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Rt. Hon. Lord Mandelson, First Secretary of State, Secretary of State for Business, Innovation & Skills, Lord President of the Council
Policy Network Conference, LSE, London, 05 June 2009
Policy network chose Friday to hold this conference because it’s always a quiet day!
In the last few months we have entered a difficult time for mainstream politics in the UK, affecting all the main parties. Cynicism and scepticism about politicians and politics is high. We need to counter this by fixing our political system, I have no doubt about that, cleaning up the use of parliamentary expenses and allowances, and increasing our parliamentary accountability.
But this will not be enough. We need wider political and constitutional reform in our country to empower our citizens.
But structures and processes are, in themselves, not enough. We have a core of positive ideas about the future in this country, but we need to harness political energy to this progressive age, and for me climate change is one of the key subjects at the heart of that.
Let’s be clear. Rebuilding political trust in Britain matters for its own sake. But it also matters because politics is the only way that we will be able legitimately to make the huge decisions that need to be made now to face up to the challenges of our global economic future and its associated opportunities and insecurities; the demand for greater personal control over our lives, public services, as well as greater democratic accountability; as well as the challenge of climate change.
Politics is the multiplier of that sense of collective renewal and endeavour. Politics is the agent of change in our society. If you cannot fix what’s wrong in our political system it won’t be possible to fix anything else. This morning I would like to say just a few things about what else needs fixing and how we do that, particularly in industrial policy.
As Tony sets out in his book, the core challenge of climate change politics is getting people to connect their choices now with outcomes in the relatively distant future and in different parts of the world. That’s a colossal challenge. It’s going to cost in the short term, there is no way around that.
People often find the scale of the challenge overwhelming. So somehow we have to go from awareness to engagement, rather than awareness to resignation.
The only way to do this is to stress that at the level of individual choices, business choices and national economic choices, the shift to low carbon offers economic opportunities - very substantial economic opportunities - as well as costs.
In energy savings or trade, the global market for low carbon goods and services is already worth around £3trillion a year, and will probably grow by half that again by 2015.
Almost 900,000 people already work in the low carbon sector or its supply chain in the UK, not just in green manufacturing but in green services like consultancy or low carbon venture capital. The sector is projected to maintain positive growth rates, even through the downturn. We are in a strong position to be a global first mover.
But how do we shape a positive business environment for low carbon goods and services in the UK? How do we ensure that UK companies have the necessary skilled workforces, clarity and certainty to invest in change?
The government has already set out some of the answers to these questions in our New Industry New Jobs policy framework we published in April, and its ultra low carbon vehicles strategy, and we will provide a further, full picture in our Low Carbon Industrial Strategy in the summer. At the heart of this work are three basic ideas.
The first is the need for a long term strategic approach from government. Short-termism simply won’t work in this game. Businesses won’t invest in change and individuals won’t invest in training for low carbon industries or make low carbon consumer choices unless they believe that the direction of travel in our society is irreversibly towards a low carbon future.
Up until recently there has been too much ambiguity or uncertainty in UK climate policy – in nuclear energy or renewables for example. Clear leadership on these questions over the course of the last year has now unlocked billions of pounds of investment in the UK’s capacity. We need to maintain momentum, that sense of clear strategic direction and keep it running right through our actions as a government. There has to be a clear, stable framework of policy.
The second basic principle is that market dynamics alone will not create the shift we need quickly or effectively enough. We cannot be ideological about the roles of the market and the state in driving this low carbon transition. There has to be a real partnership.
This can mean intervening in the market to raise the cost of carbon in certain ways, and to a level that forces a genuine change in behaviour.
It is also going to mean public sector interventions to ensure that Britain has the necessary infrastructure to support low carbon technologies. That includes the national grid, which is up for serious renewal over the next five years, and other forms of infrastructure such as the charging networks required to make ultra-low carbon vehicles viable.
While these technologies and consumer preferences are still clearly barely off the drawing board, we do need to be careful to ensure that lack of infrastructure does not undermine viable technological solutions.
We’ll need to ensure that UK-based companies can continue to draw on a quality science base and the resources to develop and commercialise low carbon technologies.
In the budget we created a new £750million fund that will be used to strengthen the Technology Strategy Board amongst other things and which we will use to make selective investments in, among other things, the resources our companies can use to test and commercialise low carbon technologies.
Our skills policy will be adapted in the summer to reflect the growing need for workers with low carbon skills.
We are also looking at ideas for a new public-private innovation fund that would be a source of growth capital for high tech small and medium sized enterprises many of which would inevitably be in the low carbon sector.
Where appropriate, it will also mean government intervening in the market to generate demand – with support for buyers of energy efficiency measures or ultra low carbon vehicles, or government procurement programs that increase demand for ultra-low carbon vehicle fleets.
Finally, I believe government has a responsibility to ensure that UK-based companies are equipped to compete successfully for the new demand created by government climate change policies. This kind of strategic approach was set out in the government’s New Industry, New Jobs framework paper in April. It requires policies to raise the full range of capabilities in the UK supply chain – including the skills and productivity of workers – to win contracts and therefore jobs for Britain.
Green politics sometimes presents business as the enemy of climate change policy. For as long as business resists long term change then that will be the case. But low carbon business, and ‘low carbon consumers’ can and are also a positive driver of change, and are in most cases.
Mainstream climate change politics obviously can’t be totally anti-politics, anti-business and anti-growth, as we see in some parts of the green movement. We can’t just throw green slime at the problem, as I know to my own personal cost and discomfort. It will however mean a different approach to politics, business and growth. Mainstream green politics needs to inherit the passion and the energy of the green movement, without its dogma or inflexibility.
And it has to be positive, it has to be about opportunities. You cannot get people to embrace change by making them afraid. Of course business models are going to have to change and there will be costs. But negative incentives for change can only be half the story.
So these are my three basic principles for a positive environment for low carbon business: a long term strategic approach from government; a pragmatic approach to the role of both markets and the state, and a recognition that we should be actively equipping our people to supply the demand created by climate change targets.
This is all the more important in the context of the current recession, where investment in the transition to low carbon will play an important part in our economic recovery and renewal, as the Prime Minister will emphasise in his plans for national recovery and future strength that will be published by the government.
I started by saying we are at a precarious time for mainstream politics in the UK. We can get cynical about politics in this country, or we can have a serious debate about what needs to be done to get our politics back on track and our economy back to growth; to extend social opportunity in Britain and strengthen our internationalism.
A positive politics of climate change depends on us deciding that politics works, that politics is how we focus collectively on a different future for our society and our economy, and in focusing on it, make it happen.
