Will Holloway: The challenges awaiting Ministers and MPs as Parliament returns today

11 Jan

Will Holloway is the Deputy Director of the think tank Onward and a former Special Adviser.

This is not the New Year reset that the Government was hoping for. Parliament has returned not to slowing transmission and a gradual reopening of the economy, but to the worst elements of last year: a lockdown, surging infection rates and all the hardship both entail.

But as easy as it is to be depressed with the new start of term, we should recognise that we are entering the final furlong of this crisis. And now that Brexit negotiations will no longer absorb political oxygen, the Government has an opportunity to push ahead not just with vaccinations, but with delivering the promises made on doorsteps in 2019.

As the final months of 2020 have demonstrated, progress can be made at speed. Trade deals are renowned for taking years to negotiate – take for example, the EU-Canada trade deal that took seven years – but the recently agreed EU/UK agreement that covers everything from security to energy bucked the trend, and was finalised in less than a year. 

Even though it can sometimes take more than a decade to develop a new drug, vaccines for Covid were developed within the year. The UK is now fourth globally for doses of vaccine administered per 100 people. We have access to more than 350 million vaccine doses through a range of companies – the first of which have been approved by the independent regulator. Subsequent candidates will be submitted for approval in the near future.

Taken together, this means that enough vaccines have been procured to protect the whole of the UK population several times over. We have been fast to act while other European countries trail behind. Despite not having a major diagnostics manufacturing base in the UK, and at a time when countries around the world were competing for the same products, hundreds of thousands of Covid tests are now conducted every day.

Indeed, since the onset of the pandemic, less than a year ago, over 55 million tests have been carried out, and the UK is now testing more than any other advanced economy per 1,000 people.These are achievements that many would have regarded as impossible at the onset of the pandemic, and show what can be achieved with focus, resolve and urgency. It should be a lesson for the rest of the Parliament.

Already, we are a quarter of the way through this term and time is quickly running away. This year could be make or break for the Government’s new voter coalition. Not only will this year hold the first major test internationally of what the Government stands for globally post-Brexit, with the UK chairing the G7 and hosting of the COP26 climate summit, but it could face its first electoral test since the general election.

Should the elections go ahead, even if later in the year, the campaigns will inevitably be different, but the impact will be no less significant. While commentators are likely to focus on the Scottish Parliamentary elections, and the subsequent implications that they will have for the future of the Union, as well as the London mayoral elections, the results elsewhere may prove to be more of a bellwether for the behaviour of the 2019 general election coalition of Conservative voters.

As Onward’s landmark research before the election and a year on from it showed, the Prime Minister has a historic opportunity to build a new, lasting support base. The research found that Conservative voters – both “southern” and “Red Wall” conservatives – are more likely on balance to lean to the left, albeit marginally, on the economy and to the right on socio-economic issues.

Those who backed the Conservatives at the last general election are economically more interventionist, on balance supporting more regulation rather than less, as well as efforts to retrain workers, while at the same time backing a tough approach to crime and immigration.

With record levels of police recruitment, the launch of the Lifetime Skills Guarantee enabling adults to benefit from hundreds of fully-funded courses, and one of the biggest efforts to protect jobs and livelihoods in peacetime history, the government has a strong record of delivery on voters’ priorities.

But the biggest outstanding promise lies ahead. With Brexit done, the Prime Minister said that the Government’s focus will be to “level up and spread opportunity across the country”. A mission not without challenge, given the recent poll results to suggest that a third of voters had never heard of levelling up.

But terminology aside, increasing opportunities in communities that have for years seen prospects fail to be recognised is one of the great prizes available to the Government. To sustainably and successfully achieve that aim requires bold thinking and ruthless focus. We need to look ahead of the curve.

For example, Onward’s new research on Net Zero found that up to 10 million jobs may be affected as a result of the drive towards decarbonisation over the next 29 years, and the need to plan for and support the shift.  We need to ask challenging questions: what impact do taxes have on different parts of the country? How can innovation be spread beyond the London-Oxford-Cambridge triangle?  And now that we have left the European Union, how can the UK attract more foreign direct investment outside of the usual areas?

Success will involve bending every area of policy to achieve the objective. It is by no means assured. With an unforeseen global pandemic throwing a spanner into the machinery of government, combined with commitments for new infrastructure projects and legislative changes that will take time to come into effect, the pressure is on.

And the stakes are high. It is instructive that only a 4.3 per cent swing to Labour would be needed to generate a hung parliament in 2024. Anything more could deliver an SNP-Labour coalition.  Failure to deliver in the next 12 months may result in the loss of the majority in Parliament, and a return to the stasis and acrimony that succeeded the 2017 result. Success will mean a lasting change, a political realignment across the country, and a consolidated base of support for the future.

The short sharp shuffle. Sharma takes on COP26 full-time. Kwarteng steps up a rung to become Business Secretary.

8 Jan

The end of transition was a calendar fixture and ought, in the event of a trade agreement, to have offered Boris Johnson the chance to refresh the Government – since a deal would both boost his standing with Conservative MPs and bring calmer political waters.

But then an event took place last winter that was very much not a calendar fixture: the first major pandemic in a century.  It would consequently have looked and been frivolous to have a major reshuffle now, and so lash those waters up again at a moment when the Prime Minister needs all Ministerial hands on deck.

The same logic applies to the next natural break in the political calendar: the February half-term recess.  Hospitalisations will have risen and may not be falling by then.

Then there is Easter in early April.  But Covid considerations apart, local elections are due in May.  Why hold a big reshuffle before then rather than after?

And if they are postponed until June, why not wait until September for a shuffle, before the Conservative Party Conference (for there will be one in some form), rather than send MPs off for the summer recess in the wake of a self-made squall – since reshuffles inevitably bring more pain than gain?

