Written statement on DBEIS Departmental Update - Nov 5

Andrea Leadsom (Secretary of State for Business, Energy and Industrial Strategy): I would like to update the house on some of the key achievements of the Department for Business, Energy and the Industrial Strategy since it was created in July 2016.

Leading the world in tackling climate change

Achieving net zero carbon emissions is a key departmental priority and we have set out actions we are taking across the economy to accomplish this.

• We committed to set a legally binding target to end the UK’s contribution to climate change to net zero by 2050.

• We have set out further actions we are taking across the economy to achieve net zero by 2050. These include adding around 6GW of clean energy to the grid by 2025 through the Contracts for Difference (CfD) scheme – enough to power over seven million homes at record low costs.

• We announced £200m initial funding for a programme which aims to design and build a nuclear fusion plant by 2040, looking to exploit the potential for clean, safe and inexhaustible power.

• We announced £27.8m of government funding to advance carbon capture, utilisation and storage (CCUS) technologies in the UK – a crucial step towards the UK’s net zero emissions.

• We announced investment of up to £1 billion over five years to boost the production of key green technologies in the motor industry, including batteries, electric motors, power electronics and hydrogen fuel cells. This is in addition to £400 million for electric vehicle charging infrastructure.

• The UK was nominated to host the COP26 UN climate talks next year in partnership with Italy, recognition by world leaders of our strong global on climate issues.

• UK emissions in 2019 were 42% lower than in 1990, while growing the economy by 72%. The UK has delivered fastest decarbonisation in G20 since 2000 according to PWC.

• The UK’s fifth Carbon Budget was passed into law, equivalent to a 57% reduction on 1990 levels by 2032.

• We committed £5.8bn of international climate finance from 2016-2021, placing us among the world’s leading providers of climate finance, in addition to the £3.87bn we provided from 2011-2016. The Prime Minister later announced the doubling of international climate finance spend to £11.6 billion.

• Our international climate finance programmes are delivering real results on the ground and are catalysing wider change:

1. Among others, we have built the market for Concentrated Solar Power (CSP) in developing countries.
2. We have contributed £720m to the Green Climate Fund, financing projects and programmes in a range of developing countries.

• We published the Clean Growth Strategy: Leading the way to a low carbon future policy paper. This set out the strategy for decarbonising all sectors of the UK economy through the 2020s – benefitting the economy while meeting commitments to tackle climate change.

• We held the UK’s first Green GB Week in 2018, a week to celebrate clean growth and raise awareness regarding how the public and businesses can tackle climate change.

• We launched the Smart Export Guarantee consultation which proposed that large electricity suppliers must offer small scale generators a price per kWh for the electricity they export to the grid. The scheme came into force in June 2019.

• We are taking action to make sure the UK’s energy system has adequate capacity and is diverse and reliable.

1. We gave the go-ahead agreement to proceed with the first nuclear power station in a generation at Hinkley Point C to ensure future low-carbon energy security. Hinkley will provide seven per cent of Britain’s electricity needs for sixty years. UK-based businesses will benefit from more than 60% of the £18 billion value of the project, and 26,000 jobs and apprenticeships will be created.
2. We continued to support the Capacity Market Auctions. The Capacity Market aims to ensure security of electricity supply by providing a payment for reliable sources of capacity, alongside electricity revenues, to ensure the delivery of electricity when needed.

• The department’s ambition is for the UK to have the lowest energy costs in Europe, for both households and businesses.

1. The Domestic Gas and Electricity (Tariff Cap) Bill put a requirement on the independent regulator, Ofgem, to cap energy tariffs until 2020. It came into force in January 2019, saving customers on default tariffs around £76 on average and as much as £120 on the most expensive tariffs.
2. As of March 2019, there were over 14.3 million meters operating under the Smart Meter programme.

Making the UK the best place to work and grow a business

The Secretary of State has set out her ambition to make the UK the best place in the world to work and grow a business. Creating fairer, inclusive workplaces and unlocking enterprise by cutting the burdens on businesses are two sides of the same coin and both equally important.

• We announced that the British Business Bank would expand its venture capital and debt support programmes. A total of 82,000 smaller businesses have been supported by the British Business Bank.

