John Chowcat
Some more detail has recently emerged revealing the Labour leadership’s approach to the key related issues of UK economic recovery, climate repair and international relations, in shadow ministerial speeches and pamphlets. A central theme is a government ‘green growth’ strategy supported by a national wealth fund and private sector investment, designed to achieve a zero-carbon energy system by 2030 and create new jobs in clean-technology industries, to stimulate national economic resurgence alongside improved public services.
Acknowledging the country’s existing assets, its strong industrial research base and onshore and off-shore wind power potential, and the major challenge posed by the USA’s large-scale industrial modernisation project triggered by its Inflation Reduction Act, the party’s tone reflects a certain defensive patriotism. As Ed Miliband put it in a recent speech: “Joe Biden wants the future made in America. We want the future made in Britain”. At the same time, Labour is signalling some desire for a warmer approach to relations with Europe, albeit from outside the single market and customs union. Shadow Foreign Secretary David Lammy has also sought to position the UK at the heart of a form of “clean power alliance of developed and developing nations” in a Fabian Society pamphlet. The issues of the likely scale and practicability of this unfolding party economic strategy, amid today’s increasing global competition, deserve close attention.
The global context
Labour is right to sharply criticise the Tory record on overall economic competence and environmental protection, and to firmly grasp the growing connection between these two issues which proactive nations elsewhere are already exploiting. The UK government’s own climate advisor, the Climate Change Committee, has just described the country as “strikingly unprepared” for the increasing impact of global warming, noting that “the government is not putting together a plan that reflects the scale and the nature of the risks that face the whole country. This is completely critical.”
Labour’s open admiration of the new US drive to expand its clean manufacturing sector is also significant. Although the Inflation Reduction Act does not match the ambition of Biden’s original ‘Build Back Better’ plans, it nonetheless represents the strongest Western initiative so far to face up to the global climate challenge and indeed threatens to attract European green enterprises to invest in the US instead of Europe. Other significant developments include China’s commitment to full carbon neutrality by 2060 and, much closer to home, the EU’s European Green Deal project. All these superpower initiatives together furnish the relevant global context for assessing Labour’s plan. At this juncture, none of them is sufficient to meet the 2015 Paris Climate Agreement target of a maximum 1.5 degree rise in global warming above pre-industrial levels, but they do constitute the strongest steps towards climate repair yet attempted, allowing some hope to remain for the planet’s future.
The US Inflation Reduction Act provides $391 billion for advancing clean energy and climate protection over 10 years, mainly via tax credits to private corporations. Combined with two other recent Acts supporting new technologies and infrastructural renewal, Washington is allocating a total of nearly $2 trillion to boosting the US economy. The climate repair aspects are accompanied, however, by controversial federal authorisation of substantial new oil and gas exploration and pipelines.
The EU’s 2020 European Green Deal is mobilising €1 trillion of sustainable investments over a decade, financed by a third of both its existing post-pandemic recovery plan and its current seven year budget. In addition, the European Commission’s new Green Deal Industrial Plan for the Net Zero Age is speeding up this funding and enabling larger national-level industrial subsidies. An extra €250 billion has been earmarked for this plan and a new European Sovereignty Fund is also being prepared. The EU’s winter 2022 energy rationing successfully reduced reliance on Russian fossil fuels, but its own traditional heavy industries continue to lobby to weaken decarbonisation.
China, the world’s largest source of greenhouse gas emissions, aims to meet 25% of its energy consumption with non-fossil fuels by 2030 en route to carbon neutrality by 2060. Most of the energy consumption generated by the country’s dramatic long-term economic growth has been fuelled by its coal industry, but its smaller renewables sector is growing fast. The World Bank estimates China will need to spend $14-17 trillion to fully achieve green energy and transport by 2060, and last year alone it spent a globally unrivalled $546 billion on clean technologies, underlining a unique state capacity to actually deliver a green economy. However, the country’s overall energy insecurity, highlighted during the Ukraine conflict, may yet encourage both fossil fuel and renewables expansion for a further period.
Lacking ambition?
Viewed against this international backdrop, Labour’s plans for the UK represent an advance in the right direction but may not be enough to renew our faltering and highly uneven economy. The party’s green prosperity strategy is linked to an evolving wider programme that embraces a more balanced labour market and long overdue regional and national devolution. The principle of a national wealth fund – due to rise to £50 billion on some estimations, potentially matched by a similar size private sector fund created by British insurance companies and pension funds – is welcome.
