The National:

GORDON MacIntyre-Kemp has argued in The National that "the climate crisis is not a drill, we must act now or lose everything".  I agree with him.

I also agree with Gordon that quantitative easing (QE) – which is the process where the government creates money for use in the economy, and funds its deficit without ever making a claim on taxpayers – is likely to have a big role in paying for our climate transition. I have been arguing that since 2010 when Coilin Hines and I created the idea of green quantitative easing.

However, that’s not the only answer to the question as to how to pay for the climate transition that we are going to need. The other answer is that people’s savings need to be used for this purpose. As the Office for National Statistics for the UK has shown, total UK private wealth exceeded £12.7 trillion in 2018.

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It may well be more than that by now, and Scotland has an almost proportionate part of that. Admittedly housing and physical wealth, like cars, made up £5.7 trillion of this, but that still left £5.3 billion in pension funds, whilst we also know that more than £700bn is saved in ISAs on top of that. That is about £6tr of tax incentivised saving, into which the state pours subsidies of in excess of £53bn a year, which is enough by itself to pay for some estimates of the cost of climate change.

What’s the relevance of pointing this out? It is simply that if the state is going to spend this much subsidising wealthy people’s pensions and savings then it should be expecting something back in return for that spend on its part. And what it should be expecting is that these savings be redirected now so that they become the capital that can be used to pay for the cost of the climate transition.

This redirection is easy to achieve, and can all be done my minor changes to tax law. If ISA law was changed so that all ISA saving had to go into three-year savings bonds to fund the climate transition then the £70bn a year saved in ISAs could be available for this purpose. Change pension law so that one quarter of all new contributions had to be used for this purpose if they were to enjoy tax relief and then the sum available would exceed £100bn a year – which is more than anyone thinks the green transition will cost.

This would, of course, require that the Government guarantee a return be paid on this money – but right now a sum of little more than 1% would attract hordes of savers into such accounts. Since, however, the Bank of England say that there is little real prospect of interest rate rises of any significant amount for a long time to come there is very little risk in doing this.

And it should also be remembered that the UK Government already guarantees that security of almost all savings in the UK in any event, so there is nothing novel about this suggestion.

My point then is that if QE was combined with savings and tax changes then we could fund the climate transition without ever having to tax people more. Colin Hines and I now call this the QuEST for the Green New Deal.

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The bottom-line message of all this is a simple one. When it is said by the climate change deniers and the climate change delayers that we can’t afford to tackle climate change because the cost will all fall on the poorest though tax increases – which is the story already being put about – simply don’t believe those saying so.

We literally need no new taxes to pay for the cost of the Green New Deal to tackle climate change. All the money we already need is already available in state subsidised savings accounts. We just have to make sure that money is put to use in saving the planet for the benefit of all of us – including those savers whose funds need to be used in this way. And they should not object. After all, they’re as much at risk as all the rest of us.