Will Sunak’s ‘plan for growth’ be a magnet for future investment?

The government has made two significant announcements over the past few weeks – the launch of Great British Nuclear (GBN) and the pledge to deliver Tata’s £4bn electric vehicle battery gigafactory in Somerset – which suggest that they are trying to tease the direction of their evolving plans for the UK’s long-term industrial strategy along the path to achieving net zero.

The announcements indicate a commitment to driving rapid investment and expansion in industries and energy infrastructure to enable the transition to net zero and support the government’s vision for “global Britain” that would reinforce the UK’s position on the international stage.

But we must not forget that both the GBN and Tata announcements, made in quick succession, come after the prime minister faced a barrage of criticism from leading groups, such as Make UK, over the lack of a clear plan for our industrial future. The news also came just months after Rishi Sunak dismantled BEIS, the government department specifically named and dedicated to shaping and delivering our industrial strategy.

The fact that this has now been replaced by the Department for Energy Security and Net Zero, the Department for Science, Innovation and Technology, and the Department for Business and Trade tells us a lot about the evolution of the Conservatives’ thinking around policy direction.

Three prime ministers and more than 15 months have passed since we started to hear murmurings that nuclear would play a pivotal role in the government’s industrial strategy to increase energy security and push towards a low-carbon energy infrastructure, as part of a “10-point plan for a green revolution”   announced by Boris Johnson.

It is clear that we have been slow in coming forward and driving a strong industrial strategy amid political turmoil both domestically and abroad. With a general election looming, now is not the time to procrastinate anymore.

The two announcements – especially the launch of GBN – reflect a new phase of government and industry collaboration which can only be a good thing, providing that all parties are aware of and understand the objectives and goals. But does this go far enough finally to pave the way for the UK’s international industrial renaissance? Or are we simply witnessing the creation of another consortium that will say a lot but achieve few of its goals?

A taste of things to come

Many might say that the proximity of these two major announcements was an attempt to silence critics, who argue that the UK lacks a long-term industrial strategy. However, they could rather be seen as a warning sign to international competitors – the UK is putting considerable financial investment into such projects and as a result has gained a seat at the table with the big global players.

Tata’s decision to build its battery manufacturing gigafactory for Jaguar Land Rover in Somerset may have come as a surprise. The successes for the sector in Europe, with up to 40 battery plants across the continent compared with just one in Britain, made the continent an attractive option for investment.

One of the key reasons Tata has given for its decision is a preference to source as close to production sites as possible to cut the risk of disruptions. But we would be foolish to rule out any assumptions that the decision was not also made on the basis that the government offered a support package estimated to be around £500m to secure the deal over a pitch from a rival site in Spain. After all, just two months ago, no electric vehicle or battery manufacturers had chosen the UK over other locations as an investment destination.

Talks about the launch of GBN had been generating charge for well over a year when its official launch was finally confirmed last month. The initial offer of grants totalling up to £157m will be key to helping drive the rapid and much-needed expansion of nuclear infrastructure between now and 2050, when the government has committed to ensuring that a quarter of all British electricity will be generated by nuclear.

Simply issuing funding is not enough for small modular reactor developers to create the plants needed within our tight timeframes and there needs to be absolute clarity over what the “prize” is for successful companies to develop their products.

The government hopes the competition to develop small modular reactors (SMRs) will drive billions of pounds of investment into the technology required to build large fleets of small nuclear power plants quicker, more cheaply and with the right investment profiles. Simply issuing funding is not enough for SMR developers to create the plants needed within our tight timeframes and there needs to be absolute clarity over what the “prize” is for successful companies to develop their products.

It cannot be stressed enough that access to sites and regulatory processes are as – if not more – important than match-funding if we want to seriously plan for growth in this sector.

To intervene or to incentivise?

If the UK wants to be seen as a serious international player with robust industrial credentials, it is essential that the government – whatever its colour – develops a strong strategy that will generate support and collaboration from the sector to deliver a shared long-term vision. It is vital that, regardless of the approach Sunak and Grant Shapps adopt for the UK, work must now be rolled out to deliver in a timely manner for investors.

We are at a crucial juncture that could see potential vendors invest elsewhere if we fail to step forward and show our potential now – before time runs out.

As it stands, the current industrial strategy is heavily focused on putting money on the table to draw additional investment into Britain. It begs the question whether enough is being done to intervene with a solid plan that will drive genuine enthusiasm from the sector to invest in Britain as an attractive home for industry, as opposed to just signing the biggest cheque. That said, Britain looks to be following the example of countries such as Canada, Spain, Poland and Belgium – and it seems to be working for them.

Investment is key to the success of any government-led programme to ensure that it gets off the ground and the work gets done. Whether that investment comes from Whitehall or private financing is beside the point – we need to collaborate to ensure that the UK is seen as a major international player and the future of manufacturing and industry does not just lie in Asia.

But the government needs to lead the way in creating a framework that guarantees that any investment is not lost and that the goals of their programme are clearly articulated. Take GBN, for example. We cannot just incentivise SMR developers to build products with cash without a long-term vision of how these will play a key role in powering our economy, towns, cities and public services.

A skilled workforce, backed by strong central and private investment, will be key to delivering these programmes efficiently and will help make sure that the manufacturing, construction and commissioning supply chains can keep up with the pace demanded by the marketplace.

It is up to the government to provide support to ensure that we have the workforce available and equipped to support the roll-out of their various investment programmes. The commitment to incentivise businesses with significant funding is great and should be celebrated, but we need to reflect that commitment with an adequate number of people on the ground to do the jobs required.

Dedication to high-quality education and skills training across all the regions will play a vital role in sustaining our productivity growth and make the UK stand out across the globe. A skilled workforce, backed by strong central and private investment, will be key to delivering these programmes efficiently and will help make sure that the manufacturing, construction and commissioning supply chains can keep up with the pace demanded by the marketplace.

Connecting the cash to the strategy

We cannot deny that the Conservatives are showing good will in rolling out investment for much-needed industrial programmes. The incentives-led approach is clearly working to secure international investment in Britain and will be vital if we are to boost infrastructure, skills and innovation across all four nations. But, as keyholders, the government needs to open the door to a focused plan and framework for ensuring that we remain on track to become a leading voice in industry.

>>See also: Great British Nuclear launches competition to develop UK’s first mini-reactors

>>See also: Tata announces plans for £4bn gigafactory in Somerset

Swooping in on the expensive Tata deal paid off – but we cannot just rely on signing a big cheque to secure international investment. There are plenty of other sectors and services that also need funding and that will probably get the lion’s share of attention as the parties play political football in the lead up to the general election.

With the launch of GBN, we need to ensure that we are building a partnership between government and industry that responds to the challenge, as opposed to falling flat on its promises. It must go beyond being another unhelpful political vehicle and instead prioritise getting on with the job.

A strong leadership team has been assembled to drive this forward, and the sector is ready to engage. So the early signs are already looking positive.

With the two programmes under its belt, it is now up to the government to ensure that we have an integrated, long-term plan which allows them to thrive and to catalyse more investment. But, as we look forward to the next two years and a potential change of government, the real challenge will be in maintaining a serious commitment to making the UK a leading player in the global game.

Peter Sibley is divisional director (nuclear) and energy sector lead at Hydrock