Labour urges government to avoid austerity and beat coronavirus recession by creating 400,000 jobs with vast green new deal stimulus

Labour is urging the government to enact a vast green stimulus to create 400,000 jobs and jolt the UK of out of the economic depression triggered by Covid-19.

The party wants chancellor Rishi Sunak to commit to at least £30 billion in capital investment over the next year and a half – warning that “austerity isn’t the answer”.

Shadow business and industrial strategy secretary Ed Miliband told The Independent that there was “work crying out to be done” – as the party publishes a new economic blueprint drawn up with input from trade unions and businesses.

Proposed projects to get the economy moving include upgrading ports and shipyards to build offshore wind farms, stepping up the manufacture of electric buses, and the creation of a National Nature Service to plant trees and develop conservation projects.

The party is also calling for a massive programme to retrofit homes for energy efficiency, expansion of carbon capture, new railways, and increased investment in flood defences, prioritising regions like the North West, Yorkshire and the East Midlands.

“There’s all this work crying out to be done, people who are crying out to be do it,” Mr Miliband told The Independent.

“We’re going to have to spend this money anyway because down the road we know we’ve got to get to net zero. Invest it now, get people jobs, set our economy up for the green future.”

Speaking ahead of the policy launch, the shadow industry secretary said the situation created by the pandemic meant the government had to act even more urgently than the plans for a vast “green new deal” in Labour’s 2019 manifesto.

“The context is different: if anything the urgency has come become greater because the case for a stimulus now is something that is obviously a response to the economic crisis caused by Covid,” he said.

“This is the time for a green new deal, because what we face is a combination of a jobs emergency and a climate emergency.”

Some Conservatives want chancellor Mr Sunak, who is set to deliver a mini-budget later this month, to make cuts or raise taxes to reduce the government’s budget deficit, in light of spending to support people during the pandemic.

But Mr Miliband, a veteran of similar arguments in the early 2010s when he led his party, urged the government to earn “the lessons of history” and avoid austerity economics at all costs.

“Now is the time to go for economic growth: even the IMF is saying this, even the International Monetary Fund is saying that austerity isn’t the answer,” Mr Miliband said.

“It’s so obvious that at this moment of economic crisis with so many people and businesses going through such businesses, you need a stimulus and the right stimulus to have is a green stimulus.

“That’s where all the lessons of history are.”

He added: “The question here is: does the government just shrug its shoulders and say ‘well, unemployment is going to go up and there’s not much we can do about it?’ or do we think, actually, there’s a case for government to act because we don’t want to be out of work for month after month. We know we’ve got to do this green action, and we should do it now.”

Labour says the green stimulus should be funded by bringing forward part of the £100 billion capital investment promised by the government, which has yet to be detailed.

Shadow chancellor Anneliese Dodds said the UK had seen “far more rhetoric than action”, on climate investment adding: “Future generations will judge us by the choices we make today to tackle the unemployment crisis and face up to the realities of the climate emergency.

“That’s why we need coordinated action to support 400,000 jobs of the future today, not tomorrow. Now’s the time to build it in Britain.”  

TUC General Secretary Frances O’Grady welcomed Labour’s policy proposal, saying that fast-tracking investment would help “prevent the damage of mass unemployment”.

“We should waste no time getting shovels in the ground,” she said. “This month’s spending review should be used to green-light spending on homes, faster broadband, better transport links and greener technology.”

Greenpeace UK’s head of politics, Rebecca Newsom, said the economy and climate were “at a critical juncture”, adding that Labour’s proposal was “the right sort of investment in many of the right areas that is needed to create hundreds of thousands of new green jobs and put the UK on a clear path to decarbonisation”.

Luke Murphy, a researcher and the left-leaning think-tank IPPR, said: “We welcome Labour’s call for the government to step-up investment in a green recovery. With a vaccine for Covid-19 potentially imminent, now is the time for the government to invest for the future, to create jobs and opportunity across the country, lower emissions and restore nature, and address wider inequality.

“IPPR analysis has shown that the government is investing a little over a tenth of the funds needed to meet net zero and restore nature. So while a stimulus is needed now, there will also need to be sustained investment annually to tackle the climate and nature crises.

“There are huge opportunities to be harnessed in the low carbon economy but the government must set out a clear strategy, ambitious policies and the investment needed to realise them.”