What do Labour and Conservative energy promises have in common? Overlooking climate change
It’s been a fortnight of party political grandstanding, with both the Labour and Conservatives unveiling populist energy plans in a fight for the votes of the “squeezed middle”. But neither clarify the parties’ positions on how these measures will help decarbonise the UK’s economy.
On Monday, George Osborne announced a fuel duty freeze, hot on the heels of Ed MIliband’s announcement to halt rising consumer energy bills.
Consumers
Osborne said freezing the tax drivers pay on petrol for a further two years shows the Conservatives are on the side of workers, while Miliband claimed halting energy bill hikes would help households tightening their belts. But does either promise really benefit consumers?
Osborne included some substantial caveats in his speech. He said the fuel duty freeze would only go ahead if the government could find the spare cash. What’s more, he made the announcement at the same time as committing to get the UK back into surplus. So holding the fuel duty tax at a steady rate could mean increasing taxes elsewhere.
Miliband’s plan could also potentially hit consumers in the short term. It has been suggested that Labour’s announcement could lead to price hikes just before the price freeze came into force – effectively locking-in high energy prices. Miliband has conceded this could be the case, and it’s unclear how Labour could prevent it.
So both parties’ promises could end up costing consumers – at least in the short-term.
Business
Both plans claim to be good for the UK’s economy overall, albeit in different ways.
Osborne’s plan is ostensibly pro-business. Freezing the fuel duty could potentially encourage more people into their cars, boosting petrol company profits.
In contrast, Miliband’s plan annoyed the big six energy companies – SSE said it wasn’t sure how it could fund the price cut and Centrica flat-out threatened to leave the country. Miliband is adamant Labour’s plan could open the door to a much more competitive energy market, however.
So while Osborne was at pains to point out the differences between the parties’ plans, both are populist moves designed to appeal to a considerably poorer British public while claiming the freezes will be good for business.
Emissions
The similarity doesn’t end there. On close inspection, both plans seem to have large climate change-shaped holes.
Whichever party ends up in government will have to meet a legally-binding commitment to an 80 per cent emissions cut by 2050. But neither party details how its promises fit with that goal.
Osborne has form when it comes to overlooking emissions targets. In his speech, he also said the UK should not do more than other nations to cut emissions, despite the Intergovernmental Panel on Climate Change saying humans have already emitted around half the carbon dioxide budget which would keep warming below two degrees. A group of businesses sent the Chancellor a letter earlier in the week saying his efforts to water down the energy bill’s pledge to decarbonise the energy sector was scaring off investment.
In contrast, Labour has committed to include a decarbonisation target in the energy bill. But Miliband’s plan is similarly short on detail as to how this fits with his price freeze promise. The government says it needs £110 billion of investment to transform the UK’s currently high-carbon energy sector – and it’s unclear where this investment will come from if household energy bills are not allowed to rise.
Energy efficiency also appears to lose out. Both parties are concerned with helping consumers cut energy costs, whether in their cars or homes. But they also seem to overlook the benefits of helping consumers reduce their consumption – whether it’s cleaner air, cutting fuel bills, or lower emissions.
Popularity and populism
While lower costs are likely to be popular with voters in the short term, both parties may have missed a trick. Our polling shows the public are keen to see the government take action on climate change. So cutting bills perhaps isn’t the only way to voters’ hearts.