The Prime Minister’s decision to merge the energy and business departments represents one of the biggest changes in recent years to the machinery of central government. But perhaps the most eye-catching change of all was the addition of ‘industrial strategy’ to the new department’s already lengthy remit.
It is perhaps too early to speculate what this new industrial strategy will amount to, though early signs point towards a government prepared to flex its interventionist muscle. Nick Timothy, Theresa May’s new joint chief-of-staff, is widely acknowledged as the intellectual firepower behind the government’s new found zeal for interventionism. Timothy’s musings on this very site point towards a greater acceptance of the need for the state to intervene in markets and target its support towards certain industries.
We need only look at the success of our Olympic athletes in Rio to appreciate how such a targeted approach of ‘backing winners’ can reap rich rewards. Twenty years after reaching our Olympic nadir in Atlanta, Great Britain has emerged as a sporting ‘superpower’ thanks to judicious, if not ruthless, allocation of lottery money to those sports most likely to produce medals. It is a system that leaves little room for sentiment or nostalgia.
There are signs that this sort of targeting may be catching on in Government As Britain lauded the success of its athletes, Greg Clark, the man entrusted with implementing the Government’s industrial strategy, acknowledged last weekend that we need to do a better job as a nation of recognising, nurturing and encouraging our economic strengths and talents.
This of course follows the Prime Minister’s decision to establish a new Cabinet sub-committee, which met for the first time last month, to tackle long-term productivity growth, encourage innovation and focus on industries and technologies that will shape our lives in future and give the UK a competitive advantage in a post-Brexit world.
As the first shapes of an energy, infrastructure and industrial policy start to form across May’s Government, there is one such prospective ‘winner’ awaiting Government backing in Clark’s hefty in-tray.
In addition to taking a final call on Hinkley, the Department of Business, Energy and Industrial Strategy will soon be asked to make up its mind on the Swansea Bay Tidal Lagoon power station.
In and of itself, this project may tread exciting new ground but it won’t move the dial. It is however envisaged as a bitesize, first-of-a-kind to kick off a series of larger projects that just might satisfy our changing energy appetite.
A ‘national fleet’ of six tidal lagoons, we are told, could generate eight percent of the nation’s power, marginally more than Hinkley Point C. If a sixty year foundation of nuclear generation is an energy security prize worth having, what of 120 years of power from the UK’s own tides?
Reports suggest that each tidal project could inject billions into struggling coastal communities, support thousands of blue collar jobs on site and thousands more across a predominantly British supply chain. By no means a silver bullet to the steel crisis, the development of the Swansea Tidal Lagoon Project could still provide a major fillip to the economy of South West Wales, creating major supply chain opportunities for local contractors too reliant upon the region’s steel-making, as well as attracting much needed investment and regeneration to a corner of Wales long neglected by Whitehall and taken for granted by the Welsh Labour Government.
The technology is proven and reliable. Tidal patterns are regular and can be predicted, whilst the proposed fleet of lagoons can operate around the clock, around the year. Tidal infrastructure offers nuclear scale power but with a different kind of reliability: modular, flexible and smart. The Committee on Climate Change calls it ‘near baseload’, suggesting that tidal lagoons might be used to plug gaps in the new nuclear roll out or, if the economics stack up, as a major generating technology in its own right.
Developers at Swansea Bay say that with optimal financing structures in place, the unit cost of power from the project can, at a manageably small scale, match that of Hinkley, opening the door (as any pilot project should) to bigger projects capable of generating far cheaper power. Should that stand up to scrutiny, first through the Government-appointed Hendry Review of tidal lagoons, then the time will surely have come to embrace tidal power as part of our energy mix.
The success of Team GB demonstrates what can be achieved by focusing resources and backing tomorrow’s winners. We have the chance to adopt a new policy template in this country which does just that: to adopt a strategy that invests in groundbreaking industries and technologies, which steals a march on international competitors, and which can fully seize the abundance of economic opportunities from life outside the EU.
