I have been driven to write in sheer frustration at the ability of the Liberal Democrats to believe whatever it is that comes out of their mouths. On Tuesday Nick Clegg appeared on BBC Radio 4′s the World at One and pronounced that there was new money being put through the pupil premium for children in deprived areas (Politics blog, 30 April). In fact, this money has been top-sliced from the schools budget and the previous deprivation formula for distribution has now been abolished. Yes, the schools budget has been protected, but by redistributing it. As it happens, I am in favour of the pupil premium – but, in the words of Nick Clegg, as an addition not as a substitute for what really existed.
Simon Hughes also described it as “extra money” on Radio 4′s Today programme. And he mirrored his leader’s misuse of facts when he claimed more money had been put into child care. Nick Clegg had gone further and claimed the Lib Dems were responsible for the extension of funding for early years. The Liberal Democrats have colluded in the demolition job that has been done on Sure Start which, as those who have experienced it know, has transformed the life chances, not just of children, but of the families that have been touched by this holistic approach to early years.
Above all the Lib Dems have allowed the government to abolish the early intervention grant. Part of this has been used for the expansion of what had already been initiated by the Labour government, namely 15 hours of support for two year olds. I’m still not clear whether the Lib Dems do not know what they are doing or having done it, have managed to persuade themselves that they didn’t.
David Blunkett MP
Lab, Sheffield Brightside
I think you are underestimating the growing impact of Ukip and its brand of anti-politics by arguing that this is mainly a centre-right drama (Editorial, 29 April). Here in true blue Tunbridge Wells we have seen increased shifts of support to Ukip from traditional Labour and Lib Dem voters, as well as the Tories, in recent local elections, which as a Lib Dem candidate living in a poorer community I have attempted to address in my campaigning. If national newspaper editors just think this is a tiny temporary squabble between disillusioned Conservatives then they need to think again. The gulf between professional politicians and the public has never been wider, as the expenses scandal showed, and all three main parties should urgently reconnect with the wider electorate through new forms of local engagement on bread-and-butter economic issues and housing.
Dr Alan Bullion
Tunbridge Wells, Kent
• The Tories denounce Ukip as closet racists, and my experience at byelections and local elections and of meeting many of their grassroots supporters bears this out. Most Ukip members and supporters are nothing but opportunists, seeking a populist platform for their extremist views. As the official party of protest, we Official Monster Raving Loonies strongly object to use of the terms “fruitcakes” and “loonies” when describing Ukip (Tories in disarray over response to Ukip ‘clowns’, 29 April). We who seek the holy grail of Loonyism strongly object to the cavalier use of these terms. In our long-held view, all politicians from all the unofficial loony parties are far too loony even for us Official Loonies, so on Thursday, both in South Shields and in the county council elections, don’t vote Conservative, Labour, Liberal, Ukip or for any other pretenders, vote for the real Official Raving Loony party of the UK. As our late founder Screaming Lord Sutch said: “Vote for insanity … you know it makes sense.”
Lord Toby Jug
Leader, The Official Monster Raving Loony party, Eastern Region
Scotland Yard announces formal investigation into former party chief executive Lord Rennard
Scotland Yard has launched a formal investigation into allegations of sexual harassment towards several women by the Liberal Democrat peer and former chief executive of the party Lord Rennard.
Officers had been assessing if one was merited, weighing up criteria such as whether alleged victims would co-operate with detectives and if evidence of criminal offences could be obtained.
Rennard, who wielded major influence as a strategist over the course of successive elections but stepped down as the party’s chief executive because of ill health in 2009, denies the allegations of inappropriate behaviour.
The Metropolitan police said in a statement: “As is standard in cases of an historic nature, officers’ initial inquiries are made to establish if allegations of crime are being made and if there are potential victims and witnesses who are prepared to speak to police.
“Officers then carry out inquiries to corroborate those allegations, and in this case that process is ongoing.
“We are not prepared to discuss who, how many or the nature of the allegations made by those who have come forward to police.”
Alison Smith, an Oxford University politics lecturer and former Lib Dem activist who led complaints of sexual harassment, is among those who have spoken to police. She alleges she was inappropriately touched and sexually harassed by the then Liberal Democrat chief executive after a dinner at his house in 2007.
The Metropolitan police has declined to comment on how many people have so far made complaints about the peer and also did not say if he had been interviewed.
