Rishi Sunak confirms he’s delaying ban on new petrol and diesel cars and boosts boiler upgrade scheme
Rishi Sunak has confirmed he will be easing a series of green policies under a “new approach” designed to protect “hard-pressed British families” from “unacceptable costs”.
Delivering a speech from Downing Street, he said he is still committed to reaching net zero by 2050, but the transition can be done in a “fairer and better way”.
Announcing a raft of U-turns, the prime minister confirmed he will delay a ban on the sale of new diesel and petrol cars by five years and a weakening of targets to phase out gas boilers.
He also said a “worrying set of proposals” that had emerged during debates on net zero would be scrapped, including:
- For government to interfere in how many passengers you can have in your car
- To force you to have seven different bins in your home
- To make you change your diet and harm British farmers by taxing meat
- To create new taxes to discourage flying or going on holiday
“Our destiny can be of our own choosing,” Mr Sunak said – while calling for politicians to be “honest” about the costs of green policies on families.
Politics live: Rishi Sunak gives speech from Downing Street
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‘No rights to impose costs on people’
The measures have faced criticism from across the political spectrum as well as from businesses, environmental groups and even former US vice president Al Gore.
Labour accused the prime minister of “dancing to the tune” of net zero-sceptic Tories and said the plans would actually add more costs to households while damaging investor confidence.
Explaining the government’s decision to delay the ban on the sale of new petrol and diesel cars – currently due in 2030 – by five years, Mr Sunak said this would give businesses “more time to prepare”.
He also said people would still be allowed to buy secondhand diesel and petrol cars after that date and this would align the UK’s approach with countries across Europe, Canada and many US states.
In weakening the plan to phase out gas boilers from 2035, Mr Sunak said households would “never” be forced to “rip-out their existing boiler and replace it with a heat pump”.
This will only be required when people are due to change their boiler anyway and there will be an exception for households for whom that will be the hardest.
Mr Sunak also announced an increase to the boiler upgrade scheme, saying rather than banning boilers “before people can afford the alternative” the government is going to “support them to make the switch” to heat pumps.
He said: “The boiler upgrade scheme which gives people cash grants to upgrade their boiler will be increased by 50% to seven and a half thousand pounds.
“There are no strings attached. The money will never need to be repaid.”
Landlord efficiency targets scrapped
Mr Sunak has also scrapped plans to force landlords to upgrade the energy efficiency of their properties, saying some property owners would have been forced to “make expensive upgrades” within two years and that would inevitably impact renters.
“You could be looking at a bill of £8,000, and even if you’re only renting, you’re more than likely to see some of that passed on in higher rents,” he said.
“That’s just wrong, so those plans will be scrapped.”
Despite the “new approach”, the prime minister insisted the UK would meet its international obligations on climate change – such as those made under the Paris Climate Accords.
He went on to defend the UK’s record, arguing the country is “so far ahead” of other countries in the world when it comes to cutting greenhouse gas emissions.
PM wants to portray himself as a leader prepared to take unpopular decisions his predecessors weren’t
For all the rhetoric about democracy and real political change – today’s speech was fundamentally about the Prime Minister giving into the concerns of many in his party about the costs of the green policies set out by Boris Johnson’s government.
Labour see these announcements as projecting fundamental political weakness: 20 points behind in the polls and struggling to meet the majority of his five pledges, Rishi Sunak urgently needs to find a way to connect with voters struggling during the cost of living crisis. He’s keen to win over the right wing Tory backbenchers concerned about the electoral danger of expensive environmental policies like the ULEZ expansion which was widely seen to have cost Labour the Uxbridge by election.
It’s an impression underlined by the hurried way the announcement was made – less than 24 hours after these controversial change in tack was leaked to the media, prompting a huge backlash from business and many in his own party. Making such a key speech in the Downing Street media briefing room – rather than to Parliament, also looks chaotic.
It’s sent the Speaker into a fury, earning a humiliating rebuke. “Ministers are answerable to MPs – we do not have a presidential system here,” Sir Lindsey Hoyle thundered. For a man like Mr Sunak, who prides himself on being a sensible pragmatist – the complete opposite to the cavalier Boris Johnson – it’s surely a criticism that will sting, though it’s hardly unexpected.
The irony is that Rishi Sunak opened his speech by pledging to put the long term interests of the country before the short term political needs of the moment. Climate campaigners, for whom nothing could be more urgent, will surely scoff at this.
But in the framing of his speech – as the first of a series of long term policy decisions in a ‘new kind of politics’ – the Prime Minister and his team are keen to burnish his reputation as a pragmatic reformer, prepared to take the kind of unpopular decisions his predecessors weren’t. Certainly many in his party have been calling for a change in approach, a new bolder strategy to set out a greater distance with Labour – and it seems he has been listening.
