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LONDON — The U.K.’s influential chancellor has taken a backseat when it comes to Boris Johnson’s big push to reach net-zero carbon emissions. Possibly with good reason.
Rishi Sunak, who holds the government purse strings and enjoys higher popularity ratings than the prime minister, has not been especially vocal on environmental concerns — even as Johnson makes a big play of hosting the COP26 climate summit next month. Some fear he’s swerving the hard choices needed amid concern about the public finances and the risk of spooking voters.
Sunak failed to mention climate once in his speech to the Conservative Party conference this week, where his silence contrasted with a lively program of some 30 fringe events focused on the climate drive.
Several key signs of ambition on the environment — a heat in buildings strategy, the Treasury’s review of the cost of net zero, and a cross-government net-zero strategy — have been missing in action since the spring. They’re now expected to arrive in a flurry ahead of COP26.
Fueled in part by the sensitivity of landing a net-zero strategy with the public, a divide has opened up. On one side sits the Treasury — currently in the process of formulating two big fiscal announcements — and on the other is the more bullish Department for Business, Energy and Industrial Strategy (BEIS) and Downing Street.
Ministers are keenly aware that switching to energy-efficient heating systems and cars has the potential to hurt the party’s standing with lower-income voters, many of whom helped to give Johnson’s Conservatives a big majority at the last election.
Net zero has already become a bone of contention among Tory backbenchers, with whom Sunak remains closely connected. Craig Mackinlay, a Conservative MP for Thanet in Essex, started the “net zero scrutiny group” in order to hold the government’s feet to the fire, while his party colleague Steve Baker started stirring up trouble earlier this year using the Twitter hashtag “CostOfNetZero.”
The caucus keeps in touch via a WhatsApp group comprising around 40 members drawn from a wide cross-section of the party including former Cabinet ministers — not just “blue collar” Conservatives as is sometimes assumed.
One member of the group said he felt it had Sunak’s ear. “The trouble with net zero is it’s a lot of rich people telling poor people how to live their lives — I think the Treasury understands that.”
But while it’s part of the Treasury’s job to hold out against demands for greater spending, the government is legally bound to deliver the carbon budgets it has set. The chancellor can argue for the most cost-effective approach, but he can’t duck the issue forever.
“The government’s narrative is about green jobs and subsidies — it’s all a win-win, classic cake-ism,” former Treasury Minister David Gauke said, in reference to Johnson’s famously upbeat Brexit vow to “have our cake and eat it.” But, Gauke warned: “The Treasury doesn’t do cake-ism, and they know you need to make some hard choices.”
That was echoed by Tom Sasse, associate director of the Institute for Government think tank. “I think a lot of it is the Treasury versus No. 10,” he said. “You get a sense that No. 10 would be quite happy to spend quite a lot more money on this — whereas the Treasury is holding out.”
Especially controversial is the long-awaited heat in buildings strategy, which is officially the responsibility of BEIS but will ultimately be shaped by the amount of money it gets from the Treasury. “Everyone is still in the dark on that,” Sasse said.
Speaking at the Tory conference, Business Minister Martin Callanan refused to outline his department’s expectations for the plan — saying only that BEIS had put in a “very good bid to the Treasury” for the decarbonization of homes.
One big idea, reducing taxes on electricity relative to gas, has already been complicated by the current gas price crisis.
Gauke acknowledged that Sunak’s unwillingness to get into the fine details on net zero this week marks an understandable “holding pattern” ahead of the wider budget presentation later this month. But he added: “I would absolutely have expected him to say something [at the conference] setting out how the Treasury thinks we ought to address this.”
One former minister defended Sunak’s conference silence on net zero. “This is something he does personally care about, so I wouldn’t read too much into it,” they said. “He was speaking to a particular audience. I would have thought he can only pick one argument with the party faithful [over recent tax rises] and was not going to rub their faces in this other stuff.”
The recent appointment of Simon Clarke as the new chief secretary to the Treasury could also prove significant. He hails from the former Labour stronghold of Middlesbrough and, along with popular Tees Valley Mayor Ben Houchen, has repeatedly stressed the benefits of bringing the manufacture of green kit such as electric car batteries and wind turbines to de-industrialized areas. Clarke is close to Sunak, and his promotion may provide a clue as to the Treasury’s green priorities.
And while Treasury officials want No. 10 to remain clear-eyed on the reality of shifting to lower-carbon heating and transport, there are reasons for environmental campaigners to feel cautiously optimistic.
The new Green Gilt program to sell government bonds produced £10 billion for green projects and will be issued again later this year. The queen will host a summit for sovereign wealth funds and pension funds next week, which, if it yields results, will allow the government to say it is taking active steps to ensure the burden of the transition does not only fall on taxpayers.
A Treasury official said: “We have already invested £12 billion as part of the PM’s ambitious 10-point plan to achieve net zero. And earlier this year the chancellor launched the first of its kind — a new green bond to ensure there is access to finance for investments necessary to green our economy.”
In the meantime, Johnson himself is well-placed to weather a showdown with the Treasury, one former climate adviser pointed out. “Boris is pretty hegemonic at the minute, and if he wants to pull rank, he can. He did it on the tax rise, I suspect he’ll do it on this.”
Matei Rosca and Karl Mathiesen contributed reporting.
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