Covid-19 and the public-private sector relationship. Over the course of the pandemic, a string of procurement gaffes, outsourcing failures, and allegations of cronyistic relationships between public officials and private contractors - most recently surrounding Greensill - has led to increased scrutiny of the relationship between the government and the private sector.
~~Greensill overview. The Institute for Government’s Inside Briefing podcast examines the most recent developments in the Greensill scandal, the state of lobbying rules and the promise of various inquiries.
~~Inside Britain’s pandemic spending. In December 2020, the New York Times investigation into “waste, negligence and cronyism” analysed 1200 publicly available Covid-19 contracts (many remain secret), and found that half of the £22 billion spent went to companies with connections to the Conservative Party, no prior experience and/or a history of controversy.
Rentier capitalism and outsourcing. Economic geographer Brett Christophers and others have argued the best way to understand major outsourcing companies is as specialists in winning long-term government contracts, and not in actually delivering services. They are then able to extract value from ownership of these contracts without providing commensurate social value, in the same way as owners of other scarce assets do. (See Christophers on the rentierisation of the British economy and Christine Berry’s review of Christophers’ book.)
Outsourcing, consultants and the erosion of public sector capacity. The government’s overreliance on the private sector to deliver core public services and develop strategy over recent decades has led to an erosion of public sector capacity, which in turn encourages further outsourcing.
~~Rebuilding public sector capacity. UCL Professor Mariana Mazzucato has written extensively on the state as a creator of value - undermining the rationale for outsourcing and privatisation - and the need to improve public sector capacity to tackle societal “grand challenges” (see e.g. her article with Professor Rainer Kattel on the need for governments to build dynamic capabilities to prepare for future pandemics).
Procurement and contracting. The Government has also been criticised for its approach to procurement of goods and services (as distinct from the critique of outsourcing services that should be delivered by public bodies). Prior to the pandemic, the Institute for Government had criticised the government for failing to learn the lessons of Carillion and continuing to engage in risky contracts.
~~Socially responsible outsourcing. The Centre for Local Economic Strategies’ (CLES) Neil McInroy and Tom Lloyd-Goodwin argued the present approach to outsourcing has failed, and that a combination of insourcing and a system of “social licensing” - criteria that non-government providers of public services must meet - would improve provision.
~~Covid-19 contracts. The National Audit Office concluded that the Government did not meet transparency standards in its procurement of PPE and other goods and services (British Medical Journal coverage).
Super League. Proposals for the new European Super League have sparked a debate on the governance of English football clubs. The move has been widely criticised as “driven by greed and money”, as the owners of the ‘big six’ football clubs are “interested only in increasing their own financial power”. Gary Neville explained the power imbalances and divergent interests between football fans and owners in this video reaction.
~~Restricting open competition. The proposal was condemned by the Premier League for restricting the principles of open competition and sporting merit, and UEFA, the FA, FIFA and other associations ”remain united in our efforts to stop this cynical project, a project that is founded on the self-interest of a few clubs at a time when society needs solidarity more than ever.”
Democratising football. A report from Common Wealth and the Centre for Local Economic Strategies explained how "the opening up of football clubs’ ownership structures in the 1990s precipitated a broader transformation of all aspects of the modern game by finance capitalism'' as clubs are increasingly treated by owners as financial assets among other portfolios of investments.
~~Recommendations. The authors argue “democratic forms of ownership and governance, coupled with clubs employing intentional, place-based anchor approaches, can help bring the people’s game back home to fans and communities.” The report explored the current ‘value extraction’ model of football institutions in the UK and recommended German models of fan ownership coupled with community wealth building principles as proposals for reform.
Vaccine nationalism risks international climate agreement. In an interview with the BBC, Greta Thunberg said the Glasgow COP26 Summit should be postponed until a more equitable global distribution of vaccines is secured: “Inequality and climate injustice is already the heart of the climate crisis… If people can’t be vaccinated and travel to be represented equally, that’s undemocratic and would worsen the problem”.
UK climate target. The UK is set to announce a new goal of cutting emissions by 78% by 2035 compared to 1990 levels, a more ambitious target than the previous 68% target announced in 2020. The target comes ahead of US President Biden’s climate summit this month, and would require: “an electricity system that operates without generating carbon emissions; a reduction in meat and dairy consumption across the UK; introducing low-carbon heating systems in homes; and planting more woodland” (Financial Times).
