Waveney MP Peter Aldous yesterday highlighted the potential of the green economy to the UK’s economic recovery and urges more co-ordination across government, business and local government to promote green investment.
Aldous was speaking in a Back Bench Business Debate on the Green Economy secured by Laura Sandy’s MP, moving:
“That this House urges the Government to promote the right fiscal and regulatory framework to accelerate green growth as an intrinsic part of the UK’s economic recovery strategy.”
Peter Aldous (Waveney) (Con): I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on securing the debate. Realising the full potential of the green economy is vital to securing economic recovery and creating new jobs.
The green economy is performing particularly well at present and it is important that the UK takes full advantage. Last year, the low carbon goods and services market grew by 4%, and investment in renewable energy around the world reached record levels. In 2011, there was an estimated £6.9 billion of investment in the UK renewables sector, with 21,000 jobs announced. Research and development work is ongoing, and renewable technology is becoming more competitive. The offshore wind cost reduction taskforce estimates that it should be possible to cut the cost of offshore wind by a third by the end of the decade.
It is important to take advantage of those opportunities so that as a country we are less vulnerable to rising global energy prices. We need to future-proof our economy against the vagaries of fluctuating fossil fuel prices. Such fluctuations restrict household expenditure and business investment decisions as well as pushing up inflation.
It is appropriate to commend the Government for the work they have done in the past two years. In many respects they have laid the foundations upon which a successful green economy can be built. They are tackling difficult challenges that do not have straightforward solutions. A good start has been made.
The fourth carbon budget, for the period 2023-27, has been set and the green deal starts this autumn. The Government have brought forward the green investment bank and have invested £3 billion as its initial capitalisation. It is good news that the Enterprise and Regulatory Reform Bill will enshrine in legislation the green investment bank’s objectives, embed its operational independence and provide Government with specific powers to finance it.
It is welcome that the Government are tackling electricity market reform as part of the draft Energy Bill, which is at present before the Environment and Climate Change Committee. I shall not comment on EMR in detail as we shall return to it in the autumn, but it is an extremely important subject where it is vital that the right decisions are made. In tackling EMR five guiding principles should be pursued: timeliness, simplicity, certainty, transparency and coherence.
I commend the Government for the work they have done locally in East Anglia. There is an enterprise zone aimed at the renewable energy sector in Lowestoft, in my constituency, and in Great Yarmouth, and centre for offshore renewable engineering designation for those two ports.
To realise the full potential of green growth, the Government need to address four challenges. First, there is a need for coherence from Government. Green investment is highly mobile and globally foot-loose. Investment will flow to the most attractive destinations. It is therefore important that the Government continue to send the right message: the UK is the best place to invest, with a stable fiscal regime and a sound pricing mechanism. That is how we shall achieve the necessary investment in new energy technologies.
It is also important to provide international investors with the confidence to invest in the UK. Investors need to have faith that all departments of Government are serious about the green economy. There should be a coherent and consistent framework and the right rhetoric must emanate from the Treasury.
Secondly, there is a need to provide 21st-century infrastructure. That means smart metering, a smart grid and in due course a European supergrid. Important work has already begun on rolling out superfast broadband, and it is important that that does not stall. There is also a need to continue with the work to achieve a 21st-century renaissance on our railways, and the Economic Secretary to the Treasury is playing an important role in that in East Anglia.
My third point relates to the green investment bank and its right to borrow. I have already commended the work that the Government are doing in setting up the GIB, which will operate from 2013-14, a year earlier than anticipated. It is envisaged that the bank will have the right to borrow from 2015-16. However, I must emphasise the vital importance of the GIB having powers to borrow, so that it can reach its full potential and provide certainty to investors. It must have that power so that it is not just a Government-run fund. The £3 billion of start-up funding should unlock £15 billion-worth of private sector investment, but that is a drop in the ocean compared with the £200 billion of investment needed to invest in energy infrastructure up to 2020.
It is important not to pursue the option of borrowing through the national loans fund to fulfil the GIB’s borrowing requirements. If that is done, there will be no independence at all. The GIB needs to be able to borrow independently from the capital markets. It is important to learn from the examples in Germany, where KfW leverages its equity by a multiplier of 28, and the Netherlands, where Bank Nederlandse Gemeenten achieves a multiplier of 59. My fourth point is that we need to provide people with the skills and training needed to take up the many exciting and diverse job opportunities in the green economy.
In many respects, that meeting of minds and hearts in the rose garden of No. 10 in May 2010 seems a distant memory, and perhaps another country. However, it is important to remember that one of the objectives in the coalition’s programme for government was the Prime Minister and Deputy Prime Minister’s shared vision of building a new economy from the rubble of the old, supporting sustainable growth and enterprise, balanced across all regions and industries, and promoting the green industries that are so important for our future.
I would like to promote “Leading the Way: Green Economy Pathfinder manifesto 2012-2015”, a document about which I suspect the Economic Secretary to the Treasury knows a great deal. It is a report produced by the New Anglia local enterprise partnership, covering Suffolk and Norfolk, setting out its route map for a transition to a green economy. It was launched earlier this month, and it will be presented to the Government in the next few weeks. I urge the Government to give full regard and consideration to its five objectives and 25 goals, which I will not go through because of the shortage of time.
In conclusion, the Government have made a good start, but a lot of work is still required to realise the full potential of the green economy, and there are many challenges that remain to be met. There is a need for more co-ordination across government, closer working with both business and local government, and a clear and simple regulatory framework to promote green investment. The UK remains an attractive place to invest, but we must do all we can to ensure that that reputation is not lost, but enhanced. I support the motion, and look forward to hearing the Minister’s response.
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