The shape of events since the outbreak of a new strain of Covid has thus suggested putting off the shuffle until early autumn.  Furthermore, no Cabinet Minister will then reasonably be able to complain if sacked or moved, having been in place for the best part of 18 months.  However, there was a snag.

Namely, what to do about COP26, due to take place in Glasgow this November?  To cut a long story short, it will need an agreement to be a political success for the Prime Minister, and is set to be his second major diplomatic setpiece of the year – the first being the UK’s G7 presidency and the consequent summit, usually held during the summer.

That requires a lot of legwork.  And the Minister in charge of the COP26 negotiation, Alok Sharma, wore two hats – his other being that of Business Secretary.

So the Prime Minister has gone for a short sharp solution – announced on a Friday evening, a legendary graveyard news slot, in which Governments make announcements that they wish to gain limited publicity.

No big shuffle.  No return to the Cabinet yet for Anne-Marie Trevelyan, who was removed when her DfID job was abolished recently, but reportedly promised a return.  She is back in the department as Energy Minister, which will surely be a disappointment.  And there is no comeback for Sajid Javid, whose name was in the frame for the BEIS job.  Instead, Johnson has opted for a minimalist, orderly solution.

Sharma stays in Cabinet, and goes full-time for the COP26 role.  And Kwasi Kwarteng, already a Minister of State in the Business department, moves one slot up to replace him as Secretary of State.  By our count, the Cabinet was one under its maximum count of 22, so Sharma stays a full member.

Kwarteng is a big, personable, right-wing historian, who once wrote a lively column for the Prime Minister’s alma mater – the Daily Telegraph.  He was a co-author of the Free Enterprise Group’s bracing study Britannia Unchained.

So he is bound to see the trade deal as a further loosening of the bonds.  The Government’s friends will say that he ups the Cabinet’s number of ethnic minority members to five.  Its enemies will reply that it raises the number of Old Etonians to two.

Sharma is not at all a front-of-house Cabinet showman, being inclined to block the bowling and risk nothing outside off stump, but he is a diligent, toiling Minister.  More to the point, he is a loyalist: a Johnson voter in the 2019 leadership election, playing Jeremy Hunt during campaign practice debates.  Kwarteng is another loyalist – though he broke ranks to lay into “misfit and weirdo” Andrew Sabinsky.

The term was Dominic Cummings’, not Kwarteng’s: readers will remember the former Chief Adviser seeking to recruit some to the civil service.  Kwarteng departed from the Government line to accuse Sabinsky of racism. But Cummings has left the building…

We take this mini-shuffle as a sign that a bigger one is now unlikely to come until the autumn.  This is not a strong Cabinet, but the Prime Minister is sticking with it, at least for the moment.

Dependability, a lack of fuss, predictability – and taking the drama out of event.  These are not qualities most people associate with Johnson but, when it comes to Government shuffles, they are becoming trademarks: oh, plus loyalty, of course.  Though the treatment of Trevelyan hangs over these moves like a questionmark.

Ted Christie-Miller: Everything must change if Britain is to hit its Net Zero target. How are we going to manage it?

5 Jan

Ted Christie-Miller is a Senior Researcher at Onward and is leading the Getting to zero research programme.

The existential necessity of reducing our carbon emissions, and the level of cross-party consensus in Westminster, can sometimes obscure how hard it is going to be to get there. This is a policy that will require drastic changes to human behaviour, industrial processes and the homes we live in. We need a more grown up conversation about getting to zero.

Politicians, understandably, tend to emphasise the opportunities. The Prime Minister’s Ten Point Plan and last month’s Energy White Paper painted an exciting vision of a jobs-rich, cutting-edge future that could benefit Britain’s lagging regions. Voters largely agree: YouGov recently found that a majority of all age groups, regions, genders, party voters and both sides of the Brexit vote want to see Britain leading the world on climate action. Environmentalism is no longer woke metropolitanism but good politics. On the campaign trail last year in Workington, I witnessed a hustings dominated by small nuclear reactors and offshore wind.

But despite the consensus on climate, the sheer scale of the challenge is underappreciated. Over the next 30 years everything needs to change: the food we eat, the cars we drive and the way we heat our homes. As Onward uncovered last year, we need to treble the number of plumbers just to have the capacity to change out old boilers and quintuple the rate of energy efficiency improvements to insulate our housing stock. We also need to build more than 500 electric vehicle charging points a day, according to the Society of Motor Manufacturers and Traders.

As with all industrial transformations, the costs will not be evenly spread across the country. As new Onward research out today finds, the regions which have lagged most in recent decades stand to be hardest hit: 42 per cent of jobs in the East Midlands are in high emitting industries, 41 per cent in the West Midlands, and 38 per cent in Yorkshire and the Humber and the North West – compared to just 23 per cent in London and 34 per cent in the South East. In total, more than half (52 per cent) of high emitting jobs are located in the North, Midlands and Scotland. The risks of this turning into another North-South divide are acute.

Despite this, much of the existing spending on net zero programmes is going to more prosperous regions. New analysis from Zap Map shows that London and the South East received 45 per cent of new charger capacity in the past year. There are 63 public chargers per 100,000 people in the capital, more than double the average of the rest of the UK. Given the reliance on cars outside of London, and the high levels of public transport investment in the capital, this feels back to front. The Department for Transport itself estimates that people are 27 per cent more likely to have a car if they live in the West Midlands or the North West than in London.

