It doesn’t matter what you call it – one man’s ‘windfall tax’ is another’s levy – but Rishi Sunak’s decision to address high gas prices by establishing a new multi-billion pound levy on fossil-fuel producers is sensible politics. Not only is it the right decision to ensure that the most disadvantaged in society are given more support, but it is a wise decision to take note of public opinion on this issue.
For Conservatives, obviously there is always a recognition that business creates jobs and investment; any future tax rise has to be judged on whether it will damage future opportunities for economic growth. But conservatism is also about recognising when the winds of change are blowing.
And when it comes to net zero and the need to commit to green investment, those winds couldn’t be blowing any harder. Rarely in my 12 years in parliament have I seen public opinion so strongly in need to not only take action on the cost of gas, but to recognise that we cannot continue to remain dependent on fossil fuels, for to do so is to remain dependent on an industry of the past.
Elsewhere, change is moving at a pace. The recent general election in Australia should be a shot across the bows for Conservatives in the UK. What lost it for the Liberal Party in the recent Australian elections was ceding seats to so called ‘Teal’ candidates who are economically blue, but environmentally green. Essentially, the party’s political strategy on climate change backfired, they stuck too closely to old tropes and failed to move with the public and the science. Many, but certainly not all, Liberals in Australia have presented the cost of acting on climate change as greater than the cost of climate change itself. But traditional Liberal voters looking out their windows seeing wildfires and floods thought otherwise.
It’s no secret that Australia has huge coal reserves, but it’s also plain that coal, the dirtiest of fossil fuels, is driving the extremes causing Australians to place their votes elsewhere. What’s also becoming obvious is that Australia has almost limitless potential to generate green hydrogen from solar power, kick the dirty fuels of the past and secure a clean, profitable part in the world’s greatest megatrend – the shift to net zero emissions.
To stand still and stagnate, as a business, an economy, a country and certainly as a political party is to draft the opening lines of your obituary. You must always have eyes to the future and that means investing in it. Investment is the fuel of our economic engine, the path to better infrastructure and a better-running country. It drives forwards new ideas and reaps what it sows in more profitable, more efficient, more resilient ways of doing things. Good investment respond to trends, looks past the tittle tattle of today and finds its reward in a better tomorrow.
For all of these reasons and more, we need to recognise the shift to net zero for what it is, the greatest investment opportunity of this century. Just three years ago a handful of countries had committed to the target, now there are 128 countries, 235 cities, 699 companies of the 2,000 largest, according to the Net Zero Tracker. Some try to paint it as a cost, misunderstanding the cost savings and growth that, as any good investment, net zero will undoubtedly bring.
We don’t need to rely on future-facing scenarios to evidence this, the past is ready to teach us a lesson or two. Early commitments to support British renewables have rewarded us with a world-leading offshore wind industry, much cheaper electricity and a more energy-secure power system thanks to that investment. Contracts for Difference that have brought market dynamics into wind power auctions are expected to pay back £660m over the next 18 months and if the current high gas prices are sustained for the next ten years that would see savings of £26bn over that period.
Likewise, investment, albeit relatively modest, in energy efficiency at home through the successful Energy Company Obligation (ECO) scheme and others are saving £200 on bills at a time of spiralling energy bills and a wider cost-of-living crisis.
At this week’s Northern Research Group conference, Conservative MPs in marginal seats across the north were keen to highlight the benefits net zero can bring to their local areas, for good reason.
Investments in Nissan’s Sunderland plant to help build the first mass-market electric vehicle, the Leaf, along with help for early adopters to buy electric vehicles are translating into a UK growth industry and cars which have a lower lifetime cost to their petrol and diesel counterparts.
As the cost of oil goes through the roof, so too are sales figures on new electric cars. Sales of second hand EVs are doing likewise opening the cost benefits of electric propulsion to an ever wider audience. Who would bet against EVs now? The new British Volt plants in Sunderland and the West Midlands accompanying the UK’s great car builders are investing millions and creating more jobs, enabling Britain to be at the centre of this global driving revolution. In the last week plans have been laid out for a battery-grade lithium refinery in Teesside.
Further investment in heat pumps and insulation will not only build UK industries and jobs, but will insulate homeowners from future prices spikes and save money, providing a return over time. Indeed some energy efficiency measures can pay back in just a matter of years and heat pumps are already £260 cheaper to run, given the gas price is so high.
Onward recently produced polling which showed that 64% of voters support the net zero target with only 9% in opposition to it. I remember in 2006 leading into the local elections then, David Cameron launched the campaign with the slogan ‘Vote Blue Go Green’. Clearly the wider politics of the time are different to where we are today, but it was none the less a successful message which saw Conservative making gains in London and the south of England, the very places we are now going backwards.
It was the Greens and Lib Dems who applied the most challenge to us outside of London and who, indeed, made the most gains at the local elections. It is also worth noting that the only party standing at this election with an explicit anti-net zero message was Reform UK, supported by Nigel Farage, which made next to no impact and has just two council seats in the entire UK.
Perhaps one lesson to learn from both the local elections and the election in Australia is that we need to invest in our economy, our future, but also our votes of the future if we’re to continue to apply Conservative and market-based principles to the UK’s shift to net zero.
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