£7bn Red Herring

Last month, the Budget saw a £7bn package of energy cuts passed to manufacturers, based mainly on reduced green taxes. This means that a mid-sized manufacturer will save around £50k per year on their electricity bill. Excited? Maybe you shouldn’t be. 

Several decades of policy indecision have brought us to an emerging energy gap. We made hay during the 1970s with now-declining North Sea oil, but we failed to sow the seeds for the future. Now we pin our hopes on fracked natural gas, hoping that Russia plays nicely and that our decrepit nuclear stations chug-on until sufficient foreign capital can be secured to replace them. Our national grid is ill-prepared for a future where electricity will be king and decentralised generation the norm, whilst the Prime Minister’s message to ‘cut the green crap’ neutralises investment in renewables. We’ve procrastinated ourselves into a corner.

The Chancellor’s £7bn tax break was gained by some intense lobbying from manufacturers, but they shouldn’t have to be lobbying government for incremental red-herrings. What they should be getting is a coherent, cross-party energy policy that can be delivered by successive governments. 

This £7bn sop rankles because it shields manufacturers from a future they need to see. It encourages them to defer the benefits of energy efficient investments until another day, a day when they compete unprotected against global competitors who’ve already made those investments. £7bn wins the ‘global race’ today, and loses it tomorrow.

There’s simply no plausible quick-win for cheap energy, only a yawning gap where a long-term, non-partisan energy policy should be. Manufacturer’s need to tell the Emperor he’s wearing no clothes.

This blog first appeared in Manchester Evening News Business Week on 10.04.2014