A spokesperson for the Liberal Democrats insisted that nothing had changed in terms of the status of the police inquiry, with which the party was continuing to co-operate.
He added: “The situation today is exactly the same as it was last month.”
The Women Liberal Democrats group wrote to Nick Clegg in February with concerns about the vigour of the party’s own investigations, saying its members had been “shocked and saddened” by the allegations against Rennard.
In previous statements, Rennard has said he was “deeply shocked” by the allegations, which he has described them as a “total distortion” of his character.
Your editorial (2 April) on the coalition’s squeeze on the welfare budget lacks a conclusion. Alongside your criticisms of coalition policy, you ought to be arguing for a positive alternative: which, following the logic of your argument, is clearly for a larger state, with a higher proportion of national income passing through the state, which must continue to rise further as our population ages.
This was, after all, the logic of the position that the Labour government adopted after 2001, when it allowed spending on welfare to rise more rapidly than national income. Labour’s failure to raise taxes to match this rise in spending led to successive fiscal deficits from 2002 onwards – even while the economy was booming – thus leaving to the coalition government the overhang of debt that it has been struggling to reduce.
Labour’s platform for the next election must therefore include substantial rises in taxation, across the board. Ed Balls’s repeated suggestions that somehow enough can be raised from the top 1% alone, without affecting “the squeezed middle”, is not credible. In any event, the coalition government has done more to close tax loopholes and bring the richest back within the tax system than Labour did in the years before 2010. If a returning Labour government also commits itself to a like-for-like replacement for the UK nuclear deterrent, as many leading Labour politicians are urging, that will further add to the necessity for higher taxation. There are some very hard spending choices here, which the Guardian appears happy to allow the Labour party to evade.
Lib Dem, House of Lords
• In claiming that he will “make work pay” (Osborne: we will make work pay, 2 April) George Osborne may think he has discovered an important new principle of social policy. In fact he is merely echoing in modern words the Poor Law report of 1834, which led to the setting up of the workhouses. A central principle of the report was that of “less eligibility”, meaning that those supported by the state should be kept in a condition more miserable than that of the lowest-paid labourer. After 180 years it appears that social policy has come full circle.
Department of economics, University of Warwick
• John Harris sounds reasonably even-handed (We have to talk about why some people do want cuts, 1 April) though the figures he quotes should mean the article’s heading ought to say “why most people…”. But, like most people on the left, he cannot accept the validity of this view or that it is arrived at freely, rather than being the result of ordinary people being manipulated by the right and holding opinions based on “wildly inaccurate views”. Until the left accept that those they patronise as hard-working families who are, in many cases, able to judge from their day-to-day experience that the benefit system is not working and that significant changes are needed, the situation he laments will continue.
• Pity the poor workers on the receiving end of the coalition’s new schemes to penalise them for not working enough hours (Poor could be told: earn more or lose tax credit, 3 April). At a time when jobs are either scarce or part-time and some exist only because employers want to hold on to them on a “just in case things improve basis” or offer only zero-hours contracts (Report, 3 April), the thought that employees are in any position to ask for more hours is ludicrous.
The government’s policies are becoming more like the goading of medieval bear-baiting than fairness.
• The current debate about the bedroom tax touches on a wider malaise. Because renting or buying a home is so incredibly expensive as a proportion of one’s income (spending 40% is not uncommon), once people get into social housing many tend to hang on to it at all costs. Ditto with transport to and from work; rising petrol prices and the astronomical costs of public transport deter many people from taking work outside their local area.
This leads to the situation where many people would rather struggle on paltry benefits than struggle on paltry wages. The costs of accessing the infrastructure necessary for work need to be addressed, as the implications of people opting out of the working world are cause for concern.
• The paradox of the coalition government’s claim that it will make work pay is that for a substantial section of the labour force it is locking in place a system which ensures that work may never pay. More and more workers will not be paid what they are truly worth, but will have to depend on means-tested wage top-ups or credits.Government policy perpetuates and encourages the development of a systemically unequal labour market in which many of those who aspire to decent work must compete for under-paid and precarious jobs. George Osborne’s idea of “fairness” is that taxpayers should subsidise the exploitation of hard-working people by low-paying employers. Why not make the employers pay and use taxes to pay down the deficit?
