In July 2008 I was one of the authors of what a group of us called the Green New Deal. It was a plan to revitalise and transform the UK economy in the face of an impending crash that we were sure was imminent.
We were right about that imminent crash. But no one has done the Green New Deal. Ann Pettifor, another member of the Green New Deal group suggested on Saturday that Labour should now adopt the idea as the basis for a coherent economic policy. I agree with her. I never expected the plan to remain so relevant for so long, but with minor tweaks it is still what the country needs.
So I review my call for a Green New Deal, and Green Infrastructure Quantitative Easing, which was a part of it and which was called People's Quantitative Easing in Corbynomics. This is the core of the plan:
- Executing a bold new vision for a low-carbon energy system that will include making ‘every building a power station'. Involving tens of millions of properties, their energy efficiency will be maximised, as will the use of renewables to generate electricity. This will require a £50 billion-plus per year crash programme to be implemented as widely and rapidly as possible. We are calling for a programme of investment and a call to action as urgent and far-reaching as the US New Deal in the 1930s and the mobilisation for war in 1939.
- Creating and training a ‘carbon army' of workers to provide the human resources for a vast environmental reconstruction programme. We want to see hundreds of thousands of these new high- and lower-skilled jobs created in the UK. It will be part of a wider shift from an economy narrowly focused on financial services and shopping to one that is an engine of environmental transformation. The UK has so far largely missed out on the boom in ‘green collar' jobs, with Germany already employing 250,000 in renewable energy alone.
- Ensuring more realistic fossil fuel prices that include the cost to the environment, and are high enough to tackle climate change effectively by creating the economic incentive to drive efficiency and bring alternative fuels to market. This will provide funding for the Green New Deal and safety nets to those vulnerable to higher prices via rapidly rising carbon taxes and revenue from carbon trading. We advocate establishing an Oil Legacy Fund, paid for by a windfall tax on the profits of oil and gas companies. The monies raised would help deal with the effects of climate change and smooth the transition to a low-carbon economy.
- Developing a wide-ranging package of other financial innovations and incentives to assemble the tens of billions of pounds that need to be spent. The focus should be on smart investments that not only finance the development of new, efficient energy infrastructure but also help reduce demand for energy, particularly among low-income groups, for example by improving home insulation. The science and technology needed to power an energy-and-transport revolution are already in place. But at present the funds to propel the latest advances into full-scale development are not.
- Re-regulating the domestic financial system to ensure that the creation of money at low rates of interest is consistent with democratic aims, financial stability, social justice and environmental sustainability. Our initial proposals for financial renewal are inspired by those implemented in the 1930s. They involve the reduction of the Bank of England's interest rate to help those borrowing to build a new energy and transport infrastructure, with changes in debt-management policy to enable reductions in interest rates across all government borrowing instruments. In parallel, to prevent inflation, we want to see much tighter controls on lending and on the generation of credit.
- Breaking up the discredited financial institutions that have needed so much public money to prop them up in the latest credit crunch.We are calling for the forced demerger of large banking and finance groups. Retail banking should be split from both corporate finance (merchant banking) and from securities dealing. The demerged units should then be split into smaller banks. Mega banks make mega mistakes that affect us all. Instead of institutions that are ‘too big to fail', we need institutions that are small enough to fail without creating problems for depositors and the wider public.
- Re-regulating and restricting the international finance sector to transform national economies and the global economy. Finance will have to be returned to its role as servant, not master, of the global economy, to dealing prudently with people's savings and providing regular capital for productive and sustainable investment. Regulation of finance, and the restoration of policy autonomy to democratic government, implies the re-introduction of capital controls. These are vital if central banks and governments are to fix and determine one of the most important levers of the economy — interest rates
- Subjecting all derivative products and other exotic instruments to official inspection. Only those approved should be permitted to be traded. Anyone trying to circumvent the rules by going offshore or on to the internet should face the simple and effective sanction of ‘negative enforcement' — their contracts would be made unenforceable in law. Ultimately our aim is an orderly downsizing of the financial sector in relation to the rest of the economy.
- Minimising corporate tax evasion by clamping down on tax havens and corporate financial reporting. Tax should be deducted at source (i.e. from the country from which payment is made) for all income paid to financial institutions in tax havens. International accounting rules should be changed to eliminate transfer mispricing by requiring corporations to report on a country by-country basis. These measures will provide much-needed sources of public finance at a time when economic contraction is reducing conventional tax receipts.
The details are here. I would tweak them now. But not a lot.
