The Guardian view on cabinet splits: a fight for a party’s heart and soul | Editorial

The dispute between Chancellor Rishi Sunak and Economic Secretary Kwasi Kwarteng is not a semantic tournament, but a battle over the economic direction of the Tory party. Looking for a bailout for companies struggling with the rise in energy prices, Mr Kwarteng claimed on Sunday that he “spoke” to the Treasury Department. Hours later, Mr. Sunak’s advisors fired back. There were no conversations. And this is not the first time, added the Treasury Department source, that Mr. Kwarteng “made things up in interviews.” Boris Johnson authorized his spokesman to turn down the Treasury Department. Both cabinet ministers were working, according to No. 10, to “alleviate the challenges”.

What the spit revealed is the unsolved question within the power corridors of how a “green industrial revolution” can be financed. These policies are key to the government’s plan to level parts of the country and create jobs for constituencies that moved from Labor to vote for Mr Johnson. But no credible plan emerged from Whitehall. Time is running out. Commitments for projects for CO2 capture, for green steelworks and the expansion of house insulation are worthless if they are not deposited with cash.

Unfortunately, the Treasury Department will not allow climate change to change its view that rising government spending must be paid for through tax increases. Mr. Sunak is behind plans to cut carbon emissions by increasing household bills by hundreds of pounds a year. Keep things under tight fiscal control now, argues Mr Sunak, and the Tories will be able to cut taxes before the next election. In his speech at the party congress, Sunak demonstratively praised his predecessor George Osborne for his austerity measures.

For the Chancellor, fiscal conservatism is a Tory vote winner. Mr. Kwarteng has other ideas that are more like Mr. Johnson’s gut instinct. The economy minister apparently wants payments for families to offset the green electricity bills on the way to net zero emissions. If the state provided money directly to households, consumers could pay for green investments – and create jobs through subsidies for companies.

This is the Tory “Santa Claus” theory of economics. Instead of being a political Scrooge and insisting on lean budgets with tax increases to offset spending, Mr Kwarteng seems to believe that conservatives should give gifts in order to gain economic momentum. Like-minded ministers have publicly campaigned for Mr. Sunak to borrow at least £ 50 billion to attract private capital to fund decarbonization. This is the true Tory green revolution: creating jobs in new industries controlled by lightly regulated private companies without creating jobs in government.

It is questionable whether private companies can be productive in the narrower economic sense without being environmentally harmful. But Mr. Kwarteng thinks that it is better to be vaguely right than to be exactly wrong. He may be right. Next week, the government is due to determine how much it will spend each year to meet its net-zero targets. So far, only a quarter of the £ 20 billion required annually has been estimated. It would be unforgivable if Britain did not do its part to deal with the environmental crisis by skimming off the Treasury.

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