Christian Wakeford: Why we need a Cabinet Minister for Net Zero

3 Sep

Christian Wakeford is MP for Bury South.

As the MP for Bury South, in the so-called “Red Wall”, I have no doubt about the need to drive down emissions.

I am a supporter of our Conservative manifesto commitment to Net Zero by 2050, and like many of my colleagues in Parliament, my focus is on finding practical and affordable policies which will allow us to live more sustainably.

Some have recently questioned our Net Zero commitments, but poll after poll shows increasing public concern over the environment and a desire for faster action.

85 per cent of the British public are concerned about climate change, while the environment is now the third biggest priority for the public, behind healthcare and the economy, with 33 per cent saying it’s the most important issue.

In my constituency, I held a pre-COP26 “environment forum” for local people. It was a great opportunity to hear their views, concerns and hopes about our efforts to tackle climate change.

However, throughout the forum it was highlighted that government of all levels is notoriously bad at working cross department and this leads to either duplicated working or watered down and overcomplicated projects.

This will only hold back the action they want to see. The suggestion of having someone oversee action on climate change, from a cross-departmental basis, was regarded as efficient and sensible.

My constituents are right. It’s clear that we will need a senior Cabinet Minister for Net Zero to oversee this transition – ​working directly with the Prime Minister and the Chancellor. Every sector must become more sustainable – and government has a big role to play in setting the right framework.

You only have to look at the example of housing. According to Green Alliance, whose Net Zero Policy Tracker comes out this month, homes account for 16 per cent of greenhouse gas emissions in the UK and require substantial reductions. We need joined-up policy to ensure home decarbonisation is fair, whether it is on retrofitting old houses or building standards for new homes.

The Future Homes Standard, for example, should be brought forward from 2025 to ensure new homes built today are the greenest they can be. Not only will it be better for the homeowner, it will also save the Treasury and taxpayer money in the long-run, cutting out the need to subsidise expensive retrofitting down the line. A Minister for Net Zero could ensure our transition to a more sustainable economy is as quick and efficient as possible.

Currently, Alok Sharma, who is doing a brilliant job as President Designate of COP26, sits around the decision-making table as a Minister in the Cabinet Office.

This adds extra weight to the Government’s green credentials and demonstrates that we are taking our climate conference hosting responsibilities seriously. But after COP26, he could be out of a job and there is a danger that the impetus generated by hosting the UN climate change conference will be lost.

As part of our COP26 legacy, a Cabinet Minister for Net Zero can show the world how to lead cross-government action on the matter. They can also help knock heads together within government and act as both a convener and an elected spokesperson.

Not only that, they will be answerable to Parliament, providing extra scrutiny and coverage of the most pressing and challenging issue we face as we build back better from the pandemic. My constituents approve – and I hope the Government will too.

Ryan Bourne: Furlough might have averted mass layoffs. But the Government’s next challenge is the reallocation economy.

11 Aug

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

What is the biggest challenge currently facing the UK’s jobs market? Not “mass unemployment,” as was feared as Covid-19 ravaged and lockdowns closed businesses last year. No, the concern today – according to the Governor of the Bank of England – is labour shortages.

Last Thursday, Andrew Bailey said, “The challenge of avoiding a steep rise in unemployment has been replaced by that of ensuring a flow of labour into jobs. I want to emphasise that this is a crucial challenge.” This is acknowledgement of one of the pains of what I call the “reallocation economy.”

In spring 2020, the furlough scheme was designed to avert mass layoffs and protect job relationships until things reopened. The idea was that government social insurance to pay wages would help firms “bridge” through a temporary shutdown, allowing them to retain workers and so protecting the productive capacity of the economy. Last spring, as many as 8.9 million jobs had wages subsidised by the taxpayer at the peak.

The Chancellor, and most pundits, will say it worked, albeit lasting longer than expected. Official unemployment peaked just 5.2 per cent last year, against 14.8 per cent in the United States. Now, with furlough winding down, just 1.1 to 1.6 million are left on the scheme, and with almost half of these on “flexible furloughs.”

Though many of these subsidised jobs may be non-viable as support ends, the Treasury will look at the huge 862,000 vacancies in the country and think: we have avoided a jobs disaster and now have a clear glidepath back to full employment.

So what’s the problem? Well, you can’t just “pause” an economy for a year in a world of ever-changing preferences, demands, and technologies. Research already showed larger job changes between sectors and occupations up until January than seen in the Great Recession.

It seems likely Covid-19 will have lasting effects on our preferences, where and how we want to work, and where we are able to travel too. As our lives re-normalise, this and a bounceback in service industries will see many workers temporarily finding themselves in the “wrong” jobs given new trends, or in the wrong places, and or with the wrong skills.

