To those who’ve known Greg Clark for any length of time, the transformation of the mild-mannered business secretary into the Cabinet’s most fervent Remainer requires some kind of explanation. So what’s the real reason Clark finds Brexit a threat? Forget about protecting the automotive industry and manufacturing generally. The car industry is already reeling from the government’s hostile environment towards car ownership. Last year, car sales fell for the second year in a row, with diesel vehicles down 29.6 per cent. Supply was hit by testing to meet new emissions standards and demand dented by the government’s ongoing war on diesel. And there’s worse to come with Michael Gove’s air quality strategy promising increasingly tight regulation with ever diminishing returns.
Thanks to Clark, the long term outlook for manufacturing in Britain is grim. British manufacturers face among the highest energy costs in Europe. Concern about Britain’s excessive energy costs even prompted the Tories to promise, in their 2017 manifesto, to aim to have the lowest energy prices in Europe. The party also pledged to conduct a cost of energy review.
The first of these have been quietly dropped by Clark. The second resulted in one of the most scathing official reports into government policy ever produced. Unless policy was changed, it would prolong the ‘crisis mentality’ of the energy sector, perpetuate fuel poverty and weaken industrial competitiveness, professor Dieter Helm warned. Developments since then have vindicated Helm’s damning judgment. In November, Toshiba pulled the plug on the Moorside nuclear project. This was followed earlier this week by Hitachi suspending work on the Wylfa project in Anglesey.
It took Clark thirteen months to respond to the Helm review, only to dismiss its key recommendation that historic legacy costs of decarbonisation should be ringfenced. With sea green indifference, Clark argued that British manufacturers should just suck up exorbitant energy costs, appearing to falsely cite Lord Lawson for supposedly saying that energy ‘conservation’ was the best starting point for competitiveness. ‘I take exception to Mr. Clark’s shameless misrepresentation of my views to falsely assert that high energy costs are good for business competitiveness,’ Lord Lawson said.
Brexit removes ministers’ perennial excuse that policy can’t be changed because of the EU. This presents Clark with having to face up to the folly of his, and the Tory government’s, policies. As a consequence of the competitive penalty of Britain being outside the Single Market, Brexit would force ministers to use their new found freedom to restore the competitiveness of British industry. They could do this partly by reversing from the policies that have driven up energy costs. In short, taking control requires ministers to take responsibility.
According to professor Helm, the EU Renewables Directive has been a ‘major contributor’ to raising costs above those needed to meet Britain’s decarbonisation commitments. His finding is supported in a devastating report out last week by Dr. Capell Aris, a retired electricity industry expert. If Britain had continued with the dash for gas, he argues that electricity prices would be 30-40 per cent lower today for a similar level of carbon dioxide emissions, whereas using wind and solar to cut emissions costs a whopping £350 per tonne of CO2 saved.
Dr. Aris gives short shrift to Clark’s deluded claim that green power will become cheaper and cheaper. In fact, such energy is probably going to rise even faster. According to the most recent Ofgem figures, the Big Six energy companies charged an average price of £115.40 per MWh for electricity from renewable sources compared to £59.31 per MWh for gas and coal-fired power station generation.
Yet the government’s economic appraisals of various Brexit options systematically exclude the upside from Britain taking back control of energy policy. This is in order to drive the preferred policy conclusion of a weak-form Brexit and no Brexit at all. In the Treasury’s pre-referendum economic assessment, the big ticket gain from energy de-regulation was dismissed in a single sentence on the grounds it has ‘considerable domestic political support.’ The Treasury might just have well outsourced its Brexit analysis to Alastair Campbell. Its job is to provide impartial, objective analysis, not second-guess politicians on whether voters like paying more for their electricity. Its failure to do so is further evidence of its endemic anti-Brexit bias.
Similarly, Clark’s opposition to Brexit because of its potential impact on manufacturers is a smokescreen. He shows little compunction in piling exorbitant energy costs on British business which are far more damaging to their competitiveness than having to fill out some extra customs forms.
As in the past, Britain’s economic performance will be overwhelmingly determined by domestic economic policies – good, bad, or mediocre – rather than the precise form of our trading relationship with the EU. Our economic performance lies in our own hands. For some politicians, that responsibility is a frightening prospect. It is for that reason ministers like Clark are no fans of Brexit.
Rupert Darwall is the author of Green Tyranny: Exposing the totalitarian roots of the Climate Industrial Complex (2017)