UK markets closed
  • FTSE 100

    7,342.38
    +110.10 (+1.52%)
     
  • FTSE 250

    23,255.33
    +374.00 (+1.63%)
     
  • AIM

    1,199.28
    +19.25 (+1.63%)
     
  • GBP/EUR

    1.1765
    +0.0015 (+0.13%)
     
  • GBP/USD

    1.3228
    -0.0032 (-0.24%)
     
  • BTC-GBP

    39,036.43
    +1,844.63 (+4.96%)
     
  • CMC Crypto 200

    1,329.67
    +8.39 (+0.64%)
     
  • S&P 500

    4,686.56
    +94.89 (+2.07%)
     
  • DOW

    35,749.07
    +522.04 (+1.48%)
     
  • CRUDE OIL

    72.65
    +3.16 (+4.55%)
     
  • GOLD FUTURES

    1,783.30
    +3.80 (+0.21%)
     
  • NIKKEI 225

    28,455.60
    +528.23 (+1.89%)
     
  • HANG SENG

    23,983.66
    +634.28 (+2.72%)
     
  • DAX

    15,812.51
    +431.72 (+2.81%)
     
  • CAC 40

    7,062.33
    +196.55 (+2.86%)
     

Rishi vs Boris: inside the COP26 eco war

·8-min read
 (PA)
(PA)

The COP Clique is riding into town. The meeting is described by one attendee as the exclusive “platinum card Davos” event for world leaders and opinion formers, who range from Joe Biden and Ursula von der Leyen to Greta Thunberg; to the Queen and next-two-generation heirs, Charles and William; the Vatican’s prime cardinal Pietro Parolin and America’s tycoon planet savers Bill Gates and Mike Bloomberg, along with some 20,000 delegates and NGOs. One cabinet minister called Cop26 “Boris’s Yalta summit” — referring to the crucial 1945 meeting of the leaders who carved up Europe and set out the dividing lines of the Cold War.

This time, it’s the chance to see a concerted international push on combating global warming agreed as governments balance eye-catching commitments on reaching “net zero” emissions by 2050 (or 2060 in the case of the mega-emitter China, which is not sending President Xi Jinping to the grand clan meeting.) 

Climate change is also a subject close to the green heart of Carrie Johnson, who acted as social convenor and organiser of the successful Carbis Bay pre-meeting of G7 leaders in Cornwall. However, Downing Street sources say that Glasgow will be “more serious optics, less frivolity and a dawn-to-dusk workload”. Decoded, this means that COP26 is the emergence of “serious Boris” as a believer in the urgency of tackling climate change, laying to rest the puckish, cherry-picking Johnson who once joked that energy from wind farms would not blow the skin off a rice pudding.

Watch: Boris Johnson and Rishi Sunak visit brewery following Budget

For Team Johnson, the opportunity in Glasgow is not only to establish Johnson as the leader of a major G7 country and partner of the US on a vital issue — “it gets him off the naughty step of the international club”, is the side-swipe of one former environment minister. But it is also fundamental to the projection of a confident “global Britain” which can combine progressive causes with mercantile self-interest and the defence outreach embodied in the AUKUS submarine deal with the US and Australia.

Pursuing net zero, however, comes with a lot more than zero cost attached — and that has brought Johnson and his ambitious Chancellor Rishi Sunak onto an increasingly bumpy collision course. Sunak is outspoken about the mounting risks of commitments to transition the economy when energy costs are soaring for reasons of bad geo-politics and even worse policy-making by previous UK governments. He knows that voters will be anxious about the costs of green-ing the economy landing with them. As one aide puts it: “He does not want to end up as Nigel Lawson, bitterly blamed for tax raids on pensioners in 1988 while Boris smiles and waves like Margaret Thatcher”. 

Carrie Johnson is team green (AFP via Getty Images)
Carrie Johnson is team green (AFP via Getty Images)

The result has been a tussle over pace, policy and proprietorship of net zero measures. Johnson has signed off “an ambitious roadmap but has no compass to get the country there,” snipes a critical Tory MP. It has led to sharpening of divisions between Johnson’s COP advocates (who are, not coincidentally, often close to Carrie too), and the Treasury team who underline the need for more careful examination of financial commitments. The peacemaker and link figure here is Allegra Stratton: the former journalist and ally of Sunak, originally poached by Johnson to be the face of televised press conferences, who was diverted into a role guiding communications about COP. At the time, it looked like a demotion — but is now regarded as crucial to smoothing the choppy waters between No 10 and No 11 over how many commitments the UK should sign up to and in what detail next week.

Another figure closely involved in ironing out differences is Mark Carney, the urbane former governor of the Bank of England who knows Sunak well and — as a twice former central banker in the UK and Canada — understands his anxieties, despite having been co-opted to the role of the PM’s finance adviser. One tendency of Johnson’s that is becoming ever clearer is his enthusiasm for raiding expertise associated with the Chancellor’s fiefdom and grabbing it for himself.

