Helm Talks - energy climate infrastructure & more

• Energy costs and economic growth

  The government’s number one mission is to grow the economy, by building more houses and sprinting to net zero by 2030. On the energy side, we’re told that investment in renewables will lower our electricity bills – costs come down, investment goes up. But despite the UK’s claim to be world leader in tackling climate change, the reality is that it has amongst the highest energy costs in the developed world and global warming is still rising. This podcast examines the challenges that the government is facing that run counter to its objective to reduce energy costs. These include the massive demands on the system that come from the new data centres that need to run 24/7, the back-up supplies required when the wind doesn’t blow and the sun doesn’t shine, and the materials needed to build the new green infrastructure, much of which needs to be imported and paid for by whatever it costs as a result of the sprint to achieve net zero in just 60 months. These high costs are making the UK a much less attractive place for investors, who are not flocking to its shores for its claimed low-cost electricity.

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• The great COP-out

  As the many tens of thousands fly back home from Baku after this year’s COP, where have the 29 attempts among the world’s nations to tackle climate change got us? The concentration of carbon in the atmosphere continues to rise; 80% of the world’s energy still comes from fossil fuels; and the 1.5 ⁰C target is being passed. But why? What’s causing the relentless increases in emissions that are feeding through to the continual, year-on-year 2ppm+ increase in carbon the atmosphere? COPs are based on the failed objective of achieving a legally binding set of emissions targets, measured in carbon production and not carbon consumption. They encourage net zero targeting, which is at best ineffectual. Why would anyone think that another 29 COPs are going to crack the climate problem? It’s time to re-set climate policies, build bottom-up coalitions of the willing, and face up to the full scale of our carbon consumption.

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• The UK’s new growth industry – regulation

  The British economy is going to see more regulators, more regulatory bodies, more intervention in the private sector – all requiring businesses, on the other side of the regulatory rules, to spend more time dealing with regulators and regulation. While all governments promise to “cut red tape” – and the new government is no different – sadly, the opposite appears to be happening. There are plans not only to beef up existing regulatory bodies (Ofcom, HMRC, Ofgem, Ofwat possibly, and the EA), but also to add new regulators, including NESO, the Regulatory Innovation Office, the Fair Work Agency. No doubt there are more to come. Why does regulation grow and grow? Do we need yet more regulatory bodies, on top of the government departments, the various offices of regulation, the plethora of quasi-regulators that surround them, and the regulators that regulate them? Does it lead to better outcomes? Not only does the new government want to do more, so, too, will the regulators themselves, as they tend to seek to expand in order to increase their budgets and make their mark. Hence the growing regulation industry, despite the efficiencies that one might expect new digital technologies to bring. But as regulation in the UK mushrooms, with this additive (not substitution) approach, what does it mean for the UK economy ahead?

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• Transformation – a case of blood, sweat, tears … and many years

  The government is planning radical transformation, to health, education, rail travel, and with a view to achieving net zero electricity by 2030. These bold plans raise questions about what is going to be achieved, by when, and how. The politics is key, as is the timing. Such transformation takes years (many more than Starmer is anticipating). Thinking through the politics of what happens between now and when the election takes place in 2028–29, the government needs to face the difficult reality that radical reform will, in essence, mean that things will get worse before they can start to get better. Thatcher’s reforms in the 1980s, for example, took a decade to begin to turn the economy around. So, it’s worth looking at what is going to get worse through the period until 2030 before it gets better (as a result of transitioning to net zero, and turning around the NHS, education, housing and transport). To ensure that this transformation is embedded and to bring the public with it, the government needs to be honest with us and manage our expectations while we experience the pain and disruption of the transition in the interim.

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• Britain's four fundamental economic problems

  The government’s overriding objective is economic growth, and it plans to get there by building lots more houses, and a dash for net zero electricity with the implausible target of 2030. There may be some merit in both, but economic growth is not caused by houses or wind turbines. What inhibits Britain’s economic growth is altogether more profound. The four fundamental problems are: not enough production, too much consumption, too little savings, and too much debt. We import rather than produce, and have almost no supply chain domestically for the net zero target. We live beyond our means, with imports exceeding exports, and calling capital maintenance “investment” supported by debt rather than paying as we go. We have virtually no savings net of capital depreciation, and hence rely on foreign investors not domestic savings. The result is too much debt, exacerbated by failing to realise that the great financial crisis of 2007-08 and the Covid-19 pandemic left us poorer, but without the willingness to accept an adjustment to our consumption.

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