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A sustainable UK needs a 'one planet' Budget

Alan Simpson

5th February 2016

When Chancellor George Osborne delivers his Budget next month, we can be sure that climate and environment won't take a high priority, writes Alan Simpson. All the more reason for the Labour leadership to develop a new 'one planet' economics for the 21st century that delivers social justice and respects ecological limits.

Democratising markets, putting clean before dirty, using less to deliver more, and restoring in preference to exploiting, become centrepieces of a different economics. But the pivotal change must come from a 'One Planet' Treasury.

With Budget day set for the 16th of March, we are rapidly approaching one of the big, post-Paris Agreement tests of this parliament. The danger is that all the major parties will fail it.

Plunging oil, coal and stock market prices, have pushed the political case for a 'put the planet first' Budget off the table. But in reality, it is the only Budget worth having.

Instead we are being offered a melée of election post-mortems and faux recovery strategies. The Chancellor seems oblivious to the very existence of the Paris Agreement, while Labour risks being drawn into a post-mortems over what it should 'atone' for. The climate barely gets a look in.

I spent much of the last parliament trying to persuade Labour and its leader, Ed Miliband, to break from the politics of the anodyne, forlornly explaining the virtues of an economics that puts back more than it takes out.

And yes, Miliband was guilty of weak leadership - never breaking from a blinkered Treasury mindset that came to define and constrain the Blair/Brown years. But he was never the core of Labour's problems.

Throughout the Blair/Brown era Labour MPs were expected to be cheerleaders for a series of economic gimmicks, dressed up as 'defeats for the cycle of boom and bust'. How silly the claim looks now.

After the doom and dust

Many New Labour policies were just a mixture of 'off balance sheet' accounting (Private Finance Initiatives); a gamblers' market for non-existent goods (Carbon Emissions Trading); an explosion of private and personal credit; the curtailing of council house building (creating a price-spiral in the private housing market); and the deregulation of banking and finance. MPs who warned it would all 'end in tears' were denounced as disloyal. This is where we ended up.

Moreover, New Labour broke from its universalist roots, and the social solidarities that went with them, throwing itself into more fragmented systems of individual means-testing.

When Frank Field MP (then 'Minister for thinking the unthinkable') told Gordon Brown he couldn't successfully pursue both a flexible labour market and a shift into means-tested benefits, Brown just had him sacked.

From Lone-Parent Benefits to Student Grants, the deconstruction of inclusive social welfare was remorseless. It went along with the construction of a new 'corporate' welfare state, showered with freedoms and unconditional benefits. Google's tax fiddling is just the tip of this iceberg.

For corporations, paying tax became optional. For the public, means-testing became obligatory. The solidarities we will need for tomorrow became debased.

So it was too, with the taxation of assets. Social housing tenants face 'bedroom tax' benefits cuts for having a spare room. But the mansions of absentee plutocrats, and empty properties sitting unimproved and unused in developers' land-banks, go tax-free.

The rich are allowed to write off 'unproductive' assets, and banks write off bad debts, against tax liabilities. The poor must carry the burden, and manage with less.

New lamps for old

Jeremy Corbyn and John McDonnell understand this. Solidarity and social inclusion are part of their DNA. What isn't clear is whether this understanding amounts to an alternative plan.

McDonnell has been shrewd. His advisory panel of Nobel Prize winning economists invites Osborne to plunge way beyond his depth. No wonder the Chancellor has stuck to shallower waters. McDonnell has been smart, too, in taking discussions into the heart of the business community.

What he will discover, however, is that (like Labour) many are hostages to the short-term. Only the insurance industry bucks the trend.

Corbyn looks equally constrained. No one doubts his compassion, his openness or altruism. But Jeremy has yet to assemble a team that can can lead rather than respond - a team that, as most of his supporters hope, will change the whole landscape of political debate. Climate must be at the centre of this.

Paris in the spring

The Paris Summit made it clear that we cannot survive in a world of reckless over-consumption. Britain's winter floods reinforced the message. Turbulent weather (and the £1.5bn of insurance claims) has become a major disruptor of conventional economics.

To borrow a thought from Naomi Klein: climate change changes everything.

Corbyn's manifesto acknowledged this and promised something radically different. With a Chancellor who increasingly looks like the 'ebola of environmentalism', the coming Budget must be Labour's moment to outline the different shape of a sustainable economics.

Osborne is obsessed with Big Energy. He throws seven times the level of subsidies at fossil fuels as he gives to renewables. He ditches democracy in support of a 'Freedom to Frack'. He promises everlasting subsidies to the peddlers of a nuclear delusion.

He sabotages the (clean) community energy movement in favour of oil exploration. He dumps Britain's commitment to zero-carbon homes, gives farmers the right to flood towns and cities, lets developers build on flood plains, and barely gives a stuff about the number of post-2009 homes ineligible for flood insurance.

Labour has to pick a fight with each and every one of these; beginning by pulling the plug on the nuclear debacle. Simply saying 'No' is a start, but not an answer. The challenge is to platform an economics that lives more lightly with itself.

Some 6,500 European towns and cities are already heading in this direction; setting targets for carbon reduction, energy saving and clean generation, often ahead of their national governments. But the real pioneers run with political support rather than despite it.

This is where Labour needs its visionaries, and at the moment it hasn't found them. The challenge is for Corbyn to define the ends, and for McDonnell to deliver the means.

News from somewhere else

Germany's Energiewende is far from perfect, but the lesson it offers is refreshingly clear. Politicians define what the country's energy policy has to deliver (within a 10 and 20 year framework), engineers and localities drive the changes, and tax policies (along with low interest loans) incentivise the process.

When Germany says it is coming out of nuclear, that's what it does. When it decides to incentivise renewables, it does that too. National targets become local duties. Localities argue about the best ways of delivering these, but this is a 'how' debate, not a 'why' one.

Moreover, today's debate is not about individual technologies. It is about the shape of tomorrow's integrated energy 'systems'. Three quarters of Germany's energy jobs are now in energy saving (or energy services) rather than in power generation. Storing, balancing and sharing become key elements in which localities redefine both job security and energy security. The energy efficiency of our homes and the air quality of our transport systems become integral parts of this process.

Democratising markets, putting clean before dirty, using less to deliver more, and restoring in preference to exploiting, become centrepieces of a different economics. But the pivotal change must come from a 'One Planet' Treasury.

When world Leaders acknowledged that, to avoid climate catastrophe, we have to live within a global carbon 'budget' of 350ppm it took us one step closer to national carbon budgets too. National carbon budgets will then become local ones.

It isn't at all clear that the current Treasury even grasps the concept, let alone believes in it. But if the Treasury cannot make this transformation then the Treasury itself may be the first thing that has to go ... and both Corbyn and McDonnell should be saying so.

At the moment, Britain faces a series of crises it has neither the skills nor the strategies to deal with. This is the challenge facing Labour.

We live in a fragile moment, shrouded in both insecurity and opportunity. It is a moment that calls for courage and clarity. Of course compassion is important. So too is fairness and justice. But if humanity is heading towards an ecological and existential crisis, we all need a bigger plan.

'A budget for the planet' is the place to start.

 


 

Alan Simpson was a Labour MP until 2010. He is an independent advisor and campaigner on energy and climate policies. Alan is a member of two community energy co-ops and lives in an Eco-house in Nottingham. He is a net exporter of electricity to the grid).

 

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