The PM’s key arguments – that government shouldn’t impose unnecessary or heavy handed costs on hard working people, and relying on the market to drive change – are a return to classic Conservatism.
But his core argument that the need for action is less urgent than we have previously been led to believe, because of the UK’s success in meeting existing climate targets – is not one which will sit easily with green minded MPs.
And while he spent a key part of the speech concentrating on the importance of green technological innovation, and celebrating the power of the market in delivering progress – that will surely stick in the throat of companies who’ve spent billions getting ready to meet targets which have now been delayed. Many in his own party are concerned about the reputational damage to the UK as a centre of business investment.
He’s well aware that today’s message will be deeply unpopular with some – but promised to ‘meet any resistance’. Many Tory MPs will welcome that more bullish approach; but his promise to deliver ‘pragmatism and not ideology’ is pure Sunak.
The question now is in the hands of voters – do they buy into this argument that the country can reach Net Zero by 2050 without many of the policies designed to get there? Or in the midst of the cost of living crisis – will they be delighted to avoid the cost of paying for them?
‘Act of weakness’
Among the critics, Ed Miliband, Labour’s Shadow Energy Security and Net Zero Secretary, said: “Today is an act of weakness from a desperate, directionless prime minister, dancing to the tune of a small minority of his party. Liz Truss crashed the economy and Rishi Sunak is trashing our economic future.
“Having delivered the worst cost of living crisis in generations, the prime minister today loads more costs onto the British people.”
Lib Dem leader Ed Davey said: “This is a prime minister who simply doesn’t understand and cannot grasp for Britain the opportunities for jobs and our economy of driving forward with action on clean energy.”
There was also criticism from the car industry and energy industry.
Chis Norbury, the chief executive of the E.ON energy firm, said it was a “false argument” that green policies can only come at a cost, arguing they deliver affordable energy while boosting jobs.
He said companies wanting to invest in the UK need “long-term certainty” while communities now risk being condemned to “many more years of living in cold and draughty homes that are expensive to heat”.
Ford cars UK chairwoman Lisa Brankin said: “Our business needs three things from the UK Government: ambition, commitment and consistency. A relaxation of 2030 would undermine all three.”
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Rishi Sunak is asked if his net zero policy climbdowns are a result of him panicking about the next election.
Tory MPs split
The announcement comes after last night’s leak of the plans sparked a major Tory backlash and even a threat of a no confidence letter.
Mr Sunak was due to give the speech later this week but brought it forward following a hastily arranged cabinet meeting this morning.
Commons Speaker Sir Lindsay Hoyle reacted furiously to the announcement not being made to MPs, who are on recess for conferences, expressing his views “in the strongest terms” in a letter to Mr Sunak.
Tory MPs are split, with some seeing the row back on costly green policies as a vote winner and others fearing the impact it will have on business and the climate.
Senior figures who have backed the prime minister include his predecessor Liz Truss, who said: “I welcome the delay on banning the sale of new petrol and diesel cars as well as the delay on the ban on oil and gas boilers. This is particularly important for rural areas.”
Read more:
Braverman: ‘Bankrupting Britons won’t save planet’
Sunak’s messaging suggests net zero is negotiable
What could be scrapped from net zero pledges?
However Boris Johnson, who Ms Truss briefly took over from, said the row back would cause uncertainty for businesses, adding: “We cannot afford to falter now or in any way lose our ambition for this country.”
Mr Johnson’s ally and prominent Tory environmentalist Lord Zac Goldsmith went as far as to demand a general election over the “economically and ecologically illiterate decision”.
The UK’s commitment to reach net zero by 2050 was written into law in 2019.
Climate scientists say urgent cuts are needed to the world’s greenhouse gas emissions if we are to stop temperatures rising to a potentially catastrophic extent.
In the summer, scientists warned extreme heat events were rapidly on the rise due to climate change.
Business
Post Office Capture scandal: Sir Alan Bates calls for those responsible for wrongful convictions to be ‘brought to account’
Sir Alan Bates has called for those responsible for the wrongful convictions of sub postmasters in the Capture IT scandal to be “brought to account”.
It comes after Sky News unearthed a report showing Post Office lawyers knew of faults in the software nearly three decades ago.
The documents, found in a garage by a retired computer expert, describe the Capture system as “an accident waiting to happen”.
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Post Office: The lost ‘Capture’ files
Sir Alan said the Sky News investigation showed “yet another failure of government oversight; another failure of the Post Office board to ensure [the] Post Office recruited senior people competent of bringing in IT systems” and management that was “out of touch with what was going on within its organisation”.
The unearthed Capture report was commissioned by the defence team for sub postmistress Patricia Owen and served on the Post Office in 1998 at her trial.
