A ‘Green New Deal’ is needed to extricate the UK from the ‘triple crunch’ entrapping it: the credit crisis and imminent recession, accelerating climate change and rising energy prices caused by ‘peak oil’.
The Green New Deal would decarbonise the country and transform its economy, create a "carbon army" with millions of new jobs and require some £50 billion a year worth of green investment. That is about half the current NHS budget, and many times higher than the current level of combined public and private sector environmental investment.
This radical prescription is set out in a 44-page pamphlet from the nine-strong Green New Deal Group. It includes the New Economics Foundation’s policy director Andrew Simms, two former director’s of Friends of the Earth - Tony Juniper and Charles Secrett - economics editor of the Guardian Larry Elliott and Green Party MEP Caroline Lucas.1 The group’s call for a transformation of the UK’s energy system - with a massive upscaling of investment in renewables and energy efficiency of homes and other buildings - is far from being the first, and is based on a recent report by the Institute for Public Policy Research (ENDS Report 394, pp 12-13 ). The political and business mainstreams are increasingly accepting such changes as necessary, even though the consensus required to implement policies needed for such rapid change is far from being achieved.
But what puts the Green New Deal far beyond the establishment pale is the way it links environmental goals and strategy to radical reform of the UK and global financial systems. It says the current model of globalisation, based on far too lax credit controls, has now failed amid a welter of bad debt.
Big banks should be broken up with retail banking (for the general public) split from merchant banking for corporations and securities dealing. Capital controls restricting flows of finance between countries should be reintroduced, with taxes on these flows. There also need to be stronger controls on trading in derivatives "and other exotic instruments" and a clamp down on tax havens.
Although there is widespread questioning of the financial system following the credit crunch which began more than a year ago, political leaders in developed nations have not agreed on the need for major change. The GND group believes they will come under pressure to do so, as economic conditions continue to worsen. The credit crunch will be the first domino to fall, followed by corporate defaults which will, in turn, tip their lenders - banks and hedge funds - into crisis.
As unemployment rises and the economy shrinks, the need for such a radical, wide-ranging programme will become increasingly accepted, says the pamphlet.
In setting out how to tackle the "triple crunch" of credit, climate change and energy prices, the report draws inspiration from President Franklin Roosevelt’s New Deal which helped lift the US out of depression in the 1930s. But it also says lessons can be learned from Britain’s experience in the Second World War, and the way Cuba dealt with a damaging combination of trade sanctions and the loss of cheap oil from Russia after the collapse of the USSR.
"In our living memory, the scale of economic re-engineering needed to prevent catastrophic climate change has only been witnessed in a wide range of countries during war time," it says. "No other approach looks remotely capable of delivering the necessary volume of emissions reductions in the time needed."