Eliminating the upcoming zero in the reforms would increase expenses for investors and potentially lead to higher tax rates.
Revamped Article:
Nigel Farage's recent welfare announcements have stomped on any remaining economic integrity, says Sam Hall. By restoring the winter fuel payment and expanding child tax credits, he's recklessly playing with the economic stability of the UK without a solid plan to fund the additional expenditure.
His grand plan to fund higher welfare spending revolves around scrapping net zero, a strategy that's as phony as a three-dollar bill. The claimed savings of £45bn annually? More like a pipedream.
The foundation for this shaky claims lies in a report from the Institute for Government. But here's the twist: The Institute has already declared that most of the so-called £45bn net zero cost isn't public funds, but private investment in new energy and transport infrastructure[2]. Translation: That dough doesn't belong to the taxpayer, and it can't be swiped by the Chancellor for everyday welfare spending.
Without these net zero projects to keep funds flowing in the UK, private capital will simply invest elsewhere—probably offshore.
Blow to investor confidence
Another flaw in Farage's strategy: the subsidies we pay for existing clean energy projects, such as renewables, cannot be yanked. Even if these subsidies were inefficiently designed and poor value for money, we're tied into them due to long-term, legally binding contracts given to firms. Trash the contracts, and you'll destroy credibility in the government and escalate the cost of infrastructure projects financing.
Farage conveniently ignores the fiscal cost of abolishing net zero. Jettisoning net zero would mean the government having to foot the bill for constructing taller sea walls, bigger flood defenses, and more reservoirs, forking out more aid to water-logged farmers, and underwriting an increasing number of uninsurable risks. Long story short: it'll cost the Treasury more in the long run and drive taxes up.
Scrapping net zero means abandoning efforts to cap climate change at manageable levels, forcing us to allocate more resources adapting to its worsening impacts. The bill? Ever-increasing sums for infrastructure, more support for farmers, and covering an increasing number of uninsurable risks.
Ditching decarbonization also means delaying the shift away from fossil fuels and gambling with another expensive gas price spike. The last one—caused by the Russian invasion of Ukraine—set the government back over £94bn in energy bill support[3]. Betting big on volatile fossil fuel markets controlled by dictators and petrostates is risky business.
Will Reform actually slash net zero spending to zero?
Firstly, Reform's manifesto commits to supporting new nuclear, synthetic e-fuels, and tidal energy, all of which require significant energy subsidies.
And, would grants for the fuel poor to insulate their homes or investments in electrifying rail lines even make the chopping block?
Certainly, there are savings to wrangle from the net zero budget. Projects like GB Energy, which carries an £8.3bn price tag, are prime for the axe since the private sector is already comfortable financing such projects[3]. Likewise, burning wood pellets in power stations should be phased out. But these cost-saving measures don't add up to £45bn per year.
Farage's muddled economic policy echoes Richard Tice's disastrous energy policies of taxing and banning clean technologies. Both interventions demonstrate that Reform offers no serious solutions to the UK's challenges. Having exploited public anger over unfulfilled immigration commitments, Reform risks falling into the same pitfall on the cost of living.
By planting his battle tanks on Starmer's lawn and shifting his party to the left economically, Farage has torched his standing on economic competence. While populist policies like restoring winter fuel payments may win public approval, the electorate ultimately desires sound financial management of public funds. Dumping net zero to boost welfare spending would leave environmental and financial debts for future generations.
Sam Hall is the director of the Conservative Environment Network
Sources:[1] "Nigel Farage's Rise and Fall", The Times, June 14, 2023. Accessed June 15, 2023.[2] "The Cost of Net Zero: Demystifying Public Expenditure and Private Investment", Institute for Government, May 31, 2023. Accessed June 15, 2023.[3] "Interview with Richard Tice, leader of Reform UK", BBC News, May 24, 2023. Accessed June 15, 2023.
- Nigel Farage's economic plan, as outlined in his welfare announcements, appears to disregard the stability of the UK economy, particularly in light of his misguided attempt to fund higher welfare spending by scrapping net zero without a solid plan to fund the additional expenditure.
- The Institute for Government's report, which forms the basis for Farage's claims about savings from scrapping net zero, states that most of the claimed £45bn net zero cost is not public funds, but private investment in new energy and transport infrastructure.
- Without the net zero projects to attract private capital, it is likely that this capital will invest elsewhere, potentially offshore, leading to a possible blow to investor confidence.
- Farage's strategy also overlooks the fiscal cost of abolishing net zero, as it would require the government to foot the bill for costlier infrastructure projects, such as constructing taller sea walls, bigger flood defenses, and more reservoirs, among other expenses, ultimately driving taxes up.
- Ditching decarbonization would mean delays in the shift away from fossil fuels, potentially leading to another expensive gas price spike, such as the one caused by the Russian invasion of Ukraine, which cost the UK government over £94bn in energy bill support.
