Mandelson: Low-carbon nuclear must drive UK manufacturing revival

The UK must shed its obsession with becoming a post-industrial society and return to its manufacturing roots via investment in low-carbon nuclear power, if it wants to attract global talent and stabilise the economy, according to business leaders and politicians at the CBI conference yesterday.

The manufacturing industry has shrunk dramatically in the past 30 years from 32 per cent of GDP in 1970 to 13 per cent today.

Reviving the industry does not mean propping up the ailing coal, car and textile industries, but instead creating a centre of expertise for high-tech manufacturing industries such as nuclear power and other low-carbon technologies, business secretary Peter Mandelson told delegates at the conference.

"This industry is not about mills and smokestacks," he said. "It is about the next industrial revolution and the low-carbon or post-carbon technologies that that will define the 21st century."

Mandleson said his department was working to make the UK the best place in the world to develop and implement low-carbon solutions and a magnet for new green-collar jobs - a global sector that could be worth trillions of pounds annually by the middle of this century.

But John Rose, chief executive of Rolls Royce, warned that conditions in the UK were not yet competitive enough compared to other countries for the emerging clean-tech sector to thrive.

"So far the strategy on low-carbon industries has been anything but clear and consistent," he said. "We are way off the pace and the lack of clarity is already having an effect on investment decisions."

Rose highlighted an ageing national grid and utilities, planning delays, and a lack of government incentives as affecting UK competitiveness, adding that clean-tech hubs such as Denmark, Germany and the US were all winning business that should be coming to the UK.

Rose pointed out that while US President-elect Barack Obama has promised a $150bn investment in renewables with much of this funding already secured and in place, the UK's support for clean tech was far less generous.

David Powell, regional vice president for nuclear technology company Westinghouse, argued that nuclear represented the one low-carbon technology where the UK still had an opportunity to establish itself as a world leader and magnet for international investment.

"The decision on nuclear should have been made five years ago, but it's not too late [to lead the world]," he said. "The key thing is only a small part of this is about creating jobs in nuclear physics, this will create most jobs in the existing high-tech manufacturing and construction industries in the UK."

He added that the services and maintenance needed for reactors of their 60-year lifespan will continue to create jobs for decades to come.

The UK halted its nuclear development after the last nuclear station to be built at Sizewell in Suffolk was completed in 1995, after 15 years of public controversy over health issues and the processing of waste.

Gas-fired plants were deemed cheaper and less controversial and became the basis of the energy strategy for the next ten years.

But concerns over CO2 led the government to reconsider nuclear power in 2002 and provide a routemap for the current nuclear development strategy.

It is now poised to launch the auction for three proposed sites for new nuclear reactors, while EDF is planning to build four new reactors following the expected completion of its takeover of UK nuclear operator British Energy.

The government has also recently created an office for nuclear development to drive this so-called renaissance in nuclear power, a move Westinghouse welcomed as a major boost to the thriving nuclear industry.

Meanwhile, Westinghouse is already building eight nuclear reactors for overseas customers worth some £30bn. Four reactors will go to the US and four to China. The company is now taking steps to bolster its supply chain, recently reaching agreements with Rolls Royce, BAE and Doosan Babcock as suppliers.

"Nuclear offers one of our few long-term routes for keeping skilled scientists and engineers in this country," said Powell.