The result of this will be an extended period of teething problems as labour markets adjust to these new realities. There’s always substantial churn in jobs anyway, as workers and activities are reallocated over time. But this change is likely to be far more dramatic given the partial freeze of much of the economy. Rigidities in wages and an unwillingness to move risk creating temporary shortages and wage and price volatility along the way.

To be sure, this seems a better problem than mass unemployment. But Bailey is right: it’s a headwind to growth. Reallocation is a process, and often a slow one. Businesses have to attract and train new workers. Workers have to search for roles. People or firms have to move locations. And companies have to decide whether to risk taking on permanent new employees or undertaking new investments. All this limits the productive capacity of the economy.

The U.S. experienced some of these challenges with its earlier reopening. Leisure and hospitality saw particularly severe shortages of available workers through summer, due to ongoing worries about Covid-19, generous government benefits to the unemployed, and people reassessing their work ambitions.

Average hourly wages surged in these sectors and are still 10 per cent up on February 2020 as labour supply failed to meet growing demand. Businesses paid big signing-on bonuses and raised wages to entice workers to them, but that hasn’t always been enough to fulfil consumer needs: some restaurants couldn’t profitably open every day.

There’s suggestive evidence of similar difficulties in the UK. A British Chamber of Commerce survey for Q2 found that as a growing number of businesses sought to hire again, 70 per cent were having difficulties finding staff, with figures as high as 82 per cent and 76 per cent in construction and hotels and catering.

ONS data for June shows 102,000 vacancies in accommodation and food services–its highest ever recorded level. Pubs and restaurants had to pay temporary workers much higher wages and bonuses to get staff in June. The number of vacancies is surging too in arts, entertainment and recreation and real estate.

Many other factors will contribute to this reallocation challenge than just reopening services though. Surveys show the pandemic has led to a broader “rethinking” by the public about their work roles–perhaps unsurprising given the disruption we’ve seen.

An Aviva poll found 60 per cent of workers say they intend to “learn new skills, gain qualifications or change their career” due to the pandemic. It’s been well-documented that large numbers of young people have opted for extended stints in higher education too. Only a fraction of all this will need to occur for large shifts in local and sector labour supplies.

Other workers are willing to stay with employers, but demanding “let me work from home or I’ll quit.” Nick Bloom’s research suggests a modal desire from office workers for two to three days home working per week. As businesses experiment, some workers will not be happy with their arrangements and move on, while companies must decide whether to adjust to these preferences by widening the geographical net on remote hiring.

Any permanent shift in where work occurs as things crystallise will have sharp consequences for the spatial location of city’s service industries, such as eateries, entertainment, and bars, as well as reductions in demand for inner-city office cleaning, security, and delivery. The process of these support and service workers finding new roles, moving, and re-training will take time too.

Now when politicians hear the word “economic challenge,” their instinct is to dream up a policy to “deal with it.” And after over a year of subsidising jobs, it will be tempting for the Chancellor and Prime Minister to consider incentives, nudges, and public statements to try to force a return to the economy of February 2020, or else to devise new laws to entrench what workers want (see the new demands for a “right” to flexible working).

But beyond removing furlough and other policies that delay reallocation, the Government has no special insight about what’s best for the long-term. How to get the right workers to the right places will only be “addressed” by the experimentation and coordination that comes from market activity, and the reaction to the signals of profitability, wages, and prices.

Though relief helped avert mass layoffs, we will see a hangover as the economy adjusts to new realities. Not because “relief” was or is inadequate, but because the crisis has disrupted so much.

Does the Climate Change Committee have too much power?

7 Jul

Last month, it was reported that “Ministers ‘should urge public to eat less meat’’. Such is the view of the Climate Change Committee (CCC) – which has advised people to consume less dairy and meat in order to help the UK meet its environmental targets.

For many Brits, the very existence of the CCC will come as a surprise – never mind that it is now offering guidance on what to eat. But the public is likely to become much more aware of it, and its recommendations, because of the Government’s desire to meet its Net Zero targets (set by the CCC), and the publicity about their costs

The CCC has also had some high profile critics, such as Nigel Lawson. In a letter to Parliament in 2019, he claimed that the CCC’s recommendations were not accurate and reliable and, furthermore, that “it is essential that Parliament has time to scrutinise new laws that are likely to result in astronomical costs.” Did he have a point?

First of all, it’s worth explaining the CCC – and its history. The body was established under the Climate Change Act 2008, which legally binds the Government to reducing UK carbon dioxide emission “by at least 80 per cent by 2050, compared to 1990 levels”.

It stipulates that the Government must create a committee in order to achieve this – hence the CCC. The CCC website says it’s an “independent, statutory body” that aims to “report to Parliament on progress made in reducing greenhouse gas emissions and preparing for and adapting to the impacts of climate change.”

As of 2017, Lord Deben has been Chair of the CCC. He was previously the Conservative MP for Suffolk Coastal and now holds a series of roles, such as Chairman for Sancroft International (a sustainability consultancy) and Valpak (a leading provider of environmental compliance).

