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Can Sweating our Assets lead to a resource efficient economy?

Date: 26/02/2014 | Author: Jane Rayner

Image for Can Sweating our Assets lead to a resource efficient economy?Jane Rayner reports from the launch of the Sweating our Assets report and finds out whether politicians can drive us to a resource efficient economy

Moving waste out from Defra’s remit and into BIS would give it a greater focus as a valuable resource, say the people behind the Sweating our Assets report, published by the 2020 Commission of Productivity and Efficiency.

Laura Sandys, MP and chair of the 2020 Commission, said: “Defra is the ministry that wants to say no. Defra considers waste as a total liability, while BIS sees the opportunities resources have, creating new ideas and new businesses.”

The suggestion is just one recommendation from the Sweating our Assets report, launched at the beginning of February. But while it has generated a positive response from many industry players, the likelihood of any change happening soon is slim.

Speaking at the launch of the report, Greg Barker MP, who is the driving force behind the 2020 Commission and Minister for Climate Change at DECC, would not commit on any specific process saying it would be “an interesting idea for the manifesto”. Laura Sandys added it was perhaps something that needed to be “pushed from the backbenches”.

The report, whose authors will be making recommendations to the Treasury in future weeks, concentrates on the need for overhauling the economy to increase its resilience, productivity and efficiency.

Laura Sandys said: “We are at a cross roads of continuing with a 19th century business model or recasting a modern economy, focused on competition, margins and profit. We need to be less obsessed with productivity; we are totally fixated on labour productivity but in manufacturing two thirds of the input are with resources.”

A focus on profitability is crucial, say the authors, and there is currently no measurement of profitability or support to increase profitability within the economy. The words profit or profitability are not mentioned once in the BIS corporate plan, something the business world would never think of doing.

Resource efficiency and the circular economy are well placed to drive the economy to profitability, said Greg Barker.  “A sustainable approach can make Britain prosperous, earning its place in the world in the global race. It plays to our virtues and strengths; understanding the importance of closed loop economy and the pressure of the finite resources. Countries that are smarter and frugal with finite resources will be the more successful and more innovative.

“Efficiency is ultimately the green genie.”

It’s important to ask about profit not just turnover, added David Ruffley MP, member of the 2020 Commission, who also sits on the Treasury select committee.

“Government is not really paying attention to the profitability of UK plc. We need a new set of metrics. We want to engage and need an economic government service committed to resources at BIS that will look after more reliable set of metrics,” he said.

He suggested a good way to start to understand this was to calculate the value to the UK economy of saving one unit of energy, assessing the ongoing costs of consuming it, the cost implications and the externalities associated.

“How do we more accurately account for saving one unit of energy?” he asked. “Government needs to be putting its weight behind how resources are used and profitably.”

Reframing the question of an economic cost to an economic benefit means having measurable data, something which is lacking at the moment.

Steve Barclay MP said: “To do this we have to measure data. What is the economic potential for reusing materials? But we have a paucity of data, a problem across government departments.”

Recognising the commercial opportunities from the reuse and remanufacturing sectors was among the profitability, productivity and resource security recommendations, by focusing on a Remade in Britain sector.

Significant improvements in resource productivity have the potential to return an extra £5 billion in profits per year for manufacturers, creating thousands of jobs with blue-chip companies at the heart, added Laura Sandys.

Commission members were keen to state the report is the start of the process, putting in the building blocks to a modern, efficient economy.

“This brings together what a modern economy looks like, efficient, using resources effectively and squeezing as much as possible from that input,” said Laura Sandys.

“This is a genuine, scalable, sustainable model,” added Greg Barker.

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