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Wed, 25 November 2020

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The Government must reduce the growth dependency of our economy

The Government must reduce the growth dependency of our economy

We can’t rely on growth in the economy to help people, to support our communities, in the coming weeks and months, writes Natalie Bennett. | PA Images.

5 min read

Decades of economic growth have delivered us a deeply unequal, unstable, insecure society and increased carbon emissions when we need to be slashing them.

Back in late February, when coronavirus was just a looming wave of uncertain size and impact, I put down an oral question in the House of Lords, phrased in the required dry manner, scheduled to be debated on March 26:

“To ask Her Majesty’s Government what plans they have to establish a formal inquiry into reducing the growth dependency of the United Kingdom economy”.

Soon after I received a query from the Whip’s Office, saying the Treasury officials tasked with drafting the minister’s answer were asking me to elaborate on the question.

I was delighted to direct them to the most recent publication from the All-party Parliamentary Committee on the Limits to Growth publication, Wellbeing Matters - Tackling Growth Dependency, the launch of which had inspired the question.

So I know that it has been read in the Treasury.

Read, but not listened to.

For on March 25, the day before the question had been due to be debated, the Lords passed the Coronavirus Emergency Bill and went into recess early, reflecting social distancing measures (not having yet delivered on the virtual parliament I was asking for at the start of the month).

And I received a written response from Lord Agnew, Minister of State for Her Majesty’s Treasury and Cabinet Office dated April 1.

It took my breath away.

The letter was extraordinarily blunt: “Our economic priority as a Government is to ultimately see the economy grow, therefore, we make no apology for ‘growth dependency’.”

There’s three reasons why this is - particularly at this moment - an extraordinary government position.

First, there’s the UK’s position as chair of the now postponed COP26 talks. We are signed up to the highest leadership position in delivering the Paris climate goal of seeking to keep global warming to below 1.5 degrees of pre-industrial levels.

As joint author of the report Professor Tim Jackson showed in his book Prosperity Without Growth, the carbon intensity of GDP growth (the climate emissions per pound value) can be reduced, but the two figures cannot be decoupled. Growing GDP means increasing emissions when we need to be slashing them.

Second, there’s the fact that decades of growth have delivered us a deeply unequal, unstable, insecure society. A diet of growth has left us deeply unhealthy - in a literal sense (obesity, diabetes and mental illness), as well as economically.

There’s uncertainty about whether Albert Einstein ever actually defined insanity as doing the same thing over and over again and expecting a different result, but it is none the less true for that.

And finally, there’s the climate in which the letter was written: the age of coronavirus. Consultants Deloitte’s last week held a gathering of economists last week. Their range of predictions for second quarter UK GDP ran down to a contraction of 21-30%. The median was a contraction of 11-15%. On the company’s weekly briefing call last week, 54% of participants thought the economic downturn would be protracted and severe.

An economy that isn’t growing but is sharing out the resources of the world fairly, according to need, not dominated by greed or growth.

Relying on growth now is like relying on unicorn horn as a medical treatment, or alchemy to fund the exchequer.

As the APPG paper, finalised well before coronavirus, says: “A wellbeing economy must start by adopting a ‘precautionary approach’ in which social stability does not depend on GDP growth.”

That’s now very obviously, scarily, true.

This week, the Institute for Fiscal Studies concluded that low-paid workers - those struggling in our growth economy, already facing food insecurity, unaffordable rents and inability to save for emergencies - are seven times as likely to work in a sector that has been shut down. ,

And even if they’re lucky enough to be furloughed on 80% pay - which relies on their employers to arrange - then 80% of inadequate pay is even more inadequate pay, as unions have been highlighting.

We obviously - self-evidently - can’t rely on growth in the economy to help these people, to support our communities, in the coming weeks, months, and most probably at least a year before we can - in health terms - be at anything like “normal”.

But we also have a climate emergency, a nature crisis with collapsing biodiversity and bioabundance, our oceans turned into a plastic soup, our soils at breaking point.

Even after - we hope - we have a reliable vaccine against SARS-CoV-2, and much better systems to the future pandemic diseases that will inevitably emerge - we cannot depend on growth.

We must have a society, in the UK and globally, that meets everyone’s needs, while living within the physical limits of this fragile planet.

That means an economy that isn’t growing but is sharing out the resources of the world fairly, according to need, not dominated by greed or growth.

 

Natalie Bennett is a Green Party member of the House of Lords. 

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