McDonnell calls for Chancellor to reveal what Budget will cost the planet
VOTERS should be told at the same time the Budget is revealed how much the British economy could lose as a result of climate change, the shadow chancellor said yesterday.
John McDonnell said a Labour government would ask independent fiscal watchdog the Office for Budget Responsibility (OBR) to forecast effects of global warming and environmental degradation on public funds.
Losses are expected to reach up to £75 billion a year by 2050 if climate-change “abatement” is not carried out, according to research by AECOM and Cambridge Econometrics for conservation organisation WWF-UK.
Decline in gross domestic product is attributed to conditions such as flooding, soil erosion and pollution.
Pledging to put the issue at the “very centre of government,” Mr McDonnell announced the plan to give the OBR oversight of potential losses to public finances, and to make it report to Parliament rather than the Treasury.
Speaking at think tank the Institute for Public Policy Research’s Economic Justice conference in London, he said: “We’ll make sure the OBR has the resources needed to deliver the best available modelling of the economic impacts of the environment.
“It will become a new centre of expertise for environmental macroeconomics.
“And we will make sure not just the next Labour government but future governments will be absolutely committed to addressing this, our greatest single public challenge.”
WWF economist Karen Ellis warned that the winter floods of 2013-14 cost an estimated £1.3bn.
“From increased risks of flooding to soil erosion, drought and air pollution, our environment is changing quicker than many people realise,” she said. “This is bad for business, bad for our national economy and bad for jobs.
“The OBR must factor in the impacts of environmental change and all political parties need to ensure long-term planning for the environment is at the heart of their programmes.”
Greenpeace UK chief scientist Doug Parr said that it is only right that the government takes climate change into account because major companies and financial institutions already do so.
He added: “Not all environmental degradation can be translated into monetary values but, if you just look at the billions of pounds of damage caused by floods, you can see why the impact of climate change on the government’s balance sheets cannot be ignored.”
Friends of the Earth chief executive Craig Bennett welcomed Mr McDonnell’s announcement and said it would tackle “the most appalling ecological debt built up for future generations.”
He said that climate change could be a bigger threat to the global economy than the financial crash of 2008.