Madano Analysis - Shifting views on net-zero

In recent months we have seen the policy gap on net-zero growing between Government and the Opposition, and if this cover story from yesterday’s Financial Times tells us anything, this dividing line is deepening.

Although Rishi Sunak has said that net-zero is important to him, he has started to publicly soften the Tory’s stance on the UK’s green policies, noting that they will progress net-zero in a “proportionate” way that does not “hassle” voters with extra costs. Sunak added that he is “standing up for the British people” during times of high inflation.

This strategic shift from Sunak comes off the back of last week’s by-election results, as Conservatives narrowly retained the seat in Uxbridge and South Ruislip. The win was largely attributed to voter protests against Labour’s plans to extend Greater London charges on heavily polluting vehicles. And also follows a joint letter from major British and international businesses to the Prime Minister calling for net-zero to remain national priority and for the UK to capitalise on its economic opportunity.

Shifting political strategies

Labour has yet to respond in detail, but Starmer has already been accused of wavering on climate commitments after walking back Labour’s original pledge to spend £28bn annually on the green transition and refusing to commit £11.6bn on climate funding for the world’s poorest nations. He has also gone against London Labour Mayor Sadiq Khan, publicly blaming him for Labour’s recent defeat in Uxbridge, implying it was due to Khan’s expansion of the Ultra Low Emission Zone (ULEZ) and asking him to “reflect” on the policy.

Labour’s charge of the Conservatives is that by being excessively focused on private sector growth and short-term political gains, there is no long-term climate strategy. Labour can be expected to repeat this criticism if a by-election result will change the course of a policy as important as net-zero. However, not least in light of their defeat in Uxbridge, there is risk that Labour will respond by limiting their own commitments for fear of being painted as spendthrift green zealots. Labour’s strategy to gain public trust has been through establishing their economic credibility, as demonstrated by the party’s public campaigning with Reeves earlier this year, who has been praised for her competence by Tory and Labour politicians alike. Starmer and Reeves will not want to be seen as frivolously spending public finances. Labour will need to respond strategically to reassure voters that they are not feeble in their stance on net-zero, which has strong public backing as the letter from big business noted, while also considering shifting voter interest in the cost of reaching the UK’s 2050 commitments.

Potential softening of Tory net-zero policies

Within the Conservative party, there are differing opinions on this potential shift including from Chris Skidmore, a prominent Tory MP, who said net-zero shouldn’t be treated as “a crusade”. Retracting other green policies is possible, including the 2030 ban on gas boilers, which Sunak remains committed to for now but has said they will “keep their position under review,” and investment in heat pumps and insulation, which Housing Secretary Michael Gove has said is “asking too much too quickly” from landlords.

Both parties will be using the Parliamentary recess to re-evaluate their political strategies and strengthen their messaging ahead of a busy autumn period, including the final pre-election party conferences and the Chancellors autumn statement, and will need to emerge from summer confident in their position on net-zero.

What does it mean?

So, in the coming weeks and months, businesses that see the potential for the net-zero economies of the future, and necessary changes we must make if the UK is to lead the world in these sectors, should double-down with political stakeholders to ensure both Labour and Tories hear the calls from industry to maintain the UK’s net-zero commitments, and share practical, costed ideas for implementation.