Green Party Manifesto 2010 - 1. The Economy

Managing the economy

Work and jobs

Welfare

Taxation

The Green Party has plans to put the country back to satisfying and meaningful work What we’ve seen over the past year is an economy in turmoil, leaking jobs and eating into pensions and savings. It’s so obvious that business as usual doesn’t work.We have to build a sustainable economy and society, otherwise there’s no future for anyone.

Cutting investment now could lead to a double-dip recession, while the Green New Deal promises job security and economic stability.

The financial system of Britain and the world has grown out of all proportion to the real economy it is supposed to serve. By building on easy credit and financial speculation, it has lost touch with its physical underpinnings.

Casino capitalism has become more important than making things and providing services. Houses have become speculative investments instead of somewhere to live.

Part of being sustainable is being more equal. An unsustainable, polluting economy affects us all, but it’s worse for the poor than the rich – the poor live where the air and water is most polluted, the environment least healthy. We have one planet, and the best way to take care of it is to share its riches more fairly. No one must be so poor that they don’t have a stake in the eventual success of our efforts.

We need policies for both sustainability and fairness – one doesn’t work without the other. That is why we argue for the same carbon quota for all, better pensions and free insulation – because they are fair, and good for both people and planet.We must use resources wisely and divide them up fairly.

Inequality in British society begins at birth, or even before, with low birth-weight and infant and child mortality significantly higher among economically disadvantaged groups.

Around one in five children continue to live in low-income households. Children from these groups are less likely to complete GCSEs and A levels, and to attend universities.

Minority ethnic groups, lone parents, and people without formal qualifications have an unemployment rate of about double that for the total working-age population. The richest 1 per cent of households own more than 20 per cent of Britain’s wealth.

The gross inequalities continue throughout life, with around 25 per cent of pensioners living in poverty, and significant disparities in life expectancy, particularly among men, associated with income.

And inequality has risen in recent years, most steeply under Mrs Thatcher’s Conservatives since 1979, before declining a little in the early years of New Labour, only to rise again in recent years. Inequality is not just wrong in itself. It makes us ill, causes us to die earlier, raises crime levels, depresses educational achievement, and creates stress and mental illness.

New research has shown that more equal societies do better, and that equality – rather than simple average wealth or even lack of poverty – is the main route to a better society for everyone, rich and poor.

Underpinning all this is green economics, which is the only realistic economics. Greens understand that we need a one-planet economy that uses no more than the resources it gives us, not the fantasy multi-planet economy of the other political parties that will one day hit the buffers with a catastrophic crash. The very way we measure economic ‘success’ today shows the bankruptcy of business as usual.

‘Gross Domestic Product’ measures all the economic activity in Britain – even the money spent on picking up the pieces of our unfair and unsustainable society. Prisons and pollution are as ‘productive’ as schools and sanitation in the world of conventional economics.

We want to improve the welfare of people and the health of the planet rather than the size of the economy. Because size matters: if the economy gets too big it will grow beyond its ecological limits. Now we are up against a very challenging limit: the capacity of the atmosphere and the Earth to absorb our greenhouse gas emissions without overheating.

Only the Green Party is willing to face up properly to these limits, and to say that limitless economic growth without thinking about the consequences is a dangerous and careless fantasy.

There is much work to be done to create a secure and stable economy. The transition to a sustainable, fair economy will create hundreds of thousands of jobs in manufacturing, design, building and engineering. And there is much work that is already being done but not yet recognised, like work in the home.

Carers should be rewarded for the work they do. Job-sharing, part-time work, and time off for study or recharging should not be the poverty trap they are under the current benefits system.

In sum, we will create a fair and sustainable economy through redistributing income and assets, reclaiming the tools of economic management, and freeing the diverse talents of our citizens.

Managing the economy

Short-term management of the economy that returns to the basics – sound money, less debt, responsible lending, proper regulation and no risky financial instruments

Ending unemployment and repairing the Government’s finances are obviously currently top of the list. But we must also make important long-term changes to rebuild the economy: move to a zero-carbon economy, move away from an obsession with growth, and build a more equal society.

