The first few months in any new job are always a steep learning curve. In politics, though, it’s when you’re said to be your most powerful: setting out your agenda and priorities for the new administration.
Sunak’s first 100 days were tough. Nobody would say he’s enjoyed a honeymoon period after being brought in by his peers to calm the markets. After the disastrous mini-budget and an aborted confidence vote on fracking effectively brought down the last government, Rishi Sunak and his team needed a low risk strategy. In environment terms, that meant returning to the manifesto position of a moratorium on shale gas, and it also meant focusing on the big issues which could command parliamentary support. The ship has been steadied, but new problems now threaten to rock the boat.
The return of Liz Truss to the political fray, still backing her tax cutting and growth agenda, adds to the existing problem of Boris Johnson on the backbenches. Looming ever larger, the threat from him is more akin to a pitch invasion than a ball coming loose from the back of the scrum. The danger point is likely to be after the May local elections. If the polls are correct, the Conservatives are in for a hammering, and talk will ramp up about whether the prime minister is the right person to take the Conservatives into the next election.
The environment is the country’s fourth priority
The concern for the government is that the steady drumbeat of chatter becomes a self-fulfilling prophecy. It’s partly why Sunak set out his five point plan in January: to halve inflation, grow the economy, reduce national debt, cut NHS waiting lists and stop the small boats. He’s asking the country, and his own MPs, to mark him against these parameters of success. These are (apparently) the country’s priorities, which he needs to deliver on. Actually the environment is the country’s fourth priority, according to the YouGov attitudes tracker. This is missing from the list, along with other important issues like Brexit and education. Perhaps more galling, if not unsurprising, was that the chancellor’s speech a few weeks’ ago, setting out his four priority Es (Enterprise, Education, Employment and Everywhere), did not also include an E for the environment.
Does this mean the environment is not a priority? No. But it makes it even more challenging for people working on environmental policy to make vital change happen. In his Mais lecture as chancellor, Rishi Sunak referred to net zero as capital intensive. He’s right, but costs are falling and payback times on investments are shortening, especially with gas prices so high. If we want to halve inflation, grow the economy and bring down debt, there are clear economic arguments for pursuing environmental policies.
As we showed clearly last year, and as Labour has set out in its green prosperity plan, how well the economy is doing and the state of the environment are inseparable. Building more cheap renewables and reducing exposure to volatile gas prices will underpin energy security, lower prices and increase productivity.
Taking a different approach, Public First published a report in November last year based around the concept of taking the environment out of the energy equation altogether. It found that a renewables centered power system would be the cheapest and best system for energy security, without considering the added benefit of emissions reductions. As it happens, the author of that report is now the prime minister’s energy adviser, which should give some hope that more progress will be made.
There are positive signs that the Treasury now gets it
There is also optimism that the chancellor understands green. Despite ploughing through a mountain of disposable coffee cups for a Treasury explainer video, the content itself shows an understanding of inflation drivers and what the UK can do. The fact the Treasury is on the hook for energy bills may stimulate it to take a more active approach at the March budget, with a small amount of fiscal headroom to invest, but don’t hold your breath.
However, whilst Labour says it would invest £6 billion a year on energy efficiency over the next parliament, Jeremy Hunt has promised the same amount for the entire term. Money is tight, but spending on this not only helps the UK reduce climate impacts, it keeps people warmer every winter and protected from heatwaves for less cash. Ministers will be hoping that the £22 billion UK infrastructure bank (UKIB) can do them a favour.
The new department could be a positive step
The newly announced Department for Energy Security and Net Zero, now led by Grant Shapps, is a positive step that could have real impact if it’s given the funding and backing it needs. The spring budget will be the immediate test of that. The risk is that splitting BEIS up could mean less clout in a spending round and a hamstrung progress. With the government expected to respond to Chris Skidmore’s Net zero review, together with the anticipated Net Zero Strategy update by the end of March, the budget may come too early, but it would be a missed opportunity if the chancellor didn’t at least make a start on implementing wide ranging reform if that’s the case.
The political question, for Sunak, is will he use the enforced moment of the Net Zero Strategy update to set out his own version of the green prosperity plan, or green industrial revolution, as it was under Boris Johnson. And how will the UK respond to the US Inflation Reduction Act? The EU will undoubtedly take time to respond, so could the UK use its Brexit freedom to move quicker with its own British Inflation Reduction Act? This would seize the initiative ahead of the election and allow the PM to prioritise green for economic reasons and be seen as a Brexit benefit to the economy (of which there have so far been few).
Around three decades ago, “It’s the economy stupid” was the now infamous phrase coined by James Carville in Bill Clinton’s successful 1992 campaign for the White House. Isaac Levido (current Tory election guru) has said there is basically only a narrow path to a Conservative victory in 18 months’ time, with the best hope of it being a 1992 style John Major win. The similarities are striking, and the return of the political economy as a dominant theme is no accident for a former chancellor dealing with severe cost of living challenges as prime minister. His best hope of turning his fortunes around is to get inflation and debt falling, and the economy growing. The green economy can help him and his chancellor do just that.