If we want sustainable economic growth and jobs, our financial recovery is doomed to failure if it does not address our environmental deficit
guardian.co.uk, Wednesday 28 April 2010 14.56 BST
What is most striking about the election campaign to date is the fudging of the really big issues by the party leaders. There has been very little policy detail about the things that really matter, such as tackling the UK's huge budget deficit.
Yet even if that were forthcoming, any proposed solution to our financial deficit is doomed to failure if it does not address our environmental deficit.
Ignoring environmental concerns simply isn't an option if we want sustainable economic growth and job creation. Left unchecked, rising emissions, resource destruction and pollution will erode and ultimately destroy our ability to create the future wealth on which all economies depend. Environmental regulation must be at the heart of the new government's action plan, steering the UK towards a low-carbon future.
Paradoxically, it is the business community that is having to convince the political community of this intrinsic association between the environment and the economy. Our members, who include wide-ranging industrial and commercial leaders such as, BT, PepsiCo, Biffa, Johnson Matthey, Mitie and the National Grid, have long recognised the link between high environmental standards and economic growth and now the government must play catch-up.
The election is unusually critical: the next parliament is now being widely cited as the "last chance parliament" for any sort of rescue from debilitating climate change, as well as inheriting the legacy of the worst financial crisis in living memory.
Environmental commitments still risk becoming add-ons and isolated policies which are not sustainable in a wider economic recovery plan. At the Aldersgate Group we have identified three key actions for the new administration to take during its first 100 days, to shift the UK onto a safe low-carbon, high-growth trajectory.
1. Getting the carbon price right
We are currently not factoring in the true costs of pollution in everyday spending decisions, making investments in greener products and services riskier and more expensive than they should be. The first budget of the new parliament should include a floor price mechanism to underpin the EU carbon price, reduce perverse subsidies for environmentally damaging activities and issue a long-term commitment and timetable for green fiscal reform.
2. An immediate green investment bank
Establishing an immediately functioning green investment bank that mobilises capital from pension funds and other institutional investors to help stimulate green jobs and industry. The new government should set up a shadow green bank institution without delay, start lending using existing assets, and aim to pass primary legislation to establish the bank within 12 months of the election.
3. Low-carbon industrial targets
The UK should not only have targets for reducing carbon emissions but also specific targets for job creation, manufacturing capability and export growth in targeted industries. To help meet these targets the first budget should include enhanced capital allowances and tax breaks for green manufacturing.
Given the pressure on public finance, some may consider these recommendations to be expensive. But the cost of inaction will be far greater, and soon accelerate beyond our means. In contrast, government intervention and early market making will drive investment – the race to develop domestic environmental industries will define economic prosperity in the 21st century.
• Peter Young is the chair of the Aldersgate Group