The Green Transition: Net zero of the north?
Weekly analysis of the shift towards a new economy.
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Below we have some exclusive analysis of green goings-on at last week’s Convention of the North conference. But first, Budget week. Most Green Transition subscribers will have devoured every analysis line-by-line already, so I won’t bore you with the smaller details. But suffice to say there wasn’t much in the way of green policy. Jeremy Hunt may have stolen Labour’s idea of cancelling non-dom tax status, but the Chancellor wasn’t talking about green investment and securonomics. Hunt promised £120m for a “green growth accelerator” and £270m for “zero emission vehicle technology” – a drop in the ocean when compared to the £10bn cost of the National Insurance deduction or the cool trillion in current annual government spending.
The Confederation of British Industry has said that the UK’s net zero economy grew by 9 per cent last year, compared with a stagnant economic outlook overall. Instead of backing this high-growth sector, Hunt has focused on entrenching cuts to public investment. And this all presents Labour with a future headache. If it wins the election, any green or other investment, or extra revenue support over and above this low, restrictive base, means a Starmer government would need to: a) borrow more or b) raise taxes. The party’s current line is that instead it will initiate what will have to amount to a mini-boom in economic growth beyond what we’ve seen in recent years.
Paul Johnson of the Institute for Fiscal Studies has said that the “government and opposition are joining in a conspiracy of silence in not acknowledging the scale of the choices and trade-offs that will face us after the election.” On a slightly more cheery note, he also said he’s sceptical “that Rachel Reeves will preside over deep cuts in public service spending”. Hopefully, Labour will soon have a plan of how to square its circles – and will go further than the Tories on green investment, too.
Could net zero level up the north?
Last week’s Convention of the North in Leeds brought together political leaders from across the rugged, untamed regions beyond the M25 (I live here so I can make the jokes). They talked a lot about devolution, transport and being northern (full write-up here). Outside, it rained (obviously) while the Levelling Up Secretary Michael Gove announced a new package of powers for three northern combined authorities: West Yorkshire, South Yorkshire and Liverpool City Region.
Naturally, the three mayoral leaders concerned were pleased. But in the post-Gove press conference, there was awkward chatter about what a future, post-election Labour government would bring to the northerners’ table. West Yorkshire’s Tracy Brabin said she had been assured that Labour’s top brass “get it” when it comes to funding.
But Greater Manchester metro mayor Andy Burnham went further, telling huddled journos that there was “still a commitment to the green economy from Labour”, despite the U-turn on its £28bn annual spend on a Green Prosperity Plan. It’s worth quoting Burnham in full on this:
“Net zero represents the best chance to re-industrialise the north of England. The tidal barrage that Steve [Rotheram – Liverpool City Region mayor] is planning in the Mersey is fantastic. We will see green hydrogen production starting in Greater Manchester later this year. The party is backing those developments. There’s a commitment to supporting Northern Powerhouse Rail and renationalise railways… There’s still a commitment to the green transition and the north of England is best-placed to benefit from that.”
The problem is the “commitment” Burnham is referring to is no longer supported by the necessary fiscal policies from the shadow Treasury team. The current government has “committed” to Northern Powerhouse Rail several times but there are no spades in the ground. It also “committed” to HS2 beyond Birmingham pretty frequently, until it didn’t. Labour’s £28bn “commitment” has fallen by the wayside, too.
In the US, Goldman Sachs has estimated a $1.2trn price tag for Inflation Reduction Act subsidies, many of which are targeted at Rust Belt states analogous to the post-industrial north, to create good green jobs in economically depressed regions. Mimicking this was key to Labour’s offer – big green stimulus programmes to solve a policy trilemma of achieving net zero, boosting growth and reviving “left behind” Britain.
But when shadow minister’s are pushed on the “how?” question, there is now little beyond vague promises about “partnerships” and planning reform. Do the likes of Burnham and Brabin know something we don’t?
Whoever wins the next election, budget analyses show they will face a grim inheritance, and mayoral authorities will be praying Labour’s green investment commitments materialise into something more substantial.
In Brief
“The farmers are revolting”: Will Lloyd has a great piece on how Welsh Labour’s technocratic, green socialism is clashing with the livelihoods of the Welsh agricultural workers protesting over proposed net zero regulation.
Reed all about it: Freddie Hayward interviews Labour’s shadow environment secretary Steve Reed on the opposition’s vision for the countryside.
“Areas of habitat the size of Bromley”: Megan Kenyon reports on whether the government’s new biodiversity net gain regulations can reverse Britain’s nature loss.
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