UKTI Global Investment Conference
Speech by the Secretary of State for Energy & Climate Change, Edward Davey, on the energy infrastructure challenge.
As the Prime Minister will have talked about we have a challenge ahead to make sure our economy is growing but also growing sustainably.
And I want to talk about that and particularly the infrastructure challenge and the energy infrastructure challenge.
My first thing to tell you is that I’m a Liberal Democrat.
We have got a coalition here between the Liberal Democrats and Conservatives and I think that is one of the strengths of this Government
Because our policies on infrastructure, on energy and elsewhere are shared across two parties.
And it is more than that - when you listen to the debates in the House of Commons on this area the Labour opposition agrees with what we are doing.
That political consensus has been worked at, and I think that it is really important for people coming from abroad to understand those political connections.
Of course there are other debates; about deficit reduction, austerity – what’s the right thing to do there.
But one of the areas where opportunities exist is on the supply side and the Prime Minister would have talked about our tax reforms, which we think are making the UK attractive; the very, very flexible labour market. Also the support we’re giving to exporters; to R&D Research; to education and the skills agenda.
I think that’s why when you look at the recent Ernst and Young survey on multinationals they found that 40 multinationals are thinking about relocating their Headquarters to the United Kingdom - because of the supply side reforms the UK has been making.
I think that is good evidence that we are making the UK an attractive place to come to.
But in a supply side story, in that long-term economic sustainable growth story, infrastructure is critical and we have a tradition in this country of building lots of infrastructure.
Unfortunately that tradition does come from the Victorians and one of the complaints that people have had over the years when they come to the UK is our infrastructure has looked a little tired.
And it is true if you look at the World Economic Forum they place the UK 24th for the quality of our infrastructure.
And that frankly isn’t good enough.
But it shows our challenge and it shows the opportunity. And I think we have a fantastic opportunity.
The Government has outlined that in a number of ways. Even though we have made tough decisions on the budget our capital budgets have actually been supported far more - to make sure we are taking the right decisions with public expenditure, to make sure it is going the right way.
For the first time we have created a Cabinet sub-committee looking at national infrastructure, creating a national infrastructure plan that’s brought together over £250 billion worth of infrastructure opportunities and making sure that as Ministers we are pushing forward priority projects; making sure they don’t get stuck in the system.
And that focus on getting that infrastructure investment I think has never happened before – certainly not in living memory. But my responsibility is energy, on infrastructure, and when you look at the UK’s infrastructure needs, nearly half of the infrastructure needs are in energy and that’s partly because we have got a lot of energy generation and around energy networks that are getting to their end of their normal lifetime.
So between now and 2020, 20 per cent of our energy generation is going to go offline, some of the coal plants and some of the old nuclear plants are coming off line, so we have got to replace that just to stand still.
What we’ve also got is the transition from the low-carbon economy and sustainable growth agenda where we’re investing in low carbon electricity generation; new nuclear, carbon capture and storage and renewables in their many forms, offshore wind, but also onshore biomass, solar and so on.
So we think there is a massive opportunity.
Just between now and 2020, outside oil and gas, which we think is another very good opportunity; we believe there is £110 billion of investment, that is £110billion of investment, that we need to attract.
And we know if we are going to do that, to meet that challenge to upgrade the UK’s infrastructure, and particularly energy infrastructure, we have got to make sure that investors want to come here.
So our driving force is to make sure what we are doing creates a predictable framework.
A long-term framework, a stable framework backed by that political consensus that I’ve talked about.
And backed by a new legal framework.
We are putting the Energy Bill through the House of Commons, that is getting cross-party support, which will reform our electricity market so that we can be the world’s first ever low-carbon electricity market.
That will give legal certainty. Behind that we have also got financial certainty.
What you have seen in a number of other countries is they haven’t done their sums, then they get to a point and they realise they can’t afford something and there is a big brake on.
We have learnt those lessons, we have done our sums, we have got agreement across government, we understand the impact on consumer bills of our policies going way into the future, and through something called the Levy Control Framework we have our budgetary structure.
So we think, whether it’s on politics on law or the finance, we have created the framework which gives investors what they need
And I think we are seeing the fruits of that – the offshore wind investments we have seen that have placed the UK as the leading country in offshore wind investment.
We have the Green Investment Bank, Lord Kingsbury’s team, which is helping people get investment into offshore wind and indeed other forms of energy generation.
Our agreement between National Grid, the grid operator, and our energy regulator Ofgem has given a really clear picture of network investment between now and the end of the decade.
And I hope you will be able to see in due course, I can’t give a running commentary on it, that we will have agreed a deal for the first nuclear reactors in the UK for a very long time
So I think all those signs are very strong and they feed into what we’re trying to do as the British Government to get that sustainable growth, that sustainable investment.
I want to also pay tribute to the Treasury because they have been very innovative in the way they are supporting infrastructure.
Lord Deighton will talk more about this no doubt, but the Treasury infrastructure guarantees are something we have never seen before; they support what my department is trying to do in energy and the wider infrastructure picture.
So I hope you already realise what an attractive place the UK is to invest and I think also as a result of your discussions, your networking with Ministers like myself but also our officials you’ll feel ready to invest.
We want to make sure this is the best place not just in Europe but the world to invest in infrastructure and energy.
Thank you very much.