The Covid-19 crisis has revealed how vulnerable our economies and healthcare systems are to the threat of pandemics. In doing so it has also shown how exposed we will be to any future environmental breakdown.
Britain has been slow to respond effectively, despite extensive prior knowledge of pandemic risk and having developed sophisticated plans. This could partly be explained by a reduced capacity in government after austerity cuts to public spending and the focus on preparations for Brexit.
Health funding is under huge pressure in many low-income countries and there have been acute shortages of healthcare workers. Globally there is a mixed record of cooperation on pandemic or wider disaster risk reduction.
Professor Paul Rogers writes for the Oxford Research Group on how years of austerity have undermined the UK’s ability to effectively respond to pandemics.
The World Health Organisation has a major report on understanding and managing epidemics. It focuses on three key responses: engaging communities; the effective communication of risk; and both treating patients and protecting the healthcare workforce.
The Overseas Development Institute’s Global Reset Dialogue series explores issues of global leadership and resilience after Covid-19. Among its focus areas are how to deliver more effective global cooperation to reduce inequality.
The disruption caused by the pandemic has exposed serious issues in the UK's labour market and social security system.
As more people have had to rely on the social safety net, Covid-19 has drawn attention to its shortfalls - particularly in relation to Universal Credit and statutory sick pay. At the same time the unequal impact of the pandemic has shone a light on sharp inequalities within the labour market, in terms not just of income, but of precarity, flexibility, and exposure to risk. Some people have found new freedoms in being able to work from home; others have been made redundant and then re-hired on worse pay and conditions.
Calls for reform of the welfare system range from proposals to increase the amounts paid by Universal Credit and other benefits to more radical ideas such as a minimum guaranteed income or an unconditional 'Universal Basic Income'. Reform of employment law is often suggested to give self-employed and casual workers more rights, while an increasing number of voices argue that trade unions should be given greater access to workers to organise collective bargaining over wages and conditions.
For information on job and income protection and job creation during and after the pandemic, see our 'Stimulating economic recovery' pages. For more on inequality, see our 'Driving down inequalities' pages.
The House of Commons Library’s briefing on Coronavirus: Universal Credit during the crisis reviewed Universal Credit claims and changes up to January 2021, and calls for reform. A parallel briefing on Coronavirus: Impact on the labour market tracks changes in employment, pay and the furlough scheme.
The Resolution Foundation's Low Pay Britain 2021 report looks at the impact of Covid-19 on poorly-paid workers and explores whether the recovery may improve both pay and job quality.
In its latest review of workplace conditions across the UK the TUC has found that one in 9 workers (3.6 million people) are now in insecure work, with black and minority ethnic workers more likely to be in such work than their white counterparts. The TUC calls for a new package of workers' rights.
In its research on sick pay the TUC found that one in 12 key workers (788,000 people) do not qualify for statutory sick pay (SSP), despite many of them being at greater risk from Covid-19 due to the frontline nature of their job. It calls for the lowest paid workers to qualify for statutory sick pay for the first time and for the rate of SSP to be raised from its current £96 per week to at least the level of the real living wage (£330 per week).
The Reset Inquiry commissioned by the All-Party Parliamentary Group on the Green New Deal heard from over 57,000 people on what ‘life after Covid’ should look like. Their nationally representative poll found majority support for a jobs guarantee, a reduction in working time and some form of monthly, guaranteed set income for every household.
Responding to the environmental emergency requires changes in many aspects of everyday life, such as how we eat, with concerns growing over the high environmental impact of meat and dairy.
It can be politically challenging to increase environmental ambition without growing inequalities or negatively impacting people who depend on environmentally unsustainable work.
A particular concern is the fate of workers in high carbon industries. Trade unions call for a just transition for these workers to avoid the lasting impacts on people and places resulting from the closure of coal mines in the 1980s.
The New Economics Foundation situates the need for a just transition within the UK’s recent industrial past. It points to the lack of trust in deprived communities and suggests addressing this is central to delivering fair and rapid decarbonisation.
