Let’s be

THE UNITED States and the EU are teetering on the edge of a major trade dispute as a result of Joe Biden’s landmark economic legislation, the Inflation Reduction Act.

Don’t be fooled by the name, far from tackling inflation, the legislation enacts a cornucopia of Democratic Party economic priorities, including subsidies for low and zero-carbon technologies.

The EU has taken particular umbrage with rules on electric car subsidies. They fear it will drive green business away from Europe. They also argue the law unfairly discriminates against European companies, because subsidies are contingent on production being US-based. This piece of legislation, one could argue, is little more than “America First” with a green tinge.

In response, the EU is considering relaxing its state aid subsidy-control rules to allow member countries to compete. Not to be left out, UK manufacturers and politicians have also raised alarm bells.

between the major parties in order to pass liberalising legislation. Placing these issues “above party politics” reassured social moderates that such measures couldn’t be demonised by their political opponents and provided social conservatives with the freedom to vote as they desired. Crucially, as Labour became more unapologetically socially liberal it broke with this practice, frequently not just including liberalising measures within its manifestos, but whipping its MPs to vote in line with what the leadership saw as key principles of the party.

A big reason for this change is that public opinion has changed, with views such as those held by Kate Forbes becoming increasingly held by a very small minority of Britons. That is doubly true for the SNP whose membership has become more left-wing as it successfully defined the wider nationalist project against English Toryism. It must be slightly disorientating for someone like Forbes to realise what were once commonplace positions have become politically toxic. But this happens all the time in politics. It just feels more fraught because it touches upon religion, and the changes in attitudes have been so rapid. Take instead the question of proEuropeanism. Like social issues this used to be an issue that cut against party lines with both Labour and the Tories having a significant Eurosceptic minority. Gradually the two parties polarised on the issue, as Labour became more pro-European and the Tories more Eurosceptic. But in a cruel quirk, perhaps Britain’s most outspoken Europhile was left marooned in the wrong party.

Just like how Kate Forbes passionately believes in Scottish independence, Ken Clarke really is very Conservative. In his prime he was a Thatcherite bruiser who provoked a bitter strike with nurses as Health Secretary and significantly cut public spending as Chancel- lor. But he hid that steel beneath an easy-going veneer that meant even committed anti-Tories found him difficult to dislike. He would’ve been perfect to rebuild the party after either of their landslide defeats, especially when the alternatives were a callow William Hague or Iain Duncan Smith. But he could never find a way to overcome the fact that he and his party bitterly disagreed on the issue of Europe. Clarke would come out with all sorts of gimmicks and fudges to bridge the gap, but there simply wasn’t a way to make it safe or coherent for him to lead their party.

The same is true of Kate Forbes today. Kate Forbes can say that she recognises that issues such as same-sex marriage and abortion have been settled by past legislation, but other social issues will arise, and her political belief that it’s the role of government to impose conservative morality on all its citizens would shape her administration’s decisions. Indeed, she has already said that she would abandon Nicola Sturgelon’s plans to challenge the British Government veto of Scotland’s reforms to the Gender Recognition Act. People who oppose Forbes’ leadership are not being intolerant, just realistic. A social conservative cannot lead a socially liberal party, any more than a Pro-European can lead a Eurosceptic one. Whereas outliers can be tolerated elsewhere on the frontbench, agreeing with your party on key issues is a genuine occupational requirement of leadership.

£ Will Cooling writes about politics and pop culture at the It Could be Said substack

Blair Back In The Limelight

Harrison Griffiths

For the UK to join in would be a huge mistake. Attempting to reshore industry to the UK would be naïve and economically illiterate. Naïve because the UK could never hope to match US subsidies: its population is one fifth of the population of the States, and its economy is one sixth the size of America’s. Even Labour’s relatively ambitious “UK Green New Deal” investment pledge of £28bn before 2030 is a drop in the ocean compared to America’s almost £310bn splurge. We have known since the days of classical economists like Adam Smith and David Ricardo that countries have comparative advantages. What this means is production is more efficient when we use the wealth created in the UK to purchase products made better elsewhere, rather than pursuing self-sufficiency.

According to Smith, “consumption is the sole end and purpose of all production”. He believed “the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer”.

UK politicians would do well to pay more attention to Smith than electric car manufacturers begging for special favours and subsidies. Consumers, not producers, should be the priority when formulating economic policy – it should be they who pick winners and losers in the market.

Consumers’ interests would be served by making it as simple as possible to import US taxpayer-subsidised green technology, rather than embarking on another industrial strategy boondoggle.

Greater subsidies could also end up harming the fight against climate change. Current electric vehicle technology may present a great opportu- nity to reduce carbon emissions, but we cannot know what better innovations may arise in future. After all, the ‘dash for diesel” - the policy of subsidising diesel cars - ended up clogging the lungs of Londoners.

If the government wants to decarbonise, it should instead impose a carbon tax. Setting a constant price on each unit of carbon would reduce emissions and allow the market to determine the most efficient ways to decarbonise. Adopting this approach would control carbon externalities without the state embarking on new forms of protectionism.

The US government’s decision to subsidise its way to net zero is unfortunate for their economy and taxpayers, but this is out of our control. The government should take the win and allow cheap American green technology to pour into our market. American taxpayers are doing us a huge favour; we would be foolish to pass it up.

£ Harrison Griffiths is a communications officer at the Institute of Economic Affairs

Tony Blair felt left out yesterday, all this squawking from former prime ministers and not a peep out of him! So the former Labour leader and his Institute of Minions (some of whom write for us) spent the morning amping up his campaign for digital IDs