Backing Business to Create Economic Growth

Kerry McCarthy Excerpts

Monday 18th May 2026 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

I welcome the measures set out in the King’s Speech, and the wider Government programme to back British businesses. In the face of ever more disabling global headwinds, it is crucial to have a Government who accept an interventionist role, whether through renationalising British Steel, setting up Great British Energy, tougher regulation of the water companies, competition reform or tackling late payments. There is acknowledgement that an engaged state is needed, and that leaving things to the market simply does not work.

It is disappointing and frustrating that even now we are having to relitigate the debate about whether reaching our climate goals and protecting our planet is compatible with economic growth and prosperity. On the one hand, we have the Tories and Reform peddling fallacious arguments about the cost of net zero, and completely failing to grasp the importance of ending our dependence on volatile fossil-fuel markets—with an apparent abject ignorance of things like electric arc furnaces and carbon capture and storage. On the other hand, we have the Greens and their anti-growth agenda, not understanding that for redistribution, we first need to have a growing, strong economy to redistribute from; that to solve a housing crisis, we need to support our construction industry; and that we can pursue economic growth in a way that helps us protect the planet, rather than plunder it.

Indeed, many companies in my constituency of Bristol East, some of which are attracting international attention, are showing how that can be done. Matter was recently runner-up for the Earthshot prize, having developed washing machine filters that will filter out 97% of microplastics. LettUs Grow’s aeroponic growing systems were being talked about at the desertification COP that I attended in Riyadh in 2024, and Vertical Aviation is pioneering electric flight with a very cool plane. At national level, clean energy is the fastest-growing sector of the economy, bringing jobs and economic growth back to de-industrialised communities—and it has huge export potential.

When I was climate Minister with the international energy brief, I saw that the British model for offshore wind was seen as the gold standard, in everything from the way we financed it through contracts for difference to the innovation of floating offshore wind and offshore hybrid assets, such as the Nautilus and LionLink interconnector pilots. Whether I was at North Seas Energy Co-operation events, or talking to the President of Azerbaijan ahead of COP29, there was great interest in what we were doing and recognition of our expertise. The same was true of our progress on small modular reactors, fusion, and carbon capture and storage. It has to be said that that was not always recognised by other parts of the Government. Sometimes, there was a battle to stress to them just how crucial the drive towards net zero could be to our economic opportunities. Too often, progress was stalled by, “Treasury says no,” “No. 10 says no,” or “The Department for Business and Trade says no.” The knee-jerk reaction was that regulation or intervention would be a burden on business.

To take forest risk commodities as an example, in the Environment Act 2021, the previous Government committed to introducing regulations to stamp out deforestation in our supply chains. The EU was on the same mission, using the EU deforestation regulation. When I was a Minister in this Government, there were lengthy discussions about whether we should stick with the UK approach, centred on illegal deforestation, or adopt the EU’s approach, which was based on sustainability. Those discussions were valid, but what was not valid was some quarters suggesting that we should not regulate at all. First, there was the reputational crisis. How could the UK, which co-chaired the global Forest and Climate Leaders’ Partnership with Guyana, and the forest, agriculture and commodity trade dialogue with Malaysia, call on other countries to protect and restore our precious forests and peatlands if we were not prepared to act ourselves? We would have no moral standing. Secondly, businesses want this. I met companies such as Ferrero, and major supermarkets, who want the Government to act, set the direction and show leadership, so that they can plan accordingly. They do not see that as a burden. It is lack of certainty that businesses hate. They are perfectly willing to get with the programme, if they know what the programme is.

We saw misplaced caution in other areas, too, such as on our manifesto commitment to 1.5°-aligned transition plans. One other area where I suspect other parts of the Government machine have been acting as a drag on progress is the development of voluntary carbon and nature markets. We know that public money and philanthropy alone will be nowhere near enough to enable us to meet our climate and nature goals. We also know that private finance is interested in investment, whether that is driven by the need to offset its own emissions, decarbonise portfolios, or ensure biodiversity net gain—or whether it is driven by insurers’ worries about climate risks and so on. In London, we have the world’s leading financial centre, and we are the best place to lead—many international visitors to last year’s buzzing London Climate Action Week told us that—but the consultation that concluded on 10 July last year seems to have gone into the ether. If the Minister can reply on only one issue that I have asked about, can she tell us what has happened to progress on the voluntary carbon and nature markets?