Scrimping on climate action in the name of prudence is a false economy

On Andrew Neil’s Channel 4 show this weekend, Ed Balls criticised Labour’s £28bn-a-year climate investment pledge. In response to an interview in which Shadow Levelling Up, Housing and Communities Secretary Lisa Nandy reiterated support for the policy, Balls claimed that she had not answered the fundamental question of how Labour would commit to “national debt as a percentage of GDP falling” and that he was worried that, if “climate change is the exception”, it would prove to be a “big problem for Labour”.

But this analysis completely misses the point on two fronts. First, it is possible to borrow whilst national debt as a percentage of GDP is falling, if the economy is doing well and GDP is expanding. The issue isn’t borrowing – but what you use that borrowing for. Borrowing for unfunded tax cuts for the richest 1% is completely different to borrowing to invest in a Green New Deal – a point Ed Balls failed to grasp. Investment in warmer, affordable homes, high value public transport, clean energy and world-class care would not only create hundreds of thousands of well paid jobs but also stimulate the economy. If done right, this scale of investment could see GDP levels rise to a point where our debt to GDP ratio actually declines.

Second, there is a real cost to not acting in response to climate change. The more that global temperatures rise, the more chaos in the system: record droughts, extreme floods, the coastline disappearing, food scarcity from loss of crop-yield and fisheries – all driving climate related poverty across the world at a scale we can’t even imagine. The cost of this not just in pounds but in human suffering will far outstrip the cost of any green new deal. Therefore, the choice before us is whether we take concerned, deliberate action now to achieve the change we need or we sleepwalk into a crisis and throw money at the problem in a panic when it will be too late. Put simply: scrimping on climate action in the name of prudence is a false economy that will cost us in the long run.

The Green New Deal is exactly the kind of visionary and transformational programme that we should be using additional borrowing capacity for. Had we invested in a Green New Deal a decade ago we would have been insulated from the shocks to the economy we are now experiencing. For example, if we had rolled out a world leading programme of energy efficiency by now, our bills would be down, we would be less reliant on unstable gas supply and we would perhaps be closer to meeting our climate targets.

This is precisely why Labour should continue to advocate for a green new deal to transform our economy and boost our transport, education, care and health sectors. And the green economy that emerges must be owned by people and work in their interest. Labour’s proposed GB Energy – where the state invests in renewable technology that is owned by and for the benefit of the UK public – would be a step in the right direction. But the Labour Party must also look to places where public ownership has gone further, like Andy Burnham’s plan for buses in Manchester. Public ownership of key parts of the transition like transport, energy and water are hugely popular and could bring down prices at the same time as speeding up our path to zero carbon.

Ed Balls said that Labour cannot treat climate change as an exception. But he is failing to understand that we are in exceptional times. This is not the time to repeat the same mistakes of a decade ago, falling into economic traps set by a Conservative Party ideologically committed to reducing the size of the state. Instead Labour must leave behind outdated economic ideas, and use this moment to build something that tackles the climate crisis and transforms our broken economy.