My Green New Deal Group colleague and partner in Finance for the Future, has this letter in the Guardian today:
It would appear that Rachel Reeves would rather put growth ahead of protecting our children's future with net zero policies (Rachel Reeves's bid to expand Heathrow could add £40 to airline ticket, 23 January). Yet in the acres of coverage about this government's growth mantra, three crucial questions are never asked, let alone answered.
First, what exactly is the end goal of growth? The response should be an increase in economic activity directed predominantly towards rebuilding public services and turbocharging a green transition.
Second, what would this cost? Recent research has comprehensively costed most of these social and environmental transformations that polls show the public wants. The total it estimates will be around £190bn a year.
Third, how would such a programme be funded? This will require Reeves to stop obsessing about foreign investment and global bond vigilantes, and instead look to UK “savers as saviours” of our economy and environment. For example, in return for the tax breaks savers receive, all new savings in ISA funds and 25% of all new pension contributions should be invested in social and green infrastructure projects. This could eventually provide up to £100bn of funds a year. An additional £90bn or more of additional tax revenues a year could result by increasing the taxation on income from wealth.
This approach should be a priority for political activists as well as MPs, particularly jittery Labour ones. If carried out by the next election, hundreds of billions could have been invested locally, thus improving the lives of the majority, hence increasing their chances of re-election.
Colin Hines
Convener, UK Green New Deal Group
Much of this is based on the Taxing Wealth Report.
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Great letter but unfortunately Reeves is an amateur when it comes to understanding the matters raised and like her boss she appears to want to shill for the rich (watering down non-dom taxes for example).
Much to agree with.
Last week I had a rethink on community energy and realised I had “missed a trick”. Summarising, it is possible to implement community energy in (most) rural areas quickly and easily. A group of schemes (4 or 5) could reach thousands of households, farms etc. It would need the support of local gov’ because they have a very important role in legitimising community energy & getting local communities to agrre to it.
UK network operators should also welcome this new approach since it would given them more control/visibility over their networks whilst at the same time delivering low-carbon elec @ perhaps 50% of current costs to rural places. Funding should not be a problem since the “business case” for a given project is good (ground mount PV delivers @ circa 7p/kWh, wind at around 4 – 6p/kWh vs 30penceish/kWh for elec from energy companies). The new approach would also mean that local gov could become a elec licensed supplier (with very low risk). All this could be funded with the money currently sloshing around the UK – even @ the currently silly rates. I have already modelled (using real data) such schemes & they work (those interested please form an orderly queue 🙂 ).
Someone (you?) should publish the detailed case for distributed community owned renewables
( There is something here about Australia
https://switchedon.reneweconomy.com.au/content/how-communities-can-benefit-from-being—literally—invested-in-big-renewables )
The ‘debate’ on @BBC is just about ‘the march of the pylons’ through East Anglia , and apparently all predicated on centralised private equity owned big scale off shore wind.
And what about all buildings and infrastructure fitted with solar etc etc.
Apparently two-sided solar panels can enable grain growing on farms.
I’m not entirely sure of my ground here but local councils in the United States appear to have far more freedom to float municipal bonds for projects than in the UK where central government seems to have a tight grip on local council’s ability to borrow. So for example in the United States if a new high school building is required a referendum on floating a municipal bond for this is held amongst those paying council tax and if successful the float goes ahead.
This seems to be not only a very democratic way of seeking approval for increased council expenditure but in the case of encouraging more sustainable methods of energy creation and avoiding energy price manipulation very attractive for citizen investment. At the least it would seem to guarantee a reliable small return on bond investment since the use of the energy would be widespread over all sectors, domestic, industrial and general business.
The spanner in the works though appears to be where does the funding come from to beef up the local council’s electricity grid and create energy storage facilities in order to wean the community off gas as an energy supply. Can municipal bonds be stretched to cover these functions especially in low income communities?
I have long argued that municipal bonds should be encouraged again.
“to beef up the local council’s electricity grid and create energy storage facilities in order to wean the community off gas as an energy supply”
Generally the council does not own the elec network. In any case, at least for rural areas (= villages, small towns etc) there is no need to “beef up” the power network – which in rural areas is mostly capable of supporting Ev charging and heat pumps. Elec storage is part of any community energy system and sits within the business case. In the case of gas (& weaning people off nat gas) there is a somewhat diff business case, which interlocks with the community energy (elec) business case. There is mutual dependency. Both work, but both have slightly different drivers & revenue streams e.g. the gas one (hydrogen) partly depends subsidies from the “Reneable Transport Fuels Obliogation” – RTFO.
