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Ed Miliband's new plans to "decarbonise" the economy would be "a tax on the poor"

By Matthew Barrett
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Miliband E bankersEd Miliband has made a play at Lib Dems as they begin their conference today: he has announced his plans for government to play a bigger role in the energy sector in order to "decarbonise" the industry. He writes:

"Investing in the infrastructure for a low carbon economy will both kick start the growth that is missing and make our economy resilient to price shocks in an age of scarcity. It is governments which set the low carbon targets and correct market failures; and the degree of support for policies shown by governments is a major part of perceived risk for investors. To attract the investment we need, governments must cover that risk and commit to a clear goal of decarbonising the power sector by 2030, as the independent Committee on Climate Change has recommended."

Climate change and green policies are one of those "gut issues" Paul Goodman has written about before, which unite Labour and Lib Dem supporters, and divide them from Conservatives. Mr Miliband will probably be disappointed his pitch hasn't been covered as well as it might have been by the mainstream press.

However, Robert Halfon, the Conservative MP for Harlow, who has consistently campaigned against higher household oil prices, has picked up Mr Miliband's ideas and calculated that this would mean higher electricity bills: at least £120 extra, for every family in Britain and would also lead to higher inflation, as energy costs would rise for businesses and factories.

The independent Committee on Climate Change, chaired by Lord Deben (John Gummer) have estimated (pdf) that to cut emissions from British power generation down to around 50 gCO2/kWh by 2030 would cost around 0.4% of GDP, which amounts to about about £9 billion a year in today's prices. Domestic consumption of electricity accounts for a third of all electricity produced, so at least £3 billion of this cost will fall on Britain's 25 million households, meaning at least £120 for every household, but more in practice since factories and businesses would have to pay for the rest of the cost of the emissions cut, and would therefore raise prices, and drive household bills up further. Mr Halfon commented:

"Too often, the green agenda is a luxury for the chattering classes. What we need is jobs and growth, not rip-off utility bills. What Ed Miliband is proposing is literally a tax on the poor. That is why I will be writing to the Energy Secretary, and the Prime Minister, urging him to reject the plans and to make it clear that this Government is on the side of working people."