The new BritishVolt gigafactory in Blyth announced last month demonstrates the potential for net zero to be a net positive. Whether it’s offshore wind in the North Sea, carbon capture clusters in the Humber or electric vehicle manufacturing in the North East, there are a sea of economic opportunities to come over the next three decades. But we cannot kid ourselves that this will be a seamless transition, and for many workers the journey from a carbon emitting job to green industry will be tough. If politicians are going to take voters with them, we need to be honest about the trade offs and develop policies to help those who stand to lose out.

This is why the Government’s combined agendas of net zero and levelling up are so crucial. If the synergies of the two missions can be found and the policy is creative, thoughtful and practical, the Government does not have to choose between the two. Net zero can and must be the key to unlock regional growth in the UK and a prosperous future for all of us.

Ted Christie-Miller: Everything must change if Britain is to hit its Net Zero target. How are we going to manage it?

5 Jan

Ted Christie-Miller is a Senior Researcher at Onward and is leading the Getting to zero research programme.

The existential necessity of reducing our carbon emissions, and the level of cross-party consensus in Westminster, can sometimes obscure how hard it is going to be to get there. This is a policy that will require drastic changes to human behaviour, industrial processes and the homes we live in. We need a more grown up conversation about getting to zero.

Politicians, understandably, tend to emphasise the opportunities. The Prime Minister’s Ten Point Plan and last month’s Energy White Paper painted an exciting vision of a jobs-rich, cutting-edge future that could benefit Britain’s lagging regions. Voters largely agree: YouGov recently found that a majority of all age groups, regions, genders, party voters and both sides of the Brexit vote want to see Britain leading the world on climate action. Environmentalism is no longer woke metropolitanism but good politics. On the campaign trail last year in Workington, I witnessed a hustings dominated by small nuclear reactors and offshore wind.

But despite the consensus on climate, the sheer scale of the challenge is underappreciated. Over the next 30 years everything needs to change: the food we eat, the cars we drive and the way we heat our homes. As Onward uncovered last year, we need to treble the number of plumbers just to have the capacity to change out old boilers and quintuple the rate of energy efficiency improvements to insulate our housing stock. We also need to build more than 500 electric vehicle charging points a day, according to the Society of Motor Manufacturers and Traders.

As with all industrial transformations, the costs will not be evenly spread across the country. As new Onward research out today finds, the regions which have lagged most in recent decades stand to be hardest hit: 42 per cent of jobs in the East Midlands are in high emitting industries, 41 per cent in the West Midlands, and 38 per cent in Yorkshire and the Humber and the North West – compared to just 23 per cent in London and 34 per cent in the South East. In total, more than half (52 per cent) of high emitting jobs are located in the North, Midlands and Scotland. The risks of this turning into another North-South divide are acute.

Despite this, much of the existing spending on net zero programmes is going to more prosperous regions. New analysis from Zap Map shows that London and the South East received 45 per cent of new charger capacity in the past year. There are 63 public chargers per 100,000 people in the capital, more than double the average of the rest of the UK. Given the reliance on cars outside of London, and the high levels of public transport investment in the capital, this feels back to front. The Department for Transport itself estimates that people are 27 per cent more likely to have a car if they live in the West Midlands or the North West than in London.

The new BritishVolt gigafactory in Blyth announced last month demonstrates the potential for net zero to be a net positive. Whether it’s offshore wind in the North Sea, carbon capture clusters in the Humber or electric vehicle manufacturing in the North East, there are a sea of economic opportunities to come over the next three decades. But we cannot kid ourselves that this will be a seamless transition, and for many workers the journey from a carbon emitting job to green industry will be tough. If politicians are going to take voters with them, we need to be honest about the trade offs and develop policies to help those who stand to lose out.

This is why the Government’s combined agendas of net zero and levelling up are so crucial. If the synergies of the two missions can be found and the policy is creative, thoughtful and practical, the Government does not have to choose between the two. Net zero can and must be the key to unlock regional growth in the UK and a prosperous future for all of us.

Stanley Johnson: Next year’s climate change conference should take its lead on carbon pricing from this Agreement

29 Dec

Stanley Johnson is an environmentalist, author, former Conservative MEP and parliamentary candidate.  His new novel, The Warming, will be published next year.

With fellow environmentalists Bill Oddie, Baroness Young and Laura Sandys, I was a founder-member of a campaigning group called Environmentalists for Europe. In February 2016, the Times published the following letter which we co-signed.

“Sir, Britain’s membership of the EU brings benefits to the environment that would be lost if we were to walk away from Europe. By being “in” we have improved our beaches, cleaned up the air we breathe, helped to preserve our nature and wildlife and set standards for animal welfare. That is why today we are launching Environmentalists for Europe. We know the EU isn’t perfect, but we do know that our country’s greatest resource — its environment — is better protected and better preserved for future generations when we remain an active, full partner within Europe.”

Well, as we all know, the Remainers lost. I, for one, totally accepted the verdict of the June 2016 Referendum, confirmed in later elections.

That said, I couldn’t help wondering, as I down with my laptop on Boxing Day to study the text of the EU-UK Trade and Cooperation Agreement, how the environment – nature, wildlife, forests, marine pollution, climate change and so on: issues still very close to my heart – had fared during the course of the intense and protracted negotiations.

Chapter Seven deals with Climate and the Environment and Chapter Eight with ‘other instruments for trade and sustainable development’. Under other circumstances, these two Chapters, and their associated legally-binding Articles, are important and substantial enough to have formed a stand-alone EU-UK Environment, Trade and Sustainable Development Treaty.

Take the issue of carbon taxes, for example, where some path-breaking language was agreed.

Article 7.3 on “Carbon pricing” provides that –

“1. Each Party shall have in place an effective system of carbon pricing as of 1 January 2021.

