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The Guardian - UK
The Guardian - UK
Business
Richard Partington

Lack of plan for green industry risks UK ‘falling behind’, top government adviser warns

a solar power plant at sunset
The US and the EU are investing billions of pounds to support domestic production of everything from renewable energy to microchips and electric vehicles. Photograph: Fuyu Liu/Shutterstock

Britain risks falling behind in a multibillion-pound global “arms race” of re-industrialisation without an urgent launch of a coherent plan for manufacturing, Andy Haldane has warned.

The influential economist, who is on Jeremy Hunt’s council of economic advisers, said the UK was “not really in the race at any kind of scale” as other countries steal a march in developing the green, hi-tech industries of the future.

“The world is facing right now an arms race in re-industrialisation. And I think we’re at risk of falling behind in that arms race unless we give it the giddy up,” he said.

The chief executive of the Royal Society of Arts thinktank said three factors underpinned the scramble: a need to boost the resilience of supply chains after widespread disruption during the Covid pandemic; decarbonisation; and rising military tensions.

It comes as the US and the EU invest billions of pounds to support domestic production of everything from renewable energy to microchips and electric vehicles, with Joe Biden’s Inflation Reduction Act (IRA) pumping $369bn (£292bn) into America’s industrial base.

Haldane, a former chief economist at the Bank of England, said: “China has been at this – green tech – for many, many years, and has stolen a march in many, many technologies, including solar and batteries.

“The west has belatedly woken up. The IRA is throwing cash to the wall on that. The cost of that [is] almost certainly north of half a trillion dollars. Possibly north of a trillion. The EU is now playing catch up, [and] the UK currently is not really in the race at any kind of scale.”

Speaking at an event in London held by the manufacturing trade body Make UK, Haldane urged the government to develop an industrial strategy to succeed the one scrapped by Boris Johnson. Haldane had been chair of the government’s Industrial Strategy Council before the group was abolished.

“What was an imperative a few years ago – to create that long-term platform – I think now is absolutely essential,” he said.

Jeremy Hunt has previously said he wants to turn Britain into “the world’s next Silicon Valley”. However, industry leaders have warned that repeated “flip flopping” by successive Conservative governments has damaged the British economy.

Greg Clark, the business secretary under Theresa May who launched the last industrial strategy, said the government had “tried and failed to have longevity” with its manufacturing policy.

Speaking alongside Haldane, the Conservative MP said the decision during Johnson’s premiership to abolish the industrial strategy council was “a piece of vandalism that was completely without purpose”.

“Little did I think it would be my own party that would decide to get rid of it.”

Clark said the current government had continued and “accelerated” some of the support for British manufacturing contained in the industrial strategy, but suggested a long-term plan was still required.

“A short-term strategy is a contradiction in terms. It seems to me essential that you have to build up a means for investors outside of this country to have confidence that the policy framework is going to endure.”

A government spokesperson said: “The government has shown a clear strategy for UK manufacturing with a variety of schemes that ensure sectors from auto, to aerospace, to low-carbon technologies have access to the funding, talent and infrastructure they need.

“We are focusing on providing a competitive business environment to stimulate growth, reducing red-tape and investing millions in new government funding to help manufacturing SMEs increase productivity.”

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