QE3: towards a social and green new deal?


The recent Guardian editorial about the looming energy cost crisis is correct to put centre stage a massive home energy efficiency programme to both cut bills and contribute to our net zero obligations.

The government estimates that there are £1,933bn of net savings in the UK, as well as pension wealth of £6,445bn. Some of this could be leveraged to the tens of billions of pounds needed to make all the UK’s 30m homes energy efficient, creating in the process jobs in every constituency.

That proposal suggests using personal savings to fund making homes energy efficient, a key part of the eventual solution to help tackle the rising energy bills part of the Cost of Living Crisis.

In the short term, therefore, the priority must be massive support for the majority of families who are increasingly being battered by the cost of living crisis. This will increasingly crush their spending options and result in a massive decrease in demand for retail, hospitality and travel.

The huge funding required to tackle the crisis can come predominantly from the same source that dealt with the banking and covid crises – Quantitative Easing (QE). Between 2009 and 2021, with a few taps on a keyboard at the Bank of England £895 billion of new money was created. The opposition parties know about this, so it’s time they united around a call for QE3.

This third tranche of QE money would solve the cost of living crisis and could also be used to help fund a transition that will provide people with longer-term hope, economic security and local regeneration. Its programmes could range for example from adequate health and care provision to making all buildings energy efficient.

In short, a social and green new deal – a platform that could win such a co-operative coalition the next election. In today’s local elections, as Compass’ Neal Lawson pointed out in the Guardian, some standing down by Labour and Lib Dems in areas they can’t win is the Labour-Lib Dem pact that terrifies the Tories, for fear that it will to be used in the next general election.

Tomorrow morning’s results should make for interesting reading!

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Radix is the radical centre think tank. We welcome all contributions which promote system change, challenge established notions and re-imagine our societies. The views expressed here are those of the individual contributor and not necessarily shared by Radix.


  1. Stephen Gwynne says

    The cost of living squeeze is caused by multiple factors including Demand-Pull inflation resulting from COVID furlough payments where demand is financed whilst supply is either disrupted, reduced or was placed in hibernation due to COVID lockdown measures.

    Similarly, the aggressive purchasing of global gas by China and Putin’s disruption of European supplies has exerted Cost-Push inflation aided and abetted by Built-In inflation due to the rising energy costs of energy or alternatively reducing energy return on energy invested. These factors are similarly affected by the Built-In inflation of human population growth and the Built-In inflation of previous rounds of QE including the availability of cheap credit.

    Overall then, the post financial crash party of monetary expansion is over as supply can’t keep up with demand with the excess demand being priced out of the Market with higher prices for essentials (base effect inflation) in order to deflate global inflationary pressures.

    Within this context, what Colin is suggesting is continued monetary expansion with no remedies of how to balance this increased demand with increased supply, especially regarding global supply chains.

    As such, his prescription, as laudable as it sounds although what dwelling does not have double glazing, cavity wall insulation and roof insulation, is a recipe for disaster which will add inflationary pressures and make the cost of living squeeze much much worse.

    When political parties are only dealing with the symptoms with no regards to the cause (mudslinging populism) then they demonstrate their potentially ruinous economic incompetence which is why the Tories are not terrified of a Lab/Lib pact unless one thinks that the public will easily be influenced by simplistic political car showroom rhetoric.

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