As the Green party has risen in the polls our policies are coming under ever greater scrutiny. This is welcome, as we believe that we offer a real alternative to the politics of austerity and the stale dogma of the Westminster parties. So what sort of proposals would a Green chancellor have in their dispatch box on budget day?
Most important, she would not be focusing the narrative of her budget around the deficit. We believe that austerity is a political project, designed to reinforce the power of financial and corporate elites, and achieve the long-held ambition of those on the right in politics of bringing about the shrinking of the state. Closing the deficit is not our prime economic objective; the important thing is to build a more equal and ecologically sustainable economy. We would balance the current account over time, but are prepared to borrow to invest.
This commitment is based on a Keynesian understanding of the nature of the economy as a system rather than a linear flow. Money taken in tax is put back into the economy and achieves repeated benefits, rather than disappearing into the government’s coffers as too many commentators imply. Government spending can create multiplier effects, rippling out through the whole economy and generating advantages several times over. Public spending cuts have the opposite effect: undermining confidence, reducing private spending and pushing the economy into a downward spiral.
It is a cliche often repeated that citizens in the UK are seeking Scandinavian-level public services with US-level tax rates. We are unashamed about our ambition to increase both government spending and taxation. The current government planned last autumn to reduce public spending over the next five years to 35% of GDP compared with the current proportion of about 40%. We would aim to increase the public spend to about 45% of GDP. Compared with other European countries this is by no means extreme. Germany already gives 45% of its GDP to public spending, while Denmark spends 58%.
Like any aspiring chancellor I would be foolish to reveal all my costed plans so close to an election, and at least to this extent I am prepared to follow convention and reserve some of the figures for the release of our manifesto at the end of this month. However, in the case of two of our policies we are already happy to go public with our numbers.
To achieve inequality reduction as well as bringing in extra revenue the Green party proposes a wealth tax on the top 1% – UK individuals with assets of more than £3m. We have estimated that this will raise about £25bn a year, which has led to a storm of modelling controversy. Such estimates are notoriously difficult, since obviously the wealthy will seek to avoid this tax and so we would be confronted with a shifting tax base. But to make that a reason to abandon the policy would be pusillanimous in the extreme. Rather, we should commit ourselves to a society based on solidarity and equality and introduce the measures we need to achieve that, chief among them a wealth tax.
We have pledged to support the building of 500,000 new social homes by the end of the next parliament. To provide the incentive for this we will end the right-to-buy policy, so that councils do not lose control of the houses they build, as well as investing £19.5bn over the course of the next parliament, money taken from the mortgage interest relief currently paid to private landlords.
New council homes will also mean we save money on housing benefit, as people move out of privately rented homes. The difference in the average benefit cost of a private tenant and a social tenant in England is currently £936 per year. Based on this figure we estimate that up to £300m will be saved between 2015 and 2020.
Another key desire from a Green chancellor would be to give clear and consistent incentives for the transition we urgently need to make to a low-carbon economy based on renewable energy sources.
Repeated demands from renewable energy companies and communities seeking to generate their own power is that a feed-in tariff is set at a stable fixed price over the long term. This would allow companies that undertake installation work to invest with confidence, but would also provide a sufficiently stable market for entrepreneurs to invest in the manufacture of the hardware of a renewable future, currently imported from China or Germany. We would also undertake the largest ever publicly funded programme of home insulation, achieving the triple wins of reducing the scandal of winter deaths as a result of underheated homes, creating well over 100,000 jobs and reducing our CO2 emissions.
This is what we mean by the politics of hope: a bold vision for a sustainable and equitable future for our country. This is what the content of a green box would look like. Sadly, what we are likely to see in the red box is a few bedraggled rabbits offering pre-election gimmicks and the chance to drown our sorrows for a few pennies less this year.