Those that would like to contact me – feel free to ping Richard. (Oh & I’m hopeful that the LibDems will do something).
I will happily act as intermediary.
“So for example in the United States if a new high school building is required a referendum on floating a municipal bond for this is held amongst those paying council tax and if successful the float goes ahead.”
Anyone registered to vote in the county, municipality or principality wishing to issue bonds can vote on the bond referendum.
It has nothing to do with whether or not one pays or does not pay property tax.
The bond referendums are line items, just like state constitution amendments, on the normal voting ballot.
Thanks
[…] The answer is, as Colin Hines put it in his letter to the Guardian, published this morning: […]
Apologies for posting twice but I noticed this:
https://www.scotsman.com/news/uk-news/scottish-island-sacrificed-to-rush-of-wind-farms-with-more-than-130-turbines-planned
This is on Skye. To be clear most renewable development in the Uk is driven by private equity – already very rich people – getting much richer. Benefits to locals? zero (oh yes – some tokenism – bus shelter here or there etc). If the Scots had any sense, the development would not go ahead unless 40% of the equity is offered to the islanders (most of these schemes are funded 80/20 debt/equity). When you drive past fields of PV on formerly agricultural land – console yourself with the thought that the elec from them – that you pay for, is making some very very rich people – richer (& the farmer gets some rent).
I do not want austerity for our schools, hospitals, and social services. I don’t want people to be buying ultra processed food because they can’t afford the ingredients for a healthy diet (see Ultra-Processed People, by Chris van Tulleken).
At the same time, I am old enough to remember the aftermath of the Second World War: lives upset by death, injury and loss, the damaged buildings and as well as the desperate need to recover from a war economy.
“The Labour Party had won a landslide victory at the 1945 general election and went on to enact policies of what became known as ‘the post war consensus’, including the establishment of the welfare state and the nationalisation of 20 percent of the entire economy”. See Attlee ministry – Wikipedia for page after page of their achievements in the face of resistance from the likes of hospital consultants who might have strangled the NHS at birth had not Nye Bevan, the minister, been resolute: “Ultimately I had to stuff their mouths with gold”.
There was also hostility from the US: the UK must pay for the ‘lend-lease’ warships and weapons provided before the US entered the war – because the US does not agree with ‘socialism.’
Even though in 1951 the right-wing press campaigned vigorously for Churchill, the General Election was remarkable “for the fact that despite the Labour Party winning the popular vote (48.8%) and achieving the highest-ever total vote (13,948,385) at the time, the Conservative Party won a majority of [only] 17 seats.” (Wiki: 1951_United_Kingdom_general_election)
At this time, my view is that most neoliberal nostrums such as ‘wealth will trickle down’ are without foundation. (See ‘The Invisible Doctrine – The Secret History of Neoliberlism’ by George Monbiot and Peter Huchison for a rigorous analysis.) At the same time, the Taxing Wealth Report is compelling in its logic. Rather modest adaptations of existing legislation could have very significant impacts.
Indeed by this stage of human development the majority of human beings should have recognised that the Neoliberal nostrum of “trickle down” economics is for the birds! In its place there has to be a huge expansion of democratic accountability. Of course the rich will fight tooth and nail to avoid this. Elon Musk is the poster child for this avoidance!
& making a bad situation worse:
https://www.theguardian.com/business/2025/jan/27/good-energy-takeover-uae-esyasoft
The arabs are interested in replacing once source of income (oil & gas) with another – renewables. The latter lasting for as long as the sun shines & the wind blows.
Brits have a choice: own generation themselves via community energy or via a fit-for-purpose gov owned operator – or be shafted for ever by those that most definitely do not have UK serfs best interests at heart. I continue to be surprised that the UK gov allows foreign dictators to take over UK energy companies. Maybe “Rachel in accounts” knows something I don’t.
Sorry to hear Good Energy is being taken over. It has as far as I can learn long been one of the most genuine low carbon suppliers, so I’ve been a customer for over 10 years.