Professor Hartley Dean
London School of Economics
• One aspect of the changes to welfare is the way that the government is making it harder for people to claim benefits. The introduction of universal credit is being combined with the requirement for all benefit claims to be made online. Many people who claim benefits do not use the internet. At the same time, access to the internet is being cut as councils are forced to close libraries. This double-whammy is a part of the long list of ways in which those in most need of help are being forced to pay for the mistakes made by some of the wealthiest. Many people will simply not be able to claim.
Bill Esterson MP
Lab, Sefton Central
• Governments should be giving grants to bedrooms, not axing them. They are the source of bright ideas (How to become a mobile app millionaire, 27 March). The genius of future companies is up in the bedroom (pronounced bejjum) at the moment, contacting like minds in Shanghai or Seattle.
Max and Felicity Hebditch
Lib Dem leader’s office claims it did not receive letter from lawyer of woman accusing MP of sexually inappropriate conduct
Nick Clegg is facing fresh pressure over his claim that his office “never” received a letter from the solicitor of a woman who complained about allegedly inappropriate sexual behaviour by the veteran Liberal Democrat MP Mike Hancock.
The woman’s solicitor, Harriet Wistrich of Birnberg Peirce and Partners, said she wrote to the party in October 2011 after her client failed to receive a proper reply having written “one email and two full letters of complaint” to Clegg’s office earlier that year.
The intervention by Wistrich raises questions about a claim by the deputy prime minister in his weekly LBC radio interview on Thursday that his office was not contacted by the woman’s solicitor.
Clegg was asked by the LBC radio presented Nick Ferrari why he did not reply to a written complaint he received in March 2011 about Hancock’s behaviour.
Clegg told Ferrari: “My office never received one of the letters from the complainant’s solicitors. We did receive a letter in February of this year. You’ll be aware, I hope, because I think it’s only fair to point this out, that the police have looked into this matter before, have dismissed it because I don’t think that they can take it forward on advice from the Crown Prosecution Service. But you’re right, we did receive a fuller letter from the complainant in February of this year.”
It is understood the woman wrote to Clegg in March 2011 at Lib Dem headquarters. This was followed by an email to his office a month later, which prompted a standard acknowledgment. She wrote a second letter in May 2011 after receiving no proper reply to her first letter or email. She again got no reply.
Wistrich wrote to the Guardian: “My client, the constituent, wrote one email and two full letters of complaint in 2011. The email received an automatic acknowledgment, but when the complainant received no reply to the letters, she became sufficiently paranoid to tape-record two telephone calls in attempt to discover why she had not received a response. She was then given to believe a reply would be sent to her, but received none.
“Subsequently, the complainant instructed me and I wrote to the Liberal Democrat party in October 2011. They wrote back in February 2012 indicating that a ‘relevant committee’ had considered the complaint but decided not to investigate, as both the police and parliamentary standards commissioner had decided not to investigate.”
In his radio interview Clegg said that the “fuller” letter from the woman this February prompted him to despatch Alistair Carmichael, the Lib Dem chief whip, to investigate. “My chief whip has gone down to Portsmouth, has spoken to Mike Hancock’s solicitors, has written to the complainant’s solicitors offering to meet them, I hope they will do that. So I hope you won’t imply in any way that we’re not acting very, very thoroughly and quickly in response to what of course are serious allegations which are also very vigorously denied by Mike Hancock.”
Wistrich suggested that the Lib Dems acted only when the party was criticised over its failure to take action over separate allegations of inappropriate behaviour by the Lib Dem peer Lord Rennard. “It was only following the Lord Rennard scandal, that I wrote again to the Lib Dems asking them to review their decision. I was told the matter was receiving urgent consideration. However, it was not until 28 March, the day of Nick Clegg’s broadcast, that I received a letter requesting a meeting with myself and the complainant.”
The Lib Dems conduced an exhaustive search for the March 2011 letter from the complainant after her solicitor enclosed a copy when she submitted a detailed complaint last month. But the Lib Dems did not find any record of it. A party spokesperson said: “We understand from the complainant’s solicitor that she did write to us in March 2011. We apologise but as we have no record of the letter we did not reply at the time.”
Party negotiating to reopen green energy deal in attempt to introduce carbon reduction targets for energy sector
The Liberal Democrat president, Tim Farron, has raised the prospect that his party is privately negotiating to reopen the green energy deal signed by the coalition last autumn in an attempt to introduce carbon reduction targets for the energy sector.
Lobbying has intensified over an amendment to the energy bill due to be tabled by Tim Yeo, the Conservative chairman of the energy select committee, calling for a decarbonisation target for the energy sector for 2030.
