Shock: King Herod turns green

Michael Jacobs thinks that, before very long, we really will have an energy tax

Lord Marshall of Knightsbridge makes an unlikely green hero. Chairman of British Airways (one of the biggest companies in one of the world's most polluting sectors), former captain of the captains of industry at the CBI, he is a man who just eight months ago was not known to have any environmentalist sympathies whatsoever. Indeed, when he was asked by Gordon Brown in March to examine the potential role of an energy tax on industry, Friends of the Earth described this as "like putting Herod in charge of childcare".

Herod has obviously been to parenting classes. Marshall's report to the Chancellor, published with the pre-Budget statement last week but little noticed, not only recommends that an industrial energy tax be introduced, but in doing so accepts the central assumptions and claims of the environmental movement. It is not too much to say that the Marshall report marks a coming of age for the green movement.

The power of the report stems from its conclusion that industrial competitiveness, contrary to the CBI's view, need not be harmed by an energy tax.

First, Marshall insists the revenues from the tax should be recycled back to business: partly in the reduction of other business taxes, partly as assistance towards energy efficiency investment measures. This will ensure that the overall tax burden on industry is kept broadly neutral: there would simply be redistribution from extravagant to efficient energy users.

Indeed, Marshall argues that if the introduction of an energy tax allowed labour taxes (such as employers' national insurance contributions) to be reduced, the overall effect on the economy could be positive. This would be the so-called "double dividend", in which falling energy use is accompanied by rising employment. This claim has been widely modelled by environmental economists; it is the first time it has appeared in a Treasury document.

Second, Marshall shows how, throughout industry, improvements in energy efficiency would save firms money. A tax would help to get these implemented, but would leave firms no worse off overall. He argues that it is only in the energy-intensive sectors (such as iron and steel, cement and chemicals) that seriously higher costs would result. He recommends that energy-intensive firms should be given either lower tax rates in return for signing energy efficiency agreements with the government, or tax credits or reliefs for emission-reducing investments.

Third, the report points out that six European countries already have energy or carbon taxes. An energy tax package (with lower labour taxes) is a centrepiece of the new government programme in Germany, and the Italian government has proposed a carbon tax in its latest budget. The claim, therefore, that an energy tax would raise British industry's costs above those of its competitors does not stand up.

So the environmentalist baton has been passed to the Treasury. Will Gordon Brown run with it? Don't be fooled by his non-committal statement last week; the Treasury is definitely interested. This is not surprising: after a short while, an energy tax could bring in several billion pounds a year, and the Treasury does not turn up its nose at new revenue streams of this magnitude.

Just as importantly, Brown is well aware of the political opportunity. The transport white paper has proposed allowing local authorities to introduce road-congestion charges, and to use the money for public transport spending; it has also raised the prospect of a tax on office car parking. Other measures, including the reform of company car taxation, a pesticides tax and water pollution charges, are under review.

But the energy tax is the big one, and would firmly establish Brown as the first green Chancellor. The prospect of combining environmental virtue with reductions in other business taxes, including possibly the national insurance "tax on jobs", might well look enticing.

Peter Mandelson at the Department for Trade and Industry will be the principal focus for industry lobbying. The DTI has co-operated fully with the Marshall study, but its instincts are likely to be negative. Which way Mandelson will turn, however, is not clear. On the one hand, his agenda is pro-business and he will not want to damage the government's good relations with the CBI. But on the other, the energy tax can be seen as wholly in line with his vision of a highly efficient, high-technology future for British industry.

Current energy use patterns by British firms are wasteful and unproductive; investing in the latest energy-efficient technology should be a central part of any strategy of modernisation. As the Marshall report argues, there are potential export opportunities here, too. In these circumstances Mandelson might well find the environmental case as attractive as Brown.

All eyes will now be focused on the Budget next March. Clearly more work needs to be done on the precise design of any new tax. But the environmental lobby argues that this should not prevent the government announcing an intention to introduce it, just as it did with the windfall tax. A clear commitment would encourage firms to make adjustment plans well in advance of implementation.

Either way, the proposal for an industrial energy tax is now firmly on the agenda. At last, the environmental movement has entered the heart of government.