2. Each system shall cover greenhouse gas emissions from electricity generation, heat generation, industry and aviation.

3. The effectiveness of the Parties’ respective carbon pricing systems shall uphold the level of protection provided for by Article 7.2 [Non-regression from levels of protection]

4. By way of derogation from paragraph 2, aviation shall be included within two years at the latest, if not included already. The scope of the Union system of carbon pricing shall cover departing flights from the European Economic Area to the United Kingdom.

5. Each Party shall maintain their system of carbon pricing insofar as it is an effective tool for each Party in the fight against climate change and shall in any event uphold the level of protection provided for by Article 7.2 [Non-regression from levels of protection].”

The Agreement recognition – as a matter of international law – of the part to be played by carbon pricing or carbon taxes in the battle against climate change is, in my view, a tremendously important move forward in the current debate.

I would like to see the Conference of the Parties to the UN Climate Change Convention (COP 26) to be held in Glasgow in November 2021 with the UK in the Chair, adopt a conference resolution on carbon pricing or carbon taxes, based on the language of the Agreement, as cited above.

COP 26 might even go one step further than the Agreement does, and make it clear that carbon pricing or carbon taxes (and national carbon budgets) should take imported carbon into account, as Professor Dieter Helm has so convincingly argued.

Chapter Seven also recognises the vital principal of ‘non-regression.  Article 7.2.2, for example, states:

“A Party shall not weaken or reduce, in a manner affecting trade or investment between the Parties, its environmental levels of protection or its climate level of protection below the levels that are in place at the end of the transition period, including by failing to effectively enforce its environmental law or climate level of protection.”

The key issue here, of course, is enforcement. Article 7.5 says:

1. For the purposes of enforcement as referred to in Article 7.2 [Non-regression from levels of protection], each Party shall, in accordance with its law, ensure that:

(a) domestic authorities competent to enforce the relevant law with regard to environment and climate give due consideration to alleged violations of such law that come to their attention; those authorities shall have adequate and effective remedies available to them, including injunctive relief as well as proportionate and dissuasive sanctions, if appropriate; and

(b) national administrative or judicial proceedings are available to natural and legal persons with a sufficient interest to bring actions against violations of such law and to seek effective remedies, including injunctive relief, and that the proceedings are not prohibitively costly and are conducted in a fair, equitable and transparent way.

In the run-up to the 2016 Referendum, Remain supporters frequently stressed the unique role, as they saw it, of the European Commission and the European Court of Justice in enforcing legislation, including EU environmental directives.

With the Agreement in force, the EC and the ECJ will of course play no further part in the enforcement of EU environmental directives and regulations.

The Government, in publishing the text of the Agreement, comments firmly that –

“The domestic supervisory bodies of the UK and EU will cooperate to ensure effective enforcement of their respective environmental and climate laws. ..This chapter is not subject to the Agreement’s main dispute resolution mechanism but will instead be governed by a bespoke Panel of Experts procedure.”

The Government is now in the process of establishing an Office of Environmental Protection (OEP). It remains to be seen whether, in addition to the cooperation over enforcement between EU and the UK, mentioned above, the OEP will be strong and pro-active enough to fill, or at least help fill, the gaps left by the departure from the scene of the European Commission and the European Court of Justice.

Stephen Booth: This trade deal delivers both the UK and the EU’s main objectives. It gives us freedom – which comes at a price.

29 Dec

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

Much of the analysis of the UK-EU Trade and Cooperation Agreement will flow from underlying prejudices. “The UK shouldn’t have left”, “we don’t need a trade deal with the EU”, “the UK should have or could have asked for X or Y”. It is, however, more instructive to assess the deal against the Government’s stated aims and, for that matter, what the EU said it wanted.

Brexit will have economic and geopolitical consequences. But, ultimately, it is a constitutional question for both Brexiteers and Brussels. In the foreword to the UK explainer, the Prime Minister cites “restoring national sovereignty” as the “central purpose of leaving the EU”.

Meanwhile, the EU’s brochure is quick to stress that, even under the new agreement, the UK will lose the benefits of membership. “This will recreate barriers to trade in goods and services and to cross-border mobility and exchanges that have not existed for decades,” it says. In other words, freedom comes at a price.

The past year of negotiations has not simply been an exercise in haggling over the price of UK legal independence from the EU system. At times, it seemed Brussels was simply unwilling to recognise this principle as part of a negotiated settlement. The EU had initially demanded dynamic alignment with EU law, enforced via the European Court of Justice (ECJ). And it demanded a continuation of existing EU fishing rights in UK waters, despite the UK’s departure from the Common Fisheries Policy.

A Brexit government with a significant majority could not have accepted such a deal. Nonetheless, convincing the EU to conclude a deal that does recognise the UK as a “sovereign equal” is a significant achievement for the negotiating team led by David Frost. The agreement is based on international law, there is no role for the European Court of Justice (ECJ) and no requirement for the UK to continue following EU law. Under the terms of the Northern Ireland Protocol, ECJ jurisprudence will continue over some issues in the province. Despite this, there has been a calming of Northern Irish tensions over the issue.

As has been noted before, this negotiation was unique, since it was driven by the desire for separation rather than integration. Therefore, any agreement essentially had to do two things. First, establish the new baseline for the UK-EU economic relationship (or the degree of dislocation) and, second, address how further divergence (or convergence) in the future should be managed.

The deal’s main feature is ensuring there are no tariffs or quotas on goods traded between the UK and the EU, where they meet the relevant rules of origin. This is significant because it is the first time that the EU has agreed a zero-tariff, zero-quota deal with any other trading partner (for example, the EU retains a small number of tariffs on Canadian agricultural exports). Certainly, businesses would have liked more time to adjust to the new relationship, but the deal provides important stability for the sectors most vulnerable to a no deal Brexit, such as agriculture, automotive, aerospace and chemicals.

