On 20th September, the UK Prime Minister announced a range of policy row backs that watered down the UK’s net zero commitments, raising major questions about the government’s environmental credentials. The UK requires a clear and consistent approach to pursuing net zero, to access the growth opportunities of the 21st century and revolutionise the creaking UK economy. Walking away from existing commitments sends the wrong message at a time of significant pressures on the cost of living, and an intensifying global race for net zero investment.
Sunak’s “Net Zero” speech this week ran in direct opposition to growing calls from voters and industry alike to deliver on the UK’s net zero transition. The Prime Minister claimed to have set out his “pragmatic” and “proportionate” approach to delivering on the UK’s 2050 target. However, the intervention provided a clear signal of the end of a net zero consensus, attempting to draw dividing lines with opposition parties ahead of the 2024 General Election. This is a misstep – one which will prove to be the most critical mistake of Sunak’s premiership and undermine the UK’s international reputation on climate.
Rowing back on key commitments like the 2030 Electric Vehicle Target dampens business and investor confidence and disincentives investment in the UK. Ford summarised the anger across the business community, stating that the private sector requires “ambition, commitment and consistency” from government, and that Sunak’s speech had undermined all three in one fell swoop.
Moreover, while the substantive detail of policy announcements on housing decarbonisation does not represent a U-turn in overall direction, with a long-term commitment to clean heat retained, pledging to “never” introduce new energy efficiency standards will lock private renters into energy bills £1.75bn higher than under planned regulations. This is not protecting “hard-pressed” families, as the Prime Minister claims. It seems a calculation has been made that net zero can be exploited for political gain, but the true fallout will be the lasting damage to the UK’s economic prospects.
Within hours of the news, over 400 leading UK businesses, investors and CSOs provided an immediate and firm rebuttal to the Prime Minister’s interventions, uniting in opposition to the backsliding on existing commitments. With recent reports from Aldersgate estimating that the UK will miss out on over £220 billion in investment if it backtracks on net zero, the UK cannot afford to delay.
As part of his speech, the Prime Minister promised to lay out “a series of long-term decisions” over the coming months. The upcoming Autumn Statement is a clear opportunity to reassure British businesses by demonstrating the ambition needed to deliver net zero in a timely, fiscally responsible, and effective way. To do so, government must commit to delivering a clear plan for net zero to protect cash-strapped communities from rising costs and transform the UK economy into one that is productive, energy secure, and that levels up across the country.
UK investors representing over £3 trillion AUM have repeatedly called on government to publish a Net Zero Investment Plan to provide them with the “ambition, commitment and consistency” that business needs from the government to invest. This is the only way to lower costs for the taxpayer, to effectively target limited public resources to where it is most needed, and to deliver the support needed by the private sector to unleash the wave of innovation and investment required to bolster the UK’s future as a global green powerhouse.
The Prime Minister must recognise the economic costs of inaction by thinking strategically, pragmatically, and long-term in his plan to rejuvenate the British economy. We only hope that No.10 will listen to the reaction from business and voters to the Prime Minister’s announcement, and steady the ship on green.