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This is no doubt an excellent plan. I would like to discuss one point on the list, the regulation of international finance. This is surely critical, and as mentioned will probably need the reintroduction of capital controls.
Is this not the reason Labour is quite relaxed about leaving the single market (even though this is mostly talked about in terms of migration), and why Corbyn/McDonnell are sceptical historically about EU membership. Given that it is virtually impossible given EU politics to change this, maybe this is a reason to leave the EU.
Also, if this policy is pursued, and also the crackdown on tax avoidance/evasion, this will have a serious impact on the City. As this is is a significant element of British GDP, it will have serious short/medium term negative economic consequences. This does not mean it should not be done, but it can’t be ignored, and needs to be planned for.
I agree
But suppose we were better off without the City?
I think that may be possible
It would hit short term exchange rates but after that? Suppose we made things of worth?
I agree that one of the problems with British capitalism is the size and dominance of the financial sector. As we all know it’s become so big that if we allow one bank to fail we jeopardize the whole financial sector and global economy. This morning I was watching the BBC news where they were interviewing people about the election. A small business woman said she voted conservative because they supported small businesses. I thought how wrong she and millions of other like minded people are. It’s a fact that for a hundred years the Tory party as supported the financial sector to the exclusion of all other sectors of the economy. As you point out a new green deal should be the basis from which the economy should grow and could easily absorb those who now work in finance.
You are right to mention this. Just trying to grow this post crash economy through the usual channels is not enough.
Fingers crossed.
In the case of your point on banks: Richard Werner noted that Germany has 1000s of regional banks – often Lander owned – and which underpin many/most of the smaller (mittelstand) companies. He attributed some of Germany’s industrial success to this financing structure. The lack of such local financing structures in the UK, could be a factor in industrial decline – and the difficulty in moving a micro company to SME status. Just a thought. Agree with all the rest & a very large effort will need to be put into re-training people for new jobs.
I agree with him
This is banking
We have finance
Setting up community banks really ought to be an easy sell, too; as “Web of Debt” Ellen Brown has noted on many occasions, community banks give their profits back to the communities that make them. At the moment profits made by the City banksters are spent on high living (just picture the Nat West tower, for example) or squirrelled away in tax havens. Why are we giving people like them the benefit of our labours when we could and should be returning it to ourselves, over and over? Why haven’t we got our own local banks?
This idea should sell itself once the public are exposed to it.
Richard, when you write ‘In parallel, to prevent inflation, we want to see much tighter controls on lending and on the generation of credit.’ I assume you mean ‘asset inflation’rather than general inflation as we have had, of course, asset inflation produced by uncontrolled credit whilst general debt deflation.
Both, in principle
Dear Richard,
In terms of a green new deal have you an opinion of the economics in:-
* David Robinson Simon’s “Meatonomics”
https://meatonomics.com
* “Cowspiracy” by Kip Anderson and Keegan Kuhn
http://www.cowspiracy.com/
* The EU Common Agricultural Policy
No, is the honest answer and the day job is not going to let me look right now
If you happen to get a few spare mins on a train or in a departure lounge…
George Monbiot (usually worth a read perhaps you agree?) touches on Cowspiracy in this article:
https://www.theguardian.com/environment/2015/oct/05/think-dairy-farming-is-benign-our-rivers-tell-a-different-story
A Huff Post review of Meatonomics:
http://www.huffingtonpost.com/bruce-friedrich/meatonomics-the-bizarre-e_b_3853414.html
The EU CAP you likely know a ton more about than I do. Any time I’ve read of the CAP over the last 20 years I just get appalled that tax payers throw so much money at the CAP to cause so much economic damage (each of detrimental environmental and health impact as well unfair channeling of wealth).
Thanks
I am no CAP expert
We all have our limits
“I am no CAP expert”
Maybe but you are pretty hot on economics & finance generally. When it was put to me that what seems to be now colloquially known as a Norway type solution would mean the CAP not applying to the UK, it sounded to me like the Norway solution can’t be all bad. I know nothing of the EU Common Fisheries Policy. If though it was put together with similar underpinning objectives and by similar or the same people as those responsible for the CAP, I would quietly suspect it will be similarly catastrophic. That is a speculative comment though so is of negligible value.
Following the events from last Thursday onwards and the effect of that on what Brexit may hold, it would be interesting to have someone cast a critical economic eye over the numbers related to the CAP. No doubt you already have a to do list the length of the channel tunnel. If you happen to know anyone though…
I would love to….but the day job won’t be providing the time for me to do so
Sorry
You’re a very polite man Richard,
There is nothing you have to apologise for. Thanks for all your great work.