Much uncertainty remains, however. The party has long been committed to providing overall additional investment worth £28 billion per annum over seven years for climate measures, but it remains unclear how much of this will come from public funds. The scale of future private sector investment forthcoming is, moreover, a matter of guesswork since it will be affected by potential investment opportunities abroad. It will also depend on other, unknown factors, such as how proactive a ‘green’ Labour government proves to be and, crucially, what policy ‘tools’ it selects. It has at least been confirmed that a Labour government will invest £8 billion to initiate the national wealth fund, and the broad policy direction will worry the Tories, whose new UK Infrastructure Bank has clearly limited central government funding and relies heavily on levering private sector investments, including for green enterprises.
Even allowing for currency differences and the small size of the UK economy compared to that of the USA (at least six times larger, measured by GDP) and China and the EU (each approximately five times larger), Labour’s plans seem disproportionate to the existing scale of rival Western financial ambitions, which may yet extend further. This is especially concerning when we consider that the UK will be starting from a position of relative weakness, reflecting long years of Tory neglect of climate issues and the negative consequences of Brexit which will continue to hinder Labour’s economic planning.
The party’s noticeably limited proposals for improving relations with the EU are directly relevant here. UK public opinion polls now consistently report strong and growing disillusionment with Brexit, yet Labour have persistently conceded ground on cultural issues, leaving the Tories to continue to dominate certain public debates, reinforcing reactionary ‘common sense’ prejudices, and alienating young and other more tolerant voters Labour needs for a durable future electoral base. Improved UK/EU planning to jointly strengthen key European green industries would represent a more effective path to climate repair, combining greater resources to stimulate the deployment of clean technologies and avoiding wasteful duplication of effort. My recent article, “Social Democracy and Superpower Confrontation” (Renewal 31/1), therefore suggested that UK progressives should link proposals for a more balanced and sustainable British economy to the wider European strategies now emerging to meet a period of global economic polarisation, rising international tensions, and climate deterioration.
Mobilising for transition
Jeremy Green contested a core feature of the party’s approach in his recent blog post, arguing that decarbonisation is indeed a priority but that economic growth per se tends to generate overall higher emissions, referencing evidence from the IPCC. While helpfully pointing to so far neglected issues of high levels of waste, exhaustion of finite resources and protection of air quality and biodiversity, he asked whether the emphasis on growth distracts from serious consideration of necessary wealth redistribution. Rather than focusing on the growth potential it presents, he suggested that Labour would do better to link green transition policies to wellbeing, equality, and improved public services instead. His piece also importantly highlighted the international orientation of most City of London-based financial institutions, limiting their potential interest in supporting Labour’s plans for the UK economy.
This touches on the vital issue of how to build popular support for transformational green economics. Abandoning the ‘growth’ focus would mean the party is unable to offer the immediate attraction of new industrial jobs to compensate for the loss of those in high-polluting industries, right at the moment when those industries’ well-resourced hostile lobbying can be expected to intensify. The widespread and effective Dutch farmers’ protests against livestock reductions needed to ensure agricultural sustainability demonstrate the necessity of alternative job creation plans within green transitions. The considerable international impact of Aronoff et al.’s book A Planet to Win: Why We Need a Green New Deal was partly due to its commitment to future full employment and its acceptance of further growth to generate the support required to actually secure a point of sustainable ecological balance. It perceived a green new deal as making “climate action viscerally beneficial, turning victories into organising tools for yet greater political mobilisation”.
Even partial progress on decarbonisation – if well-managed and positively presented – is likely to assist public debate over climate repair, despite counter-lobbying by vested interests and anxieties over redundancies in traditional sectors, providing openings for further measures. Powerful coalitions of progressive interests can certainly be assembled to help press them home, while the continuing problems of unaddressed climate change visibly mount. Labour’s green prosperity proposals may yet turn out to be a first step only on a hard but vital road ahead.
John Chowcat is the retired General Secretary of the education union ASPECT, former Assistant General Secretary of the union MSF, and was a regular delegate to TUC and Labour Party conferences. His article, “Social Democracy and Superpower Confrontation”, appears in the 30th anniversary edition of the Renewal journal.