Unlike the Tories, we believe that this will require considerable Government intervention, both in terms of direct Government expenditure and in measures directed at the monetary system. Unlike Labour, we would not focus on encouraging consumption but protect public services, spend on investment in the new green economy and create greater equality. Labour’s approach will sow the seeds of future crises by encouraging crippling debt and unsustainable consumption.

We believe that only the following policies will deliver the equitable, stable and sustainable economy we so badly need:

Invest in the green economy now – and if, in certain vital sectors such as energy generation, the private sector is acting too slowly and on an insufficient scale, then the Government must take the lead.

Our programme has to be paid for, and we accept that the Government borrowing of 12% of GDP is unsustainable. Like the Government, we would aim to more than halve the deficit by 2013, and the programme of taxation and spending in this manifesto is designed to achieve that.

Raise taxation from its current very low level of only 36% of GDP – for example it exceeded 40% in all Mrs Thatcher’s years in office. The fiscal gap is not caused by too much public spending but by taxation dropping to unacceptably low levels.

Ensure that those most able to pay bear their fair share, and introduce a much-needed increase in environmental taxation.

Regulate the financial sector more strictly, preferably at the international or EU level, but if necessary just in the UK. In particular, separate retail from investment banking.

Support new institutions like a green investment bank and local community banks in the financial sector, and new ways of investing in the green economy, such as green national savings bonds.

Reverse the trend towards an economy ever more dependent on financial services, and build a new and sustainable agricultural and manufacturing base to the economy.

Protect basic public services, which are the foundation of an equitable society. Modest efficiency savings may be possible (perhaps £2–3bn, or 0.25% over the entire public service each year, and in particular by improving energy efficiency in schools and hospitals), but nothing on the scale relied upon by the other parties to make their figures add up. Cuts to health and education services will hit the poorest and most vulnerable first. We must help the poorest pensioners and children in particular.

Abandon gross domestic product as the key measure of economic success, and seek instead to increase our overall welfare.

Encourage greater sharing of intellectual property by reducing, but not abandoning, levels of patent and copyright protection. In particular we would legalise peer to peer copying where it is not done as a business and make it impossible to patent broad software and cultural ideas.

Work and jobs

Working to live, not living to work

The loss of jobs that has gone with mismanagement of an unsustainable economic model is a criminal waste of talent and aspiration, and has turned life into a daily struggle for survival for millions of our fellow citizens.

As top bankers continue to pocket your money in the form of unearned bonuses, factories, firms and farms are forced to lay off more and more workers by the day, week and month.

This must end. Our major and immediate priority is the creation of an extra million jobs and training places within a full year of operation of our major investment plan, the Green New Deal. This would address both the employment and the environmental problems.

It would consist of a package of measures described throughout this manifesto, including workforce training, investment in renewables, public transport, insulation, social housing and waste management. We would also:

Offer Green workforce training and an environmental community programme including training courses for jobs in energy conservation and renewable energy, with grant-funded conversion courses for skilled engineers from other industries.We would spend £5bn in the next year on creating 350,000 training places, offering opportunities to 700,000 unemployed people, in particular the young unemployed.

Work towards a 35-hour working week. Full time UK employees work the longest average hours in Europe: 43.5 hours, as against 38.2 in France and 39.9 in Germany. A 35-hour week will both improve the work/life balance, help to share out work, and be part of a just transition to a lowcarbon economy.

Resist any weakening of the Working Time Directive.

Promote gender equality. The pay gap per hour between men and women remains as high as 38% for part-time workers; retired women’s incomes are typically 40% less than men’s. Our policies on Citizen’s Pension, childcare and non-discrimination at work will help to fill these gaps.

Introduce equal pay audits for larger employers

Promote legal changes to make it much easier for women to take equal pay cases to court, and to allow women to take such cases as a group.

Require 40% of board members of larger companies to be female within five years.

Introduce more generous maternity and paternity leave.

Spend £1bn a year on enhancing and expanding Sure Start Children’s Centres, creating 10,000 jobs. Sure Start has been proved to make a real difference to the lives of some of our poorest children.

