George Osborne, followed by Mark Carney, arrives at the Lord Mayor's Dinner at Mansion House. Photograph: Getty Images.
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Why an interest rate rise could help the Tories

It would benefit savers and could be seen as a sign of a return to economic normality.

It was just a month ago that Mark Carney sought to dampen expectations of an interest rate rise, stating that rates may remain low "for some time". But in his Mansion House speech last night, the Bank of England governor took a dramatically hawkish turn. He told the inhabitants of the City of London: "There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect." With the markets currently forecasting a rise in spring next year, Carney's remarks suggest rates could increase from their record low 0f 0.5 per cent (where they have been for more than five years), before the end of 2014. Increasingly troubled by "early signs" of a housing bubble, the governor has signalled his willingness to deploy the most powerful weapon in the Bank's arsenal.

While economists debate the merits and demerits of the move, what would the political consequences be? It's generally assumed that a rate rise would be damaging for the Tories, one reason why cynics suggested that Carney (who was personally apppointed by George Osborne and awarded a bumper £800,000 salary) would postpone any increase until after the general election. Past Conservative governments, disproportionately reliant on the support of homeowners, consistently sought to avoid rate rises clashing with polling day. Indeed, it was precisely to end such politically motivated policy that Gordon Brown made the Bank of England independent in 1997.

But the politics of a rate rise may be more complex than they appear. A poll last year by YouGov for the Times found that 31 per cent of people believe an increase would leave them better off, compared to just 23 per cent who believe they would be worse off and 32 per cent who thought it would make little difference either way. While some Conservative supporters would curse a rise in their mortgage costs, others would be cheered by a better return on their savings. As Osborne's most recent Budget demonstrated, there are votes to be won in courting this group. The over-60s, who have suffered most from ultra-loose monetary policy, are desperate for signs of a return to normality and, crucially, are the most likely group to turn out.

More broadly, a rate rise could be viewed as a signal that the economy is finally back on track after years in intensive care . Osborne has already publicly claimed that the possibility of an increase is a "mark of success", an assessment that some voters will undoubtedly agree with. Labour argues, with much justification, that a rate rise would be more accurately described as a mark of a failure. As Ed Balls said in response to Osborne's Mansion House speech, it is the government's unwillingness to act on housing supply that has led to the danger of "a premature rise in interest rates to rein in the housing market which ends up hitting millions of families and businesses." But if Osborne is as relaxed as he appears about the possibility of a rate rise, he may not be wrong to be so.

George Eaton is political editor of the New Statesman.

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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