Stern Review And The Isle Of Man

[Albert Tatlock]

I have just finished reading the rather lengthy Stern Review (avialble here in its various sections).

 

In a nutshell (or possibly a nutcase, depending on whether like me, you believe much of this to be pseudo-science, guesswork and completely ignore the facts that a] the whole solar system is being affected at present by the Sun and that b] there are far greater forces at work with volcanic emissions and other natural phenomena and c] the climate has varied for billions of years etc. etc.) this review suggests:

 

*Create a global market for carbon pricing

*Extend the European Emissions Trading Scheme (EETS) globally, bringing in countries such as the US, India and China

*Set new target for EETS to reduce carbon emissions by 30% by 2020 and 60% by 2050

*Pass a bill to enshrine carbon reduction targets and create a new independent body to monitor progress

*Create a new commission to spearhead British company investment in green technology, with the aim of creating 100,000 new jobs in the UK

*Work with the World Bank and other financial institutions to create a $20bn fund to help poor countries adjust to climate change challenges

*Work with Brazil, Papua New Guinea and Costa Rica to promote sustainable forestry and prevent deforestation

 

The review 'calculates' that we should be spending 1% of GDP (which is around £16 million pounds in my estimation for the island) to offset emissions.

 

I think this whole review could work in our favour: Employ several experts at the Business School, get the government to come up with a package encouraging this industry to thrive on the island, which by 2012 could probably be employing at least a couple of thousand workers on the island e.g. Wind turbines need to be built and shipped across the world, finance expertise is required to assess impact studies and carry out global carbon trading etc. other new 'natural resource' technologies will be getting R&D funding thrown at them and small companies could be encouraged to do that research here (perhaps with a test bed area set somewhere off Jurby Head etc.).

 

If this isn't money for old rope - then I don't know what is? Shouldn't we at least try and get a little of the action?

[VinnieK]

I like the idea of providing a testing area for research into such technologies, and think it could bring in a little extra revenue into the Island's treasury, as well as providing a bit of employment, but a lot of your plan is I think a little ambitious.

 

Firsty, I think we've already long missed the boat on turbine manufacture: there are already companies with very good reputations within the industry, not to mention high profile engineering firms who no doubt have the capacity to turn their hand to this technology should it prove profitable. I think gambling on taking these people on, given our small workforce and lack of experience in this area would only be a folly that would, if anything, waste money that could be better invested elsewhere. Given this, our only recourse would be to attract manufacturers here, which I also think would be difficult. For a start, a lot of the current manufacturers appear to be located in old industrial centres which already have a large workforce accustomed to working in similar industries, as well as the infrastructure required to support it. It would be a brave company that decided to take the risk of setting up on the Island instead of enjoying the advantages places like Leicester and Sheffield can offer.

 

Secondly, regarding

 

finance expertise is required to assess impact studies and carry out global carbon trading etc

 

Despite the presence of the International Business School, and the finance sector, no such expertise exists here, and such assessments are already being carried out elsewhere by the top people in their field. Although I have nothing but respect for the Business School and its academics, this would involve us muscling in on the territory of the likes of the London School of Economics, and Chicago and other big players around the world in the world of academic research into economics who are already performing studies into this area (not to mention government economists in treasuries around the world). For a start, the carbon trading scheme has been proposed for years now, giving these institutions a big head start in their research. Cambridge University, for instance, has around 60 academic staff in its economics department alone, several of whom specialise in environmental economics and new technologies and are already engaged in researching the matters you talk about. The IBS on the other hand have twelve academic staff in total, whose primary specialities lie in corporate matters like finance and marketing, and taxation and law. Similarly, the vast amount of financial expertise on the Island outside of the business school is confined to matters relating to corporate finance and the like. We might be able to attract small scale industry to the Island, although I have my doubts that we'll be able to do so on any meaningful numbers, but we certainly haven't got a chance of breaking into the market of impact studies regarding new technologies and environmental policy.

 

I don't think we have much chance of attracting R&D grants either, for similar reasons. Those grants are already going to the big University engineering departments around the UK, not to mention numerous "spin of companies" that are already growing out of the research undertaken in such departments. They already have state of the art facilities, a large number of the top people in their fields (many of whom have interests in this specific area). In order to have any chance whatsoever of attracting investment into the research of these technologies we would have to build facilities to rival those of the very best of universities or engineering company's research labs, as well as somehow convince noted experts in the field to come to the Island over the advantages, perks and prestige of working in a well known and large institution.

 

As difficult as it may be to believe, I do have sympathy with your desire to see the Island's economy diversify, but I do think the idea of making this happen through an engineering sector is unrealistic. I believe that the Island simply cannot sustain an engineering sector of any meaningful size, simply because of its geography and population numbers. Large scale hi tech manufacturing can afford the taxes of the UK, and do so because it's worth it for access to a large workforce, big research institutions, and simplified logistics. Other large scale manufacturers have been fleeing the UK because they can get the same job done cheaper overseas, whilst still having access to a large, experienced workforce. That just leaves small scale, narrow margin industies. These companies may find their profits squeezed by UK tax, but by virtue of the same reason for this, many can't afford to relocate to the the Island or the potentially higher operating costs of adding a big belt of sea between them and their suppliers and markets.

 

The fact of the matter is that manufacturing has had over a decade or so of being tempted by the comparitively lower taxes of the Isle of Man, and yet they are conspicuous by their absence. Not all things can be solved by subsidy and taxation policies, and the sad fact is that in today's world manufacturing may be largely dead on the Isle of Man. We shouldn't really be surprised by this, our geography alone singles us out amongst the nations of the world, and so it should be expected that our economy may have to operate differently to many others if it is to survive. It should however be said that there's more to diversifying an economy than simply partitioning it into the old agricultural, manufacturing, and services categories.