Ten ideas to transform our economy

As the General Election approaches, we desperately need to expand our discussion of 'the economy.' Here's a start.

David Powell
24 April 2015
Make it in Great Britain

We are suffering from a lack of imagination. Flickr/Department for Business, Innovation and Skills. Some rights reserved.Election debates about ‘the economy’ have fixed their sights only on a few issues, like the deficit. But there are bigger questions not really being asked. The next government will have to take big decisions about what kind of economy it wants to build.

We need an economy resilient to what the 21st century is likely to throw at it – home to hundreds of thousands of new green jobs, future-proof industries and ultra-efficient businesses.  

Let’s have some vision, politicians! I think the UK should set a shining example to the rest of the world – reinventing its economic and industrial base around clean infrastructure and new, sustainable business models. That might mean standing up to powerful people who don’t like change – like the big banks, old-hat business groups and oil barons.  Tricky.  But a moment’s thought suggests there isn’t a great deal of choice in the long-run.

So, here are ten ideas for starters.

Attract investors to low-carbon, not fossil fuels

1) No more bonanzas for oil and gas companies

If we want to avoid dangerous climate change we have to leave most of the world’s known reserves of fossil fuels in the ground. But, sigh: the UK’s determined to wring ‘every drop’ from land and sea – making it illegal for any future government not to ‘maximise economic recovery’ of fossil fuel, and cutting the tax rate on profits from drilling or fracking. Tax breaks handed out to North Sea companies since 2010 have come to over £3 billion

These are the wrong signals to send to investors.  It’s not enough just to encourage some low-carbon investment – the government has to rule out high-carbon as well. Sadly, most of the main parties are still gung-ho for fracking.

2) Set out a bright future for renewable energy

The UK’s been gently slipping down the league table of the best places in the world to invest in renewable energy like solar and wind. This is in part because the government’s trying to have its cake and eat it, supporting renewables and dirty energy.

But it’s also because the future for clean energy isn’t certain. Renewable costs are tumbling but there’s a way to go yet, and they’ll need a bit of subsidy to help develop and be competitive with established technologies. 2020 isn’t very far away if you’re an investor in a major project like an offshore wind farm.  Past that date there’s a blank page – no guaranteed support framework for clean energy.

Investors need to know that the next 15 years are going to see nothing but enthusiastic support from the government, whoever they are.

We need a 2030 decarbonisation target for electricity – which some parties have pledged in their manifestos – and a stable framework to make sure that as costs fall we can continue to deploy the renewables we need to get there.

3) Spend infrastructure cash on the right stuff

Infrastructure is the arteries of the nation: our energy, transport, waste and communications systems. With only so much funding to go around, the kind of infrastructure we do and don’t build is one of any government’s biggest economic, social and environmental decisions.

We think the priority for the next parliament should be insulating the nation’s homes to a decent standard, which is the best idea in just about any area you care to mention: it’ll create tens of thousands of jobs and save the NHS upwards of a billion pounds a year in avoided health costs.  All this, and of course it’ll make a big dent in the nation’s carbon emissions.  Although two major parties have pledged to make energy efficiency an infrastructure priority, only one of them has hinted this might translate into an increase in funding.

A revolution in clean investment

4) Let the Green Investment Bank fly

The UK’s Green Investment Bank (GIB) has made some good investments with the £3.8 billion it’s been awarded by the Treasury. But the Bank’s a shadow of what it could be – it’s been banned from borrowing by the Treasury and could be so much more powerful than it is.  It’s also been required by Government to invest in some false solutions, like biomass and incineration.

In the new parliament the Bank should be reinvented – allowed to borrow and refocused only on genuinely useful technologies. It could even – like its big cousin, the German KfW – be given a ‘development’ role, so it can not just stump up cash to invest but also have a job to help get projects like community energy off the ground in the first place.  

5) Help everyone invest in a brighter future

As well as a flourishing green bank, imagine if people’s savings could be used to help fill the multi-billion clean infrastructure funding gap. We’d love to see a new ‘green ISA’ (savings account), available widely and offering the same tax-free perks as a standard ISA. It would help millions of people invest in a sustainable future by taking part in a profoundly normal activity. While the idea isn’t a new one, no party has yet put it into practice – we’d like to see it as a priority for the next parliament. 

Get smart about our economic priorities

6) Get ahead of the curve on natural resources

A populous, industrialised 21st century is going to see ever greater competition for the world’s finite natural resources, spare land and usable water. Worryingly the UK and EU are already very dependent on other countries’ resources.

It’s a win-win to start using far fewer natural resources and shrink our ‘four footprints’ of carbon, land, water and raw materials. The UK Treasury has already been asked – in vain – to conduct a review of the economic rationale for doubling down on resource efficiency. We need this review to happen now more than ever, as a precursor to the Government making the UK’s economy efficient and resilient for the pressures of the decades to come.  Great news that Labour and the Liberal Democrats are both committed to the review, but no dice from the other big parties yet.

7) Transform the Treasury

You can’t have a sustainable economy in the UK without a Treasury that’s along for the ride.  The Treasury is hugely powerful, controlling both short-term spending and long-term economic policy. At the moment it doesn’t have any kind of priority on carbon reduction, resource efficiency or improving wellbeing – but that’s a political choice for the next Chancellor.  We want to see the next Chancellor tell their top civil servants on day one that they have to start focusing on building a green, resource efficient and fair economy – and (s)he must appoint a powerful new minister to keep an eye on them. A growing number of organisations agree with us.

Make taxes fairer

8) Make big companies pay their taxes

Some of the country’s biggest companies are adept at getting round paying their fair share of tax. That’s not illegal– yet – but we think it should be. Every penny the Government misses out on from megabrands is money we can’t invest in trains, cycle routes, or protecting nature – or which forces those things to compete with schools and hospitals.  We’re proud members of the Tax Dodging Bill campaign; so far, it looks like all of the main parties have in one way or another promised to do something about tax dodging.

9) Bring in a ‘Robin Hood’ tax on the banks

It’s right that the banks pay more – after all, it was casino banking that caused the financial crisis that so hurt ordinary people. A tiny ‘Robin Hood’ tax on financial transactions like shares and derivatives would raise billions to invest in green infrastructure and helping people out of poverty. Even better, it would help slow down rampant and ‘socially useless’ trading of the kind that spiralled out of control back in 2007.

The UK Government was staunchly opposed to Robin Hood, but 11 European countries, including France and Germany, are pushing on regardless.

Don't give power away to big companies

10) Say no to the Trojan Horse Treaty - TTIP

The last thing we need right now is big business getting more of a say over whether we can regulate to protect people and the environment. But a highly controversial proposed trade partnership between the EU and the USA – the Transatlantic Trade & Investment Partnership (TTIP) – would do exactly that. Even worse, it would let companies sue governments in private courts if environmental or other regulations hit their profits. Add your name to over a million people in the US and EU who think TTIP stinks.

Friends of the Earth Ltd. 

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