3:20pm Wednesday 15th October 2008
By Tim Quantrill
Nationalisation is well and truly out of the bag now after the massive action taken to help banks in Britain and around the world. If it is for the good of the country’s economy to take companies into public ownership then it should be done.
We all thought Northern Rock might be a one-off but many banks and other financial institutions need to be propped up to keep the money markets from collapsing and state ownership is turning into a bit of a habit by this Labour Government. Even the Conservatives are all for it.
They were reticent before, with nationalisation a dirty word post Thatcher? But in the past we have had national emergencies like the Depression and wars and done a similar thing. And in an energy crisis like the disruption of our gas, coal and oil supplies of the Seventies the Government intervened.
You will not get a much bigger crisis that climate change if all the dire warnings come to pass so isn’t this a reason to do the same thing? After all the nation has spent tens of billions every year in case we are needed to fight a war and to meet perceived threats.
What could be more of a threat to our livelihoods and very lives than failing crops and droughts, more frequent storms and flooding, huge relocation of populations and global instability? And, now that the arguments about not being able to splash lots and lots of cash around to solve problems in the public good have been thrown out of the window, there is nothing to stop a future government (or even this one) investing in Britain’s infrastructure to help beat climate change and mitigate its effects.
Let us look at some figures.
The Bank of England bail-out has so far cost £81 billion in taking stakes in banks while £200 billion has been provided in short-term financing for the markets and another £250 billion set aside as debt guarantees - that is £531,000,000,000 in total! Who knows how much more the taxpayer will have to stump up to help these financial whizz-kids?
Provided in a few years the markets are functioning properly again and the Government has sold off its stakes, what could we do with that sort of money (or even an estimated £240 billion-plus in share profits that could be made)?
Here are some back-of-the-envelope calculations: insulating every home in Britain to a proper standard - £5 billion; providing a couple of high-speed train lines - £50 billion; installing enough wind, solar, tidal, hydro and wave generation plants to provide a fifth of the UK’s electricity needs - say £60 billion (a £15 billion Severn Barrage, for example, would provide five per cent); buy up properties on flood plains and coasts in danger - £214 billion for more than two million homes. A mere £329 billion in total!
The billions of pounds being put in the financial system, however, are not being put into a black hole. They are being lent (and hopefully paid back) or being swapped for assets in the banks (which may return a profit when the markets recover).
So what about the examples of environmental largesse I gave? The Stern Report concluded that the costs of the damage by not doing nothing to limit climate change could amount to 20 per cent of the world’s gross domestic product so surely borrowing now to offset the effects would be a cheaper option in the long run.
Leaving aside the good effect on the planet, they will provide a boost to the economy of securing our energy supply, increase our transport capacity, divert consumer spending like the billions saved on heating bills into other areas and create large amounts of intellectual capital and skills which can be revenue earning.
These measures could also make good financial sense too. The homes bought will provide an income from rental (and Council housing is needed) even if they may eventually end up under water while charging companies to run the high-speed trains will also provide an income. And generating plants can be sold off. The CO2 savings will also earn the Government carbon credits which could be traded for cash.
All these things have been rubbished in the traditional politics but the rules of the game have changed now haven’t they? There is nothing to stop state intervention from now on in a national emergency and if the effects of climate change do not amount to an emergency then nothing will.
When it comes to possible global catastrophe, we cannot afford to wait for the market or firms with vested interests to provide the solution. The state has shown how strong it can be in the past few weeks and now it is up to the politicians around the world to take that on and provide some real leadership. It is still not too late to reduce the carbon chaos we face.
Green or Obscene - the mileage counter
Miles by car: -165
Miles being driven: -142
Miles by train: +673
Miles on foot: +151
Miles by bike: +0
Miles by bus: +0
Miles by ferry: +0
Total: +517 (running total: -2777)
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