While today's growth figures were not as bad as expected by analysts, the fall from the previous quarter together with last week’s Spending Review will have focused minds in Numbers 10 and 11 Downing Street. It was perhaps not surprising that David Cameron opted to focus on growth in his speech to the CBI yesterday.
The prime minister used his message to outline plans to boost jobs, saying that he would unleash the ‘most entrepreneurial and dynamic’ era in British history.
Underpinning much of the government’s programme is his strong recognition of the growth opportunity for the UK from green technology. An example of which is the £69m package to encourage private sector investment in offshore wind projects. Cameron said: ‘We need thousands of offshore turbines in the next decade and beyond – each one as tall as the Gherkin. Manufacturing these needs large factories which have to be on the coast. Yet neither the factories nor these large port sites currently exist.’
Such comments are encouraging and provide investors with a much needed degree of reassurance. The key however to fully realising this growth opportunity is speed. Other countries are moving ahead decisively and quickly.
The UK urgently needs to put in place a specific strategy for unlocking private sector investment that will help drive growth and enable the underlying infrastructure. It feels as though we are still a few steps away from this.
The much-delayed Green Investment Bank, with only £1bn of funding and proceeds from sales of assets, is unlikely to deliver what the market needs. Only a fully capitalised green bank can facilitate the large-scale investment needed for the UK to become a low-carbon economy by 2025.
With UK Plc needing to fund an estimated £450bn of low-carbon investments and only £50-£80bn of funds available from traditional sources of capital – such as utility companies, project finance and infrastructure funds – the funding gap is all too clear. Furthermore, the green investment bank is needed now, not in 2013. By then, other countries may have moved so far ahead as to have captured an unassailable lead on the key technologies.
With the UK’s developing low-carbon industry needing every last penny of government support, Whitehall departments must work together to maximise the potential of green business. This is an issue that can't be seen in isolation; its importance affects departments across Whitehall – from Treasury to energy, business and environment.
So the rhetoric, while welcome, needs now to be matched by a greatly increased sense of urgency; speed and momentum are now crucial.
Steve Lang is Ernst & Young’s UK and Ireland cleantech leader