The energy secretary, Ed Davey had said he would shelve the idea of a decarbonisation target as part of a wider deal he reached with the Treasury over subsidies for renewable energy. The question of a target was not due to be reopened until after the general election in 2016.
But Farron wrote in a letter to a constituent that he supported the Yeo amendment. “I have been contacted by a very large number of constituents about this amendment. The need to tackle climate change is urgent and this issue is too important to be used as some kind of political football. I am fully committed to this principle and I can assure you that rigorous efforts are being made to secure this amendment within the government,” he wrote.
“I believe that a legally binding target will help to secure confidence and investment in low carbon projects, which will serve to strengthen our green economy. However I am advised that it may not be helpful to our bargaining position, if the president of the Liberal Democrats were to distract attention from the efforts of our ministers by signing the Greenpeace pledge.”
He continued: “I hope that you will understand that this is intended to enhance the chances of winning Treasury acceptance of the need for the amendment to be adopted. If the negotiations were to fail, I will certainly be voting for the Tim Yeo amendments when the energy bill comes before the House. I strongly believe that a decarbonisation target should be included in the bill because we need to make a firm commitment to tackling climate change.”
The Yeo amendment backed by Labour could be passed if enough Liberal Democrats defy their leadership. A growing number of Liberal Democrats have said they will support the amendment, including Tessa Munt, the parliamentary aide to the business secretary, Vince Cable, as well as Mark Williams, previously an opponent of wind power.
The Friends of the Earth campaigner Oliver Hayes welcomed the Farron letter. “For months Ed Davey has been saying that the deal is done, but this reveals the government knows full well the energy bill doesn’t work without a decarbonisation target,” he said.
“Liberal Democrats can’t hope for a credible green legacy without putting their key green policy on the statute books. They must now win the negotiations or vote en masse for Tim Yeo’s amendments”
The former energy secretary’s guilty plea means a heavyweight loss not just to the Lib Dems but to national politics as a whole
It is sometimes alleged that if about 1,300 postal votes had not got caught up in the Christmas mail in 2007, Chris Huhne would have defeated Nick Clegg and become leader of the Liberal Democrats. Perhaps, looking at the news, it is just as well for the party that those votes somehow went missing. For, if they had counted, the consequences might have been widespread. It would not just be one former cabinet minister’s career that lay in ruins. Instead it would have been a deputy prime minister who would have been forced to quit parliament and who would now be facing a possible prison sentence after pleading guilty to perverting the course of justice. Instead of just causing a difficult byelection at Eastleigh, as Mr Huhne’s resignation did on Monday, the entire British government might have come tumbling down.
Comment on the Huhne prosecution must await the conclusion of current legal proceedings. Right now, only the political implications can be debated. The first of these is that politics is the poorer for Mr Huhne’s fall. Mr Huhne – who in earlier life worked for this newspaper – was a big figure in his party and in parliament. He came close to the leader’s job twice. He made waves in his party’s internal debates and within the coalition of which he was one of the architects. He was an effective environment minister, who did as much as any politician to ensure that this country takes environmental challenges seriously. He had a grasp that marked him out from the ordinary.
There are two particular reasons why the Liberal Democrats are the poorer for his departure from politics. The first is that the party is not so rich in talent that it can afford to lose its heavyweights. Mr Huhne unquestionably fell into that category. But his departure leaves Mr Clegg and Vince Cable practically alone as nationally recognised Lib Dem figures. This is not to underestimate other senior leaders but simply to state the currently obvious.
The second loss is to the tradition of Liberal Democratic politics for which Mr Huhne spoke. As a young man, Mr Huhne took the SDP route into the party. That meant not just that he understood green and civil liberties issues, though he did that too, but that he also spoke up for social liberal values on welfare and social services and for the Keynesian tradition in Lib Dem economic thinking. Though he was a contributor to the 2004 Orange Book, his approach was significantly to the left, as traditionally defined, of the way that project is now often characterised. He was in many ways – and unlike some of his Lib Dem colleagues – a more natural Labour coalition ally than a Conservative one. As politics evolves towards 2015, the gaps caused by his departure may therefore feel larger not smaller.
