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.”
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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.
The ripping up of the trade rule book caused by President Trump’s tariffs will slow economic growth in some countries, but not cause a global recession, the International Monetary Fund (IMF) has said.
There will be “notable” markdowns to growth forecasts, according to the financial organisation’s managing director Kristalina Georgieva in her curtain raiser speech at the IMF’s spring meeting in Washington.
Some nations will also see higher inflation as a result of the taxes Mr Trump has placed on imports to the US. At the same time, the European Central Bank said it anticipated less inflation from tariffs.
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Earlier this month, a flat rate of 10% was placed on all imports, while additional levies from certain countries were paused for 90 days. Car parts, steel and aluminium are, however, still subject to a 25% tax when they arrive in the US.
This has meant the “reboot of the global trading system”, Ms Georgieva said. “Trade policy uncertainty is literally off the charts.”
The confusion over why nations were slapped with their specific tariffs, the stop-start nature of the taxes, and the rapid escalation of the tit-for-tat levies between the US and China sparked uncertainty and financial market turbulence.
“The longer uncertainty persists, the larger the cost,” Ms Georgieva cautioned.
“Unusual” activity in currency and government debt markets – as investors sold off dollars and US government debt – “should be taken as a warning”, she added.
“Everyone suffers if financial conditions worsen.”
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These challenges are being borne out from a “weaker starting position” as public debt levels are much higher in recent years due to spending during the COVID-19 pandemic and higher interest rates, which increased the cost of borrowing.
The trade tensions are “to a large extent” a result of “an erosion of trust”, Ms Georgieva said.
This erosion, coupled with jobs moving overseas, and concerns over national security and domestic production, has left us in a world where “industry gets more attention than the service sector” and “where national interests tower over global concerns,” she added.
US stock markets suffered more significant losses on Wednesday, with stocks in leading AI chipmakers slumping after firms said new restrictions on exports to China would cost them billions.
Nvidia fell 6.87% – and was at one point down 10% – after revealing it would now need a US government licence to sell its H20 chip.
Rival chipmaker AMD slumped 7.35% after it predicted a $800m (£604m) charge due to its MI308 also needing a licence.
Dutch firm ASML, which makes hardware essential to chip manufacturing, fell more than 5% after it missed order expectations and said US tariffs created uncertainty.
The losses filtered into the tech-dominated Nasdaq index, which recovered slightly to end 3% down, while the larger S&P 500 fell 2.2%.
Pic: AP
Such losses would have been among the worst in years were it not for the turmoil over recent weeks.
It comes as China remains the focus of Donald Trump’s tariff regime, with both countries imposing tit-for-tat charges of over 100% on imports.
The US commerce department said in a statement it was “committed to acting on the president’s directive to safeguard our national and economic security”.
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Nvidia’s bespoke China chip is already deliberately less powerful than products sold elsewhere after intervention from the previous Biden administration.
However, the Trump government is worried the H20 and others could still be used to build a supercomputer in China, threatening national security and US dominance in AI.
Nvidia said the move would cost it around $5.5bn (£4.1bn) and the licensing requirement would be in place for the “indefinite future”.
Nvidia’s recently announced a $500bn (£378bn) investment to build infrastructure in America – something Mr Trump heralded as a victory in his mission to boost US manufacturing.
However, it appears to have been too little to stave off the new restrictions.
Pressure has also come from the Democrats, with senator Elizabeth Warren writing to the commerce secretary and urging him to limit chip sales to China.
Meanwhile, the head of US central bank also warned on Wednesday that US tariffs could slow the economy and raise inflation more than expected.
Jerome Powell said the bank would need more time to decide on lowering interest rates.
“The level of the tariff increases announced so far is significantly larger than anticipated,” he said.
“The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
Predictions of a recession in the US have risen significantly since the president revealed details of the import taxes a few weeks ago.
However, he subsequently paused the higher rates for 90 days to allow for negotiations.
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