It described the software as “quite capable of producing absurd gibberish” and concluded “reasonable doubt” existed as to “whether any criminal offence” had taken place.
Ms Owen was found guilty of stealing from her branch and given a suspended prison sentence.
She died in 2003 and her family had always believed the computer expert, who was due to give evidence on the report, “never turned up”.
Patricia Owen (right) was convicted in 1998 of stealing from her post office branch. She died in 2003
Adrian Montagu reached out after seeing a Sky News report earlier this year and said he was actually stood down by the defending barrister with “no reason given”.
The barrister said he had no recollection of the case.
Victims and their lawyers hope the newly found “damning” expert report, which may never have been seen by a jury, could help overturn Capture convictions.
Read more: Post Office scandal redress must not only be fair – it must be fast
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What is the Capture scandal?
‘These people have to be brought to account’
Sir Alan, the leading campaigner for victims of the Horizon Post Office scandal, said while “no programme is bug free, why [was the] Post Office allowed to transfer the financial risk from these bugs on to a third party ie the sub postmaster, and why did its lawyers continue with prosecutions seemingly knowing of these system bugs?”
He continued: “Whether it was incompetence or corporate malice, these people have to be brought to account for their actions, be it for Capture or Horizon.”
More than 100 victims have come forward
More than 100 victims, including those who were not convicted but who were affected by the faulty software, have so far come forward.
Capture was used in 2,500 branches between 1992 and 1999, just before Horizon was introduced – which saw hundreds wrongfully convicted.
The Criminal Cases Review Commission (CCRC), the body responsible for investigating potential miscarriages of justice, is currently looking at a number of Capture convictions.
A CCRC spokesperson told Sky News: “We have received applications regarding 29 convictions which pre-date Horizon.
25 of these applications are being actively investigated by case review managers, and two more recent applications are in the preparatory stage and will be assigned to case review managers before the end of June.
“We have issued notices under s.17 of the Criminal Appeal Act 1995 to Post Office Ltd requiring them to produce all material relating to the applications received.
“To date, POL have provided some material in relation to 17 of the cases and confirmed that they hold no material in relation to another 5. The CCRC is awaiting a response from POL in relation to 6 cases.”
A spokesperson for the Department for Business and Trade said: “Postmasters negatively affected by Capture endured immeasurable suffering. We continue to listen to those who have been sharing their stories on the Capture system, and have taken their thoughts on board when designing the Capture Redress Scheme.”
Ministers are considering a commitment to cut soaring industrial energy prices for British companies to the same level enjoyed by competitors in France and Germany as part of its industrial strategy.
Sky News understands proposals to make energy prices more competitive are at the heart of final discussions between the Department for Business and Trade and the Treasury ahead of the publication of its industrial strategy on Monday.
Industrial electricity prices in the UK are the highest in the G7 and 46% above the median for the 32 member states of the International Energy Agency, which account for 75% of global demand.
Industrial electricity prices by country
In 2023, British businesses paid £258 per megawatt-hour for electricity compared to £178 in France and £177 in Germany, according to IEA data. Matching those prices will require a reduction of around 27% at a cost of several billion pounds.
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Earlier this month, automotive giant Nissan said UK energy prices make its Sunderland plant its most expensive in the world.
Business secretary Jonathan Reynolds is understood to be sympathetic to business concerns, and chancellor Rachel Reeves told the CBI’s annual dinner the issue of energy prices “is a question we know we need to answer”.
Extending relief
While around 350 companies in energy-intensive industries, including steel, ceramics and cement, enjoy some relief from prices through the energy supercharger scheme, which refunds 60% of network charges and is expected to rise to 90%, there is currently no support for manufacturers.
Sky News understands ministers are considering introducing a similar scheme to support the 200,000 manufacturing businesses in the UK.
Cutting network costs entirely could save more than 20% from electricity prices.
Explainer: Why are UK industrial electricity prices so high?
The mechanism for delivering support is expected to require consultation before being introduced to ensure only businesses for whom energy is a central cost would benefit. This could be based on the proportion of outgoings spent on energy bills.
It is not clear how the scheme would be funded, but the existing industrial supercharger is paid for by a levy on energy suppliers that is ultimately passed on to customers.
A central demand
Bringing down prices, particularly for electricity, has been the central demand of business and industry groups, with Make UK warning high prices are rendering businesses uncompetitive and risk “deindustrialising” the UK.
The primary driver of high electricity costs in the UK is wholesale gas, which both underpins the grid and sets the price in the market, even in periods when renewables provide the majority of supply.
Keep up with all the latest news from the UK and around the world by following Sky News
Why are costs so high?
Wholesale prices account for around 39% of bills, with operating costs and network charges – the cost of using and maintaining the grid – making up another 25%, and VAT 20%.