The UK has secured some simplifications for customs formalities and important provisions for haulage, but there will be new frictions on UK-EU trade. For example, the EU refused to reduce the frequency of checks on food imports and has insisted that some products be certified by EU rather than UK testing bodies. The provisions on services are limited. The cost of doing business with the EU will be increased as a result.

There are several issues that could evolve in future. UK professional qualifications will not be recognised at the outset, but there is a mechanism to do so in the future. Arrangements for personal data and financial services remain dependent on unilateral EU decisions, due to be taken next year, which might provide a basis for further cooperation.

On fishing, a delicate balance has been struck. 25 per cent of EU boats’ fishing quota in UK waters by value will be transferred to the UK fleet, over a period of five-and-a-half years. The Government says this will bring the share of the total catch taken in UK waters by UK vessels to around two thirds. After this period, there will be annual talks on the amount EU boats can catch in UK waters (and vice versa). The UK would then have the right to completely withdraw EU access to UK waters. However, in response, the EU could impose tariffs on fish or other goods exports from the UK. These measures would need to be proportionate to the impact of the loss of access and are subject to arbitration. This means that the annual negotiations from 2026 could yet become a difficult political battleground.

The UK probably gave a little more than it would have liked to. However, the amount of fish caught in UK waters by UK vessels will increase, the UK has maintained tariff- and quota-free access to the EU market where much of the UK catch is sold, and the agreement establishes the principle of the UK’s status as an independent coastal state. It is undoubtedly an improvement on the status quo and, at this point, it is not clear the UK has the capacity to catch all the fish available.

The other major contentious issue throughout the negotiations has been the level-playing field. The agreement is a reasonable solution to satisfy the UK’s demand for regulatory independence and address the EU’s concern that future divergence may result in distortions to trade or investment.

The UK has agreed not to lower its existing standards on employment and the environment or use subsidies to unfairly distort trade. Both sides would also have the right to take countermeasures, such as imposing tariffs, if they believe they are being damaged by future changes to subsidy policy, labour and social policy, or climate and environment policy. As such, any dispute would only concern the effects of any changes to UK legislation, rather than whether UK rules are exactly the same as the EU’s.

This “rebalancing mechanism” has the potential to get messy if it is used frequently. However, crucially, any countermeasures are subject to independent arbitration, which means there would need to be solid justification for any EU tariffs in response to UK divergence. Tariffs cannot be used arbitrarily by the EU for leverage over the UK in the future. Ultimately, a race to the bottom on standards was always likely to be a bigger EU concern in theory than in practice. The reality is that the UK is likely to be equally as ambitious as the EU in many of these areas, such as climate change or animal welfare commitments, and perhaps more so.

In summary, this agreement is a considerable political achievement, because it manages to combine independence from the EU’s regulatory system with a high degree of market access (relative to comparable trade agreements, rather than EU membership). At times, this appeared impossible and, therefore, the UK’s strategy has been vindicated.

The deal recognises that the UK-EU relationship will continue to evolve. There could be future disputes but the deal is likely to provide stability for the next five to ten years when the world will no doubt be different again.

It is equally important that the country can move on and devote its energies to the future, both with regards to domestic policy and international relationships beyond Europe.

This is the first of a new series of pieces by Policy Exchange for Conservative Home looking at the various issues that arise from the Brexit trade deal.

David Lidington: We have left the EU and there is no turning back. Here’s what our new relationship with Europe should look like.

29 Dec

David Lidington is a former Cabinet Minister and Europe Minister. He is Chair of the Royal United Services Institution (RUSI), and of the Conservative Group for Europe (CGE).

Ursula von der Leyen’s tone was elegiac, Boris Johnson’s conciliatory. Their first public statements announcing that a deal had been agreed marked a significant shift in tone. Both leaders looked to a future in which the United Kingdom and the European Union could move beyond the fractious quarrels of the last four years and forge a new partnership in the months and years ahead.

The Commission President quoted T.S Eliot’s line that “…to make an end is to make a beginning”, while the Prime Minister spoke of how the United Kingdom would continue to be “culturally, emotionally, historically, strategically” attached to Europe. The following day, Michael Gove said that the deal would be “the start of a special relationship” between this country and the EU.

This isn’t about rejoining the EU. Even for someone like me – unrepentant at having campaigned to Remain back in 2016 – the prospect of revisiting in reverse all the agonies and divisions of the last four years is profoundly unappealing, as is the prospect of EU membership without the rebates or opt-outs we once enjoyed. The challenge for our country and for our fellow European democracies now is to work out new ways of working together to uphold values and defend interests that we share.

Every European country wants to address the climate emergency, disrupt and defeat terrorism and organised crime and resist efforts by Russia to subvert democratic values and institutions in our continent. We all want to see political stability in the Western Balkans, the Eastern Mediterranean and Africa – and know from hard experience that civil war, ethnic conflict and corrupt or ineffective governance allow criminal networks and extremist doctrines to thrive.

The incoming US President values alliances and international institutions, but will also expect European allies not only to spend more on defence and security (where the UK is indeed setting an example) but to show political leadership in Eastern and South-Eastern Europe and in Africa, and to contribute support in the Indo-Pacific region, which Joe Biden, like his recent predecessors, will see as the chief focus of United States strategic interest.

Our country remains a European power but one which, like France, also has global interests and a global outlook. We should not see a strategic partnership with the Member States of the EU and the EU institutionally as an alternative to “Global Britain” but as an important aspect of it.

It will take time for bruises to heal, but I’ve been struck by how, even during difficult, sometimes acrimonious divorce talks with the EU, the Prime Minister boosted Britain’s military contribution to the French-led counter-terrorist action in the Sahel and how, announcing the merger of the Foreign Office and DfID, he cited the Western Balkans and Ukraine as places where important interests were at stake.