Other Committee members include a behavioural scientist, Director of the Priestley International Centre for Climate and an environmental economist. One member has recently had to step down because of a potential conflict of interest (more here).

While the CCC has kept quite a low profile, it has provoked mixed reactions – with some sharing Lawson’s cynicism about its role. Ben Pile is the author of the Climate Resistance blog and sceptical about the costs of Net Zero.

He tells me that in the era the CCC was created, “there was a tendency towards technocracies (such as Tony Blair’s decision to grant the Bank of England independence) and to push important decisions to those.” He calls this “the post-democratic model of politics”.

Pile adds that parliament, unsure of how to reach its own environmental targets, “essentially gave all of its power in this domain to the CCC”. The problem with this, however, is that “when there are debates about climate change and targets, no one votes against anything.” He adds that “they might as well not have a debate”, even when discussing trillions of pounds, and pushing an agenda that the “public just aren’t interested in.”

Andrew Montford is Deputy Director of the Global Warming Policy Foundation, an all-party and non-party think tank, “which, while open-minded on the contested science of global warming, is deeply concerned about the costs and other implications of many of the policies currently being advocated.”

I ask Montford if the CCC has become too powerful, but he says it’s more about influence. “Their word is in the UK taken as gospel, and if they say we need to move faster, then the Government tends to just say, well we need to do something,” he says. “They are in a position where they can bully governments into moving faster than perhaps governments would like.”

He agrees that there is “very little democratic oversight of what they do” and “they have pushed very hard on renewables… and there are other views”. Furthermore, Montford says “The committee’s got to be much more balanced… The whole thing is built around the idea that the general public’s interests revolve around the climate in 2050, and actually people have more immediate concerns, and those angles aren’t really addressed.”

Sam Hall, Director of the Conservative Environment Network, on the other hand, is more positive about the CCC. For starters, he says that David Cameron was an initial supporter of the Climate Change Act, which led to its inception, and that “as Conservatives, we should feel some ownership over this framework”.

He adds that “the fact that it’s expert, independent-advised” should mean “that targets can be less politicised” and that the Government doesn’t have to follow the CCC. “The Committee on Climate Change is there to provide that expert independent advice to inform policy-making, but ultimately it doesn’t make those decisions, so it wouldn’t have a veto on any changes to our climate targets.”

It strikes me that the closest thing to the CCC it is the Electoral Commission, but Hall points out that the EC has stronger powers (“to fine and take people to court”). The Office for Budget Responsibility might be a closer comparison. Montford thinks it is more like SAGE. (“politicians find it very hard to stand up to scientists… because then you’re anti-scientist, aren’t you.”)

Has the CCC become too powerful in politics? Although not exactly akin to the EC, you could conclude that, like it, it is part of the quangocracy legacy of the 2000s.

Its website certainly seems impressive and objective, as do its reports. However the biggest issue going forward may be one of public awareness. Frankly, I’m not sure many people are alert to the inner operations of the CCC, nor how big the bill for its recommendations are going to be.

It seems to me that such big decisions need – at the very least – more public votes, and attempts to keep the country’s environmental transformation committee-led, however sophisticated the committee is, will come back to bite.

Ruth Davidson: The pandemic has been devastating for the world’s poorest girls. We cannot turn our backs on them.

18 Mar

Ruth Davidson is the MSP for Edinburgh Central and Leader of the Conservative Party in the Scottish Parliament. This is a sponsored post by Crack the Crises.

The pandemic has hit harder than I think any of us would have imagined when we first heard of another respiratory virus jumping species and spreading around the world. For over a year, our lives have been turned upside down.

While we have all been touched in some way, nobody would suggest that it has affected us all equally. There are dozens of factors that have impacted the way we’ve experienced the last year – in different parts of the UK we’ve faced different restrictions, our jobs have carried varying degrees of risk, and our age, ethnicity, whether or not we have children and our medical histories have shaped the challenges we face.

Following International Women’s Day, and when the safety of women and girls is hitting the headlines back home, it is worth noting that there are few groups for whom this experience has been more damaging than for the poorest girls in the poorest countries.

The UK Government has done much to highlight the inequality they face – the Prime Minister has been a champion for the power of girls’ education as a transformative force in development, and a series of ministers, including the brilliant Baroness Sugg who recently resigned, have driven that agenda forward.

Even before Covid-19 hit us, 130 million girls were out of school, but after the school closures introduced to restrict the spread of the virus, research suggests that ten million more girls are at risk of never returning to school. The immense efforts taken to get girls the opportunity of a better future that education provides are – in millions of cases – being reversed.

