Protecting our 'young' industries

Jul 21 2010 by Andrew Hebden, The Journal

FOR all the bold talk from the coalition Government about the need to build a more balanced economy with a thriving manufacturing and export sector, every new week seems to bring announcements which cast doubt upon its apparent good intentions.

On Monday, the Committee on Climate Change warned public spending cutbacks of up to 40% in Whitehall could jeopardise the prospects of embryonic green industries such as offshore wind and low-carbon vehicles.

The Government responded by pointing out that £150m would be targeted at these low-carbon sectors this year, but stressed budgets were subject to the same constraints as other public sector spending.

While we are not so naive to think these industries should be bankrolled regardless of the cutbacks elsewhere, there are good reasons to argue that they do deserve some special attention.

Firstly, the level of public sector investment is relatively small considering the sums spent by other departments. And secondly, this is a sector where the timing of the investment is absolutely critical.

One of the big challenges facing the offshore wind sector in particular is building confidence among major global investors in what is still relatively untested technology. The key role to be played by the National Renewable Energy Centre in Blyth in Northumberland, for example, is to generate results from testing equipment which gives potential backers of major projects the confidence that their investment will pay off in the long term.

The Government also has a role to play in this regard. It needs to demonstrate its confidence in this relatively young sector by investing now – not as a generous gesture for the sake of it, but because it believes the investment will be good for the national economy in the long term. Only with this leadership will major global players be willing to follow.

Scaling down investment or delaying decisions may seem reasonable in the context of the current round of spending cuts, but it will be UK plc which will pay the penalty in the coming years if other national governments step in and take the business away .

:: Andrew Hebden - The Voice of nebusiness - andrew.hebden@ncjmedia.co.uk