"This is a package for the short term that makes sense for the long term; a package where the debt we must incur now produces employment, green and financial benefits that more than pay for its cost; a package where the economic causes of the crisis are tackled at their root and a package that the people of the UK need - help in delivering them from a problem that was not of their making"

The responses of governments to dealing with the financial crisis have been to cut interest rates, cut taxes, or increase public expenditure. This Green Party proposal for the Pre-budget Report states that these measures have to be judged in terms of their contribution to the wider economy as well as their effectiveness in dealing with the present economic crisis.

It is the Green Party’s conclusion that the present crisis, widely recognised as the worst since 1929, demands nothing less than a Green New Deal.In terms of a budgetary response it suggests a costed £30 billion public expenditure programme in largely labour intensive projects, starting with ensuring that all buildings in the UK are energy efficient and make the best use of renewable energy, and that interest rates should be kept low to encourage such a level of investment.

The report also suggests how private funds can also be encouraged to invest in such a programme via the encouragement of pension funds to secure a safe return for an income derived from saving energy costs and a number of novel savings vehicles.

The report makes some preliminary costed proposals for environmental taxes that could be immediately introduced, offset mainly by reducing VAT.We propose too reforms to the international financial system including significant action against tax havens, both to improve the regulation of the financial sector and to reduce tax avoidance.

The stimulus from the public expenditure programme will significantly reduce unemployment. The programme, combined with the tax changes, will also significantly reduce greenhouse gas emissions.

Finally the report calls for an inquiry into how acceptance by governments of the international neoliberal model caused this present economic crisis and what changes in economic direction could ensure a stable and environmentally sustainable economy.

Such a Green New Deal approach helps tackle not just the financial crisis but, because it reduces the use of fossil fuels, it increases our energy security and independence and helps tackle climate change.

Background In 2007 a group of campaigners, economists and industrialists, including Green Party Leader Caroline Lucas, met to discuss the concept of a Green New Deal.Their report, published in July 2008,¹ argued that a strategy to combat severe recession would also be appropriate to the beginnings of a substantial strategy to deal with climate change and the implications of an encroaching peak in oil production. The Report has been welcomed by the Green Party as an important first step towards a more sustainable and equitable economy.

First we are quite clear that significant support for the economy is required. This is true for both monetary policy (interest rates and money supply) and fiscal policy (government spending and taxation).

The Conservative U-turn announced on 17 November, where they will only countenance tax cuts matched by cuts in government spending,3 seems to be a return to their austere monetary policies of the early 1980s, will, like then, only lead to a prolonged recession, massive unemployment, huge human misery, increasing inequality and will make no contribution whatever to meeting the environmental crisis. We, like the government, reject this approach.