Will Reeves deliver on her Tory-tinted plan, or be undermined by Labour’s statist instincts?

After weeks of briefings, Rachel Reeves has finally unveiled how this government will achieve the faster economic growth the UK badly needs.

Sam Hall | Director

Her pro-market, conservative-tinted rhetoric has certainly thrown a cat amongst the environmental pigeons. But growth and the environment can – and must – go hand in hand.

This will only happen, however, if we take a true market-led approach to delivering our environmental goals. Because it is more often than not the state that pushes up costs, stands in the way of growth, and ultimately fails to protect the environment. And despite all the rhetoric, many will fear a Labour government will ideologically default to state intervention.

Growth that accelerates climate change and plunders the natural world would be short-lived, with one study suggesting the loss of nature could lead to a 12 per cent decrease in our GDP in the years ahead.

Conversely, we have seen how green industries can bring prosperity to our country. The green economy already stands at £74 billion gross value added. This success is not just located in the South East but in our former industrial heartlands such as Teesside.

We all want to see economic opportunity spread more evenly across the UK. And some of our best prospects for returning manufacturing jobs to the UK lie in sectors like carbon capture, floating offshore wind, and nuclear.

Throughout history, Britain has pioneered ground-breaking innovations that have been exported around the world – it is how our country has punched above its weight.

By cutting red tape and letting the market lead, we can thrive again. Meeting our environmental goals in this way is an opportunity for growth, not stagnation.

After all, it isn’t bats and newts that are to blame for slow growth. It’s poorly designed and implemented regulations that have too often been a barrier to genuine nature restoration, new clean energy, and that all-important prize that is growth.

The Chancellor is promising to harness our Brexit freedoms and build on Conservative proposals to redesign historic EU environmental regulations. Letting housing and clean energy developers pay into a fund to mitigate their impact on the environment will unlock more money for nature and speed up productivity-enhancing infrastructure. While some of the reforms could be bolder, Reeves deserves credit for pushing these pro-growth policies through where the last government didn’t.

But there are flaws in Reeves’s plan. Because her warm words will be undermined by Labour’s left-wing instincts and statist ideology which are evident in their energy and wider economic plans. This inconsistency is disastrous for growth and the environment.

GB Energy and the nationalisation of the railways are prime examples of unnecessary statist intervention. GB Energy simply takes money from the already overdrawn Treasury and pumps it into projects in which private finance is already more than willing to invest. And bringing the railways back into public ownership reduces investment and weakens competition. Both simply waste public funds, make the transition less efficient, and increase bills for consumers.

Another is a lack of speed around removing regulatory blocks on nuclear energy. The Treasury has already delayed important funding decisions, but the regulatory approval process for the industry is still far too convoluted. The Government should automatically approve reactors that have been given the green light by trusted regulators elsewhere in the world.

Lastly, the Government’s proposed Brexit reset risks undermining the flexibility the UK has to reform regulations and unleash new industries. Reeves’s speech was bold on reforming legacy EU rules, but will this ambition survive the renegotiation of our Brexit deal? Industries like gene editing provide significant economic opportunity for our nation and we cannot waste it by tying ourselves back into the EU’s inefficient regulatory orbit.

Reeves is talking the talk so far, recognising the environment and growth go hand in hand. She seems to acknowledge that a ‘hairshirt’ vision of environmentalism is not only bad for the economy, but will alienate the public and deprive us of the resources we need to become more sustainable. But for her to do what she is promising, she has to betray her Labour instincts, go further on reforming bad regulation, and adopt a true market-led plan for growth and the environment.

First published by ConservativeHome. Sam Hall is Director of CEN.