Support a National Minimum Wage that is a living wage, at 60% of net national average earnings (currently this would mean a minimum wage of £8.10 per hour). This policy will lead to an estimated saving of up to £6bn a year in Tax Credits, and further savings not quantified here on Council Tax and Housing Benefits.

Work towards ensuring that the maximum wage in any organisation is no more than ten times the minimum wage in that organisation.

Ensure that no one is forced to retire before they want to.

Reject workfare and forcing unemployed people into unsuitable jobs by removing benefits.

Radically increase the amounts people on benefits can earn, perhaps to the equivalent of 6 hours work at the minimum wage (‘earnings disregards’), without having their benefits withdrawn. Participating honestly in such part-time work is the best route back into employment.

Uphold the right to join or form a trade union, to obtain union representation and to take industrial action, and repeal anti-trade union laws.

Support unions in their roles as health and safety and environment representatives.

Ensure that workers’ rights apply to parttime, casual workers and the self-employed, and from the first day of employment.

Oppose discrimination in the workplace, whether on the on grounds of sex, race, family status or responsibilities, disability, sexual orientation, religious belief or age.

Value and protect carers, and volunteers.

Support moves towards workplace democracy and ensure that workers and former workers control their pension funds.

Support a greater role for mutuals, like worker co-operatives. In particular, prevent further existing mutuals from being changed into companies, consider returning Northern Rock to the mutual sector and introduce a process whereby in certain circumstances an organisation can be turned into a mutual if its workers or customers wish to do so. A first application for this latter process would be football clubs.

Our energy policy is not just the best for climate change – it also produces the most jobs: Energy source/jobs per year per terawatt hour: Wind / 918–2400

Coal / 370

Gas and oil / 250–265

Nuclear / 75 But the real winner for creating jobs is energy efficiency, like our proposals for insulation. It has been estimated that an energy efficiency increase of 1% a year, sustained over a ten year period, would create 200,000 additional jobs in the EU sustained over ten years.

Welfare

Let’s start with decent pensions

After 13 years of Labour rule we still have unacceptable levels of poverty. It is particularly offensive that 25% of pensioners and 20% of children still live in poverty. Our creaking welfare system gets ever more complex as it attempts to fill the gaps, yet it often fails to reach those entitled to benefits but who do not claim them.

In the longer run a fundamental reform is needed, where most of the complicated benefits, means tests and qualifying contributions are swept away, and all citizens receive as of right a basic income – a Citizen’s Income. The cost of this would be recovered through a more progressive income tax system.

We recognise that with the public finances in their present state this is not the time to introduce such a scheme. However, we can make a start by helping the two vulnerable groups above, with a decent Citizen’s Pension scheme and a major increase in Child Benefit.

Our present pension system is a disgrace.We pay an inadequate state pension (only £97.65 per week for a full state pension for a single person), the level of which is still not linked to average earnings (and which is not up-rated at all for UK pensioners living abroad in certain countries). It depends on an individual’s contribution record, discriminating in particular against women, but also against others with poor contribution records such as those with poor health or a broken work record, or who have been carers.

This is in theory topped up by means-tested Pension Credits, which discriminate against anyone with very modest savings, creating a massive disincentive to save to provide for yourself. As many as one in four pensioners live in poverty.

Introducing a Citizen’s Pension

We need a new system of Citizen’s Pensions. The Citizen’s Pension would be paid unconditionally to all pensioners in the UK (independent of contribution record) at the rate of the official poverty line (currently £170pw for someone living alone, and the rate would be £300pw for couples), and would be linked to average earnings.

It would also be paid to, and up-rated for, the one million pensioners living abroad.

Housing Benefit and disability benefits would continue to be paid. The demeaning Pension Credits would be abolished.

And it is right too to do something significant about child poverty. Rather than add further to the complex and means tested Child Tax Credits system, we would simply more than double the existing and universal Child Benefit payment, by paying an extra £20pw, which would be taxable, for each child. This would cost a further £14bn per year, much of which would be recovered by increased taxation on the most wealthy.

