The government should take advantage of the likelihood of historically low borrowing costs over the next decade to invest in an ambitious energy efficiency programme, a former head of the Committee on Climate Change has urged.
Lord Turner told a briefing on planning for a post-Covid economic recovery, organised this morning (21 May) by the Energy and Climate Information Unit, that the current crisis would reinforce the trend of falling long term interest rates seen over the past decade.
“In that environment, the role of government maintaining a significant level of investment in the economy becomes extremely important,” he said, adding that governments need to think “very carefully” about how they can use their balance sheets to boost investment.
Lord Turner, who chaired the CCC from 2008 to 2012, added that he was “very confident” that the “structural and macro-economic factors” underpinning the current “incredibly low interest rates” were likely to pertain for the “most of the 2020s.”
He said: “Although we clearly need a plan to get public finances back under control, we have a greater degree of freedom to continue to borrow for investment than in the past. Macro-economic strategy should use that capacity to unleash elements of growth and job int investment that will need help from the government, particularly home insulation.”
The peer added that, unlike many industries which are focused on particular regions, a home insulation programme would “by definition” create jobs in every area.
This job generation potential would be especially important following the current crisis, which he warned is likely to lead to greater automation of processes due to social distancing, while hitting sectors of the economy that have mopped up labour in recent years, like face to face services and hospitality.
“We should take opportunity to reinforce investment in renewable energy because the UK is sitting on top of extraordinary potential for renewable energy particularly offshore wind.”
Lord Turner, who was director-general of the CBI in the 1990s, also called on policy makers to take advantage of the current low prices of fossil fuels to hike carbon prices.
Alexander Stafford, MP for Rother Valley, accused the Extinction Rebellion campaign of doing “massive harm” to the environmental cause by alienating a lot of “soft green” conservatives who were upset by its civil disobedience tactics.
The recently elected Conservative MP also claimed that Brexit provides the UK with the opportunity to move more rapidly on accelerating a green recovery than if it were still a member of the EU.
“We can act quicker than the EU as a whole and we can focus on getting ahead of the game which will be incredibly important.
“If we can retool entire economy to take advantage, the dividends for the UK economy will be huge. Now is the time more than ever for an economic boost and the low carbon economy will accelerate that.”
Emma Pinchbeck, incoming CEO of Energy UK, said that the key challenge for the sector in any recovery will be around skills and training given the intense competition it will face from technology companies such as Google for engineers.