~~Action needed. The more ambitious target is welcome, but this does not guarantee sufficient action. For example, Green Alliance’s round-up of 2020 found “current government plans add up to less than a quarter of the emissions cuts needed to achieve its 2030 climate goal”. (BBC).
Issues in post-Brexit environmental regulation. Greener UK, a coalition of 12 major environmental organisations, has analysed new statutory instruments announced by DEFRA and found "significant governance gaps in the application, interpretation and enforcement of environmental law".
"Financial Stability in a Planetary Emergency". James Vaccaro (Re:Pattern) & David Barmes (Positive Money) have published a report for the UN Environment Programme exploring the role of financial regulators in a world of environmental breakdown. (Launch event video here)
Bitcoin mining threatens climate goals. An academic study forecasted China’s energy consumption from Bitcoin mining by 2024 will “exceed the total energy consumption level of countries like Italy and Saudi Arabia… and the carbon emissions will exceed the annual greenhouse gas emissions outputs of countries including the Netherlands, Spain and Czech Republic”.
Western finance funding new coal power plants. A study for Environmental Research Letters found that, whilst the vast majority of coal power construction is taking place in Asian nations, 40% of their funding often comes from banks and investors in wealthy countries.
Green Steel Stimulus to level up the North. IPPR North’s Jonathan Webb and Rosie Lockwood published a report on the importance of decarbonising the steel industry in the north of England. ‘Forging the Future’ found that 12,000 jobs for Northerners, and over 20,000 jobs in the rest of the UK could be saved through a Green Steel Stimulus to decarbonise the steel industry in the North by 2036.
Housing policy undermines 25-year Environment Plan. 31 senior conservation figures criticised the government’s planning policies as councils are being forced to develop close to high-importance rewilding sites (paywalled).
Row over Berlin’s rent cap. Berlin’s rent cap on 90% of city centre flats was ruled illegal last week. The rent cap was initially introduced to prevent price inflation fueled by hedge funds and private equity firms buying up property in the city. Investment lobbyists argued “it was inappropriate and illegal for the state to meddle with the private market” in a landmark case in Germany’s highest court.
Grenfell inquiry continues. Residents of Grenfell Tower gave evidence about expressing repeated safety concerns to their council landlord, Royal Borough of Kensington and Chelsea’s Tenant Management Organisation. The survivors were initially branded ‘rebel residents’ for raising the concerns.
Regulation and finance
Regulating surveillance and algorithms. Leaked publications suggested the EU is proposing regulations to limit the roles of AI and facial recognition technology, potentially banning ‘high risk’ AI systems used for policing, recruitment, social scoring or establishing priority for emergency services.
UK Fintech Week. Join the Financial Innovation Lab for an online event exploring whether the Kalifa Review into UK Fintech “went far enough to address financial inclusion and sustainability, and truly transform fintech”.
Central Bank Digital Currencies. The Bank of England and HM Treasury launched a task force on a Central Bank Digital Currency “a new form of digital money issued by the Bank of England for use by households and businesses” alongside cash “rather than replacing them”. (FT coverage)
~~International comparisons. The Atlantic Council and Belfer Center have produced a Central Bank Digital Currency (CBDC) Progress Map to illustrate where digital currencies are being issued in central banks across the world.
~~Can digital currencies further economic justice? Rachel Statham, Lesley Ranking and Douglas Sloan evaluated digital payment systems and their effect upon the balance of economic power in a report for the IPPR's Economic Justice Commission last year.
Work, inequalities and Covid-19
Women pay £17k more than men to borrow over lifetime. New research by Credit Karma revealed that women are paying £17,000 more than men over their lifetime to borrow, and this financial inequality is due to women having lower credit scores, driven by more conservative financial behaviour, relationship dynamics on who sorts the bills, and borrowing preferences.
UN experts react to Sewell Report. UN human rights experts have condemned the Sewell Report as an attempt to “normalise white supremacy”. Their statement reads: “In 2021, it is stunning to read a report on race and ethnicity that repackages racist tropes and stereotypes into fact, twisting data and misapplying statistics and studies into conclusory findings and ad hominem attacks on people of African descent.” (Guardian)
~~Racial inequality in the labour market. The Independent’s Ben Chu tweeted on evidence for discrimination against Black people in the UK labour market with a view to disarming the claims of the Sewell Report of the “overall convergence story on employment and pay”.
