An industrial strategy can succeed if it provides stability and brings benefits to the whole of the UK
Alistair Phillips-Davies
| SSE
Theresa May's industrial strategy must offer stability and a UK-wide approach, says the chief executive of SSE, Alistair Phillips-Davies.
One of Theresa May’s first actions as Prime Minister was creating a new department and tasking it with devising an industrial strategy for modern Britain. I’ll be looking for two things when it’s delivered this week. Can it provide stability at a time of change? And does it succeed in harnessing the resources of the UK as a whole?
The phrase industrial strategy has been an anathema to British politicians in recent years. Yet long-term planning should not be a dirty phrase. In every walk of life it is absolutely essential we’re thinking about the future so an industrial strategy helping to improve decision-making around our infrastructure needs can only be a good thing.
The need for long-term planning is particularly the case for the UK’s rapidly changing energy sector. There are few sectors affecting every part of our lives like energy, yet the scale of change is significant and must be carefully planned for. The days of the UK’s homes being powered by ageing coal, gas and nuclear power stations is fast coming to an end. Many of these power stations have been in service for over 50 years and need replaced. The UK’s decarbonisation targets and the continued fall in the costs of low-carbon technologies means that a reliance on fossil fuel is simply not sustainable and not in customers’ best interests.
Instead it appears the UK will increasingly be powered by a mix of some large power stations; smaller, more flexible power stations; and renewable energy. To support this the distribution network that runs throughout our suburbs will no longer be a relatively passive piece of infrastructure but will instead think smartly about how to connect disparate sources of energy, power electric vehicle charging points and enable people to shift their electricity use at peak times.
Change on this scale brings opportunities best realised by planning, stability and certainty. SSE intends to invest around £6bn into the UK’s energy infrastructure over the four years between 2016-20 but we need confidence those factors in the operating environment can be controlled and stable. There will always be some uncertainties, and managing risk is something investors are used to, but the role of Government is to provide predictability and stability where it can. This is much needed in our energy sector, and has been in short supply in recent years.
As well as stability we also need a strategy to unlock the potential of every part of the UK. I am encouraged there is a recognition government policy can not simply treat every part of our country as if they are identical. This is particularly the case in the energy sector where employment and growth is not driven by London and the South East, but instead in places including Yorkshire, South Wales, East Anglia, Cumbria and the Highlands.
So we need a strategy that harnesses each part of the UK. When this is done well, the benefits are not enjoyed solely by that region, but are shared across the UK as a whole.
An example is offshore wind, an industry in which the UK is now a world leader. SSE is investing in the Beatrice Offshore Wind farm in the Moray Firth. It is one of the largest Scottish infrastructure projects yet an investment of this size - £2.6bn - does not just bring low-carbon benefits or help to power our homes and businesses.
It brings benefits to the UK economy as a whole, whether it’s the turbines being manufactured in Hull, subsea jackets made in Fife or a new energy park built in the small village of Nigg in the Highlands, and an operations and maintenance centre in Wick, breathing new life into the town’s Harbour Quay.
This project is one example where the UK can use its strength in a sector to build a supply chain and bring sustainable employment, skills and economic growth to the whole of the UK. Yet a supply chain can only be built if the UK continues to deliver the orders and future projects supporting it; and this is where long-term planning and certainty comes in.
Like most people in business I’ve awaited a modern industrial strategy in recent months and I’m hoping for certainty and predictability to take UK businesses forward.
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