In Both U.S. and UK, Overtaxing Voters is Bad Climate Politics
By Paul Bledsoe
No political comparison is as discordant to British ears as one suggesting commonality with the American scene, particularly with Donald Trump still at large. Nonetheless, recent UK contretemps over energy taxes and climate policy may find an illustrative corollary in U.S. politics and prove the exception to the rule.
The decision this week by mayor Sadiq Khan to extend the Ultra-low Emissions Zone (ULEZ) tax to almost all of greater London may be justified in terms of helping air quality, but it is still questionable politics for a Labour Party attempting to regain power for the first time in 13 years.
In fact, this summer’s by-election loss by Labour in Uxbridge over high auto pollution taxes bears striking similarities to political defeats suffered by Democrats in major elections after they attempted to foist carbon taxes on consumers. In 1993, Al Gore’s energy tax proposal, which was defeated in the Senate, played a major role in Democrats losing their majority in the House of Representatives for the first time in 40 years. Not to be outdone, Barack Obama’s “cap and trade” carbon tax proposal in 2009 helped ensure losses of more than 60 Democratic seats in Congress and again gave Republicans House and Senate majorities.
In the aftermath of Donald Trump’s election, however, it was clear even to left-wing Democratic activists that a new direction was needed to attract voter support for effective climate policies. Thus was born the popularized U.S. Green New Deal. In the subsequent Presidential campaign, Joe Biden’s team took note, developing its own less ideological version of the GND, with wide-ranging clean energy subsidies for consumers, businesses, and investors — all while promising not to raise energy taxes.
Once elected, Joe Biden and Democratic allies in Congress made these policies a reality. In just a year since its passage, the main U.S. climate law has spurred more than $220 billion dollars in new private sector investments in the U.S. clean energy economy and the promise of hundreds of billions more over the next decade.
None of this is to suggest that the UK should abandon its carbon tax policy which has been a valuable policy in reducing UK emissions and is supported by all parties. But, equally, trying to further squeeze down emissions on the backs of average British voters with new taxes during a period of high inflation is a recipe for political disaster. This is especially true for middle- and working-class voters, many of whom have few immediately available alternatives to diesel cars or reliance on natural gas for home heating.
In fact, Labour Party leaders already can make a strong case that the Conservative government has botched recent energy and climate policies thoroughly. During last winter’s energy crisis, the Tories were compelled to spend more than $200 billion to provide tens of millions of UK consumers large direct cash subsidies to help pay high natural gas and heating bills made higher because Conservatives had done away with tax incentives for energy efficiency investments for homes. These huge costs to the treasury, however, did nothing to cut emissions or invest in the long-term clean energy economy.
Even the windfall profits tax on oil companies Labour proposed, and Conservatives made law, could not nearly cover the costs and may have perversely limited clean investment by that sector. And despite greater EU stockpiles of gas during the spring and summer, price spikes of natural gas could happen again this coming winter since supplies globally remain tight and are subject to outages by American, Qatari, Norwegian, and other suppliers around the world.
Keir Starmer has proposed tens of billions of dollars in clean energy incentives for UK consumers and businesses, but with a constrained UK budget causing Labour to at least delay higher subsidies. This may prove just as well for now. In his first term, Bill Clinton’s tight budget policies helped usher in his reelection in 1996 and produced the strongly competitive U.S. economy and the reemergence of a more fiscally responsible and politically effective Democratic party for years to come. Labour may get credit for doing the same.
There is little moral or political justification for moderate income voters to pay onerous taxes like the London Ultra-low Emissions Zone fees for using fossil fuels they need to conduct their daily lives. Starmer was right to urge London mayor Sadiq Khan delay the ULEZ expansion. The policy goal instead should be to reduce the costs of cleaner technologies by stimulating innovative investment so clean sources are more affordable over the long-term, while growing the economy and creating jobs. This is precisely what Biden argues — and independent analysis finds — his legislation is accomplishing.
As the Labour Party seeks to draw contrasts with the Conservative governments who are backtracking on some climate goals, they would be wise to remember the evolution of America’s Democrats. UK voters have shown stronger and more patient support for reasonable programs to reduce emissions than their American counterparts. But they’ve also made it clear they won’t support them on the backs of working-class voters.
Paul Bledsoe is a strategic advisor at the Progressive Policy Institute which has offices in Washington, Brussels, and the United Kingdom. He served as a staff member in the US House, Senate, Interior Department and White House Climate Change Task Force under President Bill Clinton.
