Time for a plan B for the UK economy?

By Éoin Clarke

GEER will formally launch our case for a Plan B at Westminster on September 14th. Tory inflicted austerity has choked the UK economy and so we in GEER are making the case for a £20bn investment (outlined below) to get the economy growing again. Investment in Co-Operative social housing and green energy projects can not only create one million jobs but also provide the tax receipts and reduce the welfare bill enough for it to make economic sense for the Treasury as well. The graph below shows how the creation of 1 million jobs would lead to £11.3bn in increased tax receipts and reduced benefits payments by the state per annum.

GEER’s plan B for the economy would mean that one million fewer people would require Job Seekers’ Allowance (JSA). In addition, one million fewer families would be entitled to Housing Benefit (HB). Also, increased consumer spending would lead to an extra £1bn in VAT receipts. As well as this the newly created jobs would lead to increased NICs and Income Tax receipts. Even on modest salaries that would net the government £2.4bn. A total of £11.3bn would be recouped. Below we outline the two main features of our plan.

a) Co-Operative Housing

Currently, 1.7 million families are on housing waiting lists. In the meantime families survive in private rental accommodation that nets landlords profits of £31 billion per year. Much of these payments are made by the state through Housing Benefit. By building 100,000 Co-Operative homes we argue that you could switch these families from private rental accommodation that currently costs on average £8,000 p.a. to Co-Op homes costing the dwellers half that. Having taken advice from two architects, we can say with confidence that 100,000 homes could be built from a £12 billion investment. The rents recouped from the Co-Op homes could provide the funds for future homes to be built. (For the finer details of GEER’s housing plan click here).

b) Green energy deal

House building alone will not kick start the economy. In total, GEER proposes that a further £8 billion of government investment should be made in the energy sector. We argue this would create of 90,000 jobs directly and a further 130,000 jobs indirectly. (See the details here)

With almost 6 million families facing fuel poverty, and oil prices having soared 400% in a decade, now is the time to cripple that industry’s capacity to have such a stranglehold over our household finances. The way to do this is by promoting alternative energy sources especially clean coal technology. In Britain we have 17 billion tonnes of coal which can be used for the Carbon Capture Storage process. As coal production worldwide is set to soar in forthcoming years the time has come for Britain to invest heavily in Clean Coal Technology.

Wind and wave energy are also key in a future green economy. Given that the renewable energy sector grew its workforce by 250% in 4 years (from 2007-10) and its share of the energy market by 225% in 7 years (2003-10), we can conclude that this is a growth sector in the economy. GEER argues that investing in hydro-electric and wind power plants along the Pennines could bring energy and employment to areas that have suffered from historically high levels of unemployment.

How would GEER pay for a Plan B?

We would explore the 7 revenue raising ideas above (amounts shown in £bns) to raise the finanaces necessary to pay for our plan. If you wish to examine those proposals in detail then follow this link.

To conclude, the total net benefit of £20bn investment would be the creation of close to a million jobs and a boost to GDP of an additional c.1.5%. This is an opportunity to rescue the UK from a generation of Tory induced unemployment and austerity.