Could the next budget be the greenest ever?
This post is by Colin Hines, convenor of the UK Green New Deal Group.
Shaun Spiers correctly cites the concerns felt by many in industry about the effects of chancellor Sajid Javid recent assertion in the Financial Times that the UK will no longer be aligned with EU rules, or in the single market or customs union.
Indeed, as the author of the book Art Deco London, I was rather surprised, when looking at the front page photo illustrating the FT’s article, that the chancellor allowed himself to be photographed under an art deco print of Tamara De Lempicka’s ‘Autoportrait’, painted in the financial crash year of 1929. This appeared to be tempting fate, given his apparent insouciance about the future of the UK car industry.
However, for environmentalists, of course, the key concern raised by the chancellor’s statement is the risk posed by divergence from EU rules, particularly given the government’s assurance that environmental standards are not at risk, which has been undermined so far by refusing to put its promises into law.
Preserving and improving standards is an important issue, but perhaps of even more political salience is which large scale programmes can be introduced to effectively tackle the climate emergency, how could they earn public support and where would the money come from.
In a recent post on this blog, I made the case that these requirements could be met by prioritising making the UK’s 30 million homes and other buildings energy efficient, whilst shifting energy supply to renewables. Such a commitment, with its appeal of providing ‘jobs in every constituency’, also has the short term political advantage for the government of being likely to gain support from the new Conservative constituencies in the Midlands and the North.
The budget’s green potential
In this context, a more careful reading of Sajid Javid’s FT article offers hope for such a goal. In the huge coverage it earned, virtually unreported were his excellent budget priorities of focusing on “people and place”, tackling climate change and increasing the role of further education colleges. These emphases should open the door to a commitment to a nationwide training and works programme to make all the country’s 30 million homes and workplaces energy efficient. Such a massive green programme would generate jobs, business and investment opportunities in every constituency.
This would also enable the government to substantially build on the commitment it made in its election manifesto to reach net zero by 2050 , including the pledge to invest £6.3 billion to improve the energy efficiency of 2.2 million disadvantaged homes.
How to pay for climate solutions
Of course, to extend such a pledge to include making all buildings energy efficient would cost many more tens of billions and the inevitable question raised would be how to pay for it?
The chancellor could answer this in the budget by changing the rules on ISAs (Individual Savings Accounts) so that some of the £70 billion saved annually could be invested in government-backed green bonds at an interest rate of 1.85 per cent (the current average cost of UK government borrowing). This would be extremely popular with savers and, given they tend to be older and that their savings would be used to employ huge numbers of younger workers, this would be a good example of intergenerational solidarity.
In addition, if pension rules were changed so that, in exchange for the tax relief given on these contributions which costs £54 billion a year at present, 25 per cent of all contributions had to be invested in green bonds, then more than £25 billion could be used to tackle the climate emergency.
‘Save for the planet’
Of course there are other ways the government itself, rather than savers, could pay for tackling climate change, ie taxation, borrowing at historically low rates of interest and money creation though quantitative easing. However, there are a number of advantages of involving millions of savers, via changes in rules on ISAs and pensions in the budget. The money would pay for the training and employment of a huge workforce which could directly provide jobs, possibly for the savers themselves or their relatives, and help to strengthen their local economy.
If allied to regulatory and financial inducements for the owners of homes and buildings, this could not only reduce the UK’s carbon emissions by up to 40 per cent, but also answer a key question being asked by more and more people. Namely, what role can they play in helping to reduce the effects of the climate emergency on themselves, their families and future generations? The answer is to be involved in the most effective thing every household can do to help tackle the climate emergency: make the places they live in or rent out energy efficient, thus reducing carbon emissions, improving comfort levels and reducing bills. In the immortal words of Dorothy, in the Wizard of Oz, “there’s no place like home”.