Boris is in a hole. It’s a deep hole, largely of his own making. Whether he can dig his way out of it and survive as prime minister, or whether he’s buried at the bottom of it never to resurface, is largely in the hands of party-time inquisitor-in-chief Sue Gray and his own Conservative backbenchers. Whatever the outcome of the No.10 Covid canape crisis, arguably the Tory party has a much more fundamental problem: it and its core supporters long since parted company ideologically, notably on policy areas including taxation, the sanctity of freedom of the individual and the significant incursion of Big State in all aspects of our lives. Until it reconnects, it will remain in office only as long as the opposition is dysfunctional, hardly a reliable and robust winning formula.

 

But away from the immediate preoccupations of the Westminster kindergarten and Boris’s personal travails, another gargantuan hole, also based on a deceit or at the very least an economy with the truth, is being dug for itself by Parliament. It has nothing to do with hedonistic Covid lock-down parties, warm white wine from plastic cups and retro vol-au-vents in the garden of No 10, or who paid for who’s wallpaper in return for what favour. This hole (and it is not merely confined to the Westminster government, it is a conspiracy of obfuscation practised by most politicians of all colours), one which in the fullness of time threatens to gobble them all up, relates to climate change and its cost. The penny is beginning to drop among the electorate that the policies on the pathway to carbon net-zero are potentially ruinously expensive. No longer is carbon reduction to save the planet merely a nice, fluffy green concept, an arguably laudable but intangible ambition; it now has a hard economic and financial edge to it. And the electorate is beginning to smell a rat.

The hypocrisy of managing energy costs

Two examples this week illustrate the point. First, as inflation runs riot (as an aside year-on-year US CPI was reported at 7% for December, up from 6.8% in November) within which energy costs are a significant component, the Westminster government is grappling with how to contain the political fall-out from the argument about rapidly escalating real living costs, soon to be exacerbated by the additional burden of higher taxes in April. Its difficulty is that, much like anti-Covid policies, its consumer and industrial energy policy is shot through with inconsistencies and contradictions.

 

Obsessed with promoting renewable energy while simultaneously penalising fossil-based fuels, and having dithered for decades about nuclear, it has been actively loading up consumers’ bills with significant renewables’ surcharges or levies to help fund the investment in wind and solar power. Even before the current crisis, recognising that in nominal terms, energy was becoming less affordable to many households and a significant proportion of their monthly outgoings, pinching the idea from Labour, it then tried to limit the damage by capping the retail energy price in order to protect consumers. The asymmetric risk taken by investors in electricity suppliers, unable to control volatile input costs such as natural gas, while simultaneously seeing retail prices prescribed and capped by regulation, has delivered predictable results when the system is put under extreme stress, as now. A raft of companies have gone bust, the customers of which are then transferred to new suppliers with none of the terms and conditions and protections of their former contracts. Not many winners here.

 

But as the government argues with itself and the opposition about whether to provide immediate relief through the taxation system (relief on VAT on consumer bills has been suggested) or waive the levies, thereby undermining investment in renewables, there remains a lack of honesty and transparency in the message which is essentially this: we (Parliament) want you (the consumer) to use less electricity; what energy you do consume we want you to source from renewables; we need to invest in renewables but we want you to pay for them.

 

As we have discussed in these columns before, the same arguments apply to the cost of retro-fitting the estimated 80% of the privately-owned UK housing stock which fails to meet energy efficiency EPC Level C (replacing gas and oil-fired boilers, installing loft and cavity wall insulation and the banning of single-glazed windows). Obfuscation from the Treasury and the Department of Energy culminating in a Freedom of Information request from the Global Policy Warming Forum resulted in it becoming evident that the total cost could exceed £2 trillion, the current equivalent of the entire UK economy. Estimates range between £18,000 and £30,000 per household. Hardly a vote-winner, levying what is in effect a massive one-off tax with the implicit threat that in the event of non-compliance one’s house will be unsellable and thus worthless until the work is done, it is a conversation no political party is likely to entertain and quantify in its manifesto, but none disagrees with the concept.

 

Away from the financial costs, there is also a lack of consistent principle. The government is quite happy to support the continuing use of natural gas in UK power stations, but will not countenance the development of on-shore fracking and the extraction of shale gas to reduce the national reliance on gas imports; further there has to be an inherent contradiction that it is acceptable to burn gas in the national interest to generate electricity but it will be forbidden for the general public to use the same gas with which to cook or heat their homes. The recent Storm Arwen highlighted further inconsistencies: government minister Michael Gove (London Mayor Sadiq Khan is another) is on the warpath to ban domestic log burners and yet for the tens of thousands of domestic dwellings in northern England and Scotland which were without electricity for up to two weeks in the cold snap in late November and early December, many relied on their wood-burning stoves for heat and the means by which to boil water, particularly in remote rural areas. Further, the government strongly supports the development of Drax power station in Yorkshire, the biggest single unit in the UK generating fleet, which is powered on wood pellets imported across the Atlantic from North America but perish the thought you might have a log-burner consuming locally-sourced dry timber to heat your living room.

Manchester disunited: Cabbies & White Van Man 1, Burnham 0

Second, this week Manchester became the latest in a long line of metropolitan areas to announce the introduction of new Clean Air Zone regulations accompanied by steep emissions charges levied against those who still choose (or more pertinently who need) to drive a non-exempt vehicle or van in the screened area. Again, the aim is laudable: to improve air quality and cut harmful particulate emissions. However, with taxi drivers and delivery companies bearing the brunt, mass go-slow protests in Bolton immediately caused Mayor Andy Burnham to ‘pause’ the scheme after only 24 hours and to consider ‘refining’ it. Electoral antennae twitching to the backlash, a hurried withdrawal statement and back to the drawing board.

Climate change: expending political capital

Governments and local politicians, and not only in the UK, are expending significant political capital in the dogged pursuit of carbon-reducing policies. That achieving net-zero is an unstoppable, runaway train is undisputable; that there is a lazy consensus across the political spectrum on the subject, one in which to challenge the accepted thesis of global warming and how best to tackle it is viewed as heresy, is unforgivable. Such conditions are a breeding ground for poorly thought-through policies. As William Hague described it, this is a revolution by coercion. Failure to carry electorates along the journey runs the significant risk either of non-compliance, or it promulgates civil disobedience. The cabbies’ go-slow in Manchester is only a mild reaction; President Macron’s diesel taxes prompted the genesis of the Gilet Jaunes protest movement in France and its fondness for casual weekend rioting, a significant thorn in his side and likely to be a populist swing-factor in the April Presidential election; the most extreme manifestation is the recent significant unrest in Kazakhstan arising from the sudden escalation in fuel prices and resulting in the deployment of troops on the streets and multiple civilian deaths.

 

Across the western democracies, as high-handed politicians and appointed policy-makers such as central bankers become increasingly detached from the electorate (it’s not so much that electorates become disenfranchised, as the perception that whomever one votes for, it makes little difference to the outcome), so it becomes a breeding ground for political polarisation and populism. There is an old adage in politics which the current generation would do well to remember: “you can fool some of the people all of the time; you can fool all of the people some of the time; you can’t fool all of the people all of the time”. Amen to that.

 

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