The Chancellor must ditch his failed austerity policies and invest in a green public works programme to create jobs and lift the UK out of recession, Caroline Lucas told the Institute of Economic Affairs on Wednesday.
A member of the Green New Deal Group, the MP for Brighton Pavilion urged the Government to increase employment to reduce the deficit – channelling investment into urgently needed green infrastructure:
“With scant evidence of the kind of strong recovery expected after previous post-war recessions, it’s time to admit that austerity in the UK has failed and that an alternative approach to reducing the deficit is needed.
“Since 2010, central bankers and politicians have presided over the application of brutal economic policies that have impoverished the innocent, enriched global financial elites, and exacerbated the worldwide slump.
“In our 2009 report, The Cuts Won’t Work, the Green New Deal Group set out what is now clear: that austerity and cuts in public spending during a slump – when private debt has grown to become 5 times the size of public debt – is completely delusional economics.
“The impacts of the climate crisis are becoming ever clearer, with 2012 going down in history as a year in which our weather spun out of control – and having carelessly assigned the nation’s energy security to the invisible and unaccountable ‘hand of the market’, we face an insecure energy future with all the economic implications that brings.
“A programme of productive investment financed by loans from the government’s own nationalised bank – the Bank of England – is a crucial way to reduce the public debt, channelling public money into projects such as a comprehensive programme for retrofitting Britain’s ancient housing stock, increasing our energy security and reducing bills.
“This is not indiscriminate spending, but ‘transitional investment’, where energy and materials are focussed on investment in infrastructure that will lead to a reduction of demand for them in the future.
“A public works spending would succeed where traditional quantitative easing has failed – going straight to help employment and companies, and the projects which can add to national well-being, generating income through employment.”
“Keynes argued and proved that such spending would pay for itself. The Government must now rise from its deep torpor, ditch its flawed economic orthodoxy and finally begin to undertake the level of public investment needed to reverse this disastrous slump.”
Notes
* The Cuts Won’t Work, a report by the Green New Deal Group is available here:
http://www.neweconomics.org/publications/cuts-wont-work