On key global issues – climate change, the Iran nuclear agreement, Israel/Palestine – the Johnson government has chosen a position closer to the European mainstream than to the White House. The E3 of Britain, France and Germany has continued to work in partnership on geo-political challenges.

Over the next ten years, a United Kingdom outside the EU will need to renew and strengthen both its bilateral relationships with other European countries and its partnership with the EU collectively.

With national governments, this partly about finding a substitute for the regular contact between British Ministers and officials and their counterparts that for nearly 50 years, has taken place at and in the margins of Council of Ministers meetings. It wasn’t only the formal Council that mattered, but the breakfast, lunch or coffee with an opposite number from another country – or even just the quiet word in a corner about some issue.

Since we left the EU on 31 January this year, there’ve not been those same regular opportunities to get to know and do business with other European governments. We’ll need alternatives. It is good that the Government has signalled its intention to strengthen our diplomatic presence across Europe – but we should also consider formalising arrangements for annual summits and joint ministerial meetings with different European countries, as we already do with France.

The UK will also need over time to develop a strategic partnership with the EU as an institution. This is partly because we shall want to discuss issues that under the EU treaties fall to the Union collectively to decide and partly too because the reality is that even the big EU members spend a lot of effort trying to shape a common EU policy approach. The UK will need to operate at both national government and EU level just as the Americans, Swiss and Norwegians already do.

This is to a large extent already envisaged in the Free Trade Agreement, through the Partnership Council and its various sub-committees established to manage and monitor how the deal is implemented. As we go forward, UK policymakers will need to understand the debates within Member States and EU institutions on subjects like data transfer and privacy, and try from outside the tent to influence the outcome in a way that protects our interests.

The same is true about climate, a top-level priority for the Johnson government especially with the COP 26 summit scheduled for 2021. Should the UK’s planned emissions trading scheme be more or less the same as the EU’s? Will the UK’s requirements for green finance be accepted in the rest of Europe? Understanding each other’s positions and, where possible, working together on the global stage should work to our mutual advantage.

NATO will remain the cornerstone of Europe’s collective defence. The EU should not try to supplant or duplicate NATO’s work. Equally, NATO cannot do everything. There are both functional and geographical limits to NATO’s mission. In an age of hybrid conflict, not just military power but economic leverage (including sanctions), information, development spending and anti-corruption work – things that are more an EU than a NATO responsibility -also matter. Truth is, we shall need to work both bilaterally with individual governments and with the different international institutions.

Above all, we need to focus on the strategic picture. Throughout the world democracy, human rights and the rule of law are under pressure. Russia and China are increasingly assertive about the merits of their very different systems of government. The idea of a rules-based international order, fundamental to both our freedom and our prosperity, is being challenged. Criminal and extremist networks operate across national borders and are as internet-savvy as any legitimate business. Outside the EU, the United Kingdom’s interests impel us to find a new model of partnership with our closest neighbours and allies in Europe while at the same time reaching out to like-minded countries worldwide. Now is the time for the world’s democracies, in Europe and beyond, to stand together.

Ryan Bourne: First, Covid-19 lockdowns. Next, climate change ones – rationed car use, no red meat. Coming soon to a country near you?

9 Dec

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

We are at the beginning of the end. Provided vaccines prove as efficacious as trial results indicate, and absent unobserved side effects, the rollout to vulnerable groups should reduce Covid-19 death risks substantially and rapidly.

Inoculations down through the priority list will then put us within reach of a herd immunity robust to ordinary behaviour. Life, it seems, could be “back to normal” by the spring or summer of next year.

I’ve never been a “V-shaper” Panglossian on the economy. You can’t switch economic life on and off without causing permanent damage. But there is nevertheless reason to be optimistic of a robust recovery next year. What is more uncertain are the longer-term consequences of this experience on our collective psyche and politics.

American economists Julian Kozlowski, Laura Veldkamp, and Venky Venkateswaran have warned of a depressive “scarring” effect, as we use the experience to revise our assumptions on the probabilities of major shocks. If we collectively infer that tail-end risks such as global pandemics are larger, then investments become less attractive.

Think alone about the willingness of entrepreneurs to go into the travel, hospitality or leisure industries after this. Then think of the effect of the risk of having to pivot to home working again, generalised across other sectors.

Alongside that are the impacts on the role of the state. Economic historian Robert Higgs’ work has highlighted how crises generate a ratchet of government power. Wars, depressions, and emergencies see powers centralised, before receding again.

But the state never quite falls back to the same size and scope as before. After the Coronavirus, we will see more taxpayer funds for virus-related public health, vaccination research, and the subsidisation of PPE production capacity. Government will also be met with demands to maintain Covid-level welfare benefits and industry-specific stimulus as a tool for future downturns, a la Eat Out to Help Out.

Lockdowns are the obvious area where these two effects could come together most damagingly. Highly crude shutdowns had a strong logic in Spring, given the high uncertainty about the prevalence and risks of the virus, and with Italy highlighting the dangers of overburdened hospitals.

More recent national measures reflect instead an ongoing policy failure to institute better control of Covid-19, but may nevertheless have passed a cost-benefit test given the arrival of vaccines (a case that the Government did not adequately prove).

Whatever your position on the desirability or consequences of lockdowns in this particular crisis, however, it’s clear that suspending economic and social liberties today brings with it the temptation for politicians to utilise such powers again – and for businesses and individuals to suspect that they could.

Given the way that politicians throw around terms such as “emergency” or “epidemic,” it is not an intellectual leap to imagine future leaders demanding similar measures for other ambitions. And therein lies a source of economic discontent—an incalculable drag or doubt for a generation.

