Lord Mandleson's Speech at the Chemical Industries Association Dinner November 2009

Let me start by saying how the constructive relationship Steve Elliot and the CIA have built with the Government is central to everything I have to say tonight.

Together, we’ve strengthened the UK’s position as a leading location for investment in this industry. And that partnership remains essential to our future prosperity in this century. So I welcome today’s launch of the CIA’s Manufacturing Strategy.

I also want to echo Steve’s thanks to Bob [Tyler] and Brian [Iddon] for their service over the last few years. And let me wish John [Saul], the very best of luck in his new role as CIA President.

The Building Blocks for Growth

If you go back down the supply chain of just about any manufacturing industry in Britain, and many other parts of our economy too, you’ll find a chemical producer.

We sometimes say that this is the carbon age – it is also the age of chemistry. And the omnipresence of fossil fuels in this industry is, as Steve said, a huge challenge.

What I want to do tonight is acknowledge the strength of the British chemical industry, and sketch out the key ways in which government will back you in facing this and other major challenges ahead.

The Challenges Ahead:

The last two years have obviously been difficult for this industry. Precisely because you are so fundamental to the industrial economy, the collapse in global demand for manufacturers is hurting you. That is why it is so critical that we maintain our fiscal stimulus until our recovery is fully locked in across our economy.

To withdraw that support now would threaten the stability that the Government, this industry and its trade unions have worked so hard to secure.

Because in the long view, this industry remains one of the UK’s great industrial successes. It is a global leader – generating billions for our economy every year, adding value across our manufacturing base and investing heavily in business-related R&D.

But even when global growth returns, this will remain a tough business to be in. You’ll be competing for markets with the chemical industries of the industrialising economies. You’ll remain highly dependent on a strong and consistent supply of trained technicians and scientists.

And of course, you will face the huge challenge of decarbonising industrial chemistry, which remains heavily rooted in fossil fuels. When we think about decarbonising the economy we tend to think about energy, about cars, about planes – but the chemical industry also faces a high and radical reinvention of itself.

That’s a huge demand. But it’s also a very exciting challenge and I’m encouraged by initiatives like those at Runcorn, such as the new Ineos Chlor Plant which are helping reduce the carbon footprint of this sector.

But this is also a massive global opportunity for our advanced manufacturing base. As we’ve heard tonight, your industry will be integral to the development of cost-effective low carbon solutions and services.

And Government is committed to equipping your industry and others to realise our vision for the UK to become a world leader in low-carbon. That includes ensuring secure, competitively priced energy supplies.

The challenge for Government is making sure that the conditions are in place to help this industry continue to make that transition and to prosper. It needs an active, strategic approach to industrial policy that puts public investment behind the capacities that the chemical industry builds on. I want to focus on three during my remarks: the right regulatory environment, the right skilled workforce and the right kind of policies to back industrial innovation.

The Right Skills

In a laboratory-based industry like this, we also need to ensure the right numbers of skilled technicians and STEM graduates. This has long been recognised as a gap in the British skills market and something that we have addressed in our new strategies for adult skills and higher education.

Both policies retarget marginal funding in the UK higher skills system towards filling strategic skills gaps, especially in industries like chemicals, pharmaceuticals, bio-science and wider advanced manufacturing. And I make no apologies for targeting and fine-tuning at areas of skills and skill needs in this country. I’m not afraid of making those choices.

We will create a modern class of British technicians through 35,000 new advanced apprenticeships for 19-30 year olds, and many of these apprenticeships will be in the chemicals sector.

To get the best out of the skills system we need industries like yours to communicate strategic demand to both trainers and students as clearly and quickly as possible. The best way to do this is often going to be to establish collaborative partnerships with local universities and colleges, in the way that companies like AstraZeneca and Shell already do. We will continue to strongly encourage and support this.

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Lord Mandleson's Speech at the Chemical Industries Association Dinner 2009