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It is now less than one month to the Autumn Statement. With a nod towards the preparation of the coalition parties' separate manifestos, we can expect a few hundred million earmarked for this or that pet project. Free schools for the Conservatives, free school dinners for the Lib Dems. But it's crunch time for big ticket, nationally strategic funding issues, such as energy and transport schemes. A strike price may have been agreed for some of the energy generation needs. Both issues remain hedged-in by unavoidably short-term political considerations, nonetheless. Last week's coalition manoeuvre to let consumers switch suppliers within a day shows how keenly ministers feel the pressure to kill the issue of energy prices before 2015. But businesses have borne a heavier burden from legally binding carbon reduction targets, the Institute for Fiscal Studies (IFS) reported last week. These policies have remained consistent from the days of inaugural secretary for energy and climate change – Ed Miliband, to the present day – the IFS reminded us. In a rational world, these targets would be met through the imposition of a single, consistent carbon price. Instead, electricity is taxed at a higher rate than gas and firms face higher charges than consumers. The result is what the economists have adjudged as a complex and incoherent system incapable of cutting maximum emissions for the lowest cost. Historical analysis of energy costs reveals they remain lower as a proportion of total spending than they were through much of the 1980s. Taxing businesses more is a roundabout and fruitless attempt to mask the fact that households, ultimately, must also bear the cost of climate change policies. Similarly, the journey of the High Speed Rail 2 programme is imperilled, as it becomes subject to Parliamentary spending approvals. Ministers brandishing new figures showing a £2.30 benefit for every £1 spent on the project must fight shadow chancellor Ed Balls' desire to bank the money in the Labour manifesto, and face opposition from Conservative Chiltern constituencies. There is a reasoned case for arguing HS2 policy doubles up as housing policy – with high-value properties likely to blossom along its course but it is doubtful the HS2 savings review will switch policy points.

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Inside View: It's time for big ticket schemes

By Jonathan Werran | 06 November 2013

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