Already, the economist Mariana Mazzucato has pitched the idea of “climate lockdowns,” should governments not deliver the green revolution she desires. In the service of mitigating the “climate emergency,” the “state would limit private-vehicle use, ban consumption of red meat, and impose energy-saving measures, while fossil-fuel companies would have to stop drilling.”

Of course, we can avoid all that, she says, if we are willing to “reorient our energy system around renewable energy” and “evict fossil-fuel interests and short-termism from business, finance, and politics”—the goals Mazzucato wants to achieve with her threats warning of what might be needed otherwise.

Now, it might seem far-fetched to imagine a world where one could face fines or jail time for driving too much, or eating steak frites. But before this year, one could have said the same about meeting four households on Christmas Day, or not eating at least a scotch egg with your pint.

Madeleine Grant worries about how the example of this pandemic might normalise health surveillance or screening for colds or flu. But it’s the everyday lifestyle regulations that have been truly novel – including the forced closure of certain businesses and the bans on gatherings. The threat of repeats predicated on the ends justifying the means is what we should be most attentive to.

To mitigate this temptation requires a reaffirmation of the legitimate justifications for government interventions. From an economic perspective, there is a defensible consequentialist claim that governments should act where huge, dangerous externalities result from collective action problems. Yet in doing so they have a duty to both prove the case and to account for these externalities in the least harmful way possible, only reaching for the most extreme measures when the consequences of inaction are grave or imminent.

The climate lockdowns idea is so pernicious not just because the imminent threat is absent. The reasoning presumes that governments should go beyond accounting for the externality, say through carbon taxes or emissions trading schemes, instead using the “emergency” to justify actively ignoring market conceptions of value, threatening vast restrictions on how you live your life unless the planners’ vision of the world is achieved. Mazzucato’s argument is not just about reducing CO2, in other words, but about using the threat of lockdowns to push for abandoning consumer-led markets entirely.

We have seen this type of thinking proliferate during this crisis. Last week, Jenny Kleeman wrote for the Guardian about lab-grown meat, which many see as a useful pathway to reducing the environmental impact of farming and the ethical concerns many have with meat consumption. Rather than embrace these innovations as a way to work with consumer preferences to reduce the impacts of meat eating, Kleeman simply declared it would be preferable if we “simply stopped eating meat, or ate it far less often.” Her inspiration? The sacrifices of the Coronavirus in showing the massive behavioural changes we are “able to make” in extremis.

As we exit this crisis, we must not forget that underpinning a healthy market economy is the idea of the sovereign consumer, who knows what he or she wants, and whose welfare is enhanced by acting on those preferences. The bar for curbing activities that bring us joy or happiness should be very high indeed. And to the extent that economic or social problems do require government interventions, they should work with the preferences of consumers, not treat them with contempt, lest the economic welfare costs spiral.

Lockdowns were a panic button reaction to an acute emergency. Their re-use was a signal of the government’s dismal failure to mitigate the virus in less costly ways. But we must quell talk of them becoming a model for solving future economic and social challenges, or else the expectation of them could itself be economically corrupting today.

Michal Bazan: Nuclear power and net-zero emissions. Why Sizewell C is key to reaching our climate change targets.

8 Dec

Michał Bazan is a policy researcher with the British Conservation Alliance.

Ten years ago, the coalition government presented a revised statement on its energy policy in order to meet the target of at least one new nuclear plant being operational in the UK by 2020. It identified eight possible nuclear plant construction sites.

Toshiba’s withdrawal from Moorside power station in Cumbria, followed by Hitachi quitting both the Oldbury project in South Gloucestershire and the Wyffa Newydd project in Wales, posed difficult questions about the future of nuclear energy in the UK. While the 2020 target is now out of reach, the imminent approval of the Sizewell C power station in Suffolk gives us hope for a more innovative and greener future.

This future is hard to imagine without nuclear power as the main source of energy for the country. Renewable sources like wind and solar need to be a part of a newly built system, but they cannot fully replace such an efficient reliable source of energy as an atom. Nuclear constitutes 21 per cent of the UK’s electricity generation, which is higher than many other European nations. The downside is that by 2030, only one of the operating plants will be still available for use. Action is needed now.

The concerns of some about the high price we are paying now (Sizewell C is to cost around £20 billion) should not overshadow our profits (not necessarily monetary ones) in the future. While the operational costs are similar as the ones of coal power plants, a solid supply of 3.2 gigawatts of energy able to provide electricity for six million households without paying the high price of polluting the environment – a price which is often overlooked because premature deaths and other societal costs are difficult to quantify.

The investment in Sizewell C seems to be a good combination of innovative approach with experience from building Hinkley Point C (a twin powerplant which is to be completed by 2023) – the latter helping to save time and money used for the project. This is crucial as prolongation of construction generates significant costs.

Moreover, the timing of the investment gives us hope that the advantages of Sizewell C might be even bigger because more and more innovative ideas are popping up. We might see new, more efficient fuels being introduced, better ways of storing or reusing nuclear waste, or the possibility of obtaining highly valuable chemical substances (to be used for medical purposes, for example).

The key is to do what the UK government also promised a decade ago – avoiding spending excessive amounts of public money on liberalising the energy sector. EDF, which is a main constructor of the Sizewell C plant, is a subsidiary of a company partly owned by the French state. Although not completely free of the hand of the state, that is a step in the right direction.

The Government should focus on finding a clever way of managing the project’s finances so that the main decisions are taken by scientists and managers, rather than politicians. The main concern of investors is possible liability in the case of a nuclear accident.

The Government was proposing a CFD (contract for difference scheme which ‘insures’ against the change in current and future value of an asset) but is now considering employing a more incentivising and investor-friendly RAB (regulated asset base) scheme for the Sizewell C construction, where the developer is guaranteed a secure return on their investment.