Sunak’s Budget tomorrow will set out his fiscal architecture for bringing the country out of the pandemic in more detail, with early leaks about more money for “trad” Tory concerns like border enforcement and investment in “branchline Britain’s” transport and infrastructure, as well as emergency NHS funding.

Allegra Stratton is the PM’s climate spokesperson (PA)
Allegra Stratton is the PM’s climate spokesperson (PA)

He may have (green) rabbits to pull out of the hat on COP-related spending, but is already under fire for a leaked plan to further squeeze international development. He has been accused of “accountancy tricks” to ensure COP commitments for the major emitters, to raise billions to allow poorer countries to decarbonise their growing economies, are offset by reducing development spending. In truth, it suits No 10 to have “squishy Rishi” as the Sun dubbed him — squeezing money in one place to allocate it in another. It’s a very old Budget trick indeed.

The more important argument is over plans for green investment — on green energy and a somewhat more modest bet on boiler replacement and electric cars. That delights advocates of rapid transition (including Bloomberg, who has become an ally of Johnson’s and helped improve his image in Brexit-hostile, liberal New York upper echelons by embracing him as a fellow climate warrior). But a recent slew of research papers from the Treasury and the Office for Budget Responsibility has seen more cautious prognoses — including the risk of green investment being likely to attract diminishing returns, reducing the positive impact of ever more investment on GDP. Some green investments could displace other, more productive investment opportunities. Sunak’s team also flagged risks of jobs moving abroad if other countries change more slowly.

Sunak, already on the rack in the Tory Party for tax rises to help fill the coffers after the fiscal depletions of the lockdowns, is eyeing an unpleasant “perfect storm” of being portrayed as a high taxer — contrary to his natural instincts, earning hostility on the Tory Right — and “anti-green” by centrists. That is an unenviable position for a man who clearly has his own eyes on the prize.

Chancellor Rishi Sunak has cautioned over the mounting costs of going green (PA)
Chancellor Rishi Sunak has cautioned over the mounting costs of going green (PA)

Whatever the fate of COP targets, it’s no secret that the Chancellor is targeting No 10 as his next job. But the summit has exacerbated differences with his neighbour — the two men rarely socialise now. One senior Downing Street insider insists that a lot of gossip about a rift is overblown. “Boris is in the driving seat on COP as in everything else. Rishi knows that and accepts it.”

The story of a recent spat which had Johnson venting to his team that Sunak might do well as Health Secretary is brushed off as good old Etonian ‘bants’. “He was roaring with laughter when he said it and it’s a good-humoured way of just reminding everyone who is in charge.” In another of Johnson’s “believe me or not asides”, he recently joked when someone ventured that Sunak or Liz Truss might succeed him, that he rather thought it might be Priti Patel, the tough, Right-wing Home Secretary who horrifies Remain-y liberal Tories.

Sunak, friends retort, is very far from being “anti Green” and his background in financial services makes him “acutely aware of the need to pivot but do so thoughtfully”. His role, says a key ally, is to ensure that the “sequencing of spending, borrowing, taxation and revenues”, which a more concerted de-carbonisation push will require, does not end up hitting poorer voters who can ill afford sweeping changes to old cars, leaky fridges and gas boilers. Hence the rapid retreat from a “bonfire of the (gas) boilers” originally proposed. They also emphasise that Sunak’s commitment to stable finances — which he has described as a “moral” aspect of conservatism as well as an ideological one — is something Johnson can ill afford to squander, especially as the threat of inflation looms, savers start to worry and a rise in wages like this week’s hike to the minimum wage create a combination that has inflation hawks anxious. 

Watch: Sunak uncomfortable being high-tax, high-spending chancellor

Heavyweights — including Lord King, the Bank of England governor before Carney — tell me they take inflation “absolutely seriously” as a threat. On this account, Sunak is not so much “squishy” as “Stolid Sunak” in the mould of Gordon Brown in his “prudent” phase or Alistair Darling, holding the rest of the economy as steady as he can for now and helping the Prime Minister deliver on his planet-saving enterprise, while moderating the impact on voters by shrewd planning of when to deliver changes and how to triage them against competitors. 

If that works, Britain’s COP squad will be a triumph of joined-up thinking by a powerful Chancellor — and a mightier Prime Minister. If it doesn’t, the squabbles on the road to Glasgow will be prophetic of more to come — and a political hard rain is most likely to fall along the way.

Anne McElvoy is Senior Editor at The Economist

Read More

COP26 programme: Full schedule for this year’s UN climate conference in Glasgow

When is the COP26 summit, who is attending and what is it about?

What the Cop26 climate summit in Glasgow could achieve

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting