Right signals, wrong scale: missed opportunities in the Pre-Budget Report
The Pre-Budget Report presented a unique opportunity to re-structure investment towards a more sustainable economy, but short-term thinking has undermined its potential, writes the Sustainable Development Commission's Tim Jackson.
The ‘green stimulus’ announced in the Pre-Budget Review (PBR) this week was a welcome package. It is timely and vital to bring forward low carbon investments. But at £535 million, this represents much too small a slice of the overall stimulus package.
This was a unique opportunity to re-structure investment towards a more sustainable economy, exactly as UNEP (and others) called for at the recent London launch of their Green Economy Initiative, attended and endorsed by Hilary Benn.
The PBR package could have included much stronger signals that the UK government is serious about renewable energy, home energy efficiency, energy efficient transportation, clean technologies, and green businesses.
Global energy investments alone will need to exceed $35 trillion over the next 20 years according to the International Energy Agency, if the world is to put itself on a path to a 450ppm stabilisation target.
It’s vital that the UK plays its part in that re-investment programme if it is to meet its 80% target and avoid being left behind in world energy markets. The government must rethink its commitment to a ‘green stimulus’ package worthy of the name.
The support offered to low-income families in the PBR is good news. So is the higher rate of tax on top earners that will be brought in to help fund the stimulus.
Again, however, the measures offered fall short of a meaningful response to income inequality in the UK.
The poorest are likely to be hardest hit through the recession and are already struggling with rising costs for food and fuel.
Income inequality is higher in the UK today than it was in the mid-1980s, according to the OECD’s recent report ‘Are we growing unequal?’.
Some modest progress has been made in recent years, but we do not yet live in the ‘strong, healthy and just society’ promised in the UK’s much-lauded Sustainable Development principles.
An unequal society is an anxious society, one given too readily to ‘positional consumption’ that adds nothing to happiness but contributes to unsustainable resource throughput.
We would urge the government to rethink its commitment to redistributive measures that will make a real difference to quality of life across the UK.
We at the SDC applaud the government’s boldness in addressing the UK’s economic position at a vital point in the deepening economic crisis.
We agree that the public sector has a vital role to play in stimulating recovery and easing the burden of recession on UK businesses and households.
At the same time, there is an urgent need to rethink the basis for future economic stability.
The government is still not coming clean about the long term public sector debt which will rise considerably beyond 60% of the GDP once the cost of financial sector interventions is taken into account.
It has failed to recognise the depth of our exposure to volatile global markets. With an external debt in excess of 450% of the GDP, the UK stands in an increasingly exposed position in financial and currency markets if it cannot get its debt burden under control.
The most sustainable way of doing this would be to encourage household saving in UK bonds, and to reduce exposure to volatile international markets. Instead, the government seems to be doing all it can to encourage households not to save.
There are too many signals in the PBR suggesting that things will be OK by 2010, so long as people can be persuaded to go out shopping again.
The government must abandon this short-term thinking and put real effort into designing a more resilient and a more sustainable economy.
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