The writer, an environmental economist, is general secretary of the Fabian Society

Michael Jacobs is visiting professor in the Department of Political Science / School of Public Policy at UCL and at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. He is co-editor of the Political Quarterly

This article first appeared in the 13 November 1998 issue of the New Statesman, Why gays become politicians

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The New Times: Brexit, globalisation, the crisis in Labour and the future of the left

With essays by David Miliband, Paul Mason, John Harris, Lisa Nandy, Vince Cable and more.

Once again the “new times” are associated with the ascendancy of the right. The financial crash of 2007-2008 – and the Great Recession and sovereign debt crises that were a consequence of it – were meant to have marked the end of an era of runaway “turbocapitalism”. It never came close to happening. The crash was a crisis of capitalism but not the crisis of capitalism. As Lenin observed, there is “no such thing as an absolutely hopeless situation” for capitalism, and so we discovered again. Instead, the greatest burden of the period of fiscal retrenchment that followed the crash was carried by the poorest in society, those most directly affected by austerity, and this in turn has contributed to a deepening distrust of elites and a wider crisis of governance.

Where are we now and in which direction are we heading?

Some of the contributors to this special issue believe that we have reached the end of the “neoliberal” era. I am more sceptical. In any event, the end of neoliberalism, however you define it, will not lead to a social-democratic revival: it looks as if, in many Western countries, we are entering an age in which centre-left parties cannot form ruling majorities, having leaked support to nationalists, populists and more radical alternatives.

Certainly the British Labour Party, riven by a war between its parliamentary representatives and much of its membership, is in a critical condition. At the same time, Jeremy Corbyn’s leadership has inspired a remarkable re-engagement with left-wing politics, even as his party slumps in the polls. His own views may seem frozen in time, but hundreds of thousands of people, many of them young graduates, have responded to his anti-austerity rhetoric, his candour and his shambolic, unspun style.

The EU referendum, in which as much as one-third of Labour supporters voted for Brexit, exposed another chasm in Labour – this time between educated metropolitan liberals and the more socially conservative white working class on whose loyalty the party has long depended. This no longer looks like a viable election-winning coalition, especially after the collapse of Labour in Scotland and the concomitant rise of nationalism in England.

In Marxism Today’s “New Times” issue of October 1988, Stuart Hall wrote: “The left seems not just displaced by Thatcherism, but disabled, flattened, becalmed by the very prospect of change; afraid of rooting itself in ‘the new’ and unable to make the leap of imagination required to engage the future.” Something similar could be said of the left today as it confronts Brexit, the disunities within the United Kingdom, and, in Theresa May, a prime minister who has indicated that she might be prepared to break with the orthodoxies of the past three decades.

The Labour leadership contest between Corbyn and Owen Smith was largely an exercise in nostalgia, both candidates seeking to revive policies that defined an era of mass production and working-class solidarity when Labour was strong. On matters such as immigration, digital disruption, the new gig economy or the power of networks, they had little to say. They proposed a politics of opposition – against austerity, against grammar schools. But what were they for? Neither man seemed capable of embracing the “leading edge of change” or of making the imaginative leap necessary to engage the future.

So is there a politics of the left that will allow us to ride with the currents of these turbulent “new times” and thus shape rather than be flattened by them? Over the next 34 pages 18 writers, offering many perspectives, attempt to answer this and related questions as they analyse the forces shaping a world in which power is shifting to the East, wars rage unchecked in the Middle East, refugees drown en masse in the Mediterranean, technology is outstripping our capacity to understand it, and globalisation begins to fragment.

— Jason Cowley, Editor 

Tom Kibasi on what the left fails to see

Philip Collins on why it's time for Labour to end its crisis

John Harris on why Labour is losing its heartland

Lisa Nandy on how Labour has been halted and hollowed out

David Runciman on networks and the digital revolution

John Gray on why the right, not the left, has grasped the new times

Mariana Mazzucato on why it's time for progressives to rethink capitalism

Robert Ford on why the left must reckon with the anger of those left behind

Ros Wynne-Jones on the people who need a Labour government most

Gary Gerstle on Corbyn, Sanders and the populist surge

Nick Pearce on why the left is haunted by the ghosts of the 1930s

Paul Mason on why the left must be ready to cause a commotion

Neal Lawson on what the new, 21st-century left needs now

Charles Leadbeater explains why we are all existentialists now

John Bew mourns the lost left

Marc Stears on why democracy is a long, hard, slow business

Vince Cable on how a financial crisis empowered the right

David Miliband on why the left needs to move forward, not back

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times