Demos and WWF's climatecalculator.co.uk is a website to help readers explore how different policy approaches to decarbonise the UK could change weekly living costs for consumers.
IPPR’s cross-party Environmental Justice Commission published its final report after a 2 year enquiry on how to bring about a just green transition. Based on the recommendations of a series of citizens’ juries organised in different parts of the UK, the report emphasises the positive effects of ambitious action through job creation, lower energy bills and improved public health.
Over recent years many countries have reduced their tax rates on businesses, hoping to attract inward investment from multinational corporations. But this can easily lead to a ‘race to the bottom’, in which tax competition leaves all countries with lower revenues. Low-income countries are hurt the most, and corporations are the beneficiaries.
Multinationals anyway find it easy to avoid high tax rates by ‘profit shifting’ and ‘transfer pricing’, the creative accounting methods by which profits are allocated to the countries and states where taxes are lowest. It is estimated that this costs governments globally up to 10% (approximately $240bn) of corporate tax revenues every year, money that could have been spent on public services, or that must instead be found from smaller businesses and citizens. Some large multinationals pay almost no corporate taxes in the UK (and other countries) at all.
At the same time both corporations and wealthy individuals have been able to make extensive of tax havens, usually small nations which seek to attract foreign capital by exempting it from tax altogether.
Proposals for international tax cooperation coordinated by the OECD have been given a boost by President Biden’s commitment to internationally agreed minimum corporation tax rates. A number of proposals have also been made for national taxes on multinationals, and for closing tax havens.
Economist Gabriel Zucman explains how multinationals engage in profit-shifting between different countries to lower their tax liabilities – and how governments can overcome this.
The Independent Commission for the Reform of International Corporate Taxation (ICRICT) argues for a globally agreed minimum corporation tax rate of 25%. Where countries levied lower rates, corporations’ home states (such as the US) would ‘top up’ the companies’ tax to the agreed rate. More detail here.
Public Services International explains the ‘unitary principle’ under which a multinational would be taxed as a single entity, not as separate companies in different countries. The Tax Justice Network proposes a ‘Minimum Effective Tax Rate’ to allocate the taxes due on a company’s global profits.
IPPR proposes an ‘Alternative Minimum Corporation Tax’ as a unilateral measure to tax multinationals consistently reporting low or zero profits. It would apportion a firm’s global profits according to its UK sales. Richard Murphy provides an illustrative example of how this would work.
TaxWatch proposes a digital services tax on the giant tech companies such as Google, which typically charge their subsidiaries royalties on their ‘intellectual property’, which they then claim is located in low-tax jurisdictions.
A working paper from Brookings explored “how elites use offshore banking” through shell companies and tax havens, using evidence from leaked account data from a bank in the Isle of Man.
The Covid-19 pandemic has exposed the large number of jobs in the UK economy which are highly insecure. 5 million people are self-employed, a status which includes many who work on contracts for a single company. Over 900,000 people now work on ‘zero hours contracts’ under which they have no fixed working hours.
Altogether it is estimated that 3.6 million people are in various forms of insecure work, including agency, casual and seasonal workers and the self-employed earning less than the minimum wage. Research suggests that nearly 1 in 10 workers in the UK do ‘platform work’ via an app at least once a week, with nearly two-thirds of those under the age of 35. Many such ‘gig workers’ were among the first to lose their jobs as the economy closed down in the pandemic. But it is estimated that over 1.5 million self-employed people were unable to get government support.
‘Gig economy’ jobs can provide welcome flexibility. But many come with very low pay, and by definition a high degree of insecurity which makes normal household budget planning very difficult. They tend to have few employment rights, such as paid holidays, sickness pay, and protection against unfair dismissal. And it is difficult for gig economy workers to organise collectively, for example through trade unions.
The UK government has commissioned independent research on the size of the gig economy, the characteristics of those participating in it and their experiences.