For too many girls, being out of school is not just about not learning. It can mean facing abuse, being put to work, being married off or otherwise having their futures snatched away from them. It is estimated that 2.5 million more girls are at risk of child marriage as a result of the pandemic, and one million more girls are at risk of adolescent pregnancy. For the lucky amongst us, this pandemic may have been a tedious intermission in our lives, but that, at base is all it has been. For these girls, it has taken away their ability to shape their own futures.

Over the last ten years, under Conservative Prime Ministers, there have been fewer more powerful forces for the rights of women and girls on the world stage than the UK Government. Projects like the Girls’ Education Challenge have supported millions of girls through school, our progressive leadership in family planning has helped save hundreds of thousands of lives in childbirth and helped women to control their own futures.

When others stepped back, such as in President Trump’s introduction of the Mexico City Policy restricting family planning, the UK stepped up. But Rishi Sunak’s announcement that the Government will break its promise to keep aid spending at 0.7 per cent of our national income puts this role in jeopardy just when it is most necessary. As every other member of the G7 increases its aid in response to the pandemic, the UK is alone in shirking from the task.

The recent reports of cuts in our support to countries like Yemen and Syria are a stark reminder of the practical impact of our broken promise. But It won’t just be in warzones where it’s felt. Girls growing up in extreme poverty, faced by the injustice of gender inequality and the oppression it brings, will have a lifeline withdrawn just when they need it most. I salute MP colleagues who are making it known to the Conservative whips that they will not be party to this abdication of our moral duty on the world stage.

For so many within the party, support of the 0.7 per cent is a cultural shibboleth helping to define the type of Conservatism we practice – and a quick headcount shows our number can tip the scales. So I welcome weekend briefing rolling back a permanent cut to a temporary one. But, frankly, I’d rather the Chancellor reconsidered his decision entirely. The UK shouldn’t balance its books on the backs of the world’s poorest and what a waste it would be to reverse the phenomenal progress towards gender equality of which we have been a part.

There has been much political discussion in recent years about how women succeed, what the barriers are and how we individually and collectively can overcome them. It’d be patronising to suggest that the intervention of others is the decisive factor in this, but it is absolutely undeniable that the context in which women grow up helps to shape their chances.

Millions of the next generation of women will have a tougher start in life, and a slimmer shot at success, because the withdrawal of UK aid will make it harder for them to learn, harder to avoid abuse and child marriage, and harder to take their futures into their own hands.

Paul Howell and Heather Wheeler: Full HS2 is critical to our election commitment to rebalance the economy

16 Feb

Paul Howell is the MP for Sedgefield and Heather Wheeler is the MP for South Derbyshire.

After our landslide election victory last year, the Prime Minister made a promise to unite the country and level-up our nations and regions. The jobs-first approach and once in a generation levels of public investment in infrastructure announced by the Chancellor in his spending review set our party on course to deliver on these promises, despite the challenges presented by the pandemic.

The Chancellor has invested in supporting businesses and individuals throughout the pandemic – at massive cost to the Exchequer. But now that the vaccine is being rapidly rolled out across the country, we need to start thinking seriously about the economic recovery. We feel strongly that we need to invest in infrastructure and that in particular, investing in new rail lines, upgrades and new train fleets is one of the best ways to do so.

As Members of Parliament representing constituencies in the Midlands and the North East, we are pleased to see reform of the Treasury’s Green Book rules to unlock future public investment for our regions. Too often in the past, a rigid interpretation of the rules has led to spending in London and the South East, with areas such as ours being overlooked. The reforms under consideration have the potential to turn the situation on its head – essential if we are going to achieve our goals of levelling up.

The publication of the National Infrastructure Strategy is also welcome, as is the unequivocal support it provides for High Speed 2 – our flagship national transport project.

When the Government gave HS2 the go-ahead it recognised that it will deliver vital connectivity, cut journey times and boost capacity. We are aware of the current calls to cancel the project outright given the impact of Coronavirus. However, as Andrew Stephenson recently said, to do so would “send a terrible signal out globally about the UK intending to build back better from Covid-19.”

With over half of the Phase 1 budget for the line from London to Birmingham already spent or contracted to, such calls are frankly nonsensical, and would lead to the loss of 13,000 jobs directly employed by HS2 and tens of thousands more in the supply chain.

Construction is well underway across the route, and British businesses are benefiting, such as County Durham based Cleveland Bridge, a world-leading steel engineering company. It produced twenty-four massive steel girders that form part of the first of HS2’s new modular bridges, recently installed over the A446 in Solihull in just 45 minutes.

Instead, we must continue with this once in a generation investment into UK plc. HS2 will serve as a much-needed catalyst for economic change across many of the cities and towns that are now Conservative constituencies. Many of these areas have seen positive change over recent years but such is the scale of the economic challenge that our levelling-up agenda must double down on investments such as these to drive economic growth and opportunity. This is made all the more important in light of the ongoing battle to contain Covid-19 across the UK, but particularly in our Blue Wall areas.

