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How Britain fights back

Rt. Hon. Lord Mandelson,  First Secretary of State, Secretary of State for Business, Innovation & Skills, Lord President of the Council
Sellafield, Cumbria,  20 February 2009

Peter Mandelson, Secretary of State for Business

Today, I want to talk about the recession, but most importantly Britain’s fight back and industrial future and Cumbria’s part in Britain’s industrial future.

It is as clear here as anywhere that we face a tough year, a tough climb out of the economic downturn, a tough mix of resilience and application and commitment and – ultimately – patience from both business and government. There is no overnight cure to what we’re going through – a very severe recession – not least because the crisis in credit and demand that we are facing is a global one.

We’ve taken action to stabilise the banking system and preserve the flow of credit in the economy. Today I can announce that just in the five weeks since I launched the Enterprise Finance Guarantee, Government has agreed to underwrite around 400 new bank loans to small and medium enterprises. That’s more than a million pounds a day. And more than a billion pounds still available under the Enterprise Finance Guarantee. Real help now for struggling viable businesses to help them get through this recession.

Under the HMRC flexibilities the government has created, 60,000 businesses have deferred more than a billion pounds in tax payments or VAT obligations in order to keep money in their cash flow now.

30,000 businesses have had a free health check through Businesslink to help them assess their own strategies for weathering the downturn. More than 2000 companies, for example, from the North West have used this service. This is what people expect from the government - not standing back or sitting on its hands, but delivering to the best of our abilities for business and those they employ.

Along with regional agencies and local government, we’re also bringing forward billions of pounds worth of infrastructure spending across the UK to help keep people and firms in work while private demand falls.

Here in the North West we’ve drawn down priority projects such as the Carlisle Northern Development Route and New Squares Development in Penrith – both projects that will reshape and renew the region’s economic potential.

The edge of a new industrial revolution

Now we are taking action to speed recovery, but not simply to turn the economy back to what it was. Today I want to talk about the future and how Britain fights back. How we put in place the bridges to our economic future. How we use the recession to ask some fundamental questions about how we will make our living in the global economy of the twenty first century.

We’re on the edge of a new low carbon industrial revolution. It doesn’t matter if you’re making industrial composites. Or running a small business in Keswick and keeping an eye on your energy costs. Or managing venture capital or carbon trading in the City of London. The shift to low-carbon technologies and production will transform how we live and work.

In the first week of March at a Low Carbon summit in London the Government will begin to set out a national vision for this transition to low carbon. Not just as an environmental and economic imperative. But as a huge economic, business and employment opportunity for the UK.

An opportunity in two ways. First, the shift to low carbon offers billion of pounds of cost savings to businesses and the public sector in the form of energy and resource efficiency. The initial cost of the transition to energy efficiency pays for itself quickly and many times over.

Second, as the global economy as a whole moves to low carbon, we will be in a position to supply a global industry. We are already one of the world’s most competitive producers in the UK of low carbon technologies and services.

We have a vital platform to build on, to generate business growth in the future in this sector.

But as this market goes mainstream, as we move from prototypes to product lines and other countries intensify their investment in their own low carbon strengths those competitive advantages will be tested in an entirely new way.

There were many explanations for Britain’s head start in the first industrial revolution. Our financial system, our dense population, our openness to trade, our natural resources. This time around, our headstart remains, but it is not quite so unique to Britain.

This means we need to think over more clearly about the UK’s low carbon competitiveness and how we can strengthen and deepen this and take it forward. We need a strategic lead and vision from government that commits this country to change and in doing so sets the right frameworks for the private sector and uses public investment strategically. This is a prime example of the “new industrial activism” that I am advocating in my new job.

We need to take the big decisions about the UK’s energy and transport infrastructure so that they are ready for the shift to renewables, nuclear and new forms of transport.

Critically we in government need to see the way in which these decisions will interact, what they will mean for low carbon demand and supply in the UK. And what they can and should mean for industry and employment in the UK. We will gain less if the low carbon demand we are generating fails to be supplied adequately from British sources and British manufacturing generating British jobs here in the UK. We have to do two jobs - create demand through new markets, but also we need to ensure we have the capacity to meet that new demand.

We have committed to a shift to low carbon as a country and an economy and have regulated, and continue to regulate to make it happen.

We are not alone. All the countries of Europe have committed to both reduce greenhouse gas emissions by at least 20% and generate 20% of energy from renewables by 2020.

This will create demand for low carbon goods and services in Britain. But the question is what more do we need to do to ensure that British companies are equipped to compete to supply that demand?

British homes and businesses and the entire public sector will need to make a rapid shift to energy and resource efficiency. What do we need to do therefore to ensure that UK firms have the skills to advise on and carry out this change?

We will be actively supporting British motorists in making the shift to low carbon vehicles – along with a hundred million drivers in China and India. What more can we do therefore to ensure that the UK vehicle industry and car manufacturers are capable of meeting this demand in the future, both for vehicles and for their components? How do we make the UK the best place in the world to demonstrate, develop and manufacture low carbon transport?

As the UK shifts over to civil nuclear power, carbon capture and renewable energy, we need to ask what more we can do to strengthen the UK’s ability to build the companies that will compete for the supply chain work that will support these industries.

