Image copyright Getty Images The Green Party has pledged to invest £100bn a year to fund its climate policy over the next decade, if it wins the election.
Where would the money come from and how would it be spent?
Borrowing
The Greens believe a large public investment, worth £1tn over 10 years, is essential to fight climate change and make Britain fossil fuel free by 2030.
The party says the money would go on building 100,000 energy-efficient homes each year, revolutionising transport infrastructure and creating hundreds of thousands of low-carbon jobs.
The bulk (£91.2bn a year) would come from borrowing, with the rest from tax changes.
This would represent a huge hike on current borrowing levels. The independent Institute for Fiscal Studies (IFS), for example, says government borrowing could be about £55bn this year.
Borrowing happens when a country’s tax revenues are not sufficient to fund its public spending commitments. When this happens, a government must borrow to make up the difference – this is known as a budget deficit.
Governments borrow by selling their debt in the form of bonds to investors, and paying them interest.
‘Historical lows’
The Green Party justifies its pledge by saying that borrowing rates are at “unprecedented historical lows” and the money is needed to transform society.
At the moment, an investor purchasing UK debt would only expect to receive a 0.75% annual return over 10 years.
However, if a government planned to massively increase borrowing, there’s a risk that investors could demand higher interest rates if they believed the UK could default on future repayments.
The IFS calculates the Greens’ proposal would take borrowing to £140bn. This would be more than 6% of national income and the highest level since 2012-2013, when borrowing rocketed following the global financial crisis.
The Green Party is in favour of remaining in the European Union, but running a budget deficit of 6% would be double the limit set out in the EU’s growth and stability pact.
Spending £100bn a year tackling climate change would be about the same amount of money the government currently spends on education.
£100bn is equivalent to government education spend
Planned 2019/2020 spending in £ billions
As well as additional borrowing, the Greens say they will raise £9bn a year from tax changes – including a rise in corporation tax to 24%.
This would put corporation tax back to the level it was in 2013. It would still be lower than pre-2008 levels, or elsewhere in the G7 (an organisation made up of the world’s seven largest so-called advanced economies).
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