Conservative spending plans: how would cuts plus green proposals add up?
Perhaps it’s just me, but I’m still scratching my head after a perplexing news day for George Osborne yesterday.
On the one hand he made a clearer-than-ever statement of the Conservative agenda for drastic spending cuts in the face of the recession.
But on the other hand he launched an ambitious – and expensive –plan for a “green technology recovery”.
It would be churlish to ignore the positive signals in the plan, such as a welcome commitment to carbon capture and storage (CCS) technology and a new high-speed rail link (something the TUC has been calling for for umpteen years!). But this is where it starts to get confusing. The Conservative proposals herald the ”unleashing of £30bn of private investment” to fund their proposals. But, in an era of corporate belt- tightening it is difficult to see where this private investment will come from. Problems with private funding for large-scale renewable projects such as the London Array are a case in point.
With companies struggling to get access to credit and suffering from declining demand, the TUC has been calling for the government to step in as investor and consumer to stimulate demand. But the Tories and the CBI have been taking the opposite approach, calling for spending restraint and ‘efficiency savings’ across the public sector.
The small print of the green plans also makes for interesting reading – whilst Osborne’s speech talked about ‘not adding a penny to national debt’, the small-print suggests the proposal for a high speed rail link would be funded by £5 billion of private sector investment … in conjunction with government funding.
The idea of using funds from the European Emissions Trading Scheme (ETS) to fund three CCS projects is the kind of thing we want to hear, but it’s not new – and significant ETS funding won’t come on-stream until 2013. Is Osborne proposing that we wait until 2013 to get the projects moving? And if not, where will the funding come from?
It seems as if it might be another example of the ‘pushmepullyou’ effect in Tory policy….