UK Budget: Not much of a green stimulus, but that may be a relief

The British government appears to have decided that “green stimulus” will be one of the ways it tries to win a few favourable headlines for what is otherwise set to be a pretty dismal Budget on Wednesday. The details of the leaked measures, however, show what a feeble attempt it will be.

The standard trick of chancellors at Budget time is to whip up as much froth as possible to make small amounts of cash being paid out of the exchequer seem substantial.

This year, the need to do that is greater than ever. The position of the public finances is shocking, with massive public borrowing and a bill of up to £60bn for the bank bail-outs.

So Alistair Darling is scratching around for £500m worth of green measures, including £300m for home insulation and £200m in support for renewables, specifically wind, wave and tidal power.

What these measures – worth less than one tenth of 1 per cent of what the government spends in a year – are intended to achieve is very clear: To provide some brightly-coloured distraction from the grey economic clouds and the red ink in the public finances.

The “green” hue of stimulus packages worldwide is generally more in the paintwork than in the substance.

However, the much discussed study from King Juan Carlos University in Madrid on the impact of “green jobs” policies suggests that every green job created in Spain since 2000 has destroyed more than two elsewhere in the economy.

The study is a rough and ready exercise, as these things tend to be, and no-one should place very much weight on the precise figures it gives for displaced jobs (2.2 lost for every green job created, to be exact). However, its general thrust, attempting to look at a general equilibrium for the economy as a whole, rather than the specific figures for people employed in renewable energy and so on, is the right approach.

In general, the arguments for environmental measures should be based on their benefits for the environment, or for cost savings they deliver, in the case of energy efficiency improvements, not the number of jobs they purportedly create.

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