The following interview is mentioned in yesterdays The Telegraph Comment: The high price of going green
After starting his role as the new CBI president, Sir Roger Carr talks of his vision for a competitive UK economy.
Sir Roger Carr could be forgiven for wondering whether he might have picked a better week to begin his new job at the voice of British business.
The Confederation of British Industry president began his role last Monday, unveiling a report backing the Coalition Government's austerity plan for cutting Britain's deficit and calling for more action on moving to a low-carbon economy, increasing labour market flexibility and reducing employment red tape.
Then the sections headed "working towards a low-carbon economy" and "developing a strong banking system" became rather overtaken by events.
As chairman of British Gas owner Centrica, Sir Roger, 64, was instead being asked about the inflation-busting energy price rises of rival utility Scottish Power and the decision by Opec to add to energy price pressures by deciding against increasing global oil supplies.
His membership of the court of the Bank of England also made him more than a casual observer of the latest appearance of the nation's top retail bankers before the Treasury Select Committee to discuss how they should be regulated.
It's all in a week's work for the portfolio director and Sir Roger is no stranger to controversy, having been at the centre of Kraft Food's hostile takeover of Cadbury as the chocolate-maker's chairman 18 months ago.
He's still keen to discuss that CBI report, however, challenging the Government to shape the right economy.
It's the growth part he seems most exercised about. The issue, he argues, is Britain's competitiveness, with the economic health of many of its traditional European and North American markets fragile, and global inflation rising.
"The problem is clear, as is the resolution," he says. "The only solution for the difficulties we have is new growth and it's something only business can provide.
"The Government is not the solution but they're the people that one looks to to create the environment in which businesses can deliver the necessary outcome."
On taxation, he welcomes the Government's first steps to reduce corporation tax with the "notable exception" of Chancellor George Osborne's raid on North Sea oil and gas producers.
Sir Roger also argues for reduction in personal tax, including changes to Labour's 50pc top income tax band.
"I think that at a time of extreme adversity it's not unreasonable for the burden to be shared," he says carefully. "But the reality is that for growth to be achieved, people at every level need to be incentivised and an improving tax rate to ensure that effort and retained reward by the individual is something that occurs is absolutely an appropriate agenda item.
"What's pleasing is in its very early stages the Government took positive steps on corporation tax, which I think makes the whole business of being in the UK a more appealing proposition."
This is traditional CBI territory. What is slightly less so is the energy market and here Sir Roger finds himself in the uncomfortable position of wearing two hats.
Let's start with Centrica's position. Sir Roger says the "shock horror" of the 19pc gas price hike and 10pc advance in electricity tariffs by Scottish Power, resulting in an extra £187 a year on "dual fuel" household bills, was more to do with the way it was reported.
"If you look at virtually all of the media over many, many weeks and months from all quarters: government, industry commentators, the industry itself and the Bank of England in its inflation forecasts, they all suggested that, because of wholesale prices, retail prices would go up materially," he says.
"I think the Bank said 15pc as a guide and I have seen figures as high of 20pc. I think the hope is that wholesale prices will start to soften and it won't be required but the fact is that hasn't occurred and therefore Scottish Power decided it was the moment to implement the price increase. Moving wholesale prices have been very material, well over 20pc, in recent months. In those circumstances, it is just a commercial fact that those things convert into price increases."
Experts have argued that energy trading speculation, rather than global demand, is what is driving wholesale prices higher but Sir Roger disagrees. "There's no doubt that the energy price is utterly related to the global position," he says. "We're seeing huge demand for energy in those countries that are growing very rapidly and there doesn't appear to be any foreseeable change in that in the short-term. This is fundamentally demand-led. That's the primary driver. There's always the risk of some speculation but it's not our view that this is a manipulated market.
"It's our view that it's being consumed and that demand is taking the price higher."
So will Centrica raise its prices too? "We never comment on anything to do with forward pricing," says the chairman.
"All we've said is we have to run a business to make a reasonable profit and have a sustainable model in the interests of the company and the UK power supply."
With his CBI hat on, Sir Roger is also keen to deal with a criticism of a mounting "stealth tax" on energy bills.
Headlines after Scottish Power's price rise complained of a hidden £200-a year "green tax" on energy bills to subsidise expansion of wind farms, solar panels and environmentally friendly heating schemes.
However, Sir Roger says it's common knowledge that the cost of the carbon reduction measures will have to be paid for partly through fuel bills.
"Ofgem has said that it would see over the next decade a dual fee bill going up by about £500 a year for a typical consumer," he says. "And that's related to decarbonisation rather than market forces.
"So there's a cost of decarbonisation but if as a country you're committed to managing climate change then you have to accept that the process of doing that is not free of cost."
A firm proponent of climate change mitigation, he believes it is "entirely appropriate" to move towards a decarbonised economy and says energy producers believe the Government's target of an 80pc reduction in carbon emissions by 2050 is manageable.
However, he says that halving emissions by 2025, compared to 1990 levels, which the Energy Secretary, Chris Huhne, has committed Britain to achieving, is "potentially a bridge too far".
Sir Roger believes that encouraging businesses and consumers to become more energy-efficient and mitigate their own bills can help prevent a backlash against the cost of being green.
Last month, Tata Steel cited uncertainty over UK carbon cost rises as a key reason behind a decision to restructure its long products division which could see up to 1,500 British jobs lost and Sir Roger accepts that the issue is a potential threat to investment in Britain.
The CBI is therefore lobbying the Government for action to help energy-intensive companies.
"If you're a UK industrial consumer, not every country in the world has the same commitment to climate change and therefore you may feel commercially disadvantaged as those costs flow through," he says. "That gives you cause for thought as to where you want to invest.
"Large energy consumers who are part of the UK manufacturing infrastructure do need some sort of dispensation or support to make sure they are not made uncompetitive or encouraged to move their manufacturing elsewhere.
"It's the CBI's job on behalf of those big energy consumers who are doing all the things they can in self-help and still need assistance to be competitive in a global environment to make sure that message is heard loud and clear in order to provoke the right supportive response from government.
"I'm very hopeful they will come up with something because at the end it's a positioning of alignment. What will be good for industry will be good for the UK and jobs and growth."
There are other threats to the CBI's members too. Bank of England figures show that in the first quarter of this year, Britain's five leading high street banks fell more than £2bn short of the £19bn of lending to British business targeted under the Project Merlin initiative.
The Business Secretary, Vince Cable, has said that the Government will consider imposing higher taxes on banks if they fail to deliver promised funding
to small and medium-sized businesses.
"My own view is that it is something that needs prompting and encouraging rather than threats," says Sir Roger. "The UK community needs to be sure that growth happens and everybody should play their part, including banks."
So how would he like to be judged after his presidential stint?
"I'd like to have added value in making the UK and UK industry more internationally competitive," he says. "And I'd like to see business recognised by society as a valuable wealth creator and the destination of choice for talented, ambitious young people."
It's a tall order for a two-year posting but Sir Roger seems glad to have taken it on.