• The Brydon Review examined the quality and effectiveness of the audit market and looked at what audits should be in the future. It addressed the audit expectation gap: the difference between what people think an audit does and what it actually does. It will also look at the scope of an audit, any changes that may need to be made to it and how it can better serve the public interest.

• We consulted on the Competition and Markets Authority’s far-reaching and ambitious recommendations to improve quality, resilience and competition in the Statutory Audit Market. We are committed to acting on the CMA’s findings and will respond as soon as possible.

• We established the Office for Product Safety and Standards to enhance consumer protections.

• We published the Consumer Green Paper, aimed at responding to the challenges and opportunities of modern consumer markets via a regulatory and competition framework. This was followed by consultation and engagement on the Green Paper.

• We carried out a Smart Data Review and proposed a set of measures to ensure consumers’ data is handled with the security they expect, while enabling them to continue to have access to the best deals available.

• The government asked Matthew Taylor to conduct an independent review of employment practices in the modern economy, which was published in July 2017.

We responded to this review with the Good Work Plan. The plan set out proposals to ensure workers know their rights and receive the benefits they are entitled to, and that action is taken against employers who breach those rights. Proposals include:

1. First-day entitlements to holiday and sick pay;
2. A new right to payslips for all workers, including casual and zero-hour workers; and
3. A right for all workers to request a more stable contract, providing more financial security for those on flexible contracts

• As of 1st 2019 the National Minimum Wage (NMW) was £7.70, and the National Living Wage (NLW) was £8.21. The annual earnings of a full-time minimum wage worker have increased by over £2,750 since the introduction of the NLW in April 2016. An estimated 1.8 million workers are expected to benefit from this above inflation increase. By 2020, almost 3 million low wage workers are expected to benefit directly from the NLW, with up to 6 million in total potentially seeing their pay rise as a result of a ripple effect up the earnings distribution.

• The Parental Bereavement Act entitles parents who lose a child under the age of 18 to two weeks paid leave, supporting those affected by the tragedy of childhood mortality.

• The department consulted on a number of key employment issues. These include measures to boost workplace participation and to tackle employers misusing flexible working arrangements.

• We announced a Tipping Bill, reaffirming our commitment to delivering employment rights reform to ensure our employment practices keep pace with modern ways of working.

Solving the Grand Challenges facing our society

Our Industrial Strategy is built to ensure we focus our efforts and resources on solving the grand challenges facing our society. Through this we will increase productivity and improve lives, as well as helping to make the UK a science superpower.

• The Industrial Strategy: building a Britain fit for the future White Paper set out the Government’s long-term plan to boost the productivity and earning power of people throughout the UK, provide more opportunities for young people to find high-quality, high-skilled work, and spread jobs, prosperity and opportunity around the whole country.

• We launched four Grand Challenges to put the UK at the forefront of the industries of the future:

1. Growing the Artificial Intelligence (AI) and Data Driven Economy
2. Clean Growth
3. Future of Mobility
4. Ageing Society

We are pursuing five individual missions related to these Grand Challenges. Each of the missions focuses on a specific problem, bringing government, businesses and organisations across the country together to make a real difference to people’s lives.

• We agreed 11 Sector Deals – partnerships between the government and industry to create significant opportunities to maximise the potential of each sector. Each deal will substantially boost the sector’s productivity, through greater investment in innovation and skills

• The Space Industry Act created a regulatory framework for the expansion of commercial space activities and the development of the UK space port. It will enable the first commercial space launch from UK soil in history, creating the potential for hundreds of highly-skilled jobs and bringing in billions of pounds for the economy

• We launched the AI package for 200 UK doctoral studentships in AI and related disciplines which could help diagnose diseases like cancer earlier and make industries, including aviation and automotive, more sustainable.

• The ‘Future of mobility: urban strategy’ outlined the government’s approach to maximising the benefits from transport innovation in cities and towns, therefore improving choice and the operation of the transport system. The strategy aims to make transport safer, more affordable and accessible to all.

• We launched the West Midlands and Greater Manchester Local Industrial Strategies, working with local leaders to boost the productivity and earning power of people throughout these regions. Local Industrial Strategies will allow places to make the most of their distinctive strengths, helping to inform local choices, prioritise local action and, where appropriate, help to inform decisions at the national level.