And to counter those who say the impact of home working and changes to commuting, or the future widespread introduction of autonomous vehicles means that we should no longer invest in rail, we say that is wrong. Demand for rail travel rose year on year since privatisation in 1995 – and pre-pandemic was predicted to go on rising – and we see no reason for this to change in the longer term. HS2 is intended to have an operating life of 120 years; it is right that we are thinking long term and investing in high-speed rail, just as virtually every advanced economy in the world is doing.

Try telling people in Japan, Germany, South Korea, China, Turkey and elsewhere that such investment is a waste of money and you will get an incredulous response. With many more countries now developing national and international high-speed rail networks, we have the opportunity in the UK to establish a world leading capability and export new trains, equipment and expertise to the likes of India, Australia, Scandinavia and many more. This opportunity is too often overlooked, but it has huge potential.

Making sure the British public gets the best bang for their buck from our flagship national transport project and that it truly delivers for the whole country will be vital. Anything less would be a missed opportunity. That is why HS2’s Phase 2b, Midlands Engine Rail, Northern Powerhouse Rail, and our plans to reverse Beeching’s cuts must also get the green light from the Integrated Rail Plan, which we are eagerly awaiting. Furthermore, investing in rail, and shifting people away from car and domestic air travel, is critical to achieving the Government’s net zero targets.

The opportunity from this unprecedented public investment is not just about new tracks, wires, bridges and tunnels – important though they are. We represent areas with rich and unrivalled heritage of train building, with two major rolling stock factories (Bombardier Transportation in Derby and Hitachi Rail in Newton Aycliffe) directly employing thousands of our constituents and supporting many thousands more jobs in their British supply chains.

After too many years of decline, when we saw British train building virtually extinguished, train building is back.

We now have two established UK factories employing highly skilled workers who are producing new trains that improve the journeys of British passengers. Were they to secure the order for the new fleet of very high-speed trains it would secure jobs and investment in regions outside HS2’s Phase 1 route, thereby spreading the programme’s benefits more evenly across the country to regions like the East Midlands and the North East. More broadly, it would enhance and protect vital existing investment in rail manufacturing at a time when the pandemic has created uncertainty across the rail sector.

We cannot waste the opportunity that our Government’s high-speed rail investment plans presents. Using it to level-up the economic fortunes of the areas we represent will make good on the Prime Minister’s promise to first time Tory voters at the last election – to unite our country and re-balance our economy. It is time to build back better.

Andy Street: 15 years on, we can finally heal the scars of MG Rover’s collapse

1 Dec

Andy Street is Mayor of the West Midlands, and is a former Managing Director of John Lewis.

The battle to protect our economy from Coronavirus has brought comparisons with previous downturns, re-examining past recessions and reminding us of the impact felt when major industrial players have collapsed.

The levels of borrowing outlined last week by Rishi Sunak are testament to the unprecedented efforts being made by Government to draw on past experiences and protect jobs as we face a new kind of recession.

Here in the West Midlands, there remain acres upon acres of former industrial land which remind us of previous slumps. With government backing, we are now reclaiming these eyesores to provide new homes and job opportunities.

And as we face this latest challenge, I am hopeful that we will finally heal one of the biggest, and most painful, of these scars. Longbridge, in Birmingham, offers an opportunity to use this economic crisis to erase the results of an infamous economic shockwave.

Completing the regeneration of Longbridge would be a powerful example of Conservative policy actively “levelling up” the economy. For 15 years, local people have waited to see this site fully reclaimed. Let’s show them that after three years under a Conservative mayor, and with a new Conservative MP in place, we are ready to deliver it.

For anyone whose roots are in the West Midlands, car making holds a special place in our hearts. As someone brought up in Northfield, just up the road from the famous Longbridge car plant, I am also very conscious of the past of our car industry. Home of “the Austin”, Longbridge at its 1960s zenith was one of the world’s biggest car factories, employing tens of thousands of people producing ground-breaking vehicles like the Mini.

Then, of course, came the painful decline through the disastrous British Leyland years and beyond. The causes of that decline are still the cause of much debate, but no-one can argue about the individual and collective pain that each job loss brought.

This culminated 15 years ago in the collapse of MG Rover, with the loss of the remaining 6,000 jobs. It remains one of the darkest days in the history of Birmingham and the West Midlands.

Psychologically, the closure dented the confidence of a region with a proud automotive pedigree. Economically, MG Rover’s collapse impacted on the thousands of people who worked for the firm and the massive supply chain that supported it.

Physically, when MG Rover shut its gates for the last time it left behind a vast industrial site that reminded us of the closure.

Since then, much of the site has been redeveloped. Developer St Modwen has shown real ambition and vision, effectively building a new town centre on part of site, which also boasts a fantastic college. Aquapak, a firm at the cutting edge of recycled polymers, recently welcomed Alok Sharma to their premises on the new business park there.

