Written evidence submitted by Mineral Products Association (SRI0041)

How effectively the RIS2 enhancements portfolio has been managed to date

MPA members are a large part of the supply chain for road construction and maintenance, supplying aggregates, cement and concrete (both ready-mixed and precast) for structures, as well as asphalt for surfaces.

Over RIS1 and RIS2 our members have been consistently disappointed by the management of enhancement projects, with very ambitious proposals subject to significant delay, descoping and cancellation.

This reflects the importance of holistic planning for infrastructure, which historically has been rather lacking but is in some ways improving. The existence of the Road Investment Strategies is an improvement on previous seemingly piecemeal approaches, but we believe that such strategies could be much more effective.

The materials supply chain needs to invest in equipment, people and sites to deliver the materials for these projects, all of which have a lead time and cost. The sector has therefore developed significant scepticism towards announced ambitions. This is particularly important when considering that many of the major businesses in this sector are parts of multi-national enterprises and that operations in the UK are competing for investment with operations across the globe. They are also investing in reach net zero and other improvements to sustainability.

Transparency and credibility of the pipeline, along with an enduring commitment to delivery are all critical drivers of business confidence and investment in the supply chain. The mineral planning system used to provide projections of need for each area, but following years of cost-cutting, it no longer fulfils this function, leaving the planning system and mineral and mineral products producers somewhat in the dark as to foreseeable demand.

There have also been significant changes in delivery plans in both RIS1 and RIS2. Undeliverable programmes and the inevitable consequences on project delays, cancellations or descoping leave an unnecessarily significant degree of uncertainty which makes it harder to plan and manage supply of materials and the investment needed.

On RIS2, by July 2022, out of 69 projects included in the original plans, 11 have been paused, 2 deferred to RIS3 and 1 cancelled.[1] This leaves 55 projects planned for delivery over FY2020-25, of which 26 had not started yet. In March 2022, about one-third of the projects in the pipeline (22) were assessed by National Highways to be at risk of missing a delivery commitment, which resulted in revised scopes of delivery.

Costs have been an issue, with the NAO warning in November 2022 that RIS2 was running well over budget, as inflationary pressures contributed toward risks to deliverability and affordability of the overall programme.[2] With fixed budgets and persistently higher costs, there is a risk of further projects delays and cancellations in 2023/24.

Planning has also caused significant challenges. A total of 33 of the initial 69 road enhancement projects planned in RIS2 are deemed nationally significant infrastructure projects and require Development Consent Orders. However, since 2020, National Highways has experienced significant delays on its DCOs for many projects relating to changes in policy, including changing environmental requirements.

It is worth noting that some of these problems have started to be addressed. MPA, working with DfT and DLUHC, has sought to establish an expectation that major projects will consider the planning needs of the mineral products sector and communicate such needs in advance. HS2 did not do this initially which prompted a series of meetings to improve the position; as a result of this, the Lower Thames Crossing project has engaged the sector much earlier in the project’s lifecycle.

What the impacts of delays and cost overruns are on the overall programme, and whether the revised programme can be delivered to schedule and on budget

Delays and cost overruns often cause further delays, descoping or even cancellation of other projects. This has a significant impact on the supply chain which has been expecting to deliver against predicted demand which is not then realised or is realised later than anticipated. This all affects confidence to invest in the medium to longer term.

What progress is being made on planning for the next Road Investment Strategy

MPA has been involved with the DfT’s preparations for the next RIS, as part of the stakeholder work. Concerns and opportunities from the supply chain have been noted and were familiar.

One key opportunity is in decarbonisation. National Highways has led the way on using Warm Mix Asphalts for its work, reducing carbon emissions and energy demand, but these are still under-exploited. We urge National Highways, DfT and the public sector in general to take a similar approach to low carbon concretes and other products, where suitable (some structures may require higher strength or other properties that may make them unsuitable for current low carbon concretes). The Environment Agency has announced they will use low carbon concretes as default for flood defences; we believe there is huge scope in the roads programme for doing the same.

Discussions with HS2 for future phases are also ongoing, and across DfT there is greater engagement with the supply chain for mineral products than there was a few years ago.

What lessons from RIS2 need to be incorporated into RIS3 to ensure it is achievable and delivers on policy objectives

The example of the Lower Thames Crossing talking to the mineral product sector early is evidence that the programme is learning, albeit in this case from HS2 rather than RIS2. Key lessons from RIS2 would include greater transparency and more open dialogue with the supply chain, to ensure that when expected demand is not going to be realised the supply chain is aware at the earliest opportunity.

That said, there is a clear tension between ambitions and realism in both RIS1 and RIS2 that has led to over-promising and under-delivering. Without wanting to temper justified ambition, a more thorough engagement with the supply chain (both MPA members but also contractors at all tiers) and an improved planning system would help.

Whether the Government’s roads investment programme aligns with other policy priorities, such as decarbonisation, levelling up, productivity and growth

Yes for the Strategic Road Network, but could do even more so. The roads investment programme is one of the Government’s most significant capital programmes, with the capacity to influence markets. The supply chain for concrete and asphalt has lower carbon options that could be used much more widely, and the roads investment programme would be an excellent way to show other potential customers (such as Local Highway Authorities) that lower carbon options should be used. The experience of Warm Mix Asphalts, which perform as well as traditional products but have not been as widely adopted yet as they could be, shows the importance of government and public sector bodies giving a lead.

The condition of local roads connecting to the SRN (97% of all roads) continues to be compromised by a lack of adequate and consistent investment to provide desired levels of performance for the first and last mile of journeys, potentially hampering productivity and growth.

About MPA

The Mineral Products Association (MPA) is the trade association for the aggregates, asphalt, cement, concrete, dimension stone, lime, mortar and silica sand industries. With the merger of British Precast, and affiliation of the British Association of Reinforcement (BAR), Eurobitume UK, MPA Northern Ireland, MPA Scotland and the British Calcium Carbonate Federation, it has a growing membership of 520 companies and is the sectoral voice for mineral products. MPA membership is made up of the vast majority of independent SME quarrying companies throughout the UK, as well as the 9 major international and global companies. It covers 100% of UK cement and lime production, 90% of GB aggregates production, 95% of asphalt and over 70% of ready-mixed concrete and precast concrete production. In 2018, the industry supplied £16 billion worth of materials and services to the Economy. It is also the largest supplier to the construction industry, which had annual output valued at £172 billion in 2018. Industry production represents the largest materials flow in the UK economy and is also one of the country’s largest manufacturing sectors.

February 2023

Endnotes