Why Rishi Sunak made yesterday’s announcement about delaying the ban on new petrol and diesel cars and weakening the gas boiler phase out is fairly obvious – an attempt to drive a wedge between the Conservatives and Labour. This strategy is also fairly obviously built on Tory success in using the ULEZ for this function in the Uxbridge by-election, and with the possibility that manipulation of social media can again play a part.
But the real question is why it has taken so long for such a strategy to emerge. The UK liberal economic model is built on flexible labour markets, for which read low pay and economic insecurity for a large section of the population, which in turn means that any suggestion of climate policies that impose costs on people is risky. The evidence is clear that people’s attention to these costs increases during phases of economic turmoil. At the same time, our first-past-the-post electoral system produces a highly competitive political culture and incentives for parties to attention to the demands of voters in marginal constituencies over delivering public goods.
Given all this, Sunak is absolutely right to say that we need an honest conversation about how we are going to get to net zero, and how we are collectively going to manage the upfront, or investment costs of the transition. But his announcement yesterday was neither fully honest (above and beyond all the made up stuff about scrapping policies on seven bins and meat taxes), nor a conversation.
One bit of being ‘economical with the truth’ was that Sunak focused exclusively on the upfront costs for new technologies. In fact, the lifetime financial costs, i.e. purchasing, installing and running EVs is already lower than the cost of petrol and diesel cars, and the same may be coming true for heat pumps compared with gas boilers. An honest conversation would be about how policy can help consumers overcome the capital cost barrier, and taking into account that psychologically is what people pay most attention to. The announced 50% increase in the subsidy for heat pumps to £7,500 may be one way to do this, but it was unclear whether the overall budget of the scheme will also increase by 50%, or simply that it will stretch to fewer households. At present the scheme offers a total of £150m a year, which would therefore subsidise 20,000 heat pumps a year compared with the Climate Change Committee’s advice that we should be installing around 130,000 a year by now.
An honest conversation would mean less selection of evidence about the likely costs involved and how these are to be borne by whom, as well as potential benefits, rather than simply throwing your hands up in the air and saying that it is all too difficult and needs to be put off into the future. This is crucial because it is clear that consumers do expect help from government, especially for heat pumps, as new research from the UK Energy Research Centrecoming out in October will show. While innovation and scale may help with cost reductions to an extent, replacing tens of millions of gas boilers will still be a huge infrastructural investment that we need a proper plan for.
The other bit of sleight of hand on view was Sunak’s emphasis on the 2050 net zero target and how this would still be met despite delaying and weakening phase-outs. As many have pointed out, the 2050 target itself is less important than how you get there, which is why we have 5-yearly carbon budgets. Earlier reductions in emissions mean far less overall emissions than if you delay action. Some believe that the announcement yesterday may mean that the 6th budget will not be met, and there is talk of legal challenge under the Climate Change Act.
If Sunak’s announcement was dishonest, it was also not a conversation. This was not an announcement of proposals for consultation or a debate in Parliament, let alone more widely, but a political intervention ahead of two upcoming by-elections and with a general election looming. It was swiftly followed up by a challenge to Labour from Conservative HQ on whether they would reverse the u-turn.
So as noted above, this was all about political positioning. Will it work? At a general level, there is a real danger for Sunak that yesterday’s announcement makes the Conservatives appear more incompetent and divided. Specific to climate change, we know that polling shows strong support for action in general, but polling on specific policy measures shows that consensus breaking down. Different actors have come out with polling on policies which they interpret in different ways, and how people feel about a particular policy may or may not translate into an increased or decreased vote for the party putting it forward. It is too early to say for sure.
But what we can say is that we are about to see two frames about economic and climate concerns go to war, as Frankie Goes to Hollywood might have said. As we head into the next election, Sunak is doubling down on a long-standing frame (we all remember ‘get rid of the green crap’) that there are strong trade-offs between climate policy and imposing costs on hard-pressed consumers. By contrast, Labour are deploying a win-win frame about jobs, investment and long term reductions in costs flowing from a green industrial revolution kick-started by climate policy. The massive negative reaction from business to yesterday’s announcement obviously backs up this latter approach. There is some evidence that these frames appeal particularly to Tory and Labour voters respectively, so to some extent the parties are playing to their own galleries, but the general election will be a real test of which one can win over floating voters, which both sides will need for a winning coalition.Follow Sussex Energy Group