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Paul Vallely: UK lacks strategy for a green future  

03 March 2023

A battery-maker’s fate shows we are lagging behind EU countries, says Paul Vallely

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NOT so long ago, the battery-maker Britishvolt was part of the bright future of Britain’s transition to green energy. It was to manufacture the new generation of batteries which would power the nation’s electric cars after the ban of the sale of new petrol and diesel vehicles in just seven years’ time. But it has, this week, been taken over by an Australian rival, backed by a hedge fund in the United States.

There is more to this than a story from the business pages. It is a sad testament to the present Government’s lack of a sound strategy on our green future.

Founded in 2019, Britishvolt had ambitions of building a £3.8-billion “gigafactory” at Blyth, in Northumberland, creating 3000 jobs. The company attracted the attention of Boris Johnson, who seized on it as something to put flesh on the bones of his “Levelling Up” agenda.

Britishvolt was initially promised a start-up grant of £250 million, but this was reduced to £200 million and then £100 million, as the company became a political football in the power struggle between Mr Johnson and his Chancellor, Rishi Sunak.

It took two years to get the support package approved, and — despite a “cheque is in the post” announcement from Mr Johnson during Prime Minister’s Questions — the money was never paid.

Compare all this with the experience of rival firms in the EU, the US, and Australia, where governments were serious about the strategic importance of the transition to green transport. A battery plant in Spain was given €397 million. One in Hungary received €209 million. New laws in the US have led to the formation of 70 new specialist battery companies. Countries such as France and Germany pay out their support packages much faster. The EU gives out subsidies of 20 per cent, compared with just three per cent in the UK.

To make matters worse, Britain’s tardy performance undermined the confidence of overseas investors, who had initially expressed interest in putting millions into Britishvolt. Turmoil in the financial markets caused by the war in Ukraine and interest-rate hikes — and the investment drag caused by Brexit — made matters worse, and Britishvolt collapsed last month after running out of money.

The company had particular problems. The ebullient style of its founder, the Swedish-Iranian entrepreneur Orral Nadjari, did not sit well with risk-averse Treasury officials. After his departure, his successors were engineers with little experience of raising money in the capital markets. But one of the critical factors that killed Britishvolt was the declining confidence of investors, who kept telling the British company that it clearly did not have the backing of its own government.

The Conservatives’ hesitant approach to investment incentives is increasingly putting us at a disadvantage in a field of the future in which Britain has the skilled workforce, engineering excellence, innovative technology, and productivity levels to become a global leader.

As a former Conservative Energy Minister, Chris Skidmore, warned recently, the UK is turning its back on a trillion pounds of investment — and the half-a-million jobs that could accompany the economic opportunity of net zero. Alas, this Government has no coherent industrial strategy on the transition to green energy. Meanwhile, the world’s dominant manufacturer of electric vehicles is China.

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