The old MG Rover site is being reshaped by a sustainable mix of businesses and housing redevelopment, including state-of-the-art senior living. Yet every time I pass Longbridge, I look across to the parts that remain empty and think about what it once meant for local jobs.

Now I’m determined to complete the regeneration of Longbridge, reclaiming a site that once represented one of our region’s most established industries, by applying one of our newest.

In the last year I have been joined by fellow Brummie Gary Sambrook, the Conservative MP for the area, in this ambition. He has been working with developer St. Modwen to get MG Rover’s “West Works” site redeveloped, and once again generating opportunity for local people.

Together we are promoting Longbridge’s strong business case to be a critical site for Government support through the Urban Transformation Fund. That’s why I submitted Longbridge to Government as one of our region’s top funding bids and it is why Sambrook passionately pitched it to the Chancellor last week in the Commons debate on the Spending Review.

To put it simply, this derelict site – which has been levelled for years – could provide a quite profound and tangible example of “levelling up” in action, and illustrate the West Midlands ability to bounce back from adversity.

That ability is also reflected in the land reclamation technology being pioneered here, which up until the pandemic hit, was cleaning up derelict eyesores like Longbridge and helping us build new homes at record numbers, through our “brownfield first” policy.

The exciting investment in the National Brownfield Institute at Wolverhampton will cement our position as a national leader in remediation and construction technology.

It is fitting that this example of West Midlands 21st Century innovation can be put to use to “level up” Longbridge, given its links to our industrial heritage.

Of course, there is another reason why the fate of the remaining Longbridge site would resonate so much now. The automotive industry is facing huge challenges. The sector is going through a revolution, illustrated by the Government’s ambitious decision to stop the production of petrol and diesel cars in 2030.

Longbridge stood as a reminder of what happens when we fail to invest in our automotive sector. The promise of £500 million in the Spending Review, to back electric battery technology and production shows the resolve not let this happen again. That’s why the Gigafactory that is so critical to our automotive future must be built in the West Midlands.

Longbridge may, sadly, never produce another car – but the site can produce quality new jobs for local people. With a new Gigafactory, we can recharge the automotive industry 15 years after MG Rover’s collapse.

By backing the regeneration of Longbridge, while investing in the West Midland’s automotive future, the Government can not only accelerate its ambitions to “level up” the economy – it can also drive home a profound message about our ability as a nation to bounce back.

The proposed foreign aid cut. Many Tories are against it. But Sunak has limited options as he tries to salvage the economy.

18 Nov

Given the Coronavirus crisis is estimated to have cost the UK £210 billion and counting, the Government is under enormous pressure to explain how it will pay its debt back. One of the ways Rishi Sunak is reportedly planning to do this is by cutting foreign aid, which he is expected to announce in a spending review next week.

Currently, the UK spends 0.7 per cent of gross national income on foreign aid, a target that is recommended by the United Nations and was written into law when David Cameron was in office. But the Chancellor apparently wants to bring this down to 0.5 per cent. The Prime Minister’s official spokesman said of the idea: “we are looking at how the aid budget is spent, ensuring it serves the UK’s priorities and represents value for money. It is legitimate to consider where savings can be made when the public finances are under huge strain.” 

Several prominent Conservatives have opposed the move. Tobias Ellwood, Tory chairman of the Commons defence committee, said: “The damage would be we are retreating from the global stage at the very time when we should be doing exactly the opposite.” Jeremy Hunt and Bob Neill are also against it, as is Dominic Raab, the Foreign Secretary, apparently, who previously dismissed reports it would be cut as “tittle tattle”. Cameron’s disapproval has been made known in several newspapers.

One concern is that a reduction would harm international relations. Andrew Mitchell, former international development secretary, said: “It would be an extraordinary decision at the very point at which Britain is about to take over the chairmanship of the G7, with a new administration in the White House which will strongly champion the international system”, and Anthony Mangnall, the Tory MP for Totnes, echoed these concerns.

Others point out the moral case for keeping foreign aid as it is, given that the pandemic is when the world’s poorest people need help the most. Even before the cut was suggested, the Government was due to spend less than its anticipated £15.8 billion this year, due to a contraction in the economy. When Conservatives have spent tremendous sums on the flawed contact tracing app, PPE, and other Covid projects, some might call foreign aid a drop in the ocean.

And yet, others will say the cut is necessary at a time of intense national need. Given the Conservatives won last year’s election with a manifesto based on “levelling up” the UK, by way of domestic investment and infrastructure, the Government no doubt believes voters want this to be reflected when the Chancellor plans the economic recovery.

If there is a cut to 0.5 per cent, it’s also worth remembering that the UK will still be one of the biggest global contributors to foreign aid. In 2019 and 2018, it was one of only five countries to hit the UN’s 0.7 per cent aid target (level with Denmark, but below Luxembourg, Norway and Sweden), and there’s an argument that other countries need to increase their spending. New Zealand, Canada, Japan and the USA have not reached 0.5 per cent, never mind 0.7 per cent. 

