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8 November 2013

Confidence to Invest is Critical

The Chancellor’s upcoming Autumn Statement is an opportunity for government to address key challenges facing the construction products industry and strengthen the fragile signs of recovery, said Chairman Geoff Cooper before an audience of nearly 600 senior industry leaders and government officials at the Construction Products Association’s Autumn Lunch.
'Following a difficult start to 2013 we have begun to see growth; however, the recovery is in its early days and will quickly be put in jeopardy unless the government lends further support.

'We need policymakers to provide greater confidence and certainty to business, particularly now in three main areas: housing, infrastructure and energy supply. These key drivers of construction and product manufacturing will help the market to grow and promote a sustainable and robust recovery, also ensuring that the materials needed to deliver all of these projects add value to the UK.'

'The construction products sector in the UK is supportive of the government's intent to deliver a low carbon, low cost built environment whilst securing the future of a vibrant, modern and innovative manufacturing sector. However, like the ordinary householder, business is being considerably impacted by the rise in energy prices and the increasing insecurity of energy supply.

'According to a study conducted for the Department of Business, Innovation and Skills, by 2020 the UK's electricity price is expected to have risen by more than three times that of Germany's. A primary reason for this is the additional taxes on energy.

'Much of our manufacturing is energy-intensive: energy bills and taxes can be up to 30-35% of total production costs. The need to maintain diversity and security of energy supply, and to meet emissions reductions targets must be balanced against the ability of the industry to pay. Many firms have already invested in the latest technology to improve energy efficiency to the maximum level possible so further savings here are unlikely.

'The Chancellor has said, 'We are not going to save the planet by putting our country's manufacturing sector out of business', and so end up importing these same products. His actions, however, speak louder than words as the minimal extra Climate Change Agreement rebate on electricity from April 2013 has been more than eclipsed by the increases in Renewable Obligation costs and Feed in Tariffs this year, neither of which are compensated for energy intensive users.

'In this year's Autumn Statement, therefore, we are joining the ranks of many senior industrialists by calling on the Chancellor to abolish the Carbon Price Floor, or at the very least to a freeze to the rates of the tax.

'It is essential that the UK has a secure, low carbon energy supply at a price that does not jeopardise investment in UK manufacturing and sustained economic recovery. We need a level playing field to ensure we can compete against international competitors to keep manufacturing in the UK. This needs a concise and coherent regulatory environment and policy framework to allow confidence to invest.'

Mr Cooper concluded: 'For construction product manufacturers there are enormous opportunities to innovate and champion UK production, especially as the market moves towards digitisation, low carbon and resource efficient construction.

'In addition, we have already seen how the work of the Association in developing and now delivering elements of the Industrial Strategy for Construction can help act as a tremendous catalyst to breaking down the construction industry's 'silo mentality' and coming together as one real partner for government.

'Ultimately, however, all of these opportunities are at risk unless government prioritises action on these important issues and provides the crucial clarity and certainty which business requires in order to confidently invest in the future.'

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