Examination of Witnesses (Questions 460-479)
SIR DIGBY
JONES AND
MR MICHAEL
ROBERTS
19 JANUARY 2005
Q460 Chairman: This, of course, is worrying
because whilst we welcome the fact that you recognise the potential
profound seriousness of the problem, the qualification you have
subsequently places on the issue means that the CBI has been actively
engaged in trying to water down various governmental measures
to seek to mitigate the problem and it seems to me that, with
the greatest respect, you cannot have it both ways,—
Sir Digby Jones: Why not?
Q461 Chairman: — that this is one
of the first equal problems facing mankind and at the same time
be seeking to diminish the efforts which Britain is making both
at home and in international fora to tackle the problem.
Sir Digby Jones: I disagree with
you. I would say we can but, more importantly, if anybody thinks
that by ensuring that jobs are lost in Britain, that businesses
migrate to countries where I would criticise their regime because
it is not as environmentally friendly but nevertheless in the
real politic of life they go there, if you think that is going
to clean up the planet more quickly, by having more polluting
countries getting more business operating in their countries where
the more environmentally friendly countries such as ours with
a stricter regime, which we happily embrace, is going to lose
work because of it, think again.
Q462 Chairman: But do you not accept
that if Britain is to take the leading role, which you say you
are proud to see the Prime Minister taking, although it is mainly
rhetoric at the moment and anyone can be proud of rhetoric, it
will involve showing a lead by taking effective action to tackle
the problem, not just making speeches and lecturing other countries
and at the same time allowing our industry to continue to treat
the environment in a way which is damaging.
Sir Digby Jones: I could not disagree
with that, could I? Of course it is right that you get maximum
effect from recommendation if you have the moral high ground of
setting a good example.
Q463 Chairman: But you can flip it round
and say that if we are not setting a good example, if we are not
doing everything we possibly can—and clearly everyone recognises
that there are economic constraints to this, of course there is
an economic dimension to it—then we have no credibility
in the international community when we come to lecture other people
about how they should behave.
Sir Digby Jones: We are in violent
agreement, Chairman. What I am saying is that there is a massive
difference between saying, "Let us be the best at this",—which
we are not, by the way, but we are on the way to being,—and
then over-achieving to the point where you render the business
environment uncompetitive so that yes, I might then be unhappy
because you damage business in this country,—and, by the
way, that would mean less profit, it would mean less tax and fewer
schools and hospitals, but if that is what you want, fine—but
on the other hand if that that happens you are not going to clean
up the planet more quickly because it is all going to go to countries
that will say, "I am not going to follow your example anyway".
The biggest polluter on earth is 3,000 miles west of here and
he is not signing up to Kyoto. That is not British business's
fault.
Chairman: No; we accept that. There is
no argument about that.
Q464 Mr McWilliam: You might have been
in danger of inadvertently not being entirely clear because I
do not think you wanted to name names. Supposing 100,000 call-centre
jobs go to India, which is one of the countries that really ought
to start, as you rightly said at the beginning, sorting out its
act in terms of environmental pollution. Are you claiming that
that is a net disbenefit in terms of the world environment?
Sir Digby Jones: And you specifically
said call-centre jobs?
Q465 Mr McWilliam: I just said call-centre
jobs because they are the ones that are going abroad.
Sir Digby Jones: That is not true.
The whole question of the jobs that go to other economies is not
just an environmental issue, of course it is not. I would say
that, unlike France, unlike Germany, unlike America, you do not
see the protectionist siren calls from business or unions or politicians
or journalists in the same way as you do there. Why? Because we
have got virtually no unemployment and we have got a skill shortage,
so if you can put more energy from business and more money into
training people into better skills and then put more value-added
work in there, the job that migrates actually produces more wealth
for the country, not less, because we have not got enough people
with skills. It also has the double effect of helping the developing
nation get richer. Offshoring and outsourcing generally are not
something you will find the United Kingdom—and I say this
with great pride—in any of our different walks of life criticising
and being protectionist about like other countries. If it is a
call-centre job the potential for environmental damage is going
to be less by definition. There might be some but it is going
to be less than if you move a manufacturing capability to the
Pearl River delta in China, for instance. Would I say that moving
a manufacturing job out of Sweden, Germany, Britain into China
would be worse for the planet in the short term environmentally?
Yes, I would. I am being serious. I was in India last week. I
went to see factories round Delhi, I was in China just before
Christmas, I was in factories in Zhanjiang. They are clean, you
could eat your lunch off the floor. They are environmentally doing
their bit. The good ones are very good, but of course if you go
a thousand miles inland in China it is a completely different
story. Therefore, at this moment that migration is going to be
environmentally damaging to the planet, not the other way round.
Would that be the same if we could get China, India, Indonesia,
Vietnam, Brazil and all the other countries to adopt the same
regimes as the European Union? No, it would not, but if it was
a call-centre job, as you call it, and I know what you mean by
that, a people-based job, I would say that the environmental impact
would be neutral.
Q466 Mr McWilliam: That is what I thought
you meant but you did not quite say it.
Sir Digby Jones: No; you are quite
right.
Q467 Chairman: Where we have got to so
far in this conversation is that you accept that climate change
is one of the biggest threats facing mankind.
Sir Digby Jones: Yes.
Q468 Chairman: You accept that in the
developed world, and that includes the United Kingdom, we need
to reduce our carbon emissions by 60-80% by 2050 if we are to
play a proper and responsible part in dealing with the threat
to climate change, and let us remind ourselves that it could be
utterly catastrophic, but the message I am getting is that if
the price of doing that is the loss of traditional jobs in the
United Kingdom you are not going to do anything about it?
Sir Digby Jones: Oh, no, no, no.
Do not put those words in my mouth, Chairman. You said, "If
the price of doing that is the loss of traditional jobs . . ."—that
is not true at all. We can as a nation progress towards that target
in ways (and I want to concentrate on one in a minute) where we
can make that progression, so it is not a black and white issue;
it is not an all-or-nothing issue, and we can get there. What
I am saying (and where you can happily put words in my mouth)
is that on that journey please do not, for the purposes of our
kids who want a school and a hospital, stop the wealth creation.
It is as blunt as that because if you stop the wealth creation
you stop the tax and you stop the public spending. For the good
of that and for the benefit of the planning, because you do not
want it all to migrate to other countries that are not so strict,
please do it in a way that does not render it illusory at the
end of the day. That is not the same as saying that I do not want
to get there, because I do just the same as you. I perhaps would
do it by taking more countries with me at the same time.
Q469 Chairman: I had not been going to
raise the question of your quote from exactly a year ago about
sacrificing British jobs on the altar of green credentials, but
the use of the word "credentials" in that is quite interesting,
is it not, because we are not really talking about credentials.
We are talking about potentially the future of the planet and
humanity's ability to exist. If I were to change your quote to
"not sacrificing British jobs on the altar of the future
of the earth", would it still hold good as far as you are
concerned?
Sir Digby Jones: Probably not,
because one of the problems with this issue is that many people
do see business placings as very much black and white, very much
that they are on the right side or the wrong side, very green
or not green, and life is not like that. I can point to many businesses
in Britain that statistically and emotionally have over-achieved,
are completely on the right side, and I can point to some which
frankly could do an awful lot more. Britain itself has changed
fundamentally in its attitudes in the last five years. Certainly
in the five years since I have done this job and I have also seen
an attitude in business and I have seen an attitude in the media.
"Green credentials", my remark of a year ago, by which
I certainly stand today, I do not want to see playing to a degree
of political correctness, playing to a politically vibrant and
exercised time before a general election when people are desperate
to try to show that they are green by forcing British companies
abroad. That is what I mean by "credentials". When you
just said, "For the future of the planet" I could probably
find far more common ground with you. In that respect we are then
talking about those jobs that Mr McWilliam referred to going out
over a period of time, supplemented by other value-added jobs
probably with businesses which are far more environmentally friendly,
and at the same time, with America setting the example and pressure
being brought on the Indias and Chinas of this world, where those
jobs were going to were more environmentally friendly environments,
fine. If that meant that UK jobs had to go, then I would be with
you. I would settle for the change in that text but not in the
first one. Do you want to say anything, Michael?
