Energy deal may not be such good politics for Osborne

Today’s energy deal is being presented as a triumph for the all-powerful Treasury and George Osborne over the inexperienced wet-behind-the-ears Ed Davey and his shambolic department DECC.

I’m not so sure.

For one thing the Treasury is now committed to letting energy firms add £7.6bn to customers’ bills to pay for renewable energy.  In the words of one DECC official: “Normally the Treasury gets the money, and we get the warm words; here we get the money, and they get the warm words.”

And what about the politics?  From the point of view of George Osborne the strategist and future leadership contender, the deal may please Tory rural backbenchers, but it could come to haunt the him and his party at the next election.  The decision to postpone until 2016 any decision on whether or not to commit to de-carbonise Britain’s electricity system by 2030, is bound to make it a big issue in the 2015 campaign.  Labour and the Liberal Democrats have already said where they stand – they favour such a target.  The Conservatives, in contrast, will go into an election either continuing to fudge the question, or they’ll be against.  Either way, it drives Labour and the Lib Dems together.  And we’re seeing that with an increasing number of issues these days, most notably Lords reform and Europe.

In the short term, Labour has to assess the chances of splitting the Coalition in Parliament over the 2030  de-carbonisation target.  What chance that Labour might join with the Lib Dems, and perhaps a handful of Conservative rebels, and inflict what would be a serious defeat?  Slim, but not impossible.

Their best bet is to get a Conservative MP such Zac Goldsmith or Laura Sandys to table an amendment to the forthcoming energy Bill, or better still Tim Yeo, the chairman of the energy select committee.  That would make it easier for pro-green Coalition MPs to defy government whips and back the measure.

And it will be agonising for Liberal Democrat ministers to vote against what is their own party’s policy.

Follow Michael on Twitter via @MichaelLCrick