A fair deal for social carers

A vast proportion of social care in the UK is provided by unpaid family carers who save the NHS £87bn a year. Carer’s Allowance (CA) is an income-capping straitjacket. CA paid to family carers aged 16 and over is the ‘Cinderella Benefit’: £53.10 for a 35-hour week minimum commitment is no real compensation.

Child carers under the age of 16 receive nothing at all. They are perhaps our most vulnerable child labourers, often working very long hours and bearing emotional burdens far beyond their years.

These children receive no financial support and in many cases work longer hours than their older counterparts. Their schooling and education are often compromised and some simply never have the chance to ‘play’.

The Green Party is committed to:

A more generous Carer’s Allowance, increased by 50% to £80pw.

Offering support to people who want to give care, recognising their pivotal position while increasing the amount of care available.

Healing the rift between adults’ and children’s social services that was created by New Labour.

Providing more short breaks to families, including disabled people or those with long-term illnesses. Such early intervention schemes have been shown to save money by preventing crises.

Improving working conditions for professional staff at all levels, paying for preparation time and follow-through, as well as contact time, and providing more in-service training to help cope with the vast spectrum of service user requirements.

Instituting workforce health checks as advocated by UNISON.

Repealing the oppressive Welfare Reform Act (2009) as a prequel to supporting people through lifelong development for their own and the planet’s well-being.

Cancelling the DWP benefit entitlement assessment contracts with private sector.

Restoring the link between state benefits and earnings.

Giving carers cheaper local travel on bus, trains, tube and trams.

How would we pay for Citizen’s Pensions? There are about 12 million pensioners living in the UK and a further 1 million living abroad. Paying a single rate of £170 per week and a couples rate of £300 per week will cost £110 billion a year. But the basic state pension already costs £56 billion, and when certain other specific pensioner benefits like the Pensions Credits paid to those of pension age are abolished the total saving will be almost £70 billion. That leaves £40 billion to find. Abolishing tax relief on pension contributions raises £20 billion, and a further £19 billion would come from abolishing employer national insurance contributions and employee National Insurance rebates associated with pension schemes. The final £1 billion will come from increased income tax receipts from pensioners. Because the number of pensioners is gradually rising, and we would link the pension level to average earnings, Citizen’s Pension will cost a further £0.8 billion by 2013–14. This figure is included in our figures for general taxation. There will also be savings (not quantified here) on Council Tax Benefits and Housing Benefits.

Taxation

Promoting fairness, sustainability and citizenship

This manifesto is not an uncosted wish list. It is a practical and realistic plan to move towards a more equal society, fight climate change and protect public services.

Unlike the other parties, we argue that increases in taxation for the better off are required. This is no bad thing in itself.

Taxes are the fees we pay as citizens for services that are best provided collectively. They are also an instrument for fairness. The corrosive belief that taxes are no better than a necessary evil, nurtured by successive Governments over the past 30 years, is at the root of the difficulties in financing public services during the same period.

So the Green Party wants to rehabilitate progressive taxation. This requires two things: raising taxes fairly and explaining them honestly. Labour’s plans depend upon wishful thinking about how quickly the economy and tax revenues will recover. They are unwilling to tell you about the cuts and tax increases coming later. The Conservatives will cut public spending, but have not put forward a plan that adds up to remotely enough cuts without tax increases to cut the deficit.

In contrast, the Green Party is open about what we would cut, what we would defend, and about the fact that we need to raise taxation from 36 per cent of GDP in 2009–10 to around 45 per cent in 2013. This would halve the gap between Government expenditure and revenues by 2013–14 (as the Labour Government proposes) and progressively close the gap thereafter.

We favour a Robin Hood Tax – a tax on financial transactions (see page 47) – but because that would work best with wide international agreement we do not rely on it to fill the gap in the Government’s finances, though we believe there is also scope to act unilaterally by introducing a tax on sterling foreign exchange transactions, and that the UK should demonstrate global leadership.

Our tax changes come in two groups – those that close the gap between rich and poor, and those that mainly discourage environmentally damaging activity.

Taxes to reduce inequality

We support a special tax on bankers’ bonuses, though we would make it permanent.

