Speech by: Pat McFadden MP
Event: TUC ‘Beyond Crisis’ conference, London

Introduction

I am glad to be here today discussing what is a critical issue for our economy – This conference is focused on how we reshape it to make the most of the transition from a high carbon to a low carbon economy. This is not the only question, but it is a fundamental one.

This is not a small shift, a minor tweak in direction. In fact I believe we are standing on the brink of a second industrial revolution with this change.

If that seems like an exaggerated claim; if we think about the first industrial revolution, it was powered by coal, steam, oil and gas. Those energy sources in turn powered the technologies, the inventions and indeed the consumer demands of the 20th century.

So, if we think about low carbon and the technologies that will be to the fore in this shift – nuclear, wind, wave, carbon capture and storage, clean coal, these too will have a profound impact not only on the way we generate our energy but also the cars we drive, how homes are built, how goods are produced.

And of course it will not only be a top down revolution. It will be also driven by consumer demand – witness the change in just two years in the demand for greener goods, behaviour changes with regard to recycling, the decline in use of free throwaway plastic bags in supermarkets and in other areas.

This shift in energy generation, production and consumer demand will fundamentally shape the economy of the 21st century.

And in the run up to the Copenhagen summit, I want to stress that this agenda is not just about emissions targets, distant deadlines of 2050, complex international carbon trading arrangements.

It is also about jobs, and industries and opportunities to do things in a cleaner and better way. The market for such technologies will be enormous. It is already estimated at £3 trillion. In the UK low carbon market, it is estimated that 50,000 companies employ 880,000 people and this is set to grow in the years to come as profound changes take place in the way we produce our energy, build and heat our homes and workplaces, and transport ourselves.

Government’s role in the shift to low carbon

What I want to focus on today is government’s role in this shift. How do we underpin this second industrial revolution to ensure that Britain has a strong capability in the technologies of the future? It is a shift that will affect every country. But how do we, in this country, ensure that in creativity and design, manufacturing and services, that Britain is well placed to succeed?

1. Industrial capability

The Government’s starting point is a simple one. That we have to work with the energy and drive of markets to make this happen. We have adopted a stance of industrial activism because we know that without strong signals – and in some cases funding – from government – the UK will not be best placed to succeed.

And that is one of the reasons, for example, why we established a strategic investment fund of £750 million to support industrial change and to foster capability. Around a third of that was committed to the low carbon industrial strategy published in July.

It set out support of up to £120 million for offshore wind, up to £60million for wave and tidal power and £19 million for the nuclear supply chain and other initiatives too.

We have already committed around £400m for low carbon vehicles. Some of this money is being used for some of the most advanced low carbon vehicle demonstrator projects in the world. In the streets of Oxford today you will soon be able to find electric BMW minis being tested in everyday use as a result of government supported investment.

Later this week Andrew Adonis and I will have more to say about the charging infrastructure and how we want to see electric vehicles in the UK.

And of course last week my colleague Ed Miliband announced the national planning policy statement designed to help bring out a new generation of nuclear power stations as a key part of cleaner energy production.

So part one of this strategy is about industrial capability, about trying to ensure that a decent proportion of the products, the technologies and the energy production benefit industries in the UK and their workers. And by this I don’t mean we take a nationalistic view. We know many of the companies may be based abroad or owned abroad. The issue is that they operate here, they invest here and they create employment here.

2. Skills

The second key issue I want to stress is skills – equipping the workforce for the jobs of the future. This is absolutely essential if Britain is to succeed in the 21st century. It’s a worldwide race and there is no hiding place for the countries that fall behind.

We have reasons to be confident. We have four out of the best 10 universities in the world. We have an excellent science and research base supported by significant increases in government science investment in recent years. We have expanded the numbers going in to higher education and, in doing so, increased our national capability as well as enhancing the life chances of many people who would not have enjoyed these opportunities had we not made that commitment. We have also revived apprenticeships, bringing them out of the intensive care ward they were in when we came in to power and making them once again a part of the mainstream labour market. And, of course, we have the Union Learning Fund doing excellent work to promote skills in the workplace, benefitting not only employees but also employers as well.