Mr Huhne’s public disgrace will not help the Liberal Democrats. But it is uncertain how much extra damage it will do. The Lib Dems lost a quarter of their 2010 electoral support within a few months of joining the coalition and there is no evidence that they are regaining it. The Eastleigh byelection will be a pivotal test for the party and its morale. If they hold Eastleigh, where Mr Huhne had a 3,864 majority over the Tories in 2010, Lib Dems will feel that they can go on to hold the bulk of their Lib-Con marginals in 2015. Lose it, however, and they may panic. Much will depend on how the Tories behave in the coming weeks, starting in the debate on gay marriage, and on whether Ukip maintains a credible challenge. But it is not inconceivable that Mr Huhne’s departure may in the end save a party leader, Mr Clegg, whom he might have challenged if he had remained in the Commons.
Mr Huhne’s fall is not good for politics either. But beware of assuming that it will do lasting damage to anyone other than the disgraced MP himself. A Hansard Society survey last week reported a significant improvement in the reputation of parliament that may indicate a more thoughtful and less contemptuous mood than in the recent past. Mr Huhne has gone. But the important things he stood for matter as much as ever, and maybe more.
• Comments for this article were switched on in error
Four peers table amendments to defamation bill introducing low-cost arbitration service, as recommended by Leveson
Frustration in the Lords at the lack of progress over the Leveson report has led four peers to table measures to introduce a low-cost arbitration service for defamation, as recommended by Lord Justice Leveson in the defamation bill.
The proposal is one of the central planks of the Leveson report and follows what appear to be fruitless behind-closed-doors cross-party talks on how to respond to the report.
The defamation bill is in front of the Lords on Tuesday and the motion is being supported by four peers including Lady Thatcher’s lord chancellor Lord Mackay and Lady Boothroyd, a former Speaker. The other two signatories are Lord Puttnam, the Labour peer, and Lady Scotland, a former Labour attorney general.
The amendments are now gathering support from Lib Dem, Labour and Tory backbenchers. The peers would prefer the government to table its own amendments with the same effect, and at the very least want to hear something on the record from the Lib Dem leader in the Lords, Lord McNally, giving some assurances as to what the government is doing to implement the Leveson report. One source said nothing had been said on the record about progress since Leveson was published two months ago, with government figures briefing one thing to Hacked Off campaigners and another to the newspaper industry.
The Cabinet Office minister Oliver Letwin, who is leading the all-party talks on Leveson, suggested at one point he would produce proposals on a royal charter to oversee a newspaper regulatory body last week, but has failed to do so.
Puttnam has told peers in a briefing note that his amendment is designed to address concerns that access to justice will be unavailable to ordinary citizens in cases of defamation by newspapers because of cost.
He warns that without his proposed amendments “we would be in danger of passing a bill that could only be used in court by the very wealthy”.
The amendments require the newspaper industry to set up an arbitration service that would be recognised by the courts.
The purpose of the arbitration service would be to avoid expensive legal actions through the courts and allow access to justice for everybody in cases of defamation, irrespective of their means.
The Legal Aid, Sentencing and Punishment of Offenders Act 2012 in effect abolished “no win, no fee” actions for defamation claimants.
In his briefing note Puttnam points out: “During the passage of that act, the family of Milly Dowler asked us not to do so. In a letter to the prime minister, they said: ‘We could not have [reached a settlement with News International] without a no win, no fee agreement.’
Puttnam continues: “We ignored the Dowler family then; we cannot ignore them again.”
Puttnam concedes the government has asked the Civil Justice Council to review costs in defamation cases, but he argues Leveson has provided a ready-made and well-considered solution.
The first amendment inserts a new clause to allows the courts to take into account the use or not of a recognised arbitration service provided by the newspapers’ own self-regulatory body (which is called an independent regulatory board in this amendment) when awarding costs and damages in cases of defamation and related civil legal claims.
It also requires the former lord chief justice to establish a body (called a recognition committee in this amendment) to certify that the newspapers have established their independent regulatory board and arbitration service such that the courts can have confidence in their actions and services.
The use of an arbitration service provided by an independent regulatory board would be entirely voluntary. Both the board and the arbitration service would be parts of the newspaper industry’s own self-regulatory system. However, with these amendments, courts may vary costs and damages accordingly if such an arbitration service had not been used.
Lord Hunt of Wirral, chairman of the Press Complaints Commission, is holding talks with the newspaper industry to decide how to respond to the amendments.
