This article was originally published as an edition of the Green Transition, New Statesman Spotlight’s weekly newsletter on the economics of net zero. To see more editions and subscribe, click here.
The UK has some of the highest levels of regional inequality in the OECD. Geographic disparities in wealth have only increased over the past four decades. We’ve spent the last year wondering why water companies are pumping raw sewage into lakes, rivers and coastal areas while saddling themselves with enormous debts and paying out a suspiciously similar amount in dividends. Real wages are stuck roughly where they were in 2008, 16 years ago (feel old yet?).
And that’s not all. Public services are in a state of perma-crisis, geopolitics and global trade are in a dangerous state of flux and yes, the climate crisis is heating up. Some people, as regular Green Transition readers will know, are linking all of this together: climate change and environmental degradation, deglobalisation and instability, sluggish economic growth. Many believe all of this could be overcome by a new era of green investment-led recovery, which would create high-waged, high-skilled jobs for the future, energy independence, and a green industrial renaissance targeted at regions that have historically been held back. (See here for the last two editions of the GT, which presented alternative cases for how realistic this rather rosy scenario is).
So, naturally, given all of this, the first week of general election campaigning has so far been devoted to: serious discussion around detailed policy interventions from both sides of the political divide Rishi getting rained on, “Things Can Only Get Better”, Nigel Farage, a debate around sending young people on national service, and a predictable Labour Party internal war.
Labour will no doubt be hoping to cut through all the negativity today with a flurry of events, headlines and policy announcements around Great British Energy.
The logo for the new publicly owned investment vehicle has been revealed, which is nice. Turns out it’s derived from a stock photo, and GB Energy will have to share its branding with an advertising firm in Schenectady, New York. While wholly derivative, it might have at least saved the party a fair whack on commissioning a graphic design agency.
Keir Starmer is in Scotland today, where GB Energy will be based. A website has gone live, which claims GB Energy will “emulate the success of public ownership of energy that already exists in Britain – just by foreign governments such as the French and Chinese, rather than our own”.
“As we transition into clean power there is the potential for a huge number of skilled, long-term, well-paid jobs,” Starmer told the press.
“In Europe, in America, initiatives are already under way to get ahead on renewables. I want Scotland, the UK to be in the race.”
The Labour leader is, of course, referring to the green industrial strategies and public investment packages that have been unleashed on the continent and in the US (not to mention long-standing muscular industrial policies in China). These are composed of huge pieces of legislation that aim to “crowd in” money for net zero projects in the global race for green capital investment. Multi-billion subsidies, “de-risking” offers, tax breaks and public-private partnerships are set to improve grid infrastructure; create new green supply chains for batteries, wind turbines and other renewable energy generation projects; and help upskill a green labour market for a booming new industrial sector.
Last year, the shadow business secretary Jonathan Reynolds said that the US Inflation Reduction Act, the centrepiece of “Bidenomics”, has caused “significant disruption to capital markets and investment”, and that the UK needed to respond to this new era, moving beyond the globalisation-friendly political economy of New Labour.
He suggested that subsidies would be focused on firms that kept their jobs and procurement local, reducing reliance on imports, expanding economic multipliers, and creating a virtuous circle of green growth.
“I’ll give an example of a potential Chinese investment into a gigafactory. OK, you want a subsidy for that – what’s the local supply content you’re putting in place as a part of that deal?” Reynolds told Politico.
Today, this is what Labour wants to talk about – not the party’s time-honoured tradition of factional warfare playing out in Brighton, Chingford and Hackney North, in committee rooms and in Whitehall staffer WhatsApp groups. “ENERGY DAY” is written in big capital letters at the top of Labour’s press planning grid. The shadow cabinet is excitedly posting about it on X. They say that a typical family paid £1,880 more for energy than they did before the recent Ukraine-induced spike, adding that due to our reliance on fossil fuels, the government spent £94bn helping customers with their energy bills, and that the Conservatives will leave households vulnerable to a £900 annual energy price increase.
But don’t get too excited. GB Energy will be capitalised by the revenues from an £8bn windfall tax on energy giants. That falls far short of the £2,820bn that the National Grid ESO estimated in 2020 would be the cost of getting to net zero by 2050. In fairness, this very large figure will come from private sector investment in grid infrastructure, and the broader Green Prosperity Plan, which includes GB Energy as well as the National Wealth Fund and other measures, is costed at £24bn. But it falls far short of the £140bn that the Labour Party once promised to invest across the next parliament. The Tory think tanker and author of the 2019 Conservative manifesto Robert Colvile has a handy X thread attempting to debunk some of Labour’s claims about what can be done with this more meagre budget.
Even if we take the furious Twitterings of Conservative policy wonks with a pinch of scepticism (particularly at the height of an election campaign), it will be extremely difficult to end within six years our economy’s centuries-long addiction to burning fossil fuels, particularly given the fact that Labour’s five-year budget for its new public renewable generation company will come in at less than half the current annual policing budget (£18.4bn). Reynolds’ rhapsodising for a British Bidenomics took place before the £28bn pledge was dropped – and without it, the agenda is threadbare.
In 2020, Boris Johnson put in place £12bn for a “green industrial revolution”. That was four years ago, and the UK is still a big gas importer (hence the anxieties about being “at the mercy of fossil fuel markets controlled by dictators like Putin”, in the words of Starmer). If the polls hold, and we take Labour at its word, we’re about to find out if a Boris-esque version of budget Bidenomics has any substance at all.
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