Britain's cost of living emergency

Pete North • Apr 01, 2022

Our energy emergency will eclipse Brexit and Covid

I don’t normally pay any attention to David Gauke. I once took him for a bright man with a worthwhile contribution to make, but ever since Brexit he’s been the stereotypical bitter remoaner fighting old battles for which I have no time. But he right to say that there is unfinished Brexit business.


Writing in the New Statesman he says:

The mounting evidence of the economic damage caused by Brexit ought to be a worrying vulnerability for the government, with Labour pushing the line that the reason taxes are having to go up is because economic growth is so weak. It is a very good point.
Pointing out that growth is low is one thing but setting out a convincing explanation that growth would be higher with a change of government is another. There is, of course, an oven-ready solution to low growth, which would be to repair our economic relationship with the EU. Some of the 4 per cent hit to GDP caused by us leaving the single market and customs union could be recovered if we were to move closer to these institutions.
Labour, however, is reluctant to reopen the issue for much the same reason that the Conservatives are keen to talk about Brexit. Both parties assume that if our relationship with the EU is a prominent issue at the next general election, this will favour the Conservatives.
It is a curious state of affairs. The government wants to boast about a policy that is damaging growth; the opposition is keen to show that we are growing slowly but is frightened to explain why. Both parties are being evasive.
We are starting to see a debate about how we restore strong economic growth but both main parties want to discuss anything but the inadequacy of our trading relationship with the EU. This does the country no favours. If we want a stronger economy, this has to be addressed.

On this I do not disagree. The trade deal we have with the EU is threadbare, and cannot be considered a viable basis for long term trade relations. It was rushed and left a great many gaps which will need to be addressed.


One can understand, though, why Labour is reluctant to address this. Broaching the subject reopens the same old battle lines being that Labour privately believes we should re-join the single market and the customs union with a view to eventually re-joining the EU. To discuss it would demonstrate that Labour has not accepted Brexit and is unwilling to move past it. Starmer thinks, with some justification, that he has no hope of retaking “red wall” seats if they say the quiet part out loud.


It’s also problematic for Labour being that its die hard remainer MPs did everything in their power to sabotage any mode of Brexit, and comprehensively voted against EEA Efta when they had the chance. The only modes of soft Brexit they voted in favour of were those designed to shackle us to the customs union – not even knowing its function.


Now that we have left the customs union we have established our own bilateral trading relationships the world over, and while you can argue that those deals are not as comprehensive as those we had via the EU, they can and will be developed over time, but more importantly, especially now, we are able to modify them without grovelling to Brussels for permission and having to seek a common position with 27 other members. That gives us an agility that the EU simply cannot match. The EU is still wedded to big ticket FTAs which take several years to develop, while the UK is able to develop its own sector specific instruments.


We have already seen that outside of the EU we are able to act faster in response to geopolitical events, and we retain much of our soft power. Brexit has not been the blow to Britain’s global standing that remainers thought (and hoped) it would be.


Though David Gauke says Brexit has caused a 4 percent hit to GDP, in macroeconomic terms, Brexit has been something of a non-event. The real world impact has been far less severe than that of the energy crunch, the global shipping crisis and Covid lockdowns. Brexit has caused a choking of trade with the EU, which will have longer term implications which need to be addressed, but Gauke is ignoring the elephant in the room. Energy.


Britain, it is said, is to endure a the largest drop in living standards for seventy years because energy prices. Britain is not dependent on Russian gas to the same extent as mainland Europe but we are vulnerable because we’ve closed down many of our conventional power stations in order to comply with the EU Large Combustion Plant Directive, and to comply with the Renewables Directive. This set a binding target for the overall share of energy from renewable sources. This, more than any other factor has made us reliant on gas. EU energy policy has been a disaster for Britain and the EU.


Now that we are experiencing low growth, both the EU and the British government believes the answer is to double down on our insane war on fossil fuels, believing it will reindustrialise Europe as we retool for Net Zero. This is essentially socialist central economic planning.


This as we frequently note, is not a new idea. The green revolution was pushed by Gordon Brown and David Cameron. It didn’t make economic sense back then then and it certainly doesn’t now as the coast of rare earth minerals, microchips and metals is skyrocketing. We’re now having to pay for an emergency interim energy policy while also paying for the high fantasy Net Zero grid concept. That, in all likelihood, means home heating and energy bills will continue to rise for the foreseeable future, with no relief on the horizon.


Already this is making impossible demands on the household budget for the less well off but in the near future it will absorb most of the disposable income for middle income families, which will be a hammer blow to consumer spending – having a disastrous impact on Britain’s services economy. We have now eliminated any chance of a consumer led recovery. Our wealth is now going into the coffers of green subsidy harvesters. If consumers are robbed of their spending power and individual mobility then cross border trade becomes something of a moot point.


If Britain is to return to growth then action is needed now. We need a complete departure from EU energy policy and to scrap the Net Zero target. We need to upgrade our gas generation plant and to massively ramp up our nuclear programme. We cannot afford the renewable energy white elephant. No one wants a climate ‘agenda’. We just want reliable and secure energy for all of our daily needs.


We must also scrap the upcoming ban on the sale of petrol cars. I’d jokingly said on these pages that the EV rollout was basically the government coercing you into using your own money to buy a back up battery for windmills – but that’s exactly what it is. The National Grid admits as much on its own website. It says “The rise of Battery Electric Vehicles means Vehicle-to-Grid (V2G) will become important. V2G is essentially creating a battery on wheels that we can utilise”. They don’t care if it a step backwards for living standards.


The upcoming cost-of-living crisis will eclipse both Brexit and Covid at the next election, where the difference of opinion between Labour and Tories is minimal. As with lockdown measures, Labour agrees with the government but wants it to go harder and faster on Net Zero no matter how much damage it does. Labour, though, would like to see a windfall tax on energy companies. In principle, retrospective taxes are bad policy which can only deter investment, but it’s also a band aid measure – hitting the symptoms rather than the cause of the problems. It can only be done once – and then you’re back where you started.


By the time the full impact of our self-inflicted energy crisis is felt, nobody will be talking about food safety rules, customs or queues at airports (not least since nobody will going on holiday). The next election will once again be about material matters as families weigh up how they can afford to live. The die hard remainer-rejoiners will be lining up to blame Brexit, but all of Europe will be squeezed thanks to EU green policies. They will make an irrelevance of themselves if they drag Brexit back into the fray.


The outrage at the next election is that the establishment parties have all closed ranks on us to inflict Net Zero in us whether we want it or not. The Tories have given a stay of execution for shale wells and given the green light for more North Sea extraction, largely in response to Russia’s invasion of Ukraine, but is still intent on quadrupling offshore wind. More than half of the Tory party now supports the green agenda, having turned their backs on Brexit and Brexit voters, hell bent on making us colder and poorer.


Though Net Zero is still seen as a peripheral issue, it could just as easily become a an issue as divisive as Brexit, because it mirrors the issue of EU membership. There is a gulf between what the public wants and what the establishment has conspired to do to us without consultation or consent. Thus, this very well could morph into a constitutional crisis. It shows that Britain is not a democracy and nothing at all was learned from Brexit. We are still ruled by a feral, out of touch establishment, and politicians who are insulated from the consequences of their dangerous stupidity. We voted for Brexit to change things, but Net Zero tells us that nothing has changed, and nothing will change until we stop voting for them.


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