How will Ed Davey strike back at Osborne?

The Energy Secretary has been undermined and humiliated by the Chancellor's machinations on wind power. He must reassert his authority.

It is not a surprise to learn that some Tory backbenchers don’t like onshore wind turbines. Indeed, any politician in a rural constituency, including Lib Dems in the south west and local councillors all over and from all parties, will testify to the fact that nothing packs a town hall with irate constituents like a meeting about a planned windmill.

One such MP recently suggested to me that this passion owed more to people’s sense of disempowerment than to objections to the principle of renewable energy. The feeling runs high that forces mustered elsewhere, not from the local community, uninterested in local concerns, were launching a kind of metropolitan colonisation of the landscape.  Nonetheless, that anger has been effectively mobilised and channelled by people who also happen not to think that climate change is a problem – or at the very least, not a problem to which public investment in renewable energy in the form of onshore wind power is a solution.

It is clear from recent events that such a view has a strong hold on the parliamentary Conservative party. It would also appear to be discreetly encouraged by George Osborne. I reported some weeks ago that the Chancellor is, in private, scathing about environmental regulations seeing them as a tedious impediment to business and a brake on growth. He is said to be quite dismissive of the Climate Change Act, which commits Britain to reduce its carbon emissions. He is, however, stuck with it.

That hasn’t stopped him apparently nurturing the feeling among Tory backbenchers that the environmentalists’ windmill fetish is a legitimate target for attack, regardless of what official coalition policy might have to say on the matter.

Partly, I suspect, this is driven by a recognition that the restive right wing of the Conservative party needs feeding if it is not to start committing acts of dangerous sabotage against the whole Cameron-Osborne project, and green policies make a tender and tasty-looking sacrificial lamb. Osborne is often said to be preoccupied by the strategic threat from Ukip and anti-turbinery is just the kind of protest issue that fires up the Faragists. It is also remarkable how Tory backbench anti-greenery is coloured with spite towards the Lib Dems who see themselves as worthy stewards of environmentalism in government.

Besides, opinion polls show the public are not terribly interested in environmental policy. Focus groups reveal something closer to actual hostility. Hard-pressed voters associate green issues with middle class affectation – shopping for over-priced organic vegetables in exclusive farmers’ markets etc. As a diligent student of the polls, Osborne will have concluded that he can safely ditch his party’s eco-credentials. This rather ignores the fact that one of the few things people knew David Cameron claimed to believe in before the election was the sanctity of the environment. Regardless of whether they share that belief, voters will still see its cavalier abandonment as a sign of unprincipled flakiness. But, as I wrote in my column this week in relation to welfare cuts, the Tory high command has a bit of a blind spot when it comes to judging what will harm their brand – even when they appear to have built their entire political project on image management.

The news in recent days – the revelation that the Tories’ campaign manager in the Corby by-election appeared to be freelance pimping for a potential anti-turbine candidate – has brought into the open the extent to which Conservative policy on this issue is being discreetly set in deference to the Quixotic* tendency.

It also raises the question of what Ed Davey, the Lib Dem Secretary of State for Climate Change, plans to do about it. Immediately after the last cabinet reshuffle, the Lib Dems alleged that the promotion of John Hayes (Minister of State for Energy) and Owen Paterson (Secretary of State at DEFRA) were hostile acts orchestrated by Osborne to undermine Davey. That view has now been pretty comprehensively confirmed.

That leaves the credibility of Davey in serious doubt. What authority does he have as a cabinet minister when the Chancellor is known to be manoeuvring around him. The Lib Dems don’t have enough heavyweight cabinet figures or emblematic policy issues to let one just slip away into impotence and ridicule. Davey will surely have to strike back somehow and reassert his authority. 

*Tilting at windmills. (Sorry.)

Energy and Climate Change Secretary Ed Davey. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR