The “DECC coup", Nigel Lawson and green taxes: George Osborne and climate change
- 21 Mar 2012, 11:15
- Ros Donald
It's budget day again, and George Osborne is limbering up his
red suitcase to deliver the government's economic plan for the
year. Over the past six months, Osborne has generated controversy
with statements apparently aimed at rolling back the government's
plans to decarbonise the UK economy - but is he really bad news for
the UK's climate change mitigation policies? To mark his
third Budget speech, here's a look at Osborne's evolving stance on
It's November 2009, and in opposition the shadow chancellor
sounds very keen indeed on cutting the UK's carbon and implementing
other environmental measures.
In fact, Osborne criticised the Labour chancellor Alistair
Darling for "not giving a single major speech on the environment
[over the previous] two years …". According to Friends
of the Earth, (FoE) he attacked Darling and other ministers for
failing to work together to tackle climate change, and promised a
Conservative treasury would "be in the lead of developing the low
carbon economy and financing a green recovery." The treasury had
often been thought of as the "cuckoo in the nest" when it comes to
environmental policy in the UK, he said, pushing other departments'
attempts to cut carbon aside and fostering growth in heavy
But no longer?
When the Lib Dem/Conservative coalition came to power, such
rhetoric seems to have been quietly parked. Osborne takes the helm
of the treasury as part of what Prime Minister David Cameron
promised would be the "
greenest government ever". Since then he has not made any
speeches on the environment, according to FoE.
reported of the 2010 budget:
"Hopes that the emergency budget would
shed light on plans for a green investment bank, renewable
energy and financial incentives for individuals to make their
homes more energy
efficient were dashed in the chancellor's speech."
Osborne's 2011 budget had its climate moments, containing an
increased climate change levy discount - a tax break for energy
intensive businesses that signed up to promise to meet energy
efficiency or carbon-saving targets.
But it was another measure announced in the budget that captured
the environmental headlines, as the Green Investment Bank got more
flesh on its bones. But was it to be a strapping Olympian or a
shambling corpse? According to the
"limited the powers of the much-heralded
Green Investment Bank, a centrepiece of the Tories' general
election manifesto, by ensuring that it cannot borrow funds until
the government has completed its deficit-reduction plan in
October saw the chancellor's strongest suggestion that economic
recovery fuelled by heavy industry should take priority over
decarbonisation, as we reported here.
At the Conservative party conference, he effectively promised the
UK would not take the lead in Europe in reducing carbon emissions,
Daily Mail's enthusiastic campaign on so-called "green stealth
taxes" on energy bills to claim that "a decade of environmental
laws and regulations are piling costs on the energy bills of
households and companies."
But where did he get the inspiration from? News
drifting out of DECC suggested Osborne "privately defended his
green antagonism by saying he was more worried about the
£200-a-year of "green taxes" borne by energy customers." This
figure, the centrepiece of the Mail's "green stealth tax" campaign,
originated with the climate sceptic thinktank the
Global Warming Policy Foundation and was
notably wrong - the Mail group subsequently published three
The ensuing outcry from green groups forced then secretary of
state for energy and climate change, Chris Huhne, to defend Osborne
in December, saying he is "
not a climate skeptic".
2012 - Who has his ear?
The BBC and
other outlets have remarked that Osborne may today follow the lead
of former chancellor Nigel Lawson, who in the 1980s cut the
top rate of tax for the UK's high earners. Indeed, there's a
suggestion that advice from Lawson is directly behind the expected
There's no hiding the Osborne's admiration for Lawson at any
rate - he
invoked Lawson as an inspiration for tax policy in his budget
speech of a year ago, and the BBC reports Osborne hosted the peer's
80th birthday party, with the chancellor's residence resounding to
his predecessor's singing.
So we're intrigued as to whether the pair are equally in tune
when it comes to climate change policymaking. Lawson is a well
climate skeptic and chairman of the Global Warming Policy
Foundation who supplied the £200-a-year figure which may have
worried Osborne. (Needlessly, as it turned out.) The GWPF argues
for the abandonment of renewable power initiatives and developing
more conventional and unconventional gas sources for the UK
On the other hand, Huhne attempted specifically to
distance Osborne from Lawson on climate in December last year
after the chancellor got flak over his conference speech, saying:
"He is not in the position of somebody like Nigel Lawson who is
clearly skeptical about the science". It'd be interesting to know
why Huhne felt compelled to say this - we would ask him, but he's
probably got other things on his mind at the moment.
A treasury coup at DECC?
As we reported,
Osborne's comments in 2011 gave an insight into the kind of
arguments that were going on inside the Cabinet between the
treasury and the Department of Energy and Climate Change (DECC)
over whether boosting UK industry should take precedence over
When fellow Lib Dem Ed Davey took over from the notoriously
strong-willed Huhne in
February, there was speculation that the treasury would take
advantage of a less experienced minister to, as the blog
Conservative Home said, "kick some green policies into the
longer grass". This fear may have been
realised following news over the weekend that DECC is mooting
plans that would allow gas plants to operate without carbon capture
and storage for an extra decade.
WWF called the move a "treasury coup at DECC", saying it will
spur a dash for gas that will ruin the possibility of decarbonising
the economy. Osborne hasn't helped endear himself to the greens,
saying gas is a "reliable, affordable source of energy" - when, as
Damian Carrington points out, supplier nations in the Middle
East are in a state of flux at present and rising gas prices count
for 80 per cent of the energy bill increases experienced of
But as we explain,
DECC denies a dash for gas is the end game. They argue gas is
in the frame to back up renewables supplies and smooth out the
shift to decarbonisation. But the timing of the DECC gas
announcement and the prominent quote from Osborne it contained
suggests that it may have been crafted with one eye on the budget
statement this week. This indicates Osborne may not offer any
breaks to the gas industry himself.
Bang up to date, Osborne has not made much mention of further
plans regarding the UK's energy and climate policy in the new
budget, apart from provisions for a green bank to help people save
energy. But, if cynics are right and Osborne is pushing for a dash
for gas through new influence over DECC, he may not have to do much
in the budget on energy or climate. We shall wait and see.