Senior Tories trumpet UK as top location for green investment

Senior Tories have today defended the UK's competitiveness as a destination for green investment, hitting back at mounting concerns among business leaders that the government's current industrial policies are undermining its position in rapidly growing clean technology and energy markets.

Speaking at a press conference at the Innovation Zero conference in West London this afternoon, former International Trade Secretary Liam Fox said regulatory reform that could unlock private finance for clean technology start-ups would be key to maintaining the UK's pole position in growing global clean tech markets.

Fox, the chair of the two-day clean technology event in London, said that where green start-ups were leaving the UK for other markets it was primarily because of hurdles related to "scale-up finance".

"I'm actually optimistic about what Britain can do," he told reporters. "If have a worry - which I do - it is around the ability of our financial sector to provide sufficient funds for scaling up our tech companies. We've got a lot of tech businesses startups do extremely well but struggled to get scale up finance - and we ended up losing the IP, normally to the US."

Fox welcomed moves by the Treasury to deregulate pension funds to offer green companies access to a larger pool of private investment, but said the government would need to go further to make it easier for clean energy companies and markets to accelerate their expansion.

"It is not the [White House's] Inflation Reduction Act that I worry more about," he said. "It is the fact that we leak IP because of our own inability to scale up."

Ministers have faced mounting calls from business leaders, opposition parties, independent advisors, and a number of its own MPs for the government to publish a revamped Green Industrial Strategy in response to the generous subsidy programmed launched by the US and EU in the last 12 months.

Chancellor Jeremy Hunt has said the government will not provide a formal response to the IRA and the EU's Net Zero Industry Act until the autumn, prompting concerns the UK is set to fall behind in the race for key solar, battery, wind, carbon removal, heat pump, and electrolyser manufacturing markets.

Today, the Labour Party released figures that highlighted how UK manufacturing production fell by 3.7 per cent last year, compared to a 2.8 per cent rise in the US. Meanwhile, solar panel manufacturer Oxford PV joined a long list of UK business voices to raise the alarm over the prospects for green manufacturing in the UK, with the firm's chief technology officer telling the Financial Times the UK was the "least attractive" location to locate its new solar cell manufacturing factory when compared to the support on offer in the US and EU.

In addition, the Climate Change Committee today issued fresh warnings the UK would struggle to realise the economic opportunities on offer from the net zero transition unless government steps up efforts to tackle looming green skills shortages.

But Fox refuted suggestions the UK's attractiveness to green investors was being eroded, pointing to figures that show the UK continues to attract more inward investment than any other European country. "I do get rather irritated when the Financial Times keeps telling us that people aren't going to invest in the UK," he said. "We remain the third top destination in the world for FDI [foreign direct investment]."

He added that leading universities, a predictable legal system, stable regulatory frameworks, and labour market "flexibility" relative to some European neighbours continued to make the UK an attractive place for green businesses to locate.

Fox spoke to journalists shortly after Deputy Prime Minister OIiver Dowden delivered a speech in which he argued the net zero transition could serve as an engine for economic growth and green jobs in the UK.

"What's going on here today - the clean green tech revolution - is another essential component of the future growth story for our country," Dowden said. "This sector is a core priority for us, and this government is unashamedly pro-business. We want to work with you to strengthen, develop and advocate this sector."

Dowden, who was appointed Deputy Prime Minister after the resignation of Dominic Raab in late April, said the UK would need to invest $15bn to $16bn in net zero goods and services each year over the coming decades.

"In today's world, we face fierce competition for every pound in global finance, and we won't attract that capital by sitting around and waiting for it to fall into our laps," he said. "We have to continue pitching the United Kingdom as a land of green opportunity. The good news is we really are off to an incredibly strong start."

The supply of net zero goods and services could be worth £1tr to UK businesses by 2030, while supporting as many as 480,000 green jobs, he said.

Overall, Dowden said he was "incredibly optimistic" about the future of the UK's clean technology sector. "And that, in turn, makes me incredible optimistic about the prospects for the United Kingdom and indeed the whole economy," he said.

Dowden and Fox's positive assessment of the economic benefits arising from the net zero transition came just a few hours after Bank of England Governor Andrew Bailey used a speech this morning to similarly hail the long-term economic growth benefits that would come with more ambitious decarbonisation policies.

Bailey argued there was "no excuse" for failing to tackle climate change, despite considerable near term economic challenges. "Unlike pandemics and wars which are terrible, and events that we're having to deal with - climate change I'm afraid is highly predictable," he said. "That's the reality. And there is therefore no excuse for failing to tackle it."

Bailey said that while government policy would be critical to achieving the UK's net zero targets, private sector investment - and the actions of the Bank of England and financial regulators - also had a critical role to play, particularly against a backdrop of sluggish economic growth and persistent inflation.

The government's upbeat assessment of the UK's net zero plans were given a further boost today, after SSE updated its multibillion pound clean energy investment plan and reports suggested Jaguar Land Rover has selected the UK as the location for its new battery factory.

However, concerns over the ability of the UK could to match the level of subsidy and policy support on offer to a host of low carbon industries in the US and EU remain widespread. And Shadow Chancellor Rachel Reeves today used a speech to set out how Labour would seek to accelerate the net zero transition and attract more green investment.

Speaking to the Peterson Institute in Washington DC, Reeves mapped out a vision for how a 'Green Special Relationship' between the UK and US could benefit both countries, putting forward proposals for a regular dialogue with the key architects of the Inflation Reduction Act and the sharing of best practices between businesses and trade unions on both sides of the Atlantic.

She slammed the Conservative Party for allowing the UK's relationship with the US to "wane" at a critical moment in the global green industrial transition.

"In the last few years, the British government has let a critical relationship slip," Reeves said. "In his remarks, the US National Security Advisor mentioned a number of international partners: Canada, the EU, Korea, Japan, India, Taiwan, Brazil, Indonesia, Angola. One country, to me at least, was notable by its absence: Britain. A relationship once called "special" has been allowed to wane. With Labour, that would change." 

Looking closer to home, Reeves touted the importance of the Opposition's green investment plans and stressed that a Labour government, if elected, would seek to make trade with Europe easier for British exporters when the UK's deal for the European Union is due for review in 2024.

"A modern supply side approach in Britain would see us rebuild our industrial strength," she said. "But it would have trade and partnership at its heart too. Britain under Labour will be a trading nation, exporting across the world and open to business and investment at home."

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