If Monday marked the arrival of a new era, it was an inauspicious start. Sir Keir Starmer wrote in this newspaper that the Trump tariffs represented not a momentary shift but a sign that “the world has fundamentally changed”. The prime minister hopes to take on the trade-induced economic turbulence with plans to rewire the state, invest more in defence and remove burdens on business investment (some of which he raised). It is hard to dispute this diagnosis of the difficult situation that the UK finds itself in, but Sir Keir has yet to prove that he has a comprehensive plan to deliver.
In response to the 25 per cent tariffs slapped on British automotive exports by President Trump, Sir Keir said he would “not just sit back and hope”. Instead he has loosened the onerous mandate on electric vehicles. By introducing greater flexibility on how and when cars with internal combustion engines are discontinued, he hopes to provide some breathing room for the auto industry. New hybrid cars will now remain on sale until 2035 while boutique carmakers will be exempt from the immediate zero-emission mandates. Drivers of Aston Martins will rejoice that their V12 engines can roar for a little while longer.
The problem with Sir Keir’s announcement is twofold. First it represents a drop in the ocean for an industry that fears being drowned by tariffs. It was striking that the prime minister spoke at the Jaguar Land Rover factory, a key British automotive company that is aggressively transitioning to an electric-first future. Yet JLR has already suspended its exports to America in the face of the tariff uncertainty. The industry may be an economic jewel, but a depleted export market will hurt the high end products hard. It is also likely that car companies will soon return to ministers asking for further help, especially if consumer demand falls in the wake of a recession.
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The other problem is equivocation. To describe the UK’s attitude towards electric vehicles as flip flopping is an insult to the integrity of pool-side sandals, having changed five times over the past eight years. In 2017, Theresa May announced that the sale of all new petrol and diesel cars would be banned by 2040. Three years later, it was brought forward a decade to 2030 by Boris Johnson. Following sluggish sales of EVs, Rishi Sunak government then delayed the ban from 2030 to 2035. The Starmer government has reworked it twice: first to “restore” the 2030 target, and now to extend hybrid sales and reduce fines imposed on non-EV sales. For consumers it is baffling; for manufacturers it is costly and disruptive.
That being said, the fact that Sir Keir is taking a more nuanced approach towards net zero is both welcome and essential. The targets were brought into law with minimal parliamentary scrutiny and little comprehension among MPs about their economic consequences. Whether it is transiting to EVs or decarbonising the power grid by 2030, too much of the UK’s energy and industrial policy has been pinned on wishful thinking. Kemi Badenoch, the leader of the opposition, was right to argue recently that hitting net zero by 2050 was nigh impossible without ruinous costs.
If Sir Keir is to use his decision on EVs as a springboard for more change, he must move on from the ideological obsessions of Ed Miliband, the energy secretary. If the government is serious about reducing the cost of energy, it should focus intently on nuclear power. It should cease importing solar panels from China and invest in building up domestic supply chains for green energy technologies. It should intervene to approve the Rosebank oil field. And above all, it should admit that the target for decarbonising the power grid was a mistake. All of this would do little to endear the prime minister to his party’s faithful, but it would demonstrate confidence that he is serious about preparing the UK for these new times.