And yet for all these gains we know there is still a lot to do. We have come far but others are moving fast too. And believe me, you won’t find abroad the self limiting debate about a lump of quality, about the theory that more means worse and that there is a limited amount of excellence to go around and so we shouldn’t send as many people to university. No, you will not find that today. That would seem a very strange notion indeed to some of our industrial competitors around the world. Instead other countries are trying to maximise their participation in Higher Education, trying to drive up their skills and knowledge base because they know that is the right option for the future.

In the last two weeks, we have published our Higher Education Framework, launched our student finance review and published our skills strategy.

And these documents seek to continue our emphasis on expanding opportunity for people from all backgrounds and trying to strengthen the relationship between skills, education, and what employers and the economy need to succeed.

In skills we are placing a greater emphasis on boosting the technician level of worker with an announcement last week of up to 35,000 more advanced level three apprenticeships, an area where Britain has traditionally been weak.

We are empowering learners through skills accounts matched by accredited learning institutions and high quality advice from UKCES about the value and employability of particular courses.

And we want to simplify the skills landscape – everybody knows this is necessary – removing some of the confusion in what can be an overly complex field.

So, industrial capability and individual capability are two sides of the same coin. And for Britain to succeed in the 21st century we need so ensure we enhance both.

3. Capital

The third area I want to talk to you about today is capital and in particular access to capital for innovative, growing businesses. The credit crunch and its aftermath have exposed weaknesses in how businesses access capital to grow and invest, and how the best ideas get developed to reach market.

So we have launched an innovation investment fund with £150m including funding from my Department, DECC and DoH.

It’s designed to lever in up to £1 billion in total from private investors to support the best in UK innovation. It should mean that as, products change ever faster, we are well placed to have more successful and dynamic start ups and our existing companies will have the capital they need to go on and fulfil their global potential.

The Fund will invest in the key strategic sectors that will help rebalance the UK economy including clean technologies, life sciences, digital and advanced manufacturing. And we will be making an announcement before Christmas on exactly how that would be managed and run.

The Rowlands review has also been looking at access to capital and how medium sized businesses, who can’t issue corporate bonds in the markets, get access to growth capital. This will report at the Pre budget report, in a few weeks time and we will incorporate its findings into how we design support for small businesses which will underpin growth and job creation in the future.

4. A just transition

And finally, I want to talk about the spirit in which this change comes about. I have seen in my own constituency, Wolverhampton South East, how industrial change can affect a community, how the loss of several large employers can have a damaging effect that can last for years, indeed decades.

And as we shift from a high carbon to a low carbon economy I believe it is important that we consider the social and opportunity side of this shift, that we have a fair distribution of the costs and benefits, that we talk through the employment implications and new employment opportunities and that we bring together a group of people committed to the success of this who point out new opportunities to government to make the most of these changes in areas we have so far not spotted.

That’s why I am pleased to announce that the Government will proceed with the establishment of a Forum for a Just Transition. And I want to thank the TUC for their input into this idea and the form will include representatives from unions, industry, high energy user groups and consumers. It will have its first meeting in a few weeks’ time on 10 December and will be jointly chaired by me and Ed Miliband. Its purpose will be to make sure we make the most of the opportunities I am talking about, presented by this shift and that change is carried through in a fair way.

Conclusion

And, after the severe worldwide economic contraction we have seen around the world it would be natural for a loss of confidence to take hold, but that would be a mistake. The economy would change anyway in terms of the balance between real engineering and financial engineering but the environmental imperative, climate change, gives this a greater urgency. My message today is that the potential in terms of new jobs, new industries and new services is enormous. And it is not only about the new. It’s also about doing what we traditionally done in a better and cleaner way.

This government is determined to play our role in both making sure that Britain can succeed in these changes and that our workforce is equipped for the jobs they will bring. I don’t want to be too political but today I do have to say that this is not an agenda we have heard much on from our opponents. They seem to have little to say about our industrial future but if they are silent, we are certainly not. We are determined to make sure Britain succeeds in the shift to a low carbon future and that this transition is carried through in a just manner that makes our economy stronger and enhances opportunity and quality of life for people.

One final point – this isn’t an agenda that can just in one sit that can just sit in one government department. If we want to make the most of low carbon industrial opportunities, if we want to transform our transport, if we want to respond to consumers properly, we have to work together across government. That’s why many of these initiatives between us and the Department for Transport, between us and the Department for Energy and Climate Change exist across Government to embody our industrial activism of recent times. That’s what we have been doing and that’s precisely what we’ll keep on doing in order to make the most of the shift we have been talking about today.

Ends.