Research conducted for the TUC has shown how work organised through digital apps has been spreading throughout the economy, with 15% of the workforce having undertaken 'platform' work of this kind at some point.
The TUC has surveyed the rise of insecure work across the economy.
The Fairwork Foundation examines the impact of the Covid crisis on the 50 million gig economy workers throughout the world.
The Institute for the Future of Work's 2021 Global Labour Market Resilience Index listed the UK as the 12th most resilient labour market in the world. It recommends greater devolution to enable more dynamic responses to inequality and insecure work and devolving vocational training to the local level to fill national policy gaps.
There is a growing awareness of the role the state plays in driving innovation and how industrial policy can foster sustainable economic development.
In the past UK governments have been dismissive of active industrial policies on the grounds that the market was better at determining where capital can be used most productively. But the UK's poor record of research and development, and of investment outside London and the Southeast, has prompted calls for a greater role for the state in steering investment towards economic, social and environmental objectives.
By making strategic investments in particular sectors, such as green industries, an active industrial strategy can kick-start the development and take-up of new technologies, develop new markets for UK companies, trigger greater private sector investment, and tackle major environmental challenges.
A key feature of many economies with a tradition of strong industrial strategy is the presence of state-owned investment banks, with Germany’s KfW often cited as a leading example. This has led to calls for the establishment of a UK national investment bank, to help drive higher investment into innovative firms.
A 2018 report from UNCTAD found that 84 countries (accounting for 90% of global GDP) had adopted formal industrial policies in the previous five years.
Drawing on the analysis of its founder and Director Mariana Mazzucato, the UCL Institute for Innovation and Public Purpose argues that government needs to explicitly steer the direction of economic activity in order to achieve sustainable, inclusive, investment led growth. It calls for a 'mission-oriented' approach to industrial and innovation policy.
The IPPR argues that industrial policy must go well beyond correcting market failures. It should seek to change the structure of the economy, including the volume and direction of private and public sector investment and its geographic location.
The centre-right think tank Onward has called on the Treasury to establish a national investment bank modelled on Germany's KfW as a tool to unlock capital for investment in small and medium sized enterprises, municipal infrastructure and project finance to level up lagging regions.
The Sheffield Political Economy Research Institute (SPERI) established a Commission on Industrial Strategy to examine how the state could accelerate innovation. Its final report called for a new institutional basis for industrial policy with the aim of shifting the volume and direction of investment.
The 2015 Paris Agreement commits its signatories – virtually all of the world's governments – to try to keep global temperature rises above pre-industrial levels to significantly below 2 degrees celsius, ideally 1.5 degrees celsius, with wealthier nations taking the lead.
In the lead up to COP26, a range of countries are announcing their intention to reach net zero emissions. These now include China as well as the UK and other European nations. US president Joe Biden is expected to join them, increasing hopes of a successful outcome at COP26. Experts warn that the UK, as host of COP26, will be under particular pressure to credibly demonstrate it could meet its net zero target.
The United Nations Environment Programme calls for "dramatic strengthening" of national commitments ahead of COP26. It warns that the emissions gap between action and reality is growing.
The Climate Coalition calls for the UK to deliver an ambitious decarbonisation commitment that meets the net zero target while applying climate justice principles.
The UK-based UN Principles for Responsible Investment sets out how the UK can “showcase leadership” on a global net zero agenda. Its particular focus is on the policy frameworks needed to enable responsible investment in areas including transport and green buildings.
The UK has one of the highest levels of income inequality in Europe. There was a sharp increase in all measures of economic inequality over the course of the 1980s. Measured by the commonly-used Gini coefficient, relative income inequality has stayed largely flat since 2000. But this means that the real income gap between richer and poorer households has been increasing in absolute terms.
Other measures of income inequality show a continuing rise over the same period. Between 2003-4 and 2018-19, the poorest 20% of non-pensioner households saw no overall rise in their incomes at all, while the incomes of the richest tenth and of the median (typical) household grew around 15%. The poorest fifth did see their incomes rise in 2019-20, but this will almost certainly have been reversed in 2020-21. In this period pensioner poverty has fallen, though it rose to just under a fifth (18%) in 2019-20, while the proportion of children living in poverty has increased to nearly a third (31%).
