“The long-term economic plan is working”, the Chancellor claimed today in delivering the 2015 Budget – and it did include at least some good news for those who care about a more sustainable, resilient economy.
Funding to explore the feasibility of Swansea’s new tidal lagoon is a welcome move that suggests some recognition that clean energy is an essential part of our future. And the commitment to increase the proportion of revenue from environmental taxes (albeit not actually included in the speech itself) is another step in the right direction.
But WWF-UK believes that some big opportunities have been missed to help put the economy and growth on a more resilient, sustainable footing, and that some of the signals sent are confusing to say the least.
The tidal lagoon announcement seems to be at odds with increased support for investment in the North Sea fossil fuels sector, totalling £1.3 billion in total via increased tax allowances and other proposals (e.g. new investment in seismic surveys). These risk becoming stranded assets in future as fossil fuels inevitably become less tenable. And with UK investment in renewable energy stagnating, more consistent signals are needed from government.
Pre-election budgets are always as much about politics as economics, but we believe that setting a greener direction would make political and economic sense. So the Budget should have done much more to stimulate investment in clean, emerging sectors which will become vital engines of growth in the future – such as renewables, energy efficiency and re-manufacturing, and environmental protection and restoration. Mounting evidence shows that ambitious environment policies can have positive long-lasting impacts on the economy – and, indeed, should be a core focus of economic policy.
As Chief Secretary to the Treasury, Danny Alexander, said at the launch of our ‘A Greener Budget’ report last month (see my earlier blog), “there is no dichotomy between doing what is good for the economy and what is good for the environment”. He went on to say that we need to “tackle the environmental as well as economic deficit, both of which are crucial to the future of our economy and country”.
Our report set out a range of opportunities that the Treasury could have taken to help support hundreds of thousands of new jobs by capitalising on the huge advantages that a resource-efficient, low carbon future offers. It’s disappointing that we didn’t see some of these opportunities taken up today.
As has been shown through the government’s own research, action to help promote resource and energy efficiency would have been a quick-win, saving businesses billions over very short timeframes as well as creating new supply chain opportunities and cutting carbon emissions.
Substantial tax incentives to support clean technologies and decarbonise industry would have also helped the UK respond to opportunities in growing international markets and boosted exports. The low carbon and environment sector provided some 33% of the UK’s economic growth during the recession – surprising then that the Chancellor didn’t do more to stimulate green growth given his ambitions for the UK to remain amongst the fastest growing developed economies.
The Natural Capital Committee has set out a range of proposals to help more prudent management of the UK’s natural resources, putting the economy on a more secure and resilient footing for the long-term. Many of these could have been enacted through the Budget, such as a commitment to incorporating natural capital in the National Infrastructure Plan, and recovery of key ecosystems to help reduce flooding, improve health and benefit businesses.
Issues of resource scarcity, climate change and environmental degradation could have been acknowledged today. It’s welcome to hear GDP growth forecasts are on the up, but what of other measures of future economic wealth? For example, the Budget still says little about the stocks of assets on which economic growth is dependent – such as natural capital (including ecosystems, species etc).
This is despite the growing threat to economic prosperity of not acting to protect these assets, a threat that is recognised by many business leaders. In future, these issues need to be brought centre stage, treated as the economic risks that they are, and tackled appropriately.
This is in part, about more joined-up, integrated, long-term thinking. We have seen that the government can do this – for example, through the recent announcements about piloting pooling of health and social funding. It’s time to do the same with the natural environment.
We are calling on all parties to ensure that their future economic policies – whoever is in government after the General Election – are geared towards supporting a low-carbon, resource efficient economic model that protects and invests in the natural environment. The recent joint pledge by party leaders to take action on climate change shows that cross-party consensus is possible.
We need the parties to act now to ensure that the UK’s economic policy takes advantage of these new opportunities and is prosperous in the long-run.