“We can afford to take a broader look at all this and make up our own mind about the way we want to approach this,” Shapps said. “If we wanted to do the same we would need to raise the money and spend it — but we have a 10-year lead on all of this so I don’t think it’s the necessarily the route we need to dash down.”
Shapps’s remarks chime with those of Chancellor of the Exchequer Jeremy Hunt, who told Bloomberg TV on Friday that he doesn’t think subsidies are the best way to accelerate the global drive to eliminate carbon emissions.
“If we’re going to have the transition to net zero, we should benefit from free and open trade between all the countries that share that ambition because that will means we’ll get there more quickly, more cost effectively than if we go it alone,” Hunt said.
Shapps earlier this month said the US Inflation Reduction Act containing the green subsidies was “dangerous” because it risked triggering a race to protectionism.
Biden’s plan has angered allies in Europe and Asia who fear it will cut them out of the US market, particularly for automobiles. And with EU leaders pushing for huge spending to counter the US plan, the UK has privately urged the EU not to harm British companies.
While both ministers told Bloomberg the UK has some concerns, Shapps argued that if Britain were still in the EU, it would likely be a net contributer rather than net beneficiary of any subsidy package the bloc puts forward.
He said he’s reassured that the UK won’t “get left out in the cold” because the US has made it clear that whatever exemptions are made for the EU will also include the UK.
“Rather than be concerned and frightened about all this — and yes there are some issues — but I see a lot of this as an advantage,” Shapps said. “Thank goodness America are finally waking up to something we’re at least twice as far ahead with, so we should welcome that.”
Hunt, for his part, said that outside the EU, the UK has the advantage of “nimbleness,” giving it “the opportunity to do things differently, quickly, with new regulatory structures.”
Nevertheless, the position of the two cabinet ministers also risks opening the UK government up to the accusation that it doesn’t have a plan to promote green industries, especially as the US pushes its new measures and the EU prepares its response.
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Institute of Directors Chief Economist Kitty Ussher called Hunt’s wider plan for the economy — spelled out in a speech at Bloomberg before his interview — “empty,” and said businesses need to see “a plan to incentivize the net-zero transition” for small-and medium-sized businesses.
And Orral Nadjari, the founder of failed battery startup Britishvolt Ltd., said the industry is doomed unless the government ramps up support for the sector, which is one ministers have repeatedly said they want to stimulate. He said a lack of clear ambition combined with the willingness to let the firm go under shows a lack of commitment to the sector.
“We will announce our plans,” Hunt said. “I have absolutely no doubt that we will be able to announce a package that makes us highly competitive, but I don’t think subsidy is necessarily the best way. What people want is creativity, innovation, ideas, a climate, a regulatory structure that encourages investment.”
–With assistance from Rachel Morison.
More stories like this are available on bloomberg.com