~~Latest employment statistics. The Resolution Foundation analysed this month’s employment figures, finding that there are signs of improvement in the labour market, but warned that since furloughed workers count as employed, the bigger picture is less rosy than the headline stats. (Twitter)
Scotland’s shifting economy over the pandemic. Laurie Macfarlane and Christine Berry published a report for the Scottish TUC outlining the winners from Covid-19, including online retail giants, textile manufacturers, Scotland’s fund management sectors, property owners and high-income households. (Thread summary here).
The adverse health effects of precarity and low sick pay. Research from the TUC found that workers in insecure jobs are twice as likely to have died of Covid-19 as those in other professions. Polling by Britain Thinks on behalf of the union group found that 67% of insecure workers said they had received no pay when off sick, compared with 7% of those in secure employment.
~~Unemployment and mental health. The Health Foundation estimated that an increase of 900,000 people in unemployment expected by 2022 will lead to an increase of 200,000 people with poor mental health. Their new report argued the benefits system and employment support programmes currently fail to properly account for the needs of those who are unemployed.
Scottish four-day week. Nicola Sturgeon announced ambitions for a four-day working week, promising a £10 million fund to trial it across Scotland if she stays in her seat following the 6 May Scottish Parliament elections.
International finance meetings. The Jubilee Debt Campaign summarised the IMF and World Bank Spring meetings and the G20 Finance Ministers meeting: G20 extended the Debt Service Suspension Initiative again (though this is the final extension) and the IMF cancelled $283m of debt payments for 28 countries. (Bretton Woods Project summary here)
Waiving vaccine IP rights. A group of 175 former world leaders and Nobel Laureates, including Gordon Brown, wrote to Joe Biden urging him to suspend intellectual property rights for Covid-19 vaccines to help boost global inoculation rates, as proposed by India and South Africa to the World Trade Organisation.
Industrial strategy and fiscal policy
Civilian Climate Corps. The Evergreen Collaborative, a US climate change advocacy group, outlined proposals for a Civilian Climate Corps - “workforce mobilization at a scale unseen in 90 years” - to “jumpstart a revolutionary clean economy, preparing millions for good-paying careers while also strengthening American communities”.
Care systems are infrastructure. Biden’s $2.3tn American Jobs Plan includes $425bn investment in healthcare and childcare. The FT’s Rana Foroohar explained how, even though some US politicians oppose the bill for it’s “expanded definition of infrastructure”, building back better should involve investment in care work as “human capital is the infrastructure of the 21st century”.
Green social infrastructure. The Feminist Green New Deal Coalition released a briefing on the intersection of care work and climate action, making the case for investment in high-quality jobs in the care sector as part of a climate and infrastructure package.
IMF urges further stimulus. The IMF urged Eurozone member states to boost spending by an extra 3% of GDP next year, prioritising transfers targeted at households in need, hiring subsidies, temporary investment tax credits and equity support schemes. The call comes after forecasts showed the 19-country bloc is to “rebound more slowly than other economies due in part to smaller fiscal stimulus”.
~~Impossible without new fiscal rules. NEF’s Frank van Lerven explained that Biden’s approved spending is 3x the size of estimated real GDP output gap, whereas European fiscal measures only add up 70% of the bloc’s real GDP output gap. Reducing this gap will require reform of the EU’s fiscal framework.
Tax it like Biden. TJUK's Robert Palmer argued that the Government should follow Biden's plan to tackle corporate tax avoidance in order to support the levelling up agenda in a piece for ConservativeHome.
Proposal for a G20 wealth tax. Economists Emmanuel Saez and Gabriel Zucman (University of California, Berkeley) proposed a tax on corporations’ stock shares for all publicly listed companies with headquarters in G20 countries. The authors propose a 0.2% tax on the value of company stocks to raise approximately $180bn each year, levied through share issuance to directly redistribute ownership of companies so that the tax avoids liquidity issues and does not affect business operations.
Public sector deserves credit for vaccine development. An academic study reconstructed “who paid for the decades of research” that led to the Oxford/AstraZeneca vaccine, concluding that 97% of research was publicly funded by UK government departments, British and American scientific institutes, the European Commission and charities including the Wellcome Trust.
~~Patent/innovation debate. The advocacy group Universities Allied for Essential Medicines UK refuted the PM and Big Pharma’s praise of ‘greed’, ‘capitalism’ and patent-driven innovation, stating that: “Our study shows that quite the opposite is true: public investment