It is worth mentioning that (even partial) privatisation of the energy sector does not mean a brute pursuit of short-term profits. The price and quality of the service are not the only things that count – the corporate social responsibility and the company’s reputation pay off in the long run. EDF knows that and is focusing not only on providing the UK with a clean and safe energy source but also on doing that in tandem with the local community in Suffolk.

The Sizewell C project will be a seismic undertaking, with almost 8,000 people employed on-site at its peak – many of them locally. EDF is listening carefully to the voice of the local community, resulting in a recent change in the project to limit the HGV traffic to curb negative effects for the residents and the environment. EDF is working with National Trust to ensure the Dunwich Heath and Beach area will not be negatively affected and the 30-day public consultation will be held to take the opinion of opponents such as TASC (‘together against Sizewell C’) into account.

The Chernobyl disaster made it easy to see nuclear energy as a threat rather than a possibility (although its reliability is proven). But it was not the technology that was faulty – it was the totalitarian regime of the USSR, which made it impossible to safely and efficiently use that technology. Now, the UK has a chance to show the other side of the coin – how benign results can come about from unrestricted innovation, technological progress and the free market.

Sizewell C could become one of the symbols of the new, green era and an inspiration for others to follow. All we need is to create a political, legal and economic environment where innovation and progress can occur, and that means investing in technology that works.

Andrew Montford: Honesty is needed on the huge costs of attempting “net-zero”

5 Dec

Andrew Montford is the deputy director of the Global Warming Policy Forum.

Politicians can be divided into those who like to spend big (and posture), and those who know what a dangerous course that is. The Prime Minister might well complain about being labelled one of the big spenders; it is, after all, hardly his fault that his time in office has coincided with a pandemic. He would surely argue that the bill for keeping the country on its feet – around £350 billion – was a case of spending through necessity.

However, the bill that will result from Boris Johnson’s plans for another a major cut in greenhouse gas emissions cannot be waved away so easily. Quite what it will cost is unclear, but we can get some sense of the scale of what is planned from recent work on the costs of total decarbonisation of the economy. When the Government announced its net-zero plan 18 months ago, it was on the back of a recommendation from the Committee on Climate Change, which said that the cost was modest, amounting to only £50 billion in 2050. Unfortunately, they later admitted that they hadn’t actually calculated the cost of getting us to net-zero at all. Some time next year, they be appearing before the Information Tribunal to explain their refusal to release the calculations they used to persuade the Government that decarbonisation could be done on the cheap.

The Treasury and BEIS have bandied around their own estimates of the bill, with figures of £1 or £1.5 trillion quoted in the press. However, like the CCC, they too have refused to reveal their calculations to scrutiny. Despite the lack of clarity, numbers of this magnitude seem to have gained a certain currency in Whitehall. A report from the National Audit Office, published this week, speaks of having to spend “hundreds of billions”.

Apart from the secrecy over a matter of vital public concern, even a brief consideration of what needs to be done shows that all of the Whitehall estimates are so absurdly low as to smack of an almost complete lack of numeracy, or worse, a complete lack of honesty, among senior civil servants. It is simply impossible that decarbonisation can be achieved for a few hundred billion, or even a trillion pounds. Take domestic heating, for example. The cheapest way to achieve decarbonisation will be through use of air-source heat pumps, which will cost over £10,000 each to install. Putting them into 35 million homes by 2050 will therefore cost at least £350 billion – another pandemic’s worth of spending. Upgrading the electricity distribution network to deliver the extra demand will cost another £200 billion, more than the annual cost of the NHS.

So if we are spending £550 billion installing heat pumps alone, it’s fairly obvious that decarbonising the whole economy is going to come with a bill that is at least order of magnitude higher. And as if to confirm this idea, earlier this week, National Grid published the first serious official attempt to cost the project, putting the figure at around £3 trillion.

It is noteworthy that the underlying calculations for this estimate also remain unpublished, but £3 trillion may be the correct order of magnitude. However, the figure is obviously wildly understated, because of some absurd input assumptions, such as the cost of building offshore windfarms – the core of a decarbonised power system. The Grid assumes that these will set us back just half what they actually cost according to published financial accounts. Looking forward, they say the cost will fall still further, while windfarm developers are reporting that there are no cost reductions on the horizon.

It seems clear then, that net-zero is going to be much more expensive than the Grid says. My own work at GWPF suggests that we are going to be spending £3 trillion on electrification of heating and private cars alone between now and 2050. We will probably spend nearly the same amount again on decarbonising electricity generation, and then there is industry and agriculture and freight and air transport and trains and shipping to come.

It’s hard to comprehend numbers of such magnitude, but £3 trillion amounts to £100,000 per household, and we could easily end up spending double that amount. So you can get a sense of the pain that is coming. And remember, this is only the capital cost. Householders will also have to swallow a doubling of the cost of motoring and a tripling of domestic fuel bills. The price of everything will soar.

What is worse, there can be little doubt that spending on this scale cannot be achieved in a free society. Net-zero is, in effect, a programme for the conversion of the UK to a command economy, with all that entails for civil liberties and hard-won freedoms.

Johnson might protest that the tab for the pandemic was simply unavoidable, but when it comes to assigning the blame for runaway net-zero spending and the economic ruin and loss of liberty that his environmental policies will bring about, there will be nobody else to blame. Poverty will be our lot, Johnson will be the man who will be cursed for being its progenitor, and the Conservative Party will be swept aside for being responsible for the social and economic carnage.

Still, as we look back, we will at least be able to console ourselves that Johnson was the last of the big spenders, because there will simply be no more money to spend.