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Hunt needs to learn lessons from Biden ahead of crunch budget

The government’s unwillingness to invest and use industrial strategy to deliver net-zero means the UK is getting left behind in the global green race, according to the Institute for Public Policy Research (IPPR).

Recent policies from the US, including Biden’s Inflation Reduction Act (IRA), amount to a once in a generation investment programme to take advantage of the economic benefits from the race to net-zero.

Figures highlighted by IPPR show that in the seven months since the IRA passed, clean energy companies in America have announced over 100,000 new jobs across 31 states, dwarfing the 11,500 jobs that have been created in the low carbon sector in the UK in the previous seven years.

At the same time, the EU is proposing its own Green Deal Industrial Plan (GDIP), to grow clean energy, revitalise manufacturing and support well paid jobs fit for the future.

In stark contrast there is a huge public investment gap on net zero and nature in the UK, and government ministers have veered from dismissing the IRA to describing it as “dangerous”.

IPPR has highlighted some key lessons that Hunt must learn urgently if he wants to stop the UK falling behind in, or even out of, the global green race. They include:

There is a growing international consensus on green investment and industrial policy, but the UK is an outlier. IPPR has previously estimated that the UK needs to spend at least £30 billion a year between now and 2030 to meet the scale of the crisis – a gap which the government has not come close to filling.
Place-based industrial policy can deliver for climate, prosperity, and levelling up. The north of England, for example, is uniquely placed to lead our net-zero economy.
The UK can draw on a wider toolkit of green industrial policy but must be more focused in its use. Britain needs to decide what it wants to be good at.
The UK must learn from the unprecedented certainty and policy stability that the IRA provides. The current lack of long-term thinking discourages private investment.
Climate action can be a jobs engine, but the UK must focus on quality not just quantity. IPPR has previously estimated that the green transition could create up to 1.6 million jobs over the next decade but there must be a ‘clean job guarantee’.
There is a need for corporate safeguards to socialise rewards as well as risks. Gains from public investment must not just end up in the pockets of shareholders.

Luke Murphy, associate director for the energy, climate, housing and infrastructure team at IPPR, said:

“The UK is in urgent need of renewal. The country faces a series of challenges from stagnation and inequality, risks to national and energy security, to the climate and nature crises. Together they threaten to undermine the UK’s path to a sustainable economic future.

“While our international competitors are deploying public investment and using industrial strategy to take advantage of the opportunities of the net zero economy, the UK government appears to have its fingers in its ears.

“If the government is serious about reaping the benefits of the transition and levelling up it should learn from Joe Biden, scale up public investment and bring forward a serious strategy to build an economy that is prosperous, fair, and green.