Tax incentives and a new body to encourage shale gas development to be unveiled
Up to 30 gas-fired power stations will have to be built across the country, ensuring that more gas will be produced in Britain by 2030 to guarantee energy supplies, the government will announce this week.
Tax incentives and a new body to encourage the development of controversial shale gas will be unveiled as part of a new gas strategy which will be published alongside the chancellor’s autumn statement .
George Osborne, who is expected to admit that he will fail to meet his target of reducing debt as a share of GDP by 2015-16, will use his statement on Wednesday to claim he is committed to promoting economic growth when he outlines major reforms to the Private Finance Initiative (PFI).
The chancellor, who will announce that the government is on course to save £2.5bn in more than 100 PFI schemes, will speed up the process of procurement and give the taxpayer a minority stake in a new company overseeing the new model known as PF2.
A Treasury source said: “We’ll be showing that we remain committed to solving today’s problems but also preparing for tomorrow’s challenges and equipping Britain in the global race.”
Osborne pledged in opposition to reform PFI, which was first used by Sir John Major’s government, and was rapidly escalated under Tony Blair, to fund public sector infrastructure projects using private capital. Osborne, who said that the last government used PFI to play down the government’s liabilities, will create a cap on “off balance sheet” liabilities.
Katja Hall, CBI chief policy director, welcomed the PFI reform. She said: “Today’s announcement ends months of uncertainty for the industry by setting out a new model to channel private finance into the development of UK infrastructure. The pipeline of projects also offers good news for an under-pressure construction sector.”
The government will declare in its gas strategy that an extra 26 gigawatts of gas will have to be produced by 2030, which will require 30 new gas-fired power stations. Some of these will be created by modernising existing plants.
The strategy will say: “Both now and in the future we need a diverse generation mix that balances risks and uncertainties of different technology options … the government expects that gas will continue to play a major role in our electricity mix over the coming decades, alongside low-carbon technologies as we decarbonise our electricity system.”
The strategy will add: “In 2030 we could need more overall gas capacity than we have today.”
The government will also announce that it is to consult on introducing tax incentives to encourage the production of shale gas and will create an Office for Unconventional Gas. This is designed to co-ordinate responsibilities across government. Davey is to make separate decisions on the highly controversial process of fracking to extract shale gas.
The new gas strategy, which follows differences within the coalition over onshore windfarms, will prompt speculation that the Tories and Liberal Democrats are once again in disagreement over energy policy. Ed Davey, the energy and climate change secretary, told the Guardian recently that the Tories would try to “big up” gas when he unveils the new strategy on Wednesday. “It’s an over-used phrase,” he said of the term dash for gas. “We are some way off from thinking we have too much gas. I am quite relaxed about the gas strategy that will be published at time of the autumn statement.
“I am sure the Tories will big it up, but Liberal Democrats have always said gas has a role. If there is a danger that we are locking in too much gas, we will still have tools to reduce it.”
Lib Dem sources told the Guardian last night that they were relaxed about the new gas strategy even though it will signal an increase in the amount of gas. The sources said they were reasonably relaxed because the overall level of fossil fuels in the “energy mix” will fall because oil and coal, which are more expensive and more carbon intensive, will be reduced. Lib Dem also say that they are as keen as the Tories to ensure continuity of Britain’s energy prices and to keep fuel bills down.
Jesse Norman, the Conservative MP who advised Osborne in opposition, welcomed the announcement on PFI. He said: “The PFI has become notorious for its cost, inflexibility and lack of transparency. It is very good news that the government’s new PF2 is addressing all of these issues.”
Increase will help fund renewal of National Grid, but is likely to anger consumer campaigners and many Conservative MPs
Energy firms will be allowed to triple the amount of money they add to customers’ bills to pay for renewable power, nuclear and other environmental measures, under plans to be announced by the government next week.
The deal over a new energy bill, struck after weeks of sometimes bitter negotiations between the coalition partners, will mean the total amount energy suppliers can add to domestic and business bills will rise from £2.35bn this year to nearly £10bn at the end of this decade. Adjusting for inflation that would be worth £7.6bn in today’s prices, an increase of nearly three times.
Based on government estimates that green measures make up £20 of the average domestic gas and electricity bill of £1,249 a year, the cost of increasing the cash set aside to pay for renewable investment would rise to about £80, or £60 adjusted for inflation. However, officials argue that by the end of the decade the benefits of energy-saving measures and less reliance on expensive fossil fuel power will mean bills are actually lower than they would be without the green policies.
