportunity not just to help decarbonise the grid by 2030, but also decarbonise the entire economy by 2050. Specifying lower-carbon concretes and warm-mix asphalts as the default in public procurement is one move the Government could make to reduce emissions now.

Looking further ahead, Reeves should take this chance to set Britain on a course towards competitive green industry that can contribute to economic growth for years to come.

She could, for example, build on the recent much-needed confirmation of £22 billion funding for carbon capture, use, and storage (CCUS), by backing additional CCUS clusters such as Peak Cluster, and setting out how in the longer term Government will progress CCUS at dispersed sites away from the established clusters.

She could also ensure that energy-intensive industries such as cement, which have industry plans to achieve net-zero, can decarbonise while remaining internationally competitive, by tackling the causes of the UK’s energy prices being higher than global competitors.

Action could include abolishing the Carbon Price Support mechanism now that coal has been phased out of the grid; bringing forward the UK Carbon Border Adjustment Mechanism (CBAM) to 2026; or extending the compensation scheme for indirect emissions costs to cement and lime producers. All of these moves would help UK cement and lime producers compete on the global market, while continuing their path towards net-zero.

Labour’s first Budget in Government will be pivotal. It can help ministers achieve their missions of growth and clean power, as well as the wider net-zero target, or it can make those ambitions much more difficult to deliver. When she delivers her Budget next week, Reeves should back the key industries that the Government will need to rely on in order to make its vision for Britain a reality.

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