Also, no one in one of the wholly or partly state-owned banks should get a bonus of more than £25,000. And our changes to pension tax reliefs (see box on page 13) will radically reduce the huge advantages the present pension system gives to the most wealthy. But this is only a beginning.

We would also:

Introduce the new higher rate of income tax at 50% for incomes above £100,000, raising £2.3bn pa.

Abolish the upper limit for National Insurance contributions, raising £9.1bn in 2010.

Help lower earners by raising the lower National Insurance limit to the personal allowance rate (which is £6,475 a year, or £124.52 a week), costing £3.9bn.

Help lower earners by reintroducing the 10% tax band and the 22p basic rate, costing £14.9bn.

Increase the main rate of Corporation Tax from 28% back to 30% and reduce the small firms rate back to 20%, altogether raising £1.4bn.

Raise the Capital Gains Tax rate from 18% to the recipient’s highest income tax rate (that is 22%, 40% or 50%), raising £1bn.

Reform inheritance tax, so that the level of taxation depends on the wealth of the recipient rather than that of the deceased, raising £3bn by 2013. This will encourage people to distribute their property widely.

Crack down on tax havens and other methods of tax evasion and avoidance, raising £10bn in 2010 rising to £13bn by 2013. In particular press for a transparent international accounting standard that requires companies to report on a country-by-country basis so that their profits can be located and taxed.

Reform Council Tax by making people in more expensive houses pay more and those in smaller ones less, adding an additional band at the top for the biggest houses, raising £1.7bn. In the long run we favour moving to a system of Land Value Tax, where the level of taxation depends on the rental value of the land concerned.

Taxes to protect the environment

We would reform the tax system to put far greater emphasis on taxes that discourage environmentally or other damaging behaviour.

If these changes were implemented the share of environmental taxation in total taxes would double from about 7 per cent now to 14 per cent in 2013. Some of these proposals involve raising existing taxes, some are new taxes and some modify existing exemptions and reliefs to achieve environmental purposes. In the long run we would aim to replace VAT by environmental taxes, but the current state of the public finances does not allow this in the short term.

We also recognise that some of these changes, for example on VAT or placing fuel duty on aviation, may involve international negotiation and cannot be introduced immediately.

We would:

Reintroduce the fuel duty escalator, raising fuel duty by 8% per year. This will raise £2.2bn in 2010 rising to £10bn by 2013. In the longer run we would introduce a system of domestic carbon quotas.

Modify the regime for Corporation Tax Capital allowances so that the allowances are only available for investment in sustainable technologies, raising £7bn in 2010 rising to £10bn by 2013.

Introduce VAT and fuel duty on aviation, raising £7bn in 2010 and £10bn by 2013.

Increase the rates for the Climate Change Levy and for Landfill Tax, raising £300m.

End the zero-rating of VAT on new dwellings, putting them on a level with conversions and renovations of existing dwellings, raising £5bn in 2010 and £7.5bn by 2013.

Tax plastic bags and other unnecessary packaging, raising perhaps £1bn by 2013.

Levy eco-taxes on non-renewables or pollutants, in particular pesticides, organochlorines, nitrogen and artificial fertilisers and phosphates.

Introduce new taxes on use of water by businesses and waste heat from power stations, raising £3bn by 2013.

Replace vehicle excise duty by a new graduated purchase tax on vehicles that heavily penalises over-sized or over-powered vehicles. Overall this would be tax neutral.

Make tax concessions on savings, such as ISAs, only available for investment in sustainable technologies, raising £1.8bn.

No longer offer zero VAT rating to financial services and betting duties, which are of limited value to the real economy, raising £5.6bn by 2013.

Gradually increase alcohol and tobacco taxes by about 50% to match anticipated increases in expenditures on the NHS, raising £1.4bn in 2010 rising to £5.6bn by 2013.

Taken together, these tax changes are sufficient to pay for the entire programme set out in this manifesto, and also to more than halve the deficit as a proportion of GDP by 2013, setting the economy on a path that will almost eliminate the deficit by the end of the Parliament. The details of how we would pay for our programme are set out in the box below.