Mr Roberts: I was going to suggest
where the change would be difficult would be in the context of
recognising that the UK's contribution to the global problem is
small. We contribute of the order of two to three% of the global
carbon emission total. Therefore, we could commit to unilateral
action of a very significant amount and yet have a marginal impact
upon the problem unless, of course, others are coming alongside
with us. I think where the argument crystallises is the extent
to which the UK shows leadership, not whether it should. That
I think comes down to the stretch of any domestic aspirations
to reduce carbon compared with what else goes on in the rest of
the world and also the policy mix by which government seeks to
achieve that reduce that reduction. I think that is where you
get the two things coming together: an acknowledgement that we
need to show leadership but a concern about how we best achieve
that.
Sir Digby Jones: Can I put that
into context? We are just over 2% of global greenhouse gas emissions,
we are 3½% of world GDP in manufacturing and energy production
and we are just over 5% of world GDP, full stop. So, if we deliver
5% of the world GDP, just over three of the things that really
do deliver the carbon into the atmosphere, and only contribute
out of that 2% of the world's emissions, I would say to you that
we are certainly not doing enough but we are doing a lot more
than a hell of a lot more countries.
Q470 Mr Challen: Which British companies
have relocated abroad purely as a consequence of environmental
pressures?
Sir Digby Jones: In terms of they
have left somewhere where there is a strict environmental regime
and cleared off to a place where they can pollute, I would say
nil. I can tell you of a company that I got involved in about
four years ago representing their interests where they had a factory
company in France and a factory in Britain. They wanted to close
one and they chose to close the British one because of the Climate
Change Levy, because they did not have it in France and they had
it in Britain and they were going to pay more money if they stayed
in Britain, and I do not think climate change was ever brought
in to cause unemployment in Britain.
Q471 Mr Challen: They chose to blame
it on that as opposed to possibly other reasons? That was exclusively
the reason?
Sir Digby Jones: Yes, that was
exclusively the reason why. I understand where you are getting
and yes, I did explore that, because often they can wrap it up
in something else; I fully understand that. Nevertheless I did
explore it and that was the reason. It was purely and simply the
cost of the Climate Change Levy. Your real question was, because
they were going to close one anyway, did the company leave Britain
and clear off somewhere else so that they could pollute? The answer
is categorically no.
Q472 Mr Challen: I am quite interested
in the environmental balance sheet, in terms of how many jobs
can be created in this country because we are taking a leading
role in tackling climate change and creating new technologies
and so on?
Sir Digby Jones: I said to the
Chairman in one of my previous answers that I would like to come
back to one thing and that was your point here on investment in
science and technology as a way of dealing with this issue alongside
limiting emissions and creating a trading scheme and fiscal remedies
as well. One thing we as a nation should do this year—and
I will ensure that the CBI plays its full part in this—is
that if we constantly put America's back up against the wall on
not signing up to Kyoto as the European Union we are going to
fail. They have made it very clear that they are not going to
sign it and we really ought to find another way of getting them
to come to the party. I had a very interesting visit there just
before Christmas when I explored this with quite a few representatives
from New England and from the West Coast, where indeed you have
some Republican governors; this is not party-political in that
respect. They are investing enormously in science and technology
to try to get there another way rather than the Kyoto way. If,
during this year of Britain's chairmanship of the G8, we could
encourage America to come to the party by not only doing it in
their own country but helping other countries in the investment
in different ways of approaching this problem rather than just
using the blunt (I think necessary but nevertheless blunt) instrument
of Kyoto, that would be an advance. We do not want to get to the
end of December and find that all America has done in the year
is say, "No, no, no, no and no". If, instead of that,
we could get them to do more of it domestically and pump resource
into other countries for them to do it, would that not be an advance?
