Policy Pulse 02
Net zero for small businesses, COVID pressures on headteachers, and all about hydrogen.
Hello, and welcome to your weekly pulse of public policy. This week we have an inevitable report timed to coincide with COP26, a letter about COVID pressures – but not on the NHS – and a quick look at why hydrogen isn’t really the answer.
Report of the week
Accelerating Progress - Empowering small businesses on the journey to net zero, by the Federation of Small Businesses.
The opening of COP26 led to more reports being published to tie in with it than anyone could possibly read. Some are very serious and worthwhile; others are more like corporate puff pieces that verge on – dare I say it – greenwashing.
One of the more thorough reports looks at the issues from the perspective of UK small businesses. It’s all very well to talk about how large corporations might have to change their behaviour but what can, and should, small businesses be doing, and what are the barriers to that?
There are recommendations for government at all levels – UK, devolved and local – and plenty of interesting detail. For businesses in rented premises, it calls for the current split of responsibility for premises between landlord and tenant to be shifted decisively to the tenant business, giving them a clear incentive and ability to make climate-friendly changes. A benefit from Brexit is found, as the UK now in principle has more leeway to relax capital requirements when banks make loans for environmentally friendly improvements. Electric vehicles (EVs) are also a focus, with calls for an improved charging network, financial incentives for small firms to switch to EVs, and a new system of road charging. In England, Local Enterprise Partnerships are clearly seen as an important mechanism for achieving change.
That said, in places the report perhaps doesn’t tell the story it intended to. It presents interesting findings from a survey of FSB member businesses, but the full data hasn’t been published (that I could find). So, when it says 56% of small businesses believe our planet is facing a climate crisis, does that mean 44% believe it isn’t, or aren’t sure? In the population as a whole, credible polling shows that 81% of people are concerned or very concerned (35%) about climate change, and only 5% doubt it is happening or that it is man-made – the question isn’t directly comparable, but it still suggests a very different set of attitudes and beliefs among small business owners compared to the general population. Are small business owners unusually relaxed about climate change or disinclined to believe in it? Possibly not – but without the full data, it’s impossible to say. Likewise, apparently 28% of small businesses say it will be extremely difficult to transition to a net zero economy; why has the penny not dropped for the other 72%? Again, that might be an unfair jibe, but the way to avoid that kind of thing is to publish your survey results in full!
Letter of the week
This week’s letter comes from Headrest, a support organisation for head teachers. They write to the Secretary of State for Education, Nadim Zahawi, asking him to reconsider the delivery of Ofsted inspections while the COVID-19 pandemic is still playing out in schools. (Note the letter is dated October 21st 2020, which is presumably a typo for 2021; the blog article publicising it was published on October 31st.)
The letter sheds light on the pressures that the pandemic is placing on schools. Callers to Headrest’s helpline give the clear message that, things are far from “back to normal”; indeed, pressures now are greater than earlier in the pandemic, with high rates of staff and student absences, and regular requirements for teachers to covers classes for absent colleagues, or for teaching groups to be rearranged at short notice. Heads fear that inspectors will criticise them for failing to deliver strategic tasks that they would have achieved by the same point in a normal school year.
A major focus of the letter, in line with Headrest’s remit, is the emotional wellbeing of headteachers. Their arguments for not holding Ofsted inspections relate principally to the stress they bring for heads. This is backed up with an explicit warning that the profession could lose many of its most experienced members. Representative bodies can often issue concerns about big chunks of the workforce they represent leaving if a situation is not improved: if every warning from a medical union was believed, for instance, the NHS would lose 150% of its workforce every year.
However, in COVID times it does appear quite a plausible concern that many NHS workers, headteachers and no doubt others might be eyeing up a convenient moment to leave. Headrest observe that some callers to their helpline are making exit plans, and this may not be the only profession where those who can feasibly afford to leave, for instance if they are close to retirement, choose to do so in 2022.
Question of the week: is hydrogen the answer?
As we move to technologies that do not use fossil fuel, it’s clear that some have some practical drawbacks: if we rely on wind energy, how do we generate electricity when the wind drops, for instance? If we try to electrify our private car fleet, are there enough of the necessary minerals to build all the batteries? And so on – some of these will be Questions of A Future Week, no doubt.
One answer might be hydrogen: couldn’t we electrolyse water when we have excess wind energy, and burn the hydrogen when the wind drops, for instance? Could hydrogen cells ultimately be a better technology for cars than lithium ion batteries? There’s no shortage of companies extolling the potential merits of green hydrogen, this week more than ever.
Well, it turns out the answer to those questions is: no. Or perhaps more accurately: for the most part, no. The reasons for this are rather interesting.
Firstly, there are many industrial processes that require hydrogen, including steel, glass and sundry chemicals. Currently they overwhelmingly use “grey” hydrogen, obtained by splitting the hydrogen from hydrocarbons, ie fossil fuels. So, to the extent that creating “green” hydrogen is possible, the priority for its use probably needs to be the many industrial processes that need hydrogen as an input, rather than using hydrogen for our wider energy needs.
Additionally, hydrogen is a less promising energy solution than it might first appear. For a start, if you take energy from the wind to generate electricity, then use that electricity to electrolyse water, and then burn the hydrogen, you’ve converted the energy multiple times, with an efficiency loss at each stage. By the time you’ve used the hydrogen to make electricity to power your care for instance, you might have lost around 45% of the energy that originally came out of the wind turbine. Hydrogen cells might still be preferable for larger goods vehicles, where lithium ion batteries would be prohibitively heavy, but for other uses the efficiency problem appears to be a killer.
How about using hydrogen for domestic heating, for instance? Again, efficiency is a problem: heat pumps are five to six times more efficient than domestic boilers using hydrogen – that is, generating the hydrogen would require five to six times as many wind turbines. Hydrogen contains less energy than methane, so you’d need to burn a voume of it 3.4 times greater to generate the same amount of heat. And the current infrastructure for pumping gas to homes is not suitable for hydrogen, which is a smaller molecule and would need all existing metal pipes in the network and in people’s homes to be replaced with plastic ones.
This article on Recharge News gives chapter and verse on the limitations of hydrogen. It doesn’t mean there can’t be an expanded role for it in our future economic activity, but probably a relatively minor one.
Matters of note
I said last week that the first edition was a bit heavy on environmental policy, so maybe we could find some nice technical tax policy next time out. It wasn’t a threat but a promise, so here’s the Chartered Institute of Taxation outlining how the recent Budget has created the twentieth new tax since the year 2000.
This isn’t exactly a non-loaded analysis: the CIoT isn’t counting 20 new taxes as a positive achievement, and elsewhere has a jibe about “high tax Sunak.” Then again, accountants and tax advisers are mainly concerned with reducing their clients’ liabilities, and clearly that frames the culture within the profession. But it’s still an interesting article, and also flags up changes to how taxes are calculated for unincorporated businesses (ie self-employed people) known as basis period reform: this appears set to bring forward tax payments for a lot of people, and could become a bit of a policy headache in this field. The Budget delayed it for a year, but a group of professional bodies had previously urged the government to drop the proposals entirely. We’ll see if it gains more attention as the change draws nearer.
Finally, another candidate for Letter of the Week was this one from the COP26 Coalition (ie of organisations campaigning and/or protesting at and around the event) to Nicola Sturgeon, alleging aggressive and unlawful approaches to policing the event. This includes unjustified use of kettling, threatening people with arrest for holding a banner, unlawful use of stop and search powers, and a campaigner being stopped by police for “talking to people and walking too fast.” Although the letter is dated November 4th, reports of the subsequent policing of protests on the Global Day of Action for Climate Justice, Saturday 6th, suggest its concerns were well founded.
Thanks for reading
As ever, hit ‘reply’ if there’s anything you’d like to feed back on, and find me on Twitter @JMKPolicy. Please do forward this to a friend if you think they’ll find it interesting.