It’s worth commenting that when I held a Branch Political Event in my Branch Labour Party in 1995, one of my speakers was Pauline Green, then our MEP, whom I had colloquially dubbed “Prime Minister of Europe”, as she then led the majority Socialist Group in the European Parliament.
Pauline expressed her concern about the effect of the expansion of the EU might have on the budget, with particular reference to CAP, expressing her fear that the accession of Poland alone, with its underdeveloped agricultural sector, might be enough to bankrupt the CAP, but would certainly place great strains on it.
Though thay may not, in the event, have occurred, there can be little doubt that the unreformed CAP is a considerable fetter on the more rational development of the EU.
But I hasten to add that my opinion is only that of a moderately well-informed EU citizen, and am quite open to being contradicted by someone with fuller information. My relative ignorance, however, does not attach to what will undoubtedly have been Pauline Green’s superior grasp of the issue.
[…] It’s time for Labour to adopt the Green New Deal http://www.taxresearch.org.uk/Blog/2017/06/12/its-time-for-labour-to-adopt-the-green-new-deal/ […]
I’d personally have to say that the energy aspect of your GND proposal is simply too optimistic given current technology limitations.
Base load is a serious issue if you plan to generate a large proportion of your energy via renewable sources (even considering plans for investment in energy efficiency and so forth), because capacity factor isn’t something which can be ignored. Fundamentally, solar in the UK and wind power don’t provide a reliable enough means of generation to supply a modern society without serious conventional backup which these days means gas turbines. The alternative would be massive energy storage which would be far too expensive using current technologies, not least because we don’t have the geology for lots of hydro like some countries.
Because of this and as I think I’ve noted on the blog before I am a proponent of Nuclear power, though obviously not the ridiculous boondoggle of the EPR we find ourselves signed up to thanks to years of incompetence by recent governments!
I would personally welcome investment into Molten Salt Reactors running a low-pressure thermal spectrum (preferably ‘burning’ Thorium instead of Uranium or Plutonium) which would be innately safer than other reactors in use which are, on the whole, water-cooled Pressurised Water Reactors based on more complex variants of the very earliest reactors. Unfortunately, very little investment has been made into MSRs since some early proof of concept work in the 1960s and early 1970s as the Americans back then decided instead to work on fast-breeders cooled by molten Sodium and burning Plutonium – yes, this is as potentially nasty as it sounds and it isn’t perhaps a surprise that no real sodium cooled fast reactors are really in use at present!
However, as final designs for these potential MSRs are still many years away (though the Chinese in particular have worked on them in recent times), I would advocate building more simplified PWRs in the shorter term, even if they leave more waste to deal with than mooted designs of MSRs.
Safety is not a serious issue – the Fukushima reactor (designed in the 1950s) shut down correctly following the earthquake the other year, but the issue there was with the poor design of the cooling system which hadn’t been rectified – the generators were flooded by the tsunami. Had they been situated above ground level, there wouldn’t have been any problems. Chernobyl (also designed in the 1950s) came about because of a poor design and a ridiculous experiment carried out with the operators switching off the safety systems!
Waste is also much less of an issue than many would have you believe and certain MSR designs also offer the possibility of ‘burning’ much of the longer-lived actinides which are the most dangerous part of high level waste.
Nuclear power is the only reliable (virtually) carbon free method of generating base load power at present and we’re foolish not to take advantage of it, especially when you consider how imperative it is that we deal with ongoing climate change. I would say it is impossible to meet the IPCC targets without use of Nuclear power and this needs to be built soon. Many prominent green activists (including Lovelock and Monbiot, for example) have been persuaded that this is the case and I personally believe that we could build a much better society and country with some serious government investment in nuclear generation.
This is one of the main reasons that I could not support the Green party at the present time as my considered view is that their energy policy is simply not deliverable with current technology and there is no indication in anything I’ve read elsewhere that it could be feasible in the foreseeable future.
Much of the issue is a misunderstanding of the dangers of radiation caused by adherence to the Linear No-Threshold (LNT) model which attempts to categorise the dangers of different levels of radiation exposure. A simple consideration about the planet on which we live and the environment where our species evolved shows that this model is nonsense and massively over-estimates the risk of low levels of radiation. Low levels which even widespread use of nuclear power wouldn’t expose us to in any case.
Unless you can guarantee no nuclear accidents forever (and you can’t) then no thanks to one iota more nuclear
The risk is not worth it
Nuclear power requires a lot of eggs in one basket.
Mini reactors/MSR/thorium/fusion are all exciting ideas but a long way from practicability.