Furthermore, it is understood that Boris Johnson wants this to be a time-limited measure, with a return to 0.7 per cent. In the interim, the UK can make a sizeable difference is by helping to facilitate the global supply of vaccines.

Either way, this is just the beginning of Sunak having to make some incredibly unpopular decisions about how to salvage the economy. Having become one of the most popular politicians in a staggeringly short period of time, he is now going to deliver policies that illicit completely the opposite response to Eat Out to Help Out. There is no painless way out of this. The next few months are going to be testing for the Chancellor to say the least.

Ed Vaizey: Ending tax-free shopping for international visitors would be disastrous for the British economy

19 Oct

Lord Vaizey of Didcot is a Conservative Life peer who has sat under this title in the Lords since 10 September 2020. Prior to joining the Lords, he sat in the Commons as an MP, and was first elected in 2005.

I bow to no one in my admiration for Rishi Sunak.  Taking up the toughest of jobs at the toughest of times, he has played a blinder. Job Support Scheme, Bounce Back Loans, Eat Out to Help Out. Even though I’m not an MP any more, I know from talking to my former constituents how much this help has been needed and welcomed.

But with the Government having to make so many decisions so quickly, it’s unlikely everyone will be bang on the money. Even in normal times (remember those?) we occasionally saw unintended consequences.

I’m afraid to say that the Treasury decision to end tax-free shopping for international visitors at the end of December is one of those decisions. At the moment, visitors can reclaim the VAT on stuff they buy here. From January, this will be stopped.

I can see why the Treasury thought it was a clever wheeze. They think it will only affect a small group of very wealthy people. If it hits anywhere, it will hit Bond Street and Bicester village – not exactly marginal vote territory.

But there’s a problem. These wealthy visitors don’t just shop – they eat out, they go to museums and the theatre, stay in hotels. They also travel outside London, visiting places like York and the Lake District.

Also, the posh stuff they buy is often actually made here. Yes folks, those Burberry suits are made in Yorkshire. And those French Chanel jumpers are actually made in Scotland. Which is why we are now in the weird position of the SNP Finance Minister calling out a Tory Chancellor for not backing British business.

The Treasury assumptions, which I have seen, act as if the vast majority of visitors will still come, so the Treasury will make a net gain from them paying VAT. But why should they when we will be the only country in Europe not offering VAT-free shopping?

As a result of this decision, they are likely to go to Paris, Milan or any other European city instead of London. In fact, a recent poll of these visitors showed that if the UK ends tax-free shopping 93 per cent would not buy goods here and 60 per cent wouldn’t even bother visiting post the pandemic. Maybe that’s why the French are giving them a nudge by lowering their VAT free threshold the day after the Treasury took the decision.

It doesn’t take many visitors to change their plans. 13 per cent of all-tax free shoppers account for 44 per cent of all tax-free sales. All it takes is for a small proportion of high-spending international tourists to go elsewhere before the impact is felt. The end result is an increase in job losses.

Retailers, hoteliers and airport chiefs from all over the country have warned that scrapping tax-free shopping for international tourists has put 70,000 jobs in jeopardy. The decision is a big blow to the regions. Tax-free shopping supports 1,800 jobs in Edinburgh and 1,200 jobs in Manchester alone, and the money spent in London stores helps high streets throughout the UK.

Most flights from the UK’s regional airports are to and from Europe. Stores in Birmingham and Manchester had hoped to double sales to EU visitors on the understanding that tax-free shopping would be extended to EU countries once we’d left the bloc. Now the likes of Selfridges and Marks & Spencer are warning the impact it will have on jobs across the country instead. This is not what those workers voted for.

If allowed to go ahead, the decision to end tax-free shopping for international visitors will put Global Britain at a competitive disadvantage and result in thousands of jobs losses. I hope our pragmatic Chancellor will think again.

Richard Ritchie: The climate crisis – and this pandemic – have made the case for a carbon tax stronger than ever before

15 Oct

Richard Ritchie is the author of a recent history of a secretive group of Conservative MPs called The Progress Trust (Without Hindsight: A History of the Progress Trust 1943-2005). He is Enoch Powell’s archivist and is a former Conservative Parliamentary Candidate. He was BP’s director of UK Political Affairs.

There is something in the air, and it’s not just carbon or virus emissions. Earlier this month, ConservativeHome carried a piece by Rachel Wolf, championing carbon pricing – that is the polite way of describing some form of carbon tax. Then, the influential economist Dieter Helm published in September a new book, Net Zero: How We Stop Causing Climate Change, which explains in detail the rationale behind a carbon tax. And from The Times, we’ve learnt that the Chancellor is considering such a tax for his next, Covid-19 budget.

