The gift that keeps on giving

It would really help if the Conservative government actually knew what the consequences of its actions were. Knee jerk populist measures are headline grabbing, but along come the costs along with the realisation that life is not as simple as you might expect.

So, for instance, the complete reversal of decades of cross-party consensus on green policies was seen as a win-win for the Tories. It bolstered their climate change denying base and could also be used to appeal to the petrol heads and people terrified by government lies about the cost of electric cars or new boilers. Then along comes reality.

As the Financial Times reports today, UK exporters are going to be burdened with new EU taxes costing hundreds of millions of pounds as a result of the Government’s shameless U-turn, money that would otherwise have gone to HM Treasury, which really needs the money.

This is all because prices on the UK carbon market, which sets the cost companies must pay for every bit of CO2 that they release, have halved. They are now half the price that the EU’s businesses must pay because the government has lifted the burden on firms here.

You might think this is a brilliant advantage for the UK, allowing us to undercut our European rivals who are lumbered with much higher environmental costs.

But no – the bright sparks in Brussels have worked this one out already. They are introducing an import tax in 2026, to tax products made where the carbon price is much lower than in the EU, to level the playing field.

In one brilliant move the Prime Minister has therefore cost his own government hundreds of millions a year in lost carbon taxes and is gifting the money to the European Union. British exporters will not save a penny, will gain no advantage and will just have to pay carbon taxes in euros, not pounds.

This will come on top of the long-delayed introduction of new border checks on imported animal and plant products which the government’s own figures show will cost industry £330 million a year. Purely in red tape, you understand – the UK could avoid the cost and bother if it just kept EU rules, the very same rules it has been following for decades.

That move alone will add 0.2% to inflation over 3 years, a small amount it is true but a totally unnecessary added cost to people and to the economy. Brexit is therefore the gift that keeps on giving, especially if you are a tax collector working for the European Commission, or a vet who can earn a small fortune for unnecessary and pointless checks on food and animal products at the UK’s borders, or if you happen to be a shipping agent charging firms to deal with red tape and delays.

For the UK economy and for every citizen these are all just another cost of Brexit.