Wind and solar are getting cheaper by the day almost and are easily scaleable.
Can you tell me the future cost of nuclear fuel (which AFAIK cannot be sourced in the UK)?
I can tell you the future cost of wind and sun – now and in 50 years or 1000 years time.
If the money wasted on Feed In Tariff bribes to Mr & Mrs Smug in Surrey (paid for by the leccy bills of people in tower blocks in Cambuslang and their ilk) had been spent on research – or even building a solar panel factory or three in the UK) we`d be even farther down the road towards energy self-sufficiency.
There is a lot of Uranium and Thorium in seawater and technology exists to extract it easily and relatively inexpensively. Fuel costs are a tiny part of the expense of operating a nuclear reactor – even more so for Thorium, of course, which doesn’t even need to be separated into isotopes or have much in the way of pre-processing carried out before use. Not a surprise that the Indian government is interested in the use of Thorium in reactors as the sands on much of their coastline is very rich in this element.
If you’ve ever been to Kerala, you’ll have walked along a beach rich in Thorium due to the monazite sands there. No need to worry about the mild radioactivity, however, as Thorium does have a half-life of 4 billion years. Not the most lively of elements!
There are many alternative “base load” generators available that could be produced as quickly as new nuclear reactors, but are overlooked due to lack of research and development. Heat pumps (they can get hot water from the Fjords of Norway, using low volatility liquids such as ammonia and Freon, but lack of research due to a “good enough” approach by business means that safer gasses could be denied discovery), tidal and pumped hydroelectric are just three examples that are capable of generating baseload or, in the example of pumped hydroelectric, storing low demand production.
Energy generation in the west appears to be focussed on just fossil or nuclear, citing financial constraints on new developments, when the only real limit should be human ingenuity!
Agreed
More ‘nuclear material’ is released each year from burning of coal at a conventional power plant than from a nuclear power plant. Around 100 times as much, in fact:
https://www.scientificamerican.com/article/coal-ash-is-more-radioactive-than-nuclear-waste/
Now, I’d argue that the absolute amounts of this radiation aren’t particularly harmful – certainly less harmful than the other pollution emitted from the burning of the coal, but it’s something to consider.
In fact, by any objective measure, nuclear power is many times less lethal than other mainstream energy sources:
https://en.m.wikipedia.org/wiki/Energy_accidents
These figures include the assumption that radiation from the couple of serious atomic accidents which occurred over the past 70-odd years has caused the deaths of many more than is actually probable thanks to the uncritical mainstream acceptance of LNT.
I’d happily accept a nuclear accident every thirty years or so in return for the benefits that the technology can provide. Though obviously this is highly unlikely if more modern reactor designs are used rather than 40 years old plants.
I would not accept Suffolk being wiped out by Sizewell
I objected to that when I was 13 and my father was working on Sizewell A
I still do now
I will be polite and restrained about your indifference to human kind, but that is what it is
Suffolk could not be wiped out by an accident at Sizewell. Nuclear reactors are not nuclear bombs – they don’t explode in an atomic reaction even in the event of failure. The reactors at Fukishima suffered a partial meltdown due to a cooling system failure and the explosions which were seen to cause damage were caused by hydrogen which had been split from the water in the cooling ponds where spent fuel rods were kept. An aged and poor design. Sizewell B is a design which is 20 years more modern than the Fukushima or Chernobyl reactors and it has none of their faults. A Fukishima-type tsunami impacting Sizewell would not cause the same outcome. In the almost impossibly unlikely event of a meltdown at Sizewell B, the same number of civilians would be injured or harmed from radiation as in the Fukushima incident i.e. none. Of more concern would be the many thousands who died directly from the Tsunami as occurred in Japan and more of the arable land would be rendered almost unusable due to seawater as compared to fears of radiation.
Much of the remaining exclusion zone around Fukushima remains perfectly inhabitable:
http://www.bbc.co.uk/news/world-asia-35761136
Perhaps understandable that such a ‘safety first’ attitude has been taken by the Japanese but the chance of harm occurring from the radiation levels in much of the exclusion zone is extremely small, especially as most of the known harmful isotopes have now decayed down to safe levels.
Characterising my throw away comment about intermittent accidents being ‘acceptable’ is indifference to human kind is simply not sensible, I’m afraid. I could just as easily note that your support for huge rollout of wind turbines and solar panels as an indifference to the thousands of lives lost around the world as these technologies are installed and maintained. Not to mention the lives lost due to the pollution from the gas turbines and coal burned as we keep base load operating, or from the pollution caused and deaths suffered during the mining of the rare earth elements used in solar panels and wind turbines.