It’s not a new idea. When I worked for BP and climate change first entered the political agenda – before, the main worry was that oil would run out and become too expensive – thoughts on how to price carbon were already in circulation. The oil and gas industry saw some merit in the concept, but favoured emissions trading over a tax, correctly identifying this as a less expensive, Europe-inspired fudge. Now, the combination of a pandemic and climate crisis gives the idea of a carbon tax real traction.

The political implications are important. Climate change and Covid-19 have much in common. Both require us to “follow the science”, although in neither case is the science unanimous. Both are manna from heaven for those who wish to “shut-down” the economy, and limit personal freedom. Both provide excuses for expanding the state. And in both cases, the cure can prove worse than the disease.

There can be little doubt that, so far, global policies to reduce carbon emissions have failed. This won’t worry those who are sceptical of the causes of climate change. But if one believes a failure to act now is to bequeath a catastrophe to future generations, then those on the “right” should be as concerned as those on the “left”.

Where we differ will be on the remedies. So far, “left-of-centre” remedies have generally been the norm. The Kyoto Protocol in 2007 and the Paris Agreement in 2015 have been little more than an opportunity for governments and lobbyists to parade their compassion. Whatever Trump’s motives may be surrounding climate change, his analysis of the Paris Agreement is basically sound. Some of course think its failure is due to inadequate targets; but their targets would make the economic consequences of Covid-19 seem trivial in comparison.

So the question is whether there is a policy which would reduce carbon emissions effectively, in an economically rational way. This is surely one reason why Rishi Sunak is attracted by the idea of a carbon tax as a means of reducing carbon consumption.

In Dieter Helm’s view, the word “consumption” is pivotal. It is no good concentrating solely on industrial emissions, as these won’t necessarily have any global effect – it simply drives emissions abroad, frequently to China. But a carbon tax which crucially incorporated a carbon border tax on imports would, by targeting attention on everyone’s personal carbon footprint, incentivise many things which probably make sense in themselves anyway.

There will be many Conservatives who will argue that all taxes do harm, and that the introduction of a “new” tax is incompatible with Tory beliefs. But unless one is totally sceptical of the science, and dismissive of the need to balance the books, there is much to be said for taxing “bads” rather than “goods”.

Of course it is open to many objections. For example, does the Treasury regard a carbon tax as an emergency measure to raise revenue, or a longstanding instrument to influence behaviour? If it is to serve its purpose, it will eventually yield less revenue.

Equally, if applied in the wrong way, it could merely make this country less competitive. Without care, it could prove regressive. Indeed, if the Paris riots over fuel duty are any guide, it could also prove politically impossible.

Then, for it to work, there must be alternatives for consumers to choose from. Not many will choose an electric car, for example, if there is no guarantee that it can be charged along the journey. (Although mention of electric cars also serves as a reminder that not everything is at it seems – an electric car takes twice as much carbon to produce than a conventional one. A carbon tax would sort that out too).

On the other hand, if properly devised a carbon tax has the capacity both to raise government revenue and to reduce carbon emissions, and even to incentivise other countries to follow suit. Matters to be decided include how the carbon price is fixed and at what level it should be introduced. Should it be levied on consumption or production? Does the tax provide sufficient time for consumers to adjust?

This is the political danger. Carbon taxes could come to the rescue of a cash-strapped Chancellor, because they hold out the prospect of raising new revenue without breaking a manifesto commitment not to raise existing taxes. But if the carbon tax is set too high at the outset, it will be counter-productive. If the Treasury is following Helm’s advice, “the trick is to start low, but credibly signal that the price is going to go up as high as is necessary to achieve the (carbon reduction) target.”

There is no painless way of reducing carbon emissions. Those on the “left” will embrace a policy which involves “picking winners”, nationalisation, subsidies, exemptions, regulation and illiberal compliance. A lobbyist’s paradise. The alternative is to incentivise new technologies, create new markets and provide practical signals to consumers. This is the purpose of a carbon tax. It will never be “popular” because the costs of transforming the networks, communications and transport of this country to facilitate lower carbon emissions are enormous.

But compared with the alternatives, a carbon tax is at least rational and addresses all the major sources of carbon emissions, namely agriculture, transport and electricity. Moreover, it produces a new source of government revenue at a time when it is desperately needed.

Any new tax is depressing to a free market Tory. But climate change, like pandemics, raises issues which are more important than economics. If it is a whole load of nonsense to claim that today’s climate change is man-made, then we are free to carry on as we are.

But if not, Tories have an obligation to advocate alternative solutions to those of the socialist “greens”. The market is the best way of allocating scare resources effectively. But in a time of war, the market cannot tell us how much to spend on butter or guns. That is a political choice, and it is the nature of the choice presented by climate change, if most scientists are to be believed. On so many levels and for so many reasons, it is hardly surprising if Sunak is pondering one.