11 March 2023 , 17:08
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Officials must count the cost of climate inaction to prevent a ‘drastic’ rise in the national debt, Labour has warned.
Pat McFadden, Labour’s Shadow Chief Secretary to the Treasury has called for officials to routinely publish data on the financial impact of failing to take action to hit net zero targets.
It comes after a 2021 study by the Office for Budget Responsibility (OBR) suggested climate change could send the national debt rising by a staggering 300% by the end of the century if no action was taken.
Today, Mr McFadden wrote to OBR chair Richard Hughes, demanding data on the cost of climate inaction be included in the body’s annual analysis as a matter of course.
Mr McFadden said this would “improve the public debate around this important issue” and “ensure that the government are held to account for the delay and inaction in key areas including home insulation and clean power.”
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Shadow Chief Secretary to the Treasury Pat McFadden (pixel8000)Labour's letter to the OBR in full
Dear Richard,
In 2021 the Office of Budget Responsibility under your leadership published an assessment of the economic and fiscal implications of different paths to reaching our net zero goal in 2050. This was published within the Fiscal Risks report of that year.
This study found that the costs to the public sector of delivering on the net zero target, which enjoys cross-party support, would be double in a “delayed action” scenario compared to a baseline scenario.
The study also found that there was a significant and indeed higher cost of inaction compared to action to make a success of this transition now. In fact, it said unmitigated climate change would see public sector debt ratchet up to almost 300% of GDP by the end of this century.
That is additional debt that would be taken on by our children and grandchildren due to a failure to deliver on the target over this generation.
The Labour party values this evidence base, which provides much-needed clarity to the debate on how government can best balance strong and sustainable public finances with the need to ensure a timely and orderly transition to a net zero economy.
In 2022, the government chose to legislate to change the OBR’s publication cycle, with the standalone fiscal risks report scrapped and replaced with a single annual fiscal risks and sustainability report, the first edition of which was published last year.
This did not include an update on this important analysis, making it hard to evaluate whether there has been progress against the net zero and the economic and fiscal impact of the latest government policy in this area.
I am writing to you to ask whether you can provide an update to this analysis in your next fiscal risks and sustainability report, as I believe it can make a positive and valuable input to the public debate on these issues and if this is not possible due to your capacity, whether it will be included in a future edition?