Published 20th August 2021
It is all but impossible nowadays to go more than 24 hours without encountering a “newsworthy” article on climate change, carbon emissions and/or global warming.
I am not denying that the climate is changing. It is factual to say that it has changed many times over hundreds of thousands of years. For the sake of argument, Let’s take it as read that global warming is man made through CO2 emissions from a diverse range of sources inter alia burning coal for fuel and the internal combustion engine.
Let’s also accept that if we don’t change our ways, the planet is off to hell in a handcart and our grandchildren and their children with it.
So to recap, no denial that climate changing is occurring or that it is man made and we need to take action to reduce it.
At the time of writing, over 37% of an average domestic utility bill is effectively a levy to subsidise green energy. With bills set to increase by an average of £159 in October 2021, that’s another £50+ a year per household.
Currently, we are borrowing £750M a day for current government spending. That equates to around £274Bn a year. Interest rates are low but when that amount is added to the over £2Trn of existing national debt, the noughts are becoming scarily big.
Inflation has been benign for 30 years but as it inevitably increases, so will interest rates with all the commensurate problems that will deliver to those not on fixed rate mortgages (although savers will finally remember what interest on their capital is).
At current interest rates, interest payments on the national debt is around £1Bn a week. This could easily double in the next 18 months even if the economy bounces back in line with forecasted growth of 7.6% this year.
Whilst support for companies and individuals to mitigate the worst impacts of the pandemic is beginning to wind down (furlough and the ending of the additional £20 per week of Universal Credit) obvious examples, the government expects to run a borrowing requirement throughout most of not all of the current parliamentary session.
So where do we go from here? There are clearly tensions between No 10 and No 11 over Boris’ spending plans. The shelving of the Eastern spur of HS2, combined with the leaked letter from Rishi Sunak to Boris Johnson over the lifting of travel restrictions are 2 of the more obvious examples. Sunak’s PR team are clearly “on manoeuvres” sensing a fall in Johnson’s approval ratings may be chronic if COVID-19 bites back again in the Winter.
Boris got Brexit done but his latest Borisism about Margaret Thatcher giving the UK a head start on carbon reduction through the miners’ strike is the latest collateral damage to the goodwill that drove him to an 80 seat majority 20 months ago.
A number of former red wall constituencies that were won by the Tories, many for the first time in decades (or indeed ever), are former mining communities.
Manifesto commitments such as the triple lock on pensions may not matter as much as “Get Brexit Done” but no one will thank the Tories for costing them tens of thousands of pounds in the next 20-30 years to replace their gas boilers, petrol and diesel cars and give up flying to the Mediterranean for a well earned holiday. That is not levelling up.
The Northern Recovery Group will lobby furiously and not just out of self preservation. COVID-19 excuses for not “returning to normal” are beginning to wear thin with former red wall voters.
A combination of the success of the vaccine rollout programme, combined with anti-libertarian threats of dire consequences for younger cohorts who refuse to get vaccinated is threatening to snatch defeat from the jaws of victory, not least if further lockdowns or even minor restrictions are reintroduced this winter.
The government has hamstrung itself with red line dates for zero carbon. Both Carrie and Stanley Johnson appear to have the PM’s ear and both have notable environmentalist leanings, along with Boris’ old friend, Zac Goldsmith.
With the UK chairing COP26, combined with Boris generally wanting to be seen to be “doing something”, he needs to rein himself and not over promise. As with COVID-19, not all “the science” around climate change forecast is doom laden.
Already gas boilers have been given a 5 year extension before mandatory replacement and I suspect the motoring lobby will push for a similar stay of execution for cars powered by internal combustion engines. Pushing back against environmental mission creep from the state must start with these incremental gains and be built on.
Whilst hydrogen, battery technology and renewables including wind and solar all have a part to play in the energy mix of the future, I cannot see how nuclear does not have a significant part to play (the majority in fact).
7 of the 8 active nuclear power stations in the UK will have commenced decommissioning by 2030. Whilst Hinkley Point is due to start delivering power to the national grid in 2025, conservatively, at least 3 more modern nuclear plants will need to be built and operative by 2030 to fill the balance of the gap that renewables cannot or we are back to the 1970s.
The dismissal of Huawei from critical infrastructure and a decline in relations with the Chinese Communist Party for a variety of reasons (Hong Kong, Taiwan, South China Sea and human rights abuses, including the Uighur Muslims) suggest that inward investment will need to come from other sources.
The Tories have been in power for over 11 years. In that time the national debt has grown threefold and will is likely to exceed £2.5Trn in less than 2 years.
By reverting to the original objective of zero carbon by 2050, the government would give the UK a fighting chance of getting there.
It will need to incentivise the private sector to innovate through the extension of research and development tax credits or even (say it quietly), revisit the laffer curve and provide direct corporation and capital gains tax reductions.
If a more symbiotic partner than China (who are currently building 100 new coal fired power plants) can be sourced to share the risk/reward on building new nuclear plants and the private sector is motivated to turn renewable energy into mainstream energy at an affordable price, the Tories, notorious for ruthless reinvention will secure a further period in office without further raising direct taxation, which is already at its highest level since World War II.
Thanks for reading, I welcome your feedback and please feel free to follow me on Twitter (@justchrisdavies).
© justchrisdavies 2021