Who runs Britain’s energy policy?

A smaller cut in wind power funding comes at the cost of a commitment to decades more of dirty and expensive gas.

Who runs Britain’s energy policy? We have a Department of Energy and Climate Change – you might think from their name that they do. Or perhaps it’s Chancellor George Osborne’s Treasury that calls the shots? Now you’re getting warmer.

This week's announcement by the Energy Secretary, Ed Davey, that he had secured only a 10 per cent cut in wind power funding, was heavily spun as a victory for the Lib Dem-run department. Given that the Treasury had been demanding 25 per cent cuts, this seemed a victory indeed – but one with a huge hidden cost. Because, as payment for this victory, Davey has been forced to quietly concede to another of the Treasury’s demands: a commitment to decades more of dirty and expensive gas.

We know this to be the Chancellor’s wishes, because on Monday someone leaked a letter – effectively a ransom note – that he had sent to Davey outlining his position. In it, Osborne demanded that the Energy Secretary issue “a statement which gives a clear, strong signal that we regard unabated gas as able to play a core part of our electricity generation to at least 2030 – not just providing back-up for wind plant”.

Acceding to this outrageous demand would mean seriously jeopardising the UK’s fight against climate change. As the Government’s independent advisors, the Committee on Climate Change, stated in response: "This would all lead to a second dash for gas. This would be incompatible with the government's climate change goals."

But on Wednesday, DECC dutifully trotted out a press release stating that “the Government… is today confirming that it sees gas continuing to play an important part in the energy mix well into and beyond 2030”. Some victory.

The exchange has also highlighted the hypocrisy of the Treasury in its assessment of what merits public subsidy, and what must go without.

Osborne stated in his letter to Davey: “While your proposals [on renewables funding] achieve some savings we will still be paying more than £500m more to support renewable generation in 2013-14 than we collectively agreed was affordable”. No-one disputes that as technology costs come down, public funding for renewables should decline; the renewables industry itself was offering up 10 per cent cuts.

But wait; what’s this? On Wednesday, as DECC announced its cuts to renewables funding, the Treasury simultaneously unveiled £500m of tax breaks for offshore gas drilling. What’s unaffordable to spend on clean energy suddenly becomes eminently affordable to spend on drilling up the dirty stuff.

Enough is enough. The Chancellor must be prevented from undermining the UK’s green economy – as the CBI recently stated, it’s one of the few parts of the economy still growing. A high-carbon energy system will lock the UK in to a high-cost as well as high-polluting future. So in whose interests is the Chancellor acting?

It’s now up to David Cameron and Nick Clegg to back their Energy Minister over the Chancellor. They should insist that the Energy Bill includes a target to decarbonise the UK’s electricity system by 2030 and unlocks support for clean British energy. The alternative energy strategy that George Osborne would have us follow is a dirty and dangerous dead end.

Guy Shrubsole is an Energy Campaigner at Friends of the Earth. For more information on Friends of the Earth’s Clean British Energy campaign: www.cleanbritishenergy.co.uk

 

Photograph: Getty Images

Guy Shrubsole is energy campaigner at Friends of the Earth.

Photo: Getty
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The Conservative-DUP deal is great news for the DUP, but bad news for Theresa May

The DUP has secured a 10 per cent increase in Northern Ireland's budget in return for propping up the Prime Minister.

Well, that’s that then. Theresa May has reached an accord with the Democratic Unionist Party to keep herself in office. Among the items: the triple lock on pensions will remain in place, and the winter fuel allowance will not be means-tested across the United Kingdom. In addition, the DUP have bagged an extra £1bn of spending for Northern Ireland, which will go on schools, hospitals and roads. That’s more than a five per cent increase in Northern Ireland’s budget, which in 2016-7 was just £9.8bn.

The most politically significant item will be the extension of the military covenant – the government’s agreement to look after veterans of war and their families – to Northern Ireland. Although the price tag is small, extending priority access to healthcare to veterans is particularly contentious in Northern Ireland, where they have served not just overseas but in Northern Ireland itself. Sensitivities about the role of the Armed Forces in the Troubles were why the Labour government of Tony Blair did not include Northern Ireland in the covenant in 2000, when elements of it were first codified.

It gives an opportunity for the SNP…

Gina Miller, whose court judgement successfully forced the government into holding a vote on triggering Article 50, has claimed that an increase in spending in Northern Ireland will automatically entail spending increases in Wales and Scotland thanks to the Barnett formula. This allocates funding for Wales, Scotland and Northern Ireland based on spending in England or on GB-wide schemes.

However, this is incorrect. The Barnett formula has no legal force, and, in any case, is calculated using England as a baseline. However, that won’t stop the SNP MPs making political hay with the issue, particularly as “the Vow” – the last minute promise by the three Unionist party leaders during the 2014 independence referendum – promised to codify the formula. They will argue this breaks the spirit, if not the letter of the vow. 

…and Welsh Labour

However, the SNP will have a direct opponent in Wales. The Welsh Labour party has long argued that the Barnett formula, devised in 1978, gives too little to Wales. They will take the accord with Northern Ireland as an opportunity to argue that the formula should be ripped up and renegotiated.

It risks toxifying the Tories further

The DUP’s socially conservative positions, though they put them on the same side as their voters, are anathema to many voters in England, Scotland and Wales. Although the DUP’s positions on abortion and equal marriage will not be brought to bear on rUK, the association could leave a bad taste in the mouth for voters considering a Conservative vote next time. Added to that, the bumper increase in spending in Northern Ireland will make it even harder to win support for continuing cuts in the rest of the United Kingdom.

All of which is moot if the Conservatives U-Turn on austerity

Of course, all of these problems will fade if the Conservatives further loosen their deficit target, as they did last year. Turning on the spending taps in England, Scotland and Wales is probably their last, best chance of turning around the grim political picture.

It’s a remarkable coup for Arlene Foster

The agreement, which ticks a number of boxes for the DUP, caps off an astonishing reversal of fortunes for the DUP’s leader, Arlene Foster. The significant increase in spending in Northern Ireland – equivalent to the budget of the entirety of the United Kingdom going up by £70bn over two years  – is only the biggest ticket item. The extension of the military covenant to Northern Ireland appeals to two longstanding aims of the DUP. The first is to end “Northern Ireland exceptionalism” wherever possible, and the second is the red meat to their voters in offering better treatment to veterans.

It feels like a lifetime ago when you remember that in March 2017, Foster was a weakened figure having led the DUP into its worst election result since the creation of the devolved assembly at Stormont.

The election result, in which the DUP took the lion’s share of Westminster seats in Northern Ireland, is part of that. But so too are the series of canny moves made by Foster in the aftermath of her March disappointment. By attending Martin McGuinness’s funeral and striking a more consensual note on some issues, she has helped shed some of the blame for the collapse of power-sharing, and proven herself to be a tricky negotiator.

Conservatives are hoping it will be plain sailing for them, and the DUP from now on should take note. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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