What with all the excitement over Italian courtroom dramas, not enough attention was given to a radical statement by George Osborne at the Conservative party conference. It was one of the few important pronouncements made in Manchester this week. He declared: ‘Let’s at the very least resolve that we’re going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe.’ There is no mistaking his meaning. And while it might not sound like much, it was a declaration of open defiance.
Under the Climate Change Act, as it is currently structured, the government is legally bound to cut Britain’s carbon emissions by 34 per cent by the end of this decade. The rest of the EU, on the other hand, has only committed to 20 per cent. So unless the rest of the EU rapidly exceeds its target — unlikely unless their economies move from downturn to collapse — George Osborne has resolved to challenge the status quo. Any business being clobbered by green regulations harsher than those inflicted on their French or German competitors can protest, and cite this new Osborne doctrine.
The Chancellor’s detractors dismiss his talk on carbon emissions as a meaningless piece of red meat thrown to hungry Tory activists. It is not. Much of our economic stability rests on Osborne’s personal credibility. Britain retains its invaluable AAA credit rating precisely because the markets know that the Chancellor means what he says. His seven-year deficit reduction plan is moderate enough to be credible, allowing the government to borrow at a rock-bottom rate of 2.5 per cent.
But a recovery built on debt is no recovery at all. Real growth comes from tax cuts and deregulation, and if Osborne believes he cannot reduce the taxman’s burden, then he can, at the very least, rein in the bureaucrats. The Climate Change act threatens business perhaps more than any other piece of recent legislation. Passed in a spirit of unquestioning cross-party consensus, its targets are unachievable — yet pursuing them will inflict great harm.
The official 2020 target in carbon emissions is just the beginning. The ultimate target, unilaterally volunteered by Britain, is an 80 per cent cut by 2050. It is just possible that some new technology — perhaps nuclear fusion — will by that date make the use of fossil fuels redundant. But at present no such technology exists. Instead we have useless wind turbines and solar panels — and are showering them with subsidy as if cash will change them into affordable energy sources. This is a folly that the taxpayer could not afford in boom times. In the bust, it is lunacy.
Osborne might now draw up a hierarchy of green schemes whose ludicrous costs dwarf their perceived usefulness. Take the ‘floor price’ for carbon — in effect, an extra tax that raises basic energy costs. The Institute for Public Policy Research estimates the floor carbon tax will push tens of thousands of households a year into ‘fuel poverty’ (in which more than 10 per cent of household income is spent on fuel bills). That figure that could double by the end of the decade. Worse, as the IPPR says, ‘every ton of carbon that is priced out of the UK will be emitted elsewhere in Europe’. This scheme embodies the futility, almost the sadism, of the green lobby: letting British fuel bills escalate with no discernible benefit to the environment.
The government should be asking just what Britain achieves by adopting such policies when the rest of Europe, India and China refuse to do the same. Between 1990 and 2006, Britain’s carbon emissions fell by 3 per cent. That sounds impressive, until you consider that our carbon emissions have simply been outsourced to China and elsewhere. Calculate Britain’s carbon emissions on a consumption basis — add up all the emissions created in the process of making goods for British consumers — and they rose by 30 per cent over the same period. So our official reduction, as it stands, is illusory. It succeeds only exporting pollution — and jobs.
There is an overarching reason why manufacturing is moving from Britain to the Far East: cheaper labour and lower taxes. To accelerate the trend is economic suicide. If the Liberal Democrats place green ideology before British jobs or poverty reduction, then let them explain themselves to voters already confronted with eye-watering increases in fuel bills. The Lib Dems should understand that if British businesses are not allowed to buy their energy at affordable prices, even solar panels and wind turbines will be built abroad.
Osborne is trying to navigate Britain away from what looks increasingly like another world recession. But as he so rightly said, we cannot save the planet by running British businesses into the ground. The Lib Dems will wish to ignore his conference speech, but its implications are clear. A new era of climate realism is long overdue. The Osborne doctrine — that environmental legislation should not be allowed to proceed faster than in our competitor nations — does at last bring hope. We look forward to its implementation.
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