Net zero is the industrial opportunity of the twenty-first century, the UK’s Chancellor has said, setting out how the government intends to grow the economy.
In a speech Rachel Reeves set out a series of plans including building “Europe’s Silicon Valley” between Oxford and Cambridge, an AI ‘Growth Zone’ plus investments in electronic vehicle charging and Cornish tin mining, as well as signalling support for a third runway at London’s Heathrow airport.
While some have criticised efforts towards net zero as risking economic growth and deindustrialisation, Reeves said this was not the case.
The Chancellor said: “There is no trade-off between economic growth and net zero. Quite the opposite. Net zero is the industrial opportunity of the 21st century, and Britain must lead the way.”
The government’s industrial strategy will drive investment into the industries that will define the UK’s success in future, such as aerospace, automotives and life sciences. “We are not wasting any time, and we will move forward with the next stages of the Industrial Strategy ahead of its publication in the Spring,” she said.
SCI has been advocating for a comprehensive industrial strategy that champions science-based businesses, and has launched its own Manifesto for an Industrial Science and Innovation Strategy. With the right conditions and package of support for science-based businesses, SCI has said, the UK should aim to see 15 start-ups scaling to £500m, five unicorns listing in the domestic market, and ten investments of £500m+ being made in manufacturing - all by 2030.
Also in the speech, Reeves pointed to the Oxford and Cambridge area as having huge potential for the UK’s nation’s growth prospects. Only 66 miles apart these cities are home to two of the best universities in the world and are a hub for science and technology firms, and the Chancellor said the area has the potential to be Europe’s Silicon Valley. But that requires a systematic approach to attract businesses to come here and to grow here, she said.
For example, at the moment, it takes over two and a half hours to travel between Oxford and Cambridge by train and there is a lack of affordable housing right across the region.
The government plans to improve transport links and put in place new infrastructure including a new Cambridge Cancer Research Hospital and a new AI Growth Zone in Culham to speed up planning approvals for the rapid build-out of data centres. Reeves said Lord Patrick Vallance will be lead the way with the Oxford Cambridge Growth Corridor.
Reeves also announced funding by the National Wealth Fund - a £65 million investment for Connected Kerb, to expand their electric vehicle charging network and a £28 million equity investment in Cornish Metals, and said the government we will look at the visa routes for very highly skilled people “so the best people in the world choose the UK to live, work and create wealth bringing jobs and investment to Britain.”
Matthew Alabaster, deals leader of industry for energy, utilities, resources and infrastructure at PwC UK said the government’s approach is welcomed to tackle the UK’s growth challenge from all sides, but warned there is no silver bullet that will address the scale of the UK’s investment gap, which has become ingrained in the UK economy over the last decade. “We estimate a shortfall of £130bn of investment per annum just to get the UK back to the G7 average - adding up to over £1trn of missing investment over the last decade,” he said.
“The priority sectors in particular are a critical component of demonstrating to global investors that the UK is not just a low-risk investment jurisdiction (though that is of fundamental importance) but also a place for innovation, growth and exports.”
However, the UK is far from alone in trying to improve competitiveness and productivity and grab the industrial benefits of net zero.
This week the European Commission published what is calls its Competitiveness Compass, setting out how Europe can become the place where new technologies, services, and clean products are invented, manufactured, and sold, even as it becomes the first continent to become climate neutral.
The Commission warned that over the last two decades, Europe has not kept pace with other major economies due to a persistent gap in productivity growth.
To tackle this the EU wants to become home to innovative start-ups and promote industrial leadership in high growth sectors, with plans for advanced materials, quantum, biotech, robotics and space technologies.
It’s upcoming Clean Industrial Deal will set out its approach to decarbonisation and will be coupled with an Affordable Energy Action Plan and an Industrial Decarbonisation Accelerator Act, plus plans for energy intensive sectors, such as steel, metals, and chemicals which are key to manufacturing but are the most vulnerable in this phase of the transition.
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