Between the budget and a green place

By Ann Pettifor
22 Apr 2009

So the government has announced, in the 2009 budget, that it is increasing tax to 50 per cent on salaries over £150,000. And there is help for the young unemployed, the elderly, the disabled and for children. But it is too little, too late.

Trying to redistribute a little wealth in the middle of the most severe downturn in Britain's postwar history – on a day when the number of people claiming unemployment benefits increased for the 13th month, rising 73,700 to 1.46 million – will feel like gesture politics to those 73,700 people.

Given how much taxpayer support has already been funnelled to bankers earning more than £150,000 in the City of London – £1.3 trillion in support for the banks – and to big business in this budget (£1.64 billion to subsidise 40 per cent in tax relief for businesses on capital spending) – what is offered to the rest of us seems like crumbs.

Is there a 'Green New Deal' in all of this? No. The Chancellor's efforts to address the threat of climate change are contradictory. On the one hand, the setting of a carbon budget must be welcomed. But the target – 34 per cent cuts in emissions by 2020 – is well below what scientists tell us must be done if we are to avoid catastrophic climate change.

It is as if the government still has not grasped the full scale of the threat, or of the wide range of actions that must be taken. The boost to the North Sea Oil industry is the last thing we need – we have already burnt far more carbon fuel than the earth's climate can stand – and the car scrappage scheme will simply encourage the automotive industry to build more oil-burning cars. The money would have been far better spent in improving public transport.

On the other hand, the financial help for offshore wind and other clean technology investment is very welcome. The £435 million help for improving energy efficiency in homes is welcome too, although it may well only apply to new homes. Building new homes means more consumption of scarce resources and land. We need to be retro-fitting and improving existing homes and using the space we already have more efficiently.

But let us look well beyond the parameters of this budget. At the heart of the wide-ranging, Green New Deal policies that we need now, are a series of principles which, if followed, would lead to a more stable, strong and sustainable political economy that can begin to meet the real tests of debt, peak oil, and climate change. In short:

* Unpayable debts must be recognised as unpayable, and written off. This needs to done, as far as possible, in an orderly, structured manner and with due attention to principles of fairness and awareness of the causes of high levels of debt.

* The monetary system must be managed in the interests of society as a whole, not just of the finance sector.

* Debt/credit-creation must be carefully regulated.

* Capital flows must be regulated and the power to fix the key levers of the economy (interest-rates and the exchange-rate) must be restored to elected, sovereign governments - accountable to labour, industry and the ecosystem.

* Publicly accountable central banks must be free to a) inject debt-free money into the economy and b) keep the cost of borrowing low, so that loan-expenditure projects can be easily financed.

* Incomes must be raised, to restore the balance between an economy burdened with debts and stripped of pensions, and people starved of income to repay those debts or unable to live in dignity.

* There must be no eviction of people from their homes because of unpayable debts.

* New forms of social, cooperative housing and housing finance should be developed

* Resources must be raised to create jobs by using the monetary tools above and by closing tax-loopholes and tax havens.

* A "carbon army" of green-collar workers must be mobilised to insulate homes, transforming every building into a power station and building alternative sources of energy.

* Trade must be localised and regionalised in order to limit the impact of emissions, cut oil consumption and end trade imbalances. The only exceptional to be items traded internationally. (When war-memorial panels in north-eastern England containing lists of names of the fallen are stripped for the metal they contain to feed a ravenous global commodity-market, the destructive consequences of the dominant form of globalisation are vividly revealed.)

* A new global and independent central bank should be established - based on JM Keynes's International Clearing Union - to manage and stabilise trade between countries and to create both a trading currency and a reserve asset that is neutral between countries.

In other words, the way beyond this period of severe crisis and multiple threats lies in a different kind of economic future for people and planet.

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See: 'A Green New Deal: Joined-up policies to solve the triple crunch of the credit crisis, climate change and high oil prices' (NEF, 2008) - http://tinyurl.com/5jxcld

Also by Ann Pettifor on Ekklesia: 'The budget, climate and faith' - http://www.ekklesia.co.uk/node/9325

Follow budget responses from church, development and green sources on Ekklesia: http://www.ekklesia.co.uk/Budget_2009

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(c) Ann Pettifor is a political economist. She has been a leading campaigner and author on world debt and other economic justice issues. She heads Advocacy International, which works with the governments of low-income countries and with organisations working to promote positive development, investment and environmental sustainability in those countries. She is also campaigns director for Operation Noah (www.operationnoah.org), the churches' climate change initiative. Ann's own website is http://debtonation.org This article is adapted, with grateful acknowledgement, from her response to the 2009 budget and her account of the Green New Deal.

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