Industrial Strategy and the UK supply chain for wind
Posted by Dean Drinkwater on 5th December 2017
The government has published its Industrial Strategy white paper and its goals are admirable. It recognises that an essential component for greater productivity is for the UK to be the best place to start and grow a business; it puts clean growth in the engine room of the UK’s next industrial revolution; and it seeks to balance out productivity across the UK, particularly in areas that are lagging.
As a small manufacturing business embedded in the offshore wind supply chain, that is based in one of the 30% worst performing local authority areas for social mobility, this is positive and timely for Hutchinson Engineering Ltd. We have created over 20 new jobs as a result of our role supplying secondary steelwork to the offshore sector, an increase of 10% of our workforce. We are ready and willing to invest more in skilling up our workforce and creating new jobs, but the government must deliver the regulations and policies that can help deliver a steady stream of work to SMEs like us.
So, while we welcome the government’s enabling, facilitative approach to delivery of new technologies, the practicalities of how this will be achieved are not always clear. The Strategy commits to working with the offshore wind industry “to further drive down the costs of clean power, while building UK supply chains.” Achieving these two objectives will need well-designed policy.
The plummeting costs of offshore wind is a major UK success story and evidence of how consistent, long-term policy and financial support for new technologies can provide wins for business and consumers. The demand for lower costs falls, sometimes rightly, on the supply chain first. This can drive innovation but it also puts SMEs under intense pressure to innovate whilst running a business, twin demands that can stretch small companies to the limit.
Meanwhile the regulatory levers are not always driving the right outcomes. UK content requirements are calculated over the whole duration of a wind farm’s lifespan, meaning they can include accommodation and catering for maintenance workers. These may be important but will not contribute directly to the investments in innovation and skills and growth of new jobs that the government is pursuing.
The political landscape is also deeply contradictory. The government is committed to sourcing the cheapest forms of electricity for consumers but, although recent suggestions from Climate Minister Claire Perry sounded promising, it remains opposed to onshore wind in most of the UK. That is in spite of onshore wind being, alongside solar, the cheapest form of new generation available. Government research reports that around 80% of the public support renewables with 75% explicitly supportive of onshore wind. The time has come for politicking to give way to public will and for communities to be able to build clean forms of energy generation, if they wish.
Support for SMEs, especially those like Hutchinson Engineering Ltd that have a long and proud history of innovation, means clear, long-term and consistent policy from government that sets the direction for industrial development. It means rationalising regulations to ensure the right outcomes are delivered and ensuring political messaging aligns with government priorities. The Industrial Strategy white paper is a welcome contribution to this process and we look forward to its development.
Dean Drinkwater is Managing Director at Hutchinson Engineering