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  1. Environment
6 July 2022

Why putting an oil executive in charge of your economy is a bad idea

Nadhim Zahawi’s ties to Big Oil are indicative of the Conservative Party’s wider failures on climate.

By India Bourke

In a worsening energy and cost-of-living-crisis, the UK can at least be thankful that its new Chancellor has first-hand experience of feeling the pinch: in 2013, Nadhim Zahawi used his MP’s expenses to claim back the cost of supplying electricity to his horses’ stables. He later said he was “mortified” by the error and promised to repay – something with which his estimated net worth of up to £100m must have helped.

Joking aside, Boris Johnson’s latest pick for chancellor is deeply concerning. Regardless of how long he and the Prime Minister hold on to power, Zahawi’s prominence speaks to a wider truth: the Conservative Party is closely tied to the fossil fuel industry at a time when the country desperately needs weaning off hydrocarbons.

Zahawi, the MP for Stratford-on-Avon, has spent much of his parliamentary career working as the chief strategy officer for Gulf Keystone Petroleum, an oil and gas company. In the 10 years up to 2019, he reportedly received more than £1m from fossil fuel companies. There is speculation that he may have earned even more than this from his fossil fuel links, thanks to a parliamentary loophole which means his total second income from advising companies through Zahawi & Zahawi is not known.

Zahawi’s pro-oil background is also only the tip of a vast (if melting) iceberg within the Tory party’s identity. On the level of donations, an investigation by Open Democracy has shown that donors, some with links to the fossil fuel industry, have given more than £130m to the Conservative Party since 2010. Meanwhile, in terms of energy policy, recent pro-industry decisions have flown in the face of the country’s climate change commitments.

The former chancellor, Rishi Sunak’s, windfall tax may have proposed a new one-off tax on the current excess profits of the oil and gas sector – but he also announced that oil and gas companies that invest in new fossil fuel production would receive a tax break worth 90 per cent of their investment in the future. The expectation that Zahawi will be a tax-cutting chancellor could see these pro-fossil fuel incentives expanded further still.

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A cut to fuel duty and VAT on energy bills are both potentially on the table under Zahawi, says Chaitanya Kumar, the head of environment at the New Economics Foundation, a think tank – yet both are “regressive” and would “benefit the people who consume the most”. Fuel duty, for instance, has been cut already in recent months but the saving has not been passed on to motorists at the pumps.

An announcement in favour of a new UK coal mine is also expected imminently. The deep mine at Whitehaven in Cumbria would be Britain’s first in 30 years and would be a further step away from the UK’s climate credentials (with the International Energy Agency itself warning that there must be no new coal, oil or gas funding if the world’s net zero targets are to be met).

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That Zahawi’s chancellorship risks accelerating this pro fossil fuel direction is an understatement considering his record to date: as an MP and minister he has consistently voted against measures to prevent climate change and against the growth of renewable energy, such as the feed-in tariffs that helped scale-up solar power.

Hope that any of Zahawi’s potential rivals for the chancellery would pursue a different course also seems faint, however. The former oil executive may have some of the most overt links to fossil fuels’ dinosaur reign, but the wider conservative philosophy of cutting taxes in the belief it will spark investment runs deep. 

Instead, as the Green MP Caroline Lucas has urged, greater home insulation to deliver lower bills and green jobs is what is needed most at this time of high global prices, rising inflation and climate change. “After years of neglect from past Tory chancellors, we desperately need the Treasury to play its part in tackling the climate emergency,” she told the New Statesman. Instead, we have a new chancellor whose links to the oil industry are clear for all to see. Our government may be a sinking ship, but it mustn’t take the climate down with it.”

In the words of none other than the Tory peer Zac Goldsmith, in a tweet responding to Tuesday’s news that the health secretary had resigned: “I don’t know if or when ‘it is over’ [for Boris]. But based on everything I know about politicians, the thing that is most likely to be over is UK leadership on climate and nature.”

[See also: Dead birds falling from the sky is a bad omen for humanity]