Labour’s vision for a green economic future

Unlike the Conservatives, a Labour government would make sustainable energy a major national priority and give business the confidence to invest.

Tonight, at the annual Green Alliance debate, I will join an audience of business leaders, environmental campaigners and scientists to discuss Britain’s energy future.

Ten years ago, if you were attending a meeting of environmental campaigners and big business, you would have planned for a stand-off. Not anymore. The scope and breadth of the consensus across business and the environmental lobby is striking - something that would have been impossible to imagine a decade ago.

Of course, there are still big debates about the details. But everyone from Friends of the Earth and Greenpeace to the CBI, Alstom and Siemens agree that ensuring sustainable, affordable and reliable energy needs to be at the heart of any economic policy.

Getting energy policy right for the next 20 years is one of the biggest challenges – and the biggest opportunity - our economy faces in this generation. Nobody seriously questions that in the coming decades all countries will have to generate much more energy using renewable sources. The alternative is devastating climate change, ever rising prices and energy insecurity.

That is why business has been gearing up to deliver this energy revolution. As Green Alliance has confirmed today in a new analysis of UK infrastructure needs, our country already has planned investment in low carbon infrastructure of £180bn between now and 2020. Offshore wind alone is worth more than planned spending on gas, roads and airports combined.

The business view is clear: we can and should unlock major investment, huge numbers of jobs and secure our energy future over the next few years. Major firms tell us they are poised to make significant investments here in the UK that would generate vital domestic expertise and supply chains as well as the exports and jobs of the future. And the UK has a potentially world leading position in offshore wind, wave and tidal power.

Failure to invest will mean not just lost jobs but higher energy bills too. As Ofgem warned earlier this year, without new investment in renewable energy, we could well see a growing reliance on imported gas ramping up energy bills for consumers. And delaying the transition to a low carbon economy will also mean an expensive rushed transition – with the extra costs again pushing up energy bills. But needed investment and reform depends on leadership from government. And time and time again, I hear from business and green campaigners alike that this leadership is currently absent.

My fear is that the UK currently risks snatching defeat from the jaws of potential victory. At the heart of this failure is Chancellor George Osborne’s unholy alliance with his troublesome backbenchers. Faced with the choice between short-termist nods to hard-line Tory opinion or the strategic leadership that Britain needs, the Chancellor has chosen the politically easy but economically reckless path.

By refusing to agree a decarbonisation target in the Energy Bill, by raising the prospect of a new 'dash to gas' instead of renewables, by shackling the Green Investment Bank, and by failing to implement the scale and certainty of policy needed to effectively de-risk investment, the government has actively undermined business plans to create jobs and growth.

In 2010, the UK was third in the world for investment in green growth - but we have since fallen down the league tables. The danger is that we will see investment and manufacturing expertise which should be based here in Britain going to other European countries instead.

First, the government has failed to set the clear long-term targets that business needs to invest with certainty. Yes, it remains formally committed to carbon targets for 2050 through the Climate Change Act passed with cross-party support under Labour. But the independent Committee on Climate Change has made clear that this target will require largely de-carbonising electricity by 2030. And yet George Osborne has blocked the government from making a clear commitment in law to this 2030 target. Meanwhile, in Europe, the government is blocking moves to set ambitious renewable and efficiency targets for 2030 at an EU level.

Worse than that, George Osborne has fostered exactly the kind of policy uncertainty that scares away long-term investment. By talking up the possibility of an implausible shale gas bonanza to justify tacking away from renewables after the 2020 targets run out, he has cast further doubt on the government’s long-term commitment to a low carbon future. Business is being denied the confidence of knowing they will have a market and a price structure they can rely on over the investment horizon they need.

Second, the government has failed to play its part in supporting new renewable and clean technologies. Carbon capture and storage, where the UK once led the way, has stalled again. And while Ministers try to claim the credit for setting up the Green Investment Bank which Labour proposed, the government has undermined it from the start. Giving the Bank the power to borrow on the open market would lever in several times more capital and get considerably more bang for the government’s buck.

Perversely, the Chancellor arbitrarily tied this decision to him meeting his target on the national debt. Now, thanks to his wider economic failure meaning he is now not set to meet that target until 2017, the Bank has been left in limbo with neither co-investors nor the sector able to plan ahead. It is an opportunity that George Osborne seems incapable of grasping.

And third, on energy efficiency, the government has failed to deliver. The construction industry is crying out for clarity on the next steps in Labour’s successful zero-carbon homes strategy. The Green Deal, which replaced previous successful domestic energy efficiency schemes, has so far helped just four households this year.

What Britain really needs is leadership, policy certainty and a cross-party consensus to match the one that exists in industry to deliver an economy with strong and sustained prosperity. We need a clear plan for the future of energy generation, energy efficiency in the home, nuclear, gas, renewables and carbon capture and storage.

Labour’s approach will seek to deliver that. Ed Miliband, Caroline Flint and I have all said the government should commit now for a 2030 energy decarbonisation target. Delaying any decision on a commitment until 2016 is a huge missed opportunity. And because the UK should be leading and not following on the global stage, the government should be working with our EU partners to set clear goals and lead from the front in the run up to the Paris 2015 global talks, as we did in the run-up to Kyoto and Copenhagen. That is the way to lead and win the 'global race' that Conservative ministers talk about, rather than trying to turn it in a race to the bottom.

We will also put an end to the mixed signals that are causing confusion and deterring investment by posing a false choice between gas and renewable energy. We support efforts to secure new domestic gas supply, although there are real environmental concerns that must be addressed. We will need a secure gas supply in the decades ahead. But while 'fracking' has had a major impact on energy prices in the US, most experts believe any impact in Europe is uncertain at best. Any balanced and low-carbon energy strategy for the years ahead will need gas, renewable energy and, in our view, nuclear too.

We need clarity on the Green Investment Bank too – to support new technologies and to support energy efficiency. So the government should end the current uncertainty and commit now to giving the Green Investment Bank borrowing powers in 2015. If it fails then the next Labour government will do so as soon as possible after the next election, so that the Green Investment Bank can help to raise our ambition on energy efficiency to insulate homes, cut fuel poverty, bring down bills, create jobs and stimulate the economy in the process.

So the green economy and low carbon energy will be central to Labour’s plans in government. Andrew Adonis’s work for us on industrial strategy will also have energy and environmental policy at its heart. So will Sir John Armitt’s review into the way in which we make our infrastructure decisions. Without a low carbon infrastructure plan and economic strategy, in the modern economy you simply don’t have an economic plan.

Our vision is for a race to the top – to secure a world-leading position for British businesses in helping the world meet the low carbon challenge – and in doing so create prosperity and jobs for people in this country.

US President Barack Obama, in his recent speech on climate change, called for those worried about how he would deliver on his climate goals to have faith in "American ingenuity". I believe this is a challenge that Britain can and must rise to as well. The country that led the industrial revolution shouldn’t simply look on as our competitors press ahead.

And it is because we have faith in British ingenuity that a Labour government would make sustainable energy a major national priority and give business the confidence to invest in the UK. The costs of failure to our environment are well known. But the costs to our long term prosperity and security are just as great.

Ed Balls is the shadow chancellor and MP for Morley and Outwood

"The UK has a potentially world leading position in offshore wind, wave and tidal power." Photograph: Getty Images.

Ed Balls is the shadow chancellor and MP for Morley and Outwood

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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle