Published in ENDS Report 443, p. 52, 20 December, 2011.

On Europe and the environment, Cameron and Osborne have advanced arguments in the past month that will only serve to drive a wedge between the Coalition parties.

The law of unintended consequences catches up with all political leaders eventually. In the past month it has caught up with both David Cameron and George Osborne.

Rescuing the Conservative Party from the political margins into which Mrs Thatcher’s successors marched it has been their project. Their method was simple. They set out to render their party’s increasingly nasty instincts invisible with a comforting cloak of green compassion. It nearly succeeded.

So polished was their performance in the dog days of a tired Labour government whose deceits were catching up with it, that it silenced the relentless baying of the reactionary rump that made John Major’s life such a misery. Few noticed the rump quietly growing into a tumour three times its previous size.

The prospect of power is a potent discipline for politicians. As with Labour’s left in the Blair years in opposition, Cameron’s right were content to bide their time in the hope of electoral victory. At which point they always intended to act exactly as they are now doing.

Their hopes were dashed with the unwelcome arrival of the Coalition. Ever since, the rumblings from the backbenches have grown louder and the tumour has now become malignant.

In the space of a month, both the prime minister and the chancellor have been trapped by it, into advancing arguments that work better in party backrooms than they do in the full light of day.

Not only that, but they have now both adopted policies that will accomplish exactly the reverse of their supposed purpose. Isolating Britain in Europe will expose rather than protect the City. The manic attack the chancellor is sponsoring on the environment will inhibit rather than accelerate growth.

The prime minister’s deployment of the nuclear veto was not to beat off a devastating attack on the City’s primacy in financial services. No such attack was under way and in any case, plenty of safeguards were available to be negotiated. The prime minister was right, however, to argue he had no choice.

But what he really had no choice about was to agree to a treaty change of any kind. That would have compelled him either to face down his Euro-sceptics in the national interest, or hold a referendum that he might lose. Faced with this unwelcome dilemma and uncertain that he could carry the day in either case, he chose to use the veto to escape. This was more Houdini than Churchill.

The consequent loss of British influence across the board on European decision-making means the City is now actually more vulnerable to policy decisions in Brussels than it would have been had the UK joined the other 26 countries.

The chancellor has had a choice. He could have painted his drive for growth green and made the transition to a low-carbon economy a compelling narrative that would bind up the Coalition and, by improving energy efficiency and getting us off the oil hook, be very good for business.

Instead, he has chosen to launch a totally gratuitous attack on the environment and drive another wedge into the bonds that hold the Coalition together.

His language on the environment in his Autumn Statement set a new standard for callow ignorance. The environment, he implies, will price British business out of world markets. We must not “burden them [businesses] with endless social and environmental goals”. Regulations must not be allowed to place “ridiculous costs on British business”.

It is doing none of these things. British businesses, especially the more successful, Tesco for example, have taken on social and environmental goals, because there is a strong business case for doing so. Their customers demand social responsibility and reducing environmental impacts cuts costs. The emergence of corporate social responsibility departments in a growing number of companies is not driven by government but by customers.

There is no evidence that the planning system inhibits growth. Indeed, as the National Trust has made clear, well over 90% of planning applications are approved, mostly within a year. The chancellor would find it very difficult to come up with many examples of major infrastructure projects that have been prevented by the planning system. What killed nuclear power in the Thatcher years, as it looks increasingly likely to do again, was lousy economics, not public inquiries.

What the planning system has actually done for big projects is act as a relief valve for political pressures. It has filled some of the democratic deficit left by a Parliament with no real power to change the government’s mind on anything. Take away that pressure valve, as the chancellor wishes, and the result will be to slow rather than accelerate growth.

I met one planning lawyer recently who was rubbing his hands in glee at the prospects for litigation opened up by reducing 1,000 pages of carefully drafted guidance to 50-odd pages of ambiguous text.

The chancellor is not stupid. He knows the environment is not really the obstacle to growth he is pretending. But like his boss, he has to placate the baying hounds behind him in the House.

In his case, they are increasingly anxious about the failure of growth to appear or look like appearing any time soon. Since the failure cannot be his fault, someone must be found whose fault it is. The environment, like Europe, is a convenient scapegoat.

None of this is good for business, especially in turbulent times. Government policy that evolves over time in a predictable way is far better for business, and much more likely to assist growth, than radical lurches that work a lot better in the headlines than they do in the marketplace.

Messers. Cameron and Osborne are certainly in office, and for the time being, also in power, but they are both now dancing to an ugly tune played by right wing zealots. It is a tune that bodes no good for either the environment or the economy.