Helm Talks - energy climate infrastructure & more

As another heatwave grips the UK and much of Europe, we need to look beyond the immediate discomfort of hot weather and ask why existing policies are failing to dent the relentless rise in the carbon concentration in the atmosphere. More wind farms and solar panels are not going to crack the problem.

Climate policy must be judged not by good intentions, but by its real-world costs, impacts and global effectiveness. Renewables alone cannot deliver cheap, secure and clean energy. The wider costs of electricity systems, storage, back-up power and networks also need to be taken into account. The UK’s choices need to be seen in the international context and compared with the energy strategies of major economies such as China, the US and those in Europe. No other country thinks relying on wind and solar plus a bit of nuclear is going to power a modern economy.

A broader mix of technologies, including nuclear power, and a willingness to confront the costs of pollution created by our own consumption are needed. Climate change is real, action is essential, but policy must be practical, affordable and effective if it is to make a meaningful difference. The UK fails on all counts.

With the renewed political enthusiasm for nationalisation, what, in practical terms, does it mean and what would actually change? How might “Manchesterism” apply in practice?

Using buses, rail, water and electricity as examples, in this podcast I argue that public ownership and public control are not the same thing, and that different sectors require different models of organisation, regulation and investment. Appeals to “take back control” are simplistic, and need to be examined with a focus on the long-term funding, planning and delivery needs of core infrastructure. While the nationalisation debate is useful, it needs to move beyond rhetoric towards detailed questions about ownership, regulation, incentives and the proper role of the state.

Politicians have been seeking for decades to put right the infrastructure crisis in this country that is rooted not in a lack of ambition, but in deeper economic and political constraints. Building in Britain is exceptionally costly, with high energy prices, high labour costs and high financing costs making major projects difficult to deliver at scale. At the same time, the country saves too little to fund long-term investment, leaving infrastructure heavily reliant on foreign capital, while government is constrained by debt and rising interest payments, and repeatedly prioritises short-term spending over capital renewal.

Taking Thames Water as a case study, regulatory hesitation and political short-termism have both delayed necessary restructuring and entrenched decline. Meaningful renewal will require more than rhetoric: it demands lower input costs, stronger incentives to save and invest, firmer control of public debt, and a clear political willingness to favour long-term capital investment over immediate consumption. Without a whole-economy approach, the goal will remain elusive.

The International Energy Agency describes the current Iran conflict as the “biggest energy crisis in history”. While oil prices have risen sharply, they remain below the real highs of past shocks. However, the impact is being felt very differently around the world, with some countries

even benefiting from the situation. For example, the US and Russia are relatively well placed as major producers, while China and India have buffers through their domestic coal, stockpiles and alternative supplies. Europe, by contrast – especially the UK and Germany – is very exposed because of its energy choices and growing dependence on imported gas.

Markets are already adapting: higher prices encourage new production, alternative routes, and renewed interest in nuclear and other energy sources. Rather than dramatic headlines, this podcast focuses on the more complex reality: an energy problem with very different consequences across the world, not a single historic crisis.

The concept of a zero-sum game was fashionable in the 1970s. The idea was simple: competing interest groups, and especially unions, would fight for ever-bigger shares of the nation’s cake, and their gains would mean losses to others. Fast forward to 2026, and what we have now is a negative-sum game: cake for some reduces the cake for others, and reduces the size of the cake. The result is lower economic growth.

This is indeed playing out now: the government’s core motors for economic growth – 1.5 million new houses, net zero – are all coming up against the need to pay for more welfare and other public services. To cover all this, the government has raised taxes, notably on the business costs of labour, and borrowed a lot more. The result: higher labour costs and higher costs of capital. Add to this the highest costs of industrial energy in the developed economies, and the results for economic growth can only be negative. Now add in the new renters’ rights with increased costs to landlords, and thence the supply of rented housing going down, whilst the higher labour costs have increased the costs of building new houses and reduced demand. 1979 is with us again. The negative-sum game is not sustainable, and thus it will not be sustained.