I’m also a shareholder, so stand to make a profit, but shall still vote against, though almost certainly in vain. If I am bought out, I shall have to look for one of Richard’s green bonds:-)
£190billion a year!
This would involve a net transfer of about 4% of national income from the private sector to the public sector. It could even be on a reduced national income because of behavioural changes by the wealthy e.g. emigrating. This is going to cause massive economic disruption, not only because of the disparity in productivity between the two sectors.
There’s a better way to achieve a green transition. Just stop subsidising activities that are not green, and leave the rest to carbon pricing.
How will that deliver health care, education, social care, a funtionining justice system and so much more?
You do realise there is no wealth without these things?
You do realise it is work that creates wealth?
Do you have any understanding of what productivity means in the public sector?
And why would people leave a flourishing country? And if they do, so what? It is claimed we are over populated.
Your comment makes no more sense than the scam of carbon pricing does.
So in short the UK has a systemic crisis of under investment. Both by public and private sector. HM Treasury think the biggest problem is inflation (a problem of which they have responsibility). Rachel Reeves appears constrained by fears of the cost of borrowing and perhaps a belief the it’s only the City of London that will be her economic saviour.
You and others have evidenced that the UK is a wealthy country and the money is there to invest if we choose and incentivise. In finding a place to go, much of that ‘idle’money has simply been driving up asset prices….housing and international stock prices. That required a minimum of vision or risk and helped redistribute wealth upward.
I’ve seen estimates that, without the current high levels of US venture capital investment in the UK, GDP would be between 0.5% and 2% lower. In other words, in even deeper trouble. So you can see why the Single Transferable Party, with its tunnel vision, is so hooked on overseas equity investment. But of course there’s trouble coming down the road, especially when the excessive profits that these investors will make start being repatriated back to the US. Since there’s already so much US capital here, and there’s more to come, I’m wondering whether part of the strategy needs to be to hold our noses and press the Government to incentivise reinvestment of at least some of these profits into social and green enterprise projects. Of course care would also need to be taken to limit the extent of this investment to avoid even more loss of control of our essential infrastructure and other measures will be needed to combat wealth inequality and investors’ tendencies towards short-termism. But it might help, in a “lesser-of-two-evils” kind of way.
Thank you to Mike, Andrew, Schofield and Richard above.
What Mike proposes has been adopted in Mauritius. Down there, the government owned electricity board partners with sugar estates, busy reducing production / acreage, on an equal basis. Local authorities have not got involved.
A dozen year ago, then employed by Barclays, I heard about municipalities in Austria doing it alone and wondered, not for the first time, why UK authorities did not do so.
With regard to municipal bonds, the idea was raised around 2010 in the UK, but failed examples from Italy and elsewhere in the EU / Mediterranean basin, were cited as to why the UK should not proceed. It was the same with regional stock exchanges.
I am increasingly mystified by the obsession with growth for its own sake. I think it was Truss who first started banging on about it, and Reeves is idiotically aping her.
Growth in itself is a vacuous goal. Govt’s goal should be to improve people’s lives. If done effectively this may well result in growth. I.e. growth should be a consequence of good policy, not a goal in its own right.
And if lives are successfully improved but the very flawed measure of GDP does not indicate growth, it will demonstrate that the need for growth is illusory, and maybe we have a chance to live well and sustainably (am I dreaming?).
And just when you thought …….
DeepSeek – a discount (or Open Source?*) AI Chatbot, with a breakthrough technology has blown a hole in the Big Tech world, apparently…. and it is Chinese (woops!):
“Wall Street tech stocks are heading for a $1trn sell off, according to the FT.” (Sky News).
What does all this tell us. Below the spin, that the world is, and always has been driven less by politics, than innovation. It isn’t growth that changes everything; it is innovation – for good or ill. And Britain, meanwhile – unsafe in its sad, mad irrelevance – is trying to do growth without innovation. Britain now specialises in inverted-Leibniz ideology; the worst of all possible worlds.
* Google started life as Open Source, an idealistic offer funded by a Federal grant; too risky for risk capital…..
There you have. Tax increase on wealth.
We know that increased taxation on those who really can afford it, if well invested, will lead to growth and eventually lower taxation, plus a green creating futureproof British jobs.
However, the STP addicts know they can never campaign on a ticket of taxing the rich.
Oh for a proper vote-counting system in the UK that would sweep this useless purple mess out of politics.