Inside Track

I attended an excellent round table discussion this morning organised by Reform, where Greg Barker, the Climate Change Minister was the main speaker.

It was very encouraging to hear a DECC minister say things like “manufacturing is vital to rebalancing the economy” and “more must be done to support manufacturers”. For too long now EEF has been trying to get the message across that in order to have a UK low carbon economy, you need to have a vibrant economy, one which manufacturing, even energy intensive manufacturing, is supported and encouraged by government.

The short term test for government is what is said next week in terms of how it responds to the fourth Carbon Budget (2023-2027) recommendations from the Committee on Climate Change. Will it adopt the proposed budget of 1950 MtCO2e, that incorporates a tightening of the UK targets to 2020 which would replicate an EU move to -30% to 2020. If it does without any caveats, then we are in trouble and totally out of step with the rest of Europe, let alone the rest of the World. The unilateral cost increases to our economy would be significant and certainly not encourage investment in the UK. More so, it would provide a low carbon market that only overseas based companies (who aren’t subjected to costly climate change policy) could capitalise on.

We need long term policy certainty that aligns itself with investment cycles of industry. We need targets to be realistic and affordable, as deindustrialisation is not the answer and we need government to be working with manufacturing to ensure that the UK manufacturing base grows in a low carbon way and is seen as world class.

Government is saying the right things, but the coming months will be the test to find out if it will do the right things. Mr Barker, if you mean what you say, then we as manufacturers welcome that DECC is listening to our concerns.

We had a meeting this week with Gregory Barker, the Minister of State for Climate Change within DECC. It was a refreshing meeting and a welcome change from the last administration. I am coming round to believing my earlier view that this government seems to accept that the climate change policy landscape is crowded, confused and overlapping. This is something that we highlighted in our recent report on UK climate change policy. The report called on the coalition government to reduce the burden of climate change policy by simplifying the mismatch landscape that has grown over the last ten years.

Simplification was high on the Minister’s agenda and in line with the recommendations set out in our report. Again in line with the EEF position, the Minister was receptive to the concerns of manufacturers on competitiveness and carbon leakage. There was a real acceptance that industry, even carbon intensive industry, is vital to the UK economy and particularly to the emerging low carbon manufacturing sector.

However, all my positive views might change come 20 October, when government publishes its Comprehensive Spending Review and with it, detailed climate change policy intension. Of importance will be how it intends to reform the Climate Change Levy into a potential carbon tax. During our meeting with Gregory Barker, we were at pains to point out that although we support moves for a carbon tax, we do not wish to see an increase in the overall climate change policy cost burden to manufacturers resulting from such a move.

Finally, the Minister stated he wanted his department to work closely with industry rather than at length, via consultations. The test here will be whether government consults with us ahead of any formal announcement in October. I know that we would be keen to work with his department on how to change the CRC Energy Efficiency Scheme into something more workable and business friendly. This will be high on the agenda when we meet with DECC later today.