Where we can create a win-win out of this is, first, our own investment
in science and technology ought to be increased in the whole area
of limiting carbon emissions and, secondly, we are very good traders;
as a nation we are pretty good at it. The Emissions Trading Scheme
is another trading environment. We can bring our expertise, both
in financial services and in trading generally, into this area
and create wealth and employment out of the system but we need
two things if we are going to pull this off in that regard. By
the way, I do not say that as an alternative to Kyoto at all.
I think Kyoto is necessary—a bit blunt but very necessary.
However, America has set its face against that so we have to do
something. What we need in this country if we are going to push
those two points forward is more skilled people than we have just
generally. The nation needs to get more skill. Secondly, we need
more funding both from private and public sector into science
and technology to make this happen. Am I with you? Yes, but there
are a few hurdles to get over along the way.
Q473 Mr Challen: When you say that Kyoto
is a blunt instrument, do you mean it is too demanding?
Sir Digby Jones: No. I think it
is an eventual goal. It is a bit like the first conversation we
had. I think the eventual goal is not too demanding. Of course,
it depends what you define as "too demanding". I personally
do not think it is too demanding.
Q474 Mr Challen: Having strict national
targets.
Sir Digby Jones: Could the way
that we get there, the speed at which we get there, be too demanding
in certain sectors at certain times in certain countries? Yes,
but that is for a national government to decide and the European
Commission to decide. That is not for Kyoto. Do I think it is
too demanding? I think the world needs it.
Q475 Mr Challen: You have a clear view
of how to deal with America and I think everybody has got a clear
view on that subject, but George Bush, even if we accept that
he accepts that global warming is taking place, has set his face
against having firm national targets, against a great deal of
what Europe is doing. He thinks it is a deliberate attempt to
undermine the American economy and indeed, as you have said, has
pledged to increase the spend on R&D and technology. Would
you say that that is the better approach rather than having firm,
strict, targeted political frameworks which provide the overall
context in which industry has to address the issue or is it simply
going to government saying, "Give us some money for R&D
and we will sort it out for you"?
Sir Digby Jones: No. What gets
measured gets done.
Q476 Mr Challen: So there should be a
strict international treaty for determining national targets which
we can see panning out into the future?
Sir Digby Jones: Yes. Should there
be that? Yes, there should, but I am trying to live in the real
world where we have the President of the United States saying
that he is not going to do it. I do not really want to be sitting
here in a year's time, our chairmanship of the G8 gone, everybody
saying, "Oh, well, we made loads and loads of speeches—the
Director-General of the CBI, the Prime Minister of Britain, and
everybody else saying, "This is dreadful. America, sort your
act out". Frankly, if they are not going to, they are not
going to.
Q477 Mr Challen: Not even if they are
demonstrably wrong?
Sir Digby Jones: Clearly not.
I wish they would set targets and I wish they would sign up, but
they are not going to. What we need to do is work with them to
get them to use what they will do, and they have clearly said
they will put big resource into science and technology to try
and get there another way. Where you and I agree is, what do we
mean by "get there", because unless you have targets
they will meet, and you have a path and a route map (if I may
use the expression) to get there, how do we know if they have
got there? I would say yes, there ought to be internationally
agreed targets so that we can judge them on them. If they have
set their face against getting there one way let us help them
get there another way.
Q478 Mr Challen: But if they intend to
get there simply by investing in R&D that does not necessarily
give us a clear indication of meeting the urgent need to reduce
carbon emissions.
Sir Digby Jones: I agree with
you.
Q479 Mr Challen: I think that is a very
open-ended agreement, so we need strict, clear, well-defined,
manageable targets. Do you agree with that?
Sir Digby Jones: I totally agree,
but I am afraid that in a year's time we will still totally agree
and they will still not do it. I am trying to think of a way in
which we can be more constructive during our chairmanship of the
G8.
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