• We announced funding for Strategic Priorities Fund (SPF) Wave 2 programmes on healthy ageing, clean air and productivity. These will help us to fulfil our goal of improving lives and increasing productivity through high-quality research and innovation. Programmes include research into care robots that could make caring responsibilities easier; digitising museum exhibits so they can be seen in peoples’ homes, libraries and schools; research into teenage mental health issues and closing the productivity gap with investment in super computers and a new productivity institute. The SPF Wave 2 total programme funding allocation is £496.8 million.

• We set out plans to rewrite the regulation rulebook to ensure the UK leads the tech revolution and empowers consumers. The ‘Regulation for the Fourth Industrial Revolution White Paper’ outlined how the Government will transform the UK’s regulatory system to free up businesses and innovators to test their ideas, make use of the latest technologies and get their products to market quicker – keeping the UK at the forefront of innovation.

• We committed to increase investment to 2.4% of GDP by 2027. The Government is increasing spending on R&D by £7 billion over 5 years by 2021/22. This will be the largest increase in nearly 40 years.

Within this funding we have:

1. Allocated £1.7 billion to the Industrial Strategy Challenge Fund (ISCF) over two waves of investment. £1bn was announced for Wave 1 in Budget 2017, and a further £725m announced in the Industrial Strategy White Paper. These challenges have been developed to align with the four Grand Challenges set out in the White Paper. We have announced nine challenges under the third wave of the ISCF.
2. Announced investment of £118 million to attract highly skilled researchers to the UK through a new Ernest Rutherford Fund, providing fellowships for early-career and senior researchers.
3. Committed £900m to the UK Research Partnership Investment Fund over 2012-2021, which will lever double from private sources into R&D collaborations between universities, business and charities.
4. Committed to developing the UK’s national space capabilities, including:

• £1m, matched by industry, for innovative new business ideas that could benefit from a flight to the International Space Station. These could be anything from medicines and innovative materials developed in the low gravity environment, to space-flown consumer products.

• £20m is being invested to predict severe space weather events by improving systems at the Met Office Space Weather Operations Centre and building the UK’s knowledge on how to forecast and better prepare for space weather.

To support R&D we have also:

Within this funding we have:

1. Published Higher Education: Success as a Knowledge Economy (White Paper, 2016). This document set out a range of reforms to the higher education and research system, aiming to boost competition and choice in higher education, and strengthen the way the sector is regulated, and research is funded.
2. Passed the Higher Education and Research Act (2017), bringing together the seven Research Councils, Innovate UK and research functions of HEFCE into a single, strategic agency called UK Research and Innovation (UKRI) to encourage collaborative research across the sciences, and closer cooperation between researchers, innovators and entrepreneurs. UKRI was formally launched in April 2018.

Getting businesses ready for Brexit and the opportunities beyond

Preparing for all scenarios and delivering a Brexit that works for business has been the government and the department’s immediate focus.

• As part of the Government campaign to ensure people and businesses are ready for Brexit, the Secretary of State hosted nine business roundtables, including five regional events, and visited businesses across the UK, in locations including Belfast, Aberdeen, Cardiff and Manchester. Businesses participating in the roundtables included Tate and Lyle Sugars, JCB, Tesco, Unilever, Laing O’Rourke, Scottish Power and Diageo.

• We ran a ‘Get Ready for Brexit’ roadshow, with 30 events over six weeks across the UK, where 3,132 attendees received tailored advice and support on preparing for Brexit. We also produced an online version of the roadshow, which has attracted nearly 6,000 viewers.

• The department launched the Business Readiness Fund to help Business Representative Organisations (BROs) and trade associations to support businesses to be ready for EU Exit. Initially launched as a £10 million fund, a further £5 million has been made available due to the Fund’s popularity. So far over £10m in grants has been issued to support 124 BROs.

• We published 28 of the government’s 106 technical notices to help the public prepare for Brexit, including Horizon 2020, state aid, workplace rights, nuclear research, mergers and trading goods.

• The Nuclear Safeguards Act made provisions for nuclear safeguards after the UK leaves Euratom, ensuring the UK meets its international commitments.