The extra charges on bills reflect the cost of policies that successive governments have imposed on energy suppliers, such as paying above-market prices for renewable energy to support these new industries and paying homes and businesses who fit wind turbines, solar panels and other small-scale green electricity generators for the energy they supply back to the grid.
Government sources said the bill would end months of complaints by businesses that the row between the Lib Dem-controlled energy department and the Treasury was turning away investors, who said they needed more certainty before committing money to building renewable, gas and nuclear power plants in the UK.
When the bill is published ministers will claim that it will unleash £110bn of spending on generation and renewing the National Grid by the end of the decade, and generate a further 250,000 jobs by 2030. But the increase in sums added to bills for green measures is likely to anger consumer campaigners and many Conservative MPs who say customers cannot afford to pay for expensive renewable and energy-saving policies at a time when underlying bills are being driven up by the price of coal, gas and oil.
That concern will be increased by continuing uncertainty over the true cost to consumers and businesses after government officials admitted that some of the government policies which had previously been included in the cap on the amount added to bills for green measures have been left out. Among the schemes excluded from the cap are energy efficiency and measures to reduce fuel poverty. Officials said a full assessment of the cost for bill-payers would be published soon, possibly as early as next week.
The plans were welcomed by the Confederation of British Industry and key energy groups.
Maria McCaffery, chief executive of Renewable UK, said: “This provides the industry with exactly the kind of assurance we’ve been calling for. It blows the last few months of political infighting completely out of the water. The UK government is sending a clear message that 30% of our electricity will be from renewable sources by 2020. The lion’s share will come from wind energy, where we now know for certain that we will have at least 31 gigawatts installed onshore and offshore by the end of the decade.”
John Cridland, the CBI’s director general, said: “This package will send a strong signal to investors that the government is serious about providing firms with the certainty they need to invest in affordable secure low-carbon energy. The government should ensure that those households and businesses most vulnerable to increased energy prices are protected.”
Environment groups attacked a concession by Ed Davey, the Lib Dem energy and climate secretary, who pushed hard for the increase in funding for green measures. Davey appeared to have lost his battle for a target to totally decarbonise the electricity supply sector by 2030: instead the bill will say that a decision on that will be made by the next government in 2016.
In another signal that risks undermining certainty over long-term policy for reducing emissions, the bill will announce a review of the fourth carbon budget for 2023-27, provisionally agreed last year. If it is changed it can only be increased to allow the UK to generate more CO2.
Such moves might be a backdrop to an expected announcement of a new gas strategy in the next few weeks, probably alongside the chancellor’s autumn statement on 5 December.
Friends of the Earth executive director Andy Atkins said: “The coalition has caved in to Osborne’s reckless dash for gas and banged the final nail in the coffin of Cameron’s pledge to lead the greenest government ever. This decision will help keep the nation hooked on increasingly expensive gas, drive away green jobs and investment and jeopardise UK climate goals.”
The headline figures will be announced in next week’s energy bill, but investors in renewable energy will need to wait until next year to find out how much support they will receive. The energy bill does not provide details on the “strike price” – which determines the subsidy for a particular technology, such as offshore wind – until the middle of next year, while contracts will not be signed until 2014.
Officials would not say how much of the total spending each sector of the low-carbon energy industry – such as offshore wind, solar power and nuclear plants – would receive or how competition among them would be managed. This spells continuing uncertainty for investors, many of whom are likely to wait until the strike price is settled next year before making final decisions.
In its most recent assesment in 2001, the government estimated its environment policies add £20 a year to the average domestic gas and electricity bill, bringing it to £1249 a year, and £271,000 a year for the average medium sized business paying £1.8m. Previous analysis for the Department of Energy and Climate Change forecast household bills would actually fall by the end of the decade as the cost of policies was outweighed by the reduced need for expensive fossil fuels and the impact of energy saving measures. Critics argue the government’s forecasts, which are due to be updated within weeks, make over-generous assumptions about cost savings, especially from more efficient products. Research by the Guardian also previously established that while average bills are set to fall, most of those cuts will be enjoyed by a minority of households and the majority of homes will pay more. The government’s own figures also show steep rises in business bills over the next two decades.
The green economy – including renewable energy, and other environmental goods and services such as recycling and water – has been one of the few bright spots of the economy, generating a third of recent growth and accounting for 8% of GDP, according to government figures.