The Gini coefficient also hides the accelerating incomes of the richest 1%, who now take almost 14% of all national income, compared to around 7% in 1981.
The Equality Trust has brought together evidence on the drivers of inequality in high-income countries such as the UK in recent decades, including political systems, institutions and policies, technological change, patterns of globalisation and childhood and family factors.
The Resolution Foundation's annual Living Standards Audit examines trends in household incomes in the UK, including the impacts of the Covid-19 pandemic. It shows that while better-off households have been able to increase their savings and pay off debts, many of those on the lowest incomes have seen their debts increase.
Gathering multidisciplinary evidence from over 200 academics and research institutes, the British Academy has published a wide-ranging report on the likely long-term impacts of the Covid-19 crisis, and the policy implications. It forecasts that significant intervention will be needed to avoid an acceleration towards poorer health and social and economic outcomes and a more extreme pattern of inequality.
The final report of the Resolution Foundation's Intergenerational Commission sets our a comprehensive analysis of intergenerational inequality and a policy agenda to reduce it, including action on education, employment and housing.
With the focus of green growth on environmental sustainability, the concept of ‘inclusive growth’ has been developed to emphasise how growth strategies can be redesigned to achieve reductions in poverty and inequality. The OECD defines inclusive growth as ‘economic growth that is distributed fairly across society and creates opportunities for all’.
Advocates of inclusive growth argue that redistribution through the tax and welfare systems is not sufficient to achieve genuine inclusion. They typically emphasise instead the importance of education and skills, labour market reform, asset ownership, the empowerment of local places and democratic participation.
The OECD’s Inclusive Growth programme generates research and policy on how to achieve a more fairly distributed form of growth.
The Royal Society of Arts’ Inclusive Growth Commission published its recommendations in 2017. It advocates for abandoning the ‘grow now, redistribute later’ model of economic growth, advocating instead an ‘inclusive growth’ approach that puts more power in the hands of local places to create good quality jobs and prosperity.
The bottom 50% of people globally have captured just 2% of the gains from global economic growth since 1995, while the richest 1% have captured 38%, according to the new Global Inequality Report. This busts the myth that growth of itself helps tackle inequality, argues economic historian Matthias Schmelzer.
Black and minority ethnic (BME) residents of the UK have been disproportionately affected by the pandemic in two distinct ways. First, they have suffered worse health outcomes, with people of colour both more likely to contract the virus and less likely to survive it than white people. Public Health England has highlighted how pre-existing inequalities, including the impact of racism and discrimination, have contributed to these unequal health outcomes. BME people are also more likely to work in frontline, 'key worker' roles where they have been more exposed to the virus.
Second, long-standing economic inequalities between white and BME Britons, a product of structural and historical factors, have been exacerbated by the effects of the economic downturn. People from ethnic minority groups have been more likely to lose their jobs and to experience problem debt as a result of Covid-19. Ethnic minority households on average have far less wealth than white households with which to weather economic hardship.
Curating evidence from a broad coalition of organisations, the Runnymede Trust has reviewed the state of race and racism in England. Its report argues that racism is systemic. Disparities facing BME groups in England exist across the areas of health, housing, the criminal justice system, education, employment, immigration and political participation.
Ten years after his landmark review of health inequalities in 2010, Professor Sir Michael Marmot has examined the progress made in the subsequent decade. He finds that people can expect to spend more of their lives in poor health; improvements to life expectancy have stalled, and declined for the poorest 10% of women; and the health gap has grown between wealthy and deprived areas. The report includes an analysis of the link between health and racial inequalities.
Research by IPPR and the Runnymede Trust suggests that the ‘second wave’ of the virus disproportionately affected people of colour in a way that cannot be explained by genetics or co-morbidities, suggesting that this inequality results from 'structural and institutional racism'.
