Labour climate policies should get the green-light
Keir Starmer has reiterated Labour’s commitment to its flagship green industrial policy. Starmer wants Britain to emulate Biden’s legislative success in the US, the Inflation Reduction Act.
The bill, estimated to be $500 billion in spending and tax breaks, is arguably the most significant piece of climate legislation in human history. The legislation’s main goal is ostensibly to reduce inflation. The primary result will be to make the US a leader in innovative renewable energy technology by allowing private energy and tech firms to access billions of dollars in government subsidies.
The move has put a significant strain on US-EU relations, a lesson Starmer would do well to learn from, given that Brussels has accused Washington of igniting a trade war.
However, this accusation is tepid and well choreographed. Europe does not want to upset its strongest and most important ally.
Brussels has crafted changes of its own in an attempt to mitigate against a ‘climate-tech brain-drain’ that may occur from the EU to the US. This has also happened against the backdrop of a proliferation of anti-competitive trade restrictions worldwide, according to the IMF—primarily turbocharged and normalised by Trump’s trade war against China, placing tariffs on imports to America.
Such grandiose climate legislation is untested, both domestically and internationally. There are potential diplomatic and economic pitfalls.
In spite of this, the Labour leadership is determined to push ahead with their own green industrial policy, ramping up to investment worth £28 billion per year. In an interview with the FT, the Shadow City Minister, Tulip Siddiq, has said that a Labour government would ask the FCA to change regulations allowing covered bonds (bonds that have an extra guarantee from the issuing bank) to include green infrastructure; potentially unlocking £10 billion in private sector funding per year.
For some, Labour seems to be taking the climate crisis seriously with members of the Shadow Cabinet publicly endorsing massive investments in renewable technology. This was in tandem with a pledge to veto any attempt to stop the building of onshore wind farms. Starmer did say there would be significant consultation with local authorities and communities, but did not rule out any eventual veto.
To others though, Labour, and specifically Starmer, have seemingly watered down their climate-friendly policies. This has coincided with Big Business learning to love Labour again: a relationship that the party has successfully cultivated in the last 3 years—fuelling a narrative that they have taken a hard turn to the centre. The sentiment towards this shift has been fuelled by the Shadow Chancellor’s and Shadow Health Secretary, Wes Streeting’s, New Labour-esque comments about the economy, enterprise and the NHS.
A poll published by The Sun in June 2023 said that over 65% of the public support the goal to reach Net Zero, vindicating Labour’s climate pronouncements. The same poll highlighted the public’s concerns over the impact of ‘climate friendly’ policies on their finances.
The objective for Labour, as an election looms, will be to ensure that the public’s view of renewable investment is a net positive.
A priority for the next government will be alleviating the negative effects of the UK having a relatively low energy independence. However, Starmer is adamant that his proposed policies will reduce the cost of living.
In the event that Labour cannot counter Tory narratives, they could be viewed as out-of-touch and might suffer in marginal seats at the next election. The Tories, in an attempt to narrow the gap with Labour in the polls, could double down on climate-culture-war sound bites: ‘Electric cars, heat pumps and home insulation are expensive, wind farms will decrease the value of your homes, and Labour’s only concern is the metropolitan elite.’
If Labour gets into power and passes significant climate legislation it could be a major boon for business and Britain, arresting the continued economic decline from, amongst other events, Brexit, Putin’s invasion of Ukraine and a pandemic supply chain hangover.
The Labour Party’s embrace of an ambitious green policy may ultimately prove to be a critical move, electorally astute and good for Britain.
Neil McLoughlin is a Politics and Sociology graduate from the University of Cape Town.