Business groups, including the manufacturers group Make UK, have called for a reduction in those additional charges, as well as the so-called policy costs that make up the final 16% of bills.
UK industrial electricity prices
These are made up of levies and charges introduced by successive governments to encourage and underwrite the construction of renewable sources of power.
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Make UK estimate that shifting policy costs into general taxation would cost around £3.8bn, but pay for itself over time in increased growth.
Government sources confirmed that energy prices are a central issue that the industrial strategy will address, but said no final policy decisions have been agreed.
The industrial strategy, which is delayed from its scheduled publication earlier this month, will set out the government’s plans to support eight sectors identified as having high-growth potential, including advanced manufacturing, life sciences, defence and creative industries.
Britain has the highest industrial electricity prices in the G7, a cost businesses say makes it impossible to compete internationally and risks “deindustrialising” the UK.
Electricity prices are driven by wholesale fuel prices, particularly natural gas, but include taxes and “policy costs” that business groups, including Make UK and the CBI, want the government to cut.
Sky News understands the issue is a “live discussion” within government as ministers finalise the government’s industrial strategy, due to be published next week.
Money blog: Interest rate held – but Bank of England gave ‘small surprise’
So what are the options, and why are prices so high in the first place?
How much does UK business pay for electricity?
Industrial electricity prices in 2023 were 46% higher than the average of the 32 members of the International Energy Agency, a group that includes EU and G7 nations that, between them, account for 75% of global demand.
UK businesses paid an average of £258 per megawatt-hour, according to IEA data – higher than Italy (£218), France (£178) and Germany (£177), and more than four times the £65 paid on average in the USA.
While wholesale prices have been driven up in the last five years by external factors including post-pandemic demand and the Ukraine war, this is not a blip – UK prices have been consistently above the IEA average for decades.
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Britain’s big energy price problem
Why are prices so high?
The main determinant is exposure to wholesale gas markets. Gas underpins the UK grid, reliably filling the gaps renewables and nuclear sources cannot fill. Crucially, gas also sets the price in the electricity market even when it is not the primary source of energy.
The UK market uses a “marginal pricing system”, in which the price is set by the last, and thus most expensive, unit of power required to meet demand at any one time.
That means that while renewable sources, initially offered at a cheaper price, may provide the majority of power in a given period, the price for all sources is set by gas-fired power stations providing the balance of supply.
Industrial electricity bills are lower in markets that are less exposed to gas. In France, gas sets the price less than 10% of the time because its fleet of nuclear power stations underpin supply.
Industrial electricity prices by country
What makes up electricity bills?
The biggest single element of electricity prices is wholesale gas costs, which make up 39% of the bill, according to industrial supplier SEFE.
The next largest element is “network costs”, charges imposed for using, maintaining and expanding the grid, which account for 23%. Operating costs are 2%, with VAT adding a further 20%.
The remaining 16% of electricity bills is made up of “policy costs”, levies and payments introduced over the last two decades to subsidise the construction of renewable power capacity, primarily wind power.
Cost breakdown of UK industrial electricity prices
Increasing renewable supply and storage to reduce exposure has been the long-term solution favoured by successive governments. Sir Keir Starmer‘s administration has a target of shifting to a “clean power” grid by 2030 and achieving net-zero carbon emissions by 2050, a target Kemi Badenoch describes as “impossible”.
Read more from Sky News:
Government considering slashing industrial energy prices
Bank of England holds rate
Warm Home Discount extended
Some energy-intensive industries (EII), such as chemicals, steel, and cement, already receive support, with a 60% relief on network charges and a reduction of around 10% from the British Industry Supercharger fund, which the government is considering increasing.
What does business want?
Business groups are calling for these policy costs to be lifted and shifted into general taxation, calculating that a 15% reduction in prices would give them a chance of competing more equitably.
Make UK say cutting policy costs would cut 15% from bills, and is also proposing a “contract for difference” for manufacturers’ electricity, a model borrowed from the renewables market.
Under the plan, the government would guarantee a “strike price” for electricity 10% lower than the wholesale price. When prices are higher, the taxpayer would refund business, and when they are lower, industry would pay back the difference.
Keep up with all the latest news from the UK and around the world by following Sky News
Make UK estimate the cost to the exchequer of £3.8bn. They believe it will be cost-neutral courtesy of increased growth. The alternative, they say, is an uncompetitive manufacturing sector doomed to decline.
“We need to see the government remove those costs in the industrial strategy,” says Make UK chief executive Stephen Phipson.
“We believe it will be cost-neutral because of the benefit to the economy of retaining manufacturing in this country. If we don’t see it happen, we will risk deindustrialising the United Kingdom.”
A government spokesperson said: “Through our sprint to clean power, we will get off the rollercoaster of fossil fuel markets – protecting business and household finances with clean, homegrown energy that we control.”
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