In today’s issue:
- Why climate change doesn’t care who wins the election
- Where manifesto policies really come from
- Who is really pulling the strings in the UK?
James Allen here, bringing you an unusual perspective on my usual energy beat ahead of the upcoming general election.
And no, don’t worry, I won’t be making a bold prediction about who will win. I don’t see anything different from what most polls are saying.
But I will be giving you a link to check out some important work from my friend and colleague, Nick Hubble.
I’ll explain why Nick’s work is so important in the piece, but if you just want to read what he has to say right now then please don’t stand on ceremony, just click here.
Now that’s out of the way, let’s get to it.
You see, when it comes to climate change, the Conservative party is offering a very weak policy on tackling it, while Labour is being a little more ambitious.
But with a Labour victory looking likely, questions remain as to whether its ambitious pre-election plans will turn into concrete actions once in government.
Whatever you might think of the causes, the Earth has heated up more in the past 30 years than it did in the previous 110 – and that looks likely to only accelerate further over the next 30.
As the US campaigner Bill McKibben famously observed, when it comes to the climate, winning slowly is more or less exactly the same as losing.
You might think that, on this battleground at least, Sunak seems happy to lose, but at least Starmer is looking to win slowly.
As you might recall, in 2021 Labour laid out an ambitious climate investment plan of £28 billion per year until 2030. However, that flagship campaign promise died a death in February when Starmer slashed the green spending pledge by 80%, down to just £4.7 billion.
The headline commitment has now been postponed in favour of a promise to “ramp up” towards £28 billion in the second half of its parliamentary term.
This was a big move that everyone recognised was a result of a financial straightjacket mitigating against such big commitments.
Of course, Labour’s likely victory still heralds a slightly more progressive stance on getting Britain to net zero, but that is only compared to the Tories’ unashamedly weak climate agenda.
Labour still wants to make Britain a clean energy superpower, and will raise taxes on North Sea drillers, cut their investment tax benefits and issue no new licences for exploration.
(Its commitment to issue no new oil and gas licences is certainly at odds with Starmer’s admittance that a Labour government would not revoke the licence for the Rosebank oilfield, recently approved by the Tories, the largest undeveloped field in the North Sea.)
Starmer also says that Labour will still go ahead with plans to create a state-owned energy company and to insulate homes, albeit at a reduced pace, and that its goal of decarbonising Britain’s electricity supply by 2030, with private investment doing the heavy lifting, remains intact.
Of the two main choices, Labour is still very much the party of climate action even though its spending commitments have been watered down.
The party recognises that climate action is a vote-winner. According to recent polling from Ipsos, the majority of Britons want political parties to take a strong approach to climate change, with most net zero policies having more support from Britons than opposition.
Donors seem to like it, too, which must partly explain why Labour is pushing harder in this direction: it brings in campaign financing as well as votes.
Earlier this month a major Tory donor, John Caudwell, announced he was switching allegiance by calling Rishi Sunak a “dud” and pledging for Labour.
Given that he donated £500,000 to Boris Johnson to ward off the threat of Jeremy Corbyn just a couple of years ago, and his lifelong support for the Conservatives, this was a large and public snub to the current Tory leadership.
As Caudwell explained, he wants the UK to offer a compelling industrial strategy with the energy transition at its heart. As he put it, he wants the UK to be “the Silicon Valley of decarbonisation”.
Another of Caudwell’s major pet peeve’s was Sunak pushing back Boris Johnson’s policy to ban the sales of petrol vehicles from 2030 back to 2035.
Labour’s coffers have also been bolstered by £1 million from Ecotricity, the clean energy company founded by Dale Vince, which was the biggest single donation from a company in the party’s history.
In the early stages of the election, Labour raised in donations close to 15 times the amount brought in by the Tories.
Labour has undoubtedly been successful in tapping into a rich source of interest – the climate – for some of the most well-off people in our country.
Its policies – even when watered down – are helping to attract the donors, and the donations help explain the huge lead in the polls.
But whether they or the voters will be happy with the government’s eventual policies on climate is an open debate.
Already Labour has made a huge and embarrassing U-turn in order to cut back its UK energy transition spending pledges, despite support for the original intended policies from certain wealthy doners and voters.
But could the eventual policies be watered down yet further? It appeals to donors and seems to be a vote-winner, but, according to my colleague Nick Hubble, those two groups could be set for disappointment.
In fact, Nick says a huge limitation will restrict the extent to which Labour can actually deliver its green manifesto at all.
We’ve already seen one major U-turn, and, according to Nick, there may be more to come. Labour seems like the pro-climate party, but Nick says that it doesn’t actually matter what the policies are as the new government may not be allowed to implement them. As he says, one man and one man alone will decide what qualifies for government spending – and it’s not Starmer.
How is this possible?
According to Nick, we need to think about the situation facing the next government. National debt has risen, high interest rates make that a more costly burden to bear, and national economic growth remains pretty anaemic.
As we saw with Liz Truss’ disastrous mini-budget, bond markets will ruthlessly punish (or frantically panic at) the sight of fiscal irresponsibility at a time of high national indebtedness. Then, the currency crashed and bond yields exploded higher, taking mortgage rates with them.
The UK, alongside many European nations, Japan and the US, are all tip-toeing next to a precipice, says Nick. All these countries’ governments are too heavily indebted, growing too weakly, and markets are jittery.
It’s clear that it might not take much for them to take fright. We saw this when bond and equity markets in France crashed after Macron called their election, risking a new government dominated by an economically extreme right-wing party.
At home, Labour has already to pull back from its original £28 billion spending pledge on decarbonisation, as too much spending might ignite more panic. While some called it flip-flopping, others found it realistic. Nick thinks that it’s not what they say that matters, but what they’ll be allowed to do.
Just as Labour had to rein in its green spending pledges, the Rassemblement National in France has pulled back towards a more centrist economic posture, to reassure the business community and bond markets, and this has stabilised things.
You simply can’t spend money that isn’t there, financial markets simply won’t stand for it. If Labour wins, it may well have to pull back on its plans even more.
Because, according to Nick, there’s a hidden power working behind the scenes here.
The only man in the land that isn’t scared of the financial markets.
Nick has written extensively about this, and about why it doesn’t matter who wins the election on Thursday. The real power, he says, lies not with the politicians but in a different set of hands entirely.
That power was behind the Liz Truss incident, and is planning some surprise policies that will affect everyone in the UK far more than the result of the next election…
To find out more…
Click here now to watch Nick discuss his latest research.
I always find Nick’s insights worth listening to, even if I don’t like what I hear. But if anyone is concerned with finding the hidden forces that matter to your wealth, it’s him.
So take a look at what he has to say, here.
Until next time,
James Allen
Contributing Editor, Fortune & Freedom