If the IPCC is to be believed, Suffolk is much more at risk from rising sea levels caused by global warming than an accident at Sizewell. This explains my attitude as to why nuclear power is preferable to the alternatives.
As noted previously, many of the leading Green activists support nuclear power. I don’t think any of them are accused of having a disregard for human life!
Would I accept a current generation nuclear reactor being built in my locality? In a heartbeat.
I do not believe you on any of this
And for good reason
You do not know how to dispose of radioactive waste safely for thousands of years
And because that question cannot be answered I have never accepted the nuclear alternative
[…] Let’s have a Green New Deal, in other words. […]
I think we’ll have to agree to disagree Richard.
The fact that you don’t believe me is an issue as this shouldn’t be about beliefs, but rather facts. My view that LNT is a load of bunkum is just my opinion, admittedly, but one with many facts to back up that viewpoint. The rest of my post was probably factual.
Waste is really less of an issue than many believe (the volume of high level waste produced is actually very small) and I could provide a link with pertinent information about this, but the link would be provided by the nuclear industry so you would be sceptical. I would say that current high level waste actually represents a very good source of fissile material which could be reprocessed for use in various reactor designs. Obviously, this is more expensive than just producing new fuel and so this is why geological repository is considered the obvious choice.
Most critics now admit that nuclear power is safe but their complaint is that it is too expensive. I disagree with this viewpoint because much of the regulation which has occurred since the 1970s has the express aim of increasing the complexity and cost of nuclear power.
I do fear that we will regret not using this technology in future decades when the impacts of global warming really begin to take hold
I equate your view of facts but to that of the neoliberal on economics
It’s a fact because all externalities are ignored
And I am sorry, but that’s what you are doing
Needless to say, Richard, I would say that you are doing exactly the same by backing renewables so strongly at the expense of other technologies and in doing so ignoring the externalities of renewable generation!
If battery or other energy storage technology can be developed to allow a renewables-only generating system, I would accept it, though with a heavy heart as the energy density provided by nuclear power plants would allow us to do so much more – create carbon-neutral artificial fuels which are easier to handle and store than hydrogen, for example. As it stands, hydrogen seems likely to the energy medium chosen for use in future fuel cell vehicles or generators but the bulk of this will almost certainly be produced from natural gas. The oil companies are big proponents of hydrogen, unsurprisingly and carbon capture isn’t likely to come into the equation in this case.
My view remains that renewables-dominated generation you hanker after isn’t going to be possible without an unprecedented breakthrough in cost and capacity of energy storage. We’re talking orders of magnitude here and this simply isn’t on the horizon from what I can tell though much good work is being done. More affordable electric cars with substantial usable range (i.e. two or three hundred miles) should be with us soon which will certainly be one big improvement though it will be decades before combustion engines become a rarity.
One event which might change my view is if a viable fusion reactor could be developed, though there will still be radioactive materials which need to be dealt with, albeit in much smaller quantities than from fission reactors. Unfortunately, most of the investment in this field appears to be going to ITER which looks doomed to fail as it is very poorly thought out.
I’m in agreement with you on most topics, but energy generation is one where we will just have to agree to disagree.
I am sorry, but there is more fantasy in there than the average macroeconomics lecture
sorry Richard, but you are wrong on this one.
the neoliberals are the ones pointing towards prices of renewables going down while ignoring real resource constraints and externalities of renewables. (steel, concrete, rare earth mining, land use, …)
nuclear waste is much more manageable than you think it is, with a variety of options, reprocessing, dry storage, even recycling…
the special thing about nuclear waste (compared to other waste) is that it decays on it’s own.
Please do not insult our intelligence with such trite comments
I note you use a false email address
As false as your claims
Richard. You clearly don’t have a scientific background, so there is no need to be insulting to those who do and who also have a personal interest in and therefore knowledge about current developments in battery technology, energy storage and generation.
There was no fantasy in my post (though there was some personal opinion) and you claiming so with nothing other than throwaway one-liners does you no credit.
My final post in this thread.
Regards.
I know enough science to know that nuclear power creates waste that you have no clue how to manage
And that makes you and all who propose it the enemies of life on Earth
I have little time for those who wilfully choose to do that
[…] in the economy at large. If that happens (and this is why investment of the sort described in the Green New Deal is so important) then the spend by the government invariably does result in more being received by it than was […]
[…] in the economy at large. If that happens (and this is why investment of the sort described in the Green New Deal is so important) then the spend by the government invariably does result in more being received by it than was […]