Policy for Growth

Caroline Lucas Excerpts

Thursday 11th November 2010 Commons Chamber

[Caroline Lucas (Brighton, Pavilion) (Green)]

Many hon. Members have talked about the need for more and more economic growth to get us out of the current economic crisis, yet there has been very little discussion of what kind of growth that should be or of how to ensure that it is genuinely sustainable. It is clear that if we return to the kind of high-street credit boom that was instrumental in causing the crisis in the first place, it is unlikely to offer sound foundations for a genuinely sustainable recovery. The priority now should be for the Government to invest in the green infrastructure that we so urgently need in order to make a transition to a zero-carbon economy as quickly as possible.

One million green jobs could be created through a real commitment to investing in renewable energy, energy efficiency and sustainable transport. In my constituency, the potential for green jobs is very high. I warmly commend the report “One Million Climate Jobs Now”, which was produced by a number of unions and the Campaign against Climate Change. It points out that there is an environmental crisis as well as an economic crisis, although from the look of some of the media coverage in recent months, it seems as if that has been forgotten. There are ways of tackling the economic crisis and the environmental crisis at the same time through a real investment in green technology and green energies. That is a way not only to get our emissions to come down, but to create literally hundreds of thousands of jobs as quickly as possible.

From listening to previous speakers, I am reminded of the debates in recent years about targets. Our policy on growth is no more or less than a policy to increase gross domestic product by a certain percentage each year. Like any policy based around a specific target, it brings with it huge risks of distortion, unforeseen consequences and irrational outcomes. It is a familiar story across the public services. In health, we have had patients receiving the wrong care just so that an arbitrary target can be met. In education, we have had schools encouraging their students to take easier exams in order to try to make their record look better. Across the public sector we have had civil servants throwing money at wasteful projects as they come to the end of the financial year, rather than see it handed back to the Treasury.

When it comes to the economy, the distortion that comes from the pursuit of a single target is magnified tenfold. Gross domestic product does not differentiate the social values of different forms of economic activity, so a bank dabbling in stock-market speculation is on a par with a pharmaceutical company developing life-saving drugs. GDP has arbitrary divisions of what counts as economic activity. If someone helps out a neighbour by looking after their children, that is not economic activity; but if money is charged for doing so, it is.

GDP does not differentiate between revenue and capital. That is not just a technical distinction; it is a fundamental distinction, which is proper to the management of any business. If someone uses up capital, treating it in the accounts as revenue, the business is heading towards bankruptcy and the person is probably heading towards prison. Yet a Government who use up their capital—the country’s natural resources—and treat it as national income can boast of delivering economic growth and increased GDP. We have seen that on a vast scale with oil and gas from the North sea: billions of pounds treated as revenue with no thought for the fact that it is just a one-off boost to the economy. For 30 years, that has made the UK economy look far stronger than it actually is. Instead of those proceeds being invested wisely in the future—in renewable energy or other ways to keep the lights on when the oil and the gas run out—they have been used to fund consumer booms that have led to the inevitable busts.

Perhaps worst of all, GDP does not count the full cost of production. None of the impact on our natural world and people’s quality of life is covered by GDP. We have added coal, gas and oil to the credit side of the ledger and ignored their far greater negative impact on our climate, landscape and wildlife, on coastal communities and, above all, on those facing drought, flood and famine throughout the world.

The disastrous impact of the obsession of successive Governments with GDP growth affects every part of our policy making, yet there are alternatives. I commend to the House the work by organisations such as the New Economics Foundation and others, which produce measurements of our overall well-being that are far more meaningful than simple measures of GDP growth. In this debate, we need to move away from thinking that more and more GDP growth automatically means that we are better off, because there is plenty of evidence that it does not mean that. I hope very much that as the debate continues we will be more discriminatory in our definition of green growth.

[Adam Afriyie (Windsor) (Con)]

The hon. Lady makes the very powerful point that money and economic well-being are not everything in life. Greater happiness provides for greater contentment, and it is good when people make judgments not solely based on money, so I very much welcome her contribution to the debate.

[Caroline Lucas]

I thank the hon. Gentleman for his comments.

[Andrea Leadsom (South Northamptonshire) (Con)]

I, too, commend the hon. Lady’s very powerful points. Does she agree that there is an opportunity to combine our strength in banking with our interest in a new low-carbon economy by ensuring that the green investment bank is as good as it possibly can be?

[Caroline Lucas]

Absolutely. The green investment bank will be critical to the transition that we need, but it absolutely has to be a real bank, not just a fund in the Treasury with “bank” attached to it. It has to be a genuine bank that can lend money, raise money, raise bonds and so forth.

Dropping the GDP target is not anti-jobs; it would allow us as a country to develop the measures and targets that reflect the immense complexity of our economy and society and put people’s well-being at the heart of policy making. Many people talk of “sustainable growth”, but we should unpack that phrase, because it is clear that on a planet with finite resources, the infinite production and consumption of natural resources simply is not possible. Efficiency gains will help, and technology will need to play a vital role, but there is a very real risk that with a rising population and understandably rising expectations from a growing middle class throughout the world, those efficiency and technology gains will be undermined by overall growth.

Behaviour change will therefore have to be a part of truly sustainable development, but that does not mean a less fulfilling quality of life. On the contrary, it is far more likely to lead to a better quality of life. There is plenty of evidence to suggest that although GDP growth has more than doubled in the past 30 years, our well-being and happiness have not. They have either stayed the same or, according to some indicators, even declined.

Finally, I commend to the House the report from the Sustainable Development Commission, called “Prosperity without growth?”, by Professor Tim Jackson, which explores those issues clearly and makes the case that countries such as France, and even President Sarkozy, are beginning to look at those issues carefully. I am grateful to the Backbench Business Committee for raising this important question, and I hope that we can deal more critically with the idea of green growth.