Climate, Covid and Care: A Budget for critical times

The year the UK chairs the COP26 conference must be a year when the Chancellor finally rises to the scale of the challenge presented by the climate emergency. Covid gives us the platform for a real break in the destructive progress of our fossil-fuelled economy and the chance to invest in good, Green jobs right across the country.

We are in the middle of a climate emergency. We have to drive down emissions as quickly as possible if we are to have any hope of avoiding catastrophic climate change. The Chancellor has the choice right now of pulling the necessary levers to incentivise the shift away from fossil fuels and towards a cleaner future for us all.

The Green Party Budget package 2021 is intended as a balanced programme of tax incentives on the one hand and benefits on the other. As a whole it represents a fiscal package to shift the economy towards much more urgent climate action while being neutral or beneficial in terms of the experience of citizens and supporting those whose deprivation has been highlighted by the Covid crisis.

Creating the right incentives for climate action

Key policies: making the polluters pay

The government’s top priority should be making the biggest polluters pay for the carbon they emit at great cost to us all. This could be achieved through:

• An upstream carbon tax which would see the biggest polluters pay the most for CO2 emissions at source, with a dividend paid out to those in society who need it the most
• Reverse the VAT incentive on construction away from new build and towards renovation, with a reduced 5% rate of VAT on retrofit and low-energy products, as per the #retrofirst campaign by the Architects Journal and the Architects Climate Action Network and as called for by the Environmental Audit Committee
• A frequent flyer levy to reduce the impact of the 15% of people who take 70% of flights, based on pre-pandemic levels

The public understands the need for polluters to pay their fair share for the damage they do:

• A recent poll of 2,000 people carried out by Opinium for the Zero Carbon Campaign found that two-thirds of people said a carbon tax was a fair way to raise money, and that the proceeds should be spent to benefit the country
• And a citizens climate panel, organised by the Institute for Public Policy Research (IPPR) also agreed the UK’s biggest emitters should be made to pay carbon taxes — with the funds raised going towards efforts to tackle the climate and nature crises:

A Green recovery from Covid

Building back better has to mean more than business as usual with a few green tweaks. We need to use the economic dislocation made inevitable by Covid as the springboard for a full-scale economic transformation.

The only way to ensure a proper recovery for all from Covid is through a full-scale economic transformation which prioritises the wellbeing of people and planet over the current fixation with growth and GDP.

The Green Party’s world-leading Green New Deal, proposed in our 2019 manifesto, is more relevant than ever. The government’s policy on climate is piecemeal and under-invested. As the furlough unwinds we know there will be many unavoidable job losses. We need the government to step in to invest in the green transition and train people for the jobs this will create.

The coronavirus pandemic has left the government with a clear choice. Continue business as usual and attempt an economic recovery focused on the free market, which will result in austerity for everybody and actually increase inequality, or use the financial and monetary levers available to fund a Green recovery, creating jobs through public money and helping to improve the lives of us all

This should include providing the necessary funding to:

• Develop offshore and onshore wind to provide at least 100 GW of electricity by 2030
• Invest to improve the insulation of every home that needs and provide major heating upgrades for one million homes a year
• Invest in public transport, active travel and support for disabled people to reduce car miles by 50% by 2030.

This should be funded through a £100 billion a year Green New Deal over the next decade which will actually reach the level of ambition needed to reduce emissions to the point where we could expect to live in a 1.5C world, rather than the potential catastrophe of anything above 2C.

Other G7 countries are showing the way. US president Joe Biden has announced a $2 trillion plan to address the climate crisis; France has pledged £27bn for environmental stimulus measures and Germany £36bn. Compare that to Boris Johnson’s much-trumpeted 10-point climate plan which was backed with only £3bn of new money.

Making sure everybody is cared for and protected

The relentless focus of economic growth in the last two centuries has created a world where people’s health, wellbeing and the environment they live in are very much a secondary concern to the pursuit of money. Building back better has to mean more than just taking action on the climate emergency. It also needs to mean taking action on the social emergency that was cast into the spotlight by the public health crisis. From homelessness to the underfunding of our local public health systems, Covid19 exploited weaknesses in our society resulting from a decade of spending cuts. This left some communities facing double or even triple burdens of vulnerability.

The pandemic revealed the shockingly low rates of sick pay in the UK by comparison with other countries: the government had cut benefits to such an extent that people were simply unable to self-isolate, leading to further unnecessary deaths from Covid.

It is time for the Chancellor to undertake a resilience review of our existing welfare system and to make sure it provides not just a safety-net but a platform for our more vulnerable citizens to step forward into lives of security and hope.

The Chancellor must focus, once and for all, on ending inequality and insecurity by ensuring that this Budget is focused on wellbeing rather than economic growth.

The resilience review of our welfare system should include:

• The uplift of £20 in the rate of Universal Credit was a minimum necessary for many families to survive and must be maintained as a priority.
• A Universal Basic Income, without conditions, to protect people against ongoing turbulence from Covid and from changes to working patterns as a result of computerisation.
• A commitment to make sick pay comparable with other leading European economies.
• A massive publicly-funded home retrofit programme, ending the scandal of winter deaths from cold, and creating a wealth of good quality Green jobs in the process
• Transfer the £27bn destined for unnecessary and polluting road-building towards investment in cheap and accessible public transport and active travel options

Protecting our businesses

As small companies across the country struggle to keep afloat due to the pandemic, the Greens plan to keep them going is more important than ever.

• Extend the business rate holiday for as long as necessary for the retail, hospitality and leisure sectors with the UK government providing compensation to local authorities for loss of income. As business rates are devolved in Wales, we also call on the Welsh Government to do the same.
• Increase the amount of support to small businesses who have had to close during lockdown and expand the criteria for those eligible. The current payments offer a derisory £1,300 a month for those with a rateable value of £15,000, which for a lot of small businesses would not even cover rent.
• Widen the amount of support to small businesses who have stayed open, such as nurseries, but are struggling due to the additional costs of Covid, through an additional discretionary grant for councils to administer.
• Grant 15% of government contracts to small and micro businesses and revise the government contract application process to remove the current barriers for entry to small business
• Extend the current tourism VAT cut and expand by applying to food and drink served in pubs, bars and restaurants, on hotel bookings and on theatre, music concert and museum and gallery tickets. This should be made permanent and form part of a process to review our VAT system outside the EU so that it differentially supports smaller shops compared to larger and online shops.