Other countries have approached the low carbon issue as a fiscal stimulus question – a green job creation scheme. And it is true that a shift to low carbon will be invaluable in creating tens of thousands of jobs now, especially in construction and manufacturing.

But I believe it is much wider and more fundamental than simply a matter of how we green our recovery from the recession. It goes to the heart of our long term industrial future. We have to own that future. The Low Carbon Industrial Strategy that Ed Miliband and I will be consulting on from the beginning of next month will support and help explain and answer these questions about how we develop our strategy and own the future.

The green future in Cumbria

As I have said many times before, I firmly believe that we will drive this green industrial revolution from the regions. That’s why today’s launch of Cumbria’s revised Economic strategy and Sub-Regional Action Plan is so important. What we are seeing here is a market-leader for the country as a whole.

Everyone recognises that driving Cumbria’s low carbon future will take a combination of building on existing strengths and attracting new investment – probably from abroad. But you are starting from a good base in that knowledge, that investment, that infrastructure.

And it’s due to the unique partnership I have seen built up over many years - between the people that live here, the communities that they work in and the businesses that employ them and generate jobs there.

There are over 5,000 companies now operating in the low carbon and environmental sector in the North West, as a whole, employing around 86,000 people.

Inevitably civil nuclear power is at the heart of this picture. It was recently confirmed that Sellafield will be nominated as a potential site for new nuclear build. We need to use this, and the decommissioning and cleanup work for the existing facilities, as a catalyst for making the region a base from which companies can develop yet further expertise in civil nuclear operation and management – and win contracts throughout the UK and around the world.

Using this base, which you have built over decades as a springboard to win new global markets in the next decade.

The new National Nuclear Laboratory must aim to be a centre of global excellence in nuclear research and development, spinning off commercial research work and drawing on the proximity of companies like BAe Systems - whose skills and expertise makes them an important potential player in the civil nuclear power supply chain.

But your focus isn’t just nuclear. Renewables projects like the Solway Energy gateway could exploit the region’s other big energy resource – at least until they work out how to generate energy from rain! The concept of an energy coast is more than just a metaphor. It represents a really important economic prize.

I recognise that within that concept there are huge challenges. The future of Sellafield is still a moving picture. We need to ensure that we are presenting major international investors with a regional offer that is coherent, compelling and firmly backed by the British Government. We need to make sure Britain has the energy infrastructure it needs to adapt to both greater use of nuclear power and renewable energy, wherever and however it’s generated.

We will aim to address and answer all of these challenges in our low carbon industrial strategy. And we want to work closely with this region and others in making that happen.

There is a great deal you have to offer us, not just here in Cumbria but across the country to help us drive forward this strategy and generate the jobs we want to create across our economy.

Since 2006, the North West has been taking ambitious action to tackle climate change and secure its own low-carbon future. And Cumbria has a powerful potential role to play, through its energy supply and its industrial base, in realising that ambition.

If you rise to the challenge of a single regional vision for a low carbon industrial future, then we, in Government, will back you in securing extra resources, and support any effort to leverage investment into this region. We will do it directly and with the RDAs, Local Authorities and other partners, but we must do it coherently to ensure a model that’s successful.

A model for this is the decision to create a West Cumbria Vision Board where all local interests have agreed to work together on economic development. Anything we do will support the Board’s work, not sideline it.

Conclusion: Britain fights back

Let me just say this in conclusion, some might argue that the current uncertainty of recession makes this the wrong time to focus so intensively, as I plan to do, on the future. I disagree. A recession is partly a reflection of how we see the future. As well as helping families and firms through the downturn, it is the duty of government to set out a map of our economic future that reassures and inspires. Turning the clock back is not an option. In fighting back against the current banking crisis, Britain needs to re-shape and re-balance our economy in the future.

There has been a lot of talking Britain down lately, and not only from coffee shop owners. I understand the severity of our economic circumstances only too well. I work it, I live it and I sleep it as Business Secretary, believe me. But as of today, I’m going to take on the doomsters and only talk Britain up. I do not under estimate, as I say, the economic difficulties we face in this country. But the UK’s open and dynamic economy, and may it ever remain so, is a huge asset.

If we start looking inwards and away from the rest of the world, we will miss out on the opportunities that are open to us.

We have some of the best growing small firms in the world and some of the smartest and most skilled workers. Our regulatory environment is efficient and business friendly.

We have a resilience and a capacity for renewal that is not just an asset, it is the very pre-requisite for success in a rapidly changing global economy.

And this is precisely the time to apply those qualities both in business and in government to the single biggest industrial challenge of the next decade. It is vital that the UK offers the conditions that make the UK the best country in the world to develop and grow low carbon businesses. We need to make the UK a leader in low carbon innovation and research, just as we are demonstrating our capability in digital, creative, bioscience and advanced manufacturing industries.

We have to create an active industrial policy that supports British firms and the British workforce in developing their capacity to compete for and build these industries of the future. A new industrial activism for a new green industrial revolution.

Cumbria is a place of extraordinary beauty with enormous potential for the future. Up here they say “I shall lift mine eyes unto the hills”. Now we all know between here and the hills there’s a tough road ahead. But I strongly believe that this is the moment to lift our eyes and our country to the future. Britain can and will fight its way back and I and other members of Government are determined to work with you and others to make sure we do.