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The UK Government recently concluded a consultation on a new industrial strategy. Invest 2035: the UK’s modern industrial strategy is the first detailed guide to the Government’s plans to boost the economy.
That isn’t to say there haven't been a lot of big announcements. In addition to the five national missions that featured in the Labour Party’s manifesto in February, we got six first steps for change in July and a further six milestones in December.
Invest 2035 which launched in October at the UK’s International Investment Summit, was positioned by the Prime Minister as the UK’s pitch to investors.
At first glance, the proposals are strong on giving a greater voice to subnational governments and they offer the potential for a more strategic and long-term approach to policy making.
This is all very welcome. But on some of the issues that Climate Group sees as fundamentally important, the document is worryingly lacking in detail of how the industrial strategy is going to help the UK meet its climate targets and secure the economic growth that this can drive.
There are two areas where we urgently need to see the Labour government do more: address the price of electricity and improve the use of public procurement to strengthen the case for investment in low-carbon technologies.
Of these two challenges, the issue of electricity prices is the most pressing and has the widest implications for both the UK economy and our efforts to cut emissions. Put simply, the UK needs to urgently tackle the rising cost of electricity. For businesses, rising energy prices represent a huge barrier to investment. The growing gap in the cost of electricity relative to gas in the UK, combined with the fact that UK businesses pay some of the highest commercial electricity rates in the world, is acting as a major barrier to the electrification we need to see in transport and heating.
Additionally, Government bodies aren’t currently using their procurement power as effectively as they could. In highly polluting sectors like steel (8% of global emissions) and concrete (7% of global emissions), the UK has an opportunity to drive decarbonisation. This can be done through the adoption of emissions intensity standards and clear incentives to ensure that cost premiums are not a blockade to the adoption of new materials in the public sector. This would build on the work the UK has led on through the UN Industrial Deep Decarbonisation Initiative and apply it to a wider range of projects and sectors.
At Climate Group we're proud to work with businesses and subnational governments to help drive climate action, fast. With a few tweaks – and greater focus on the two issues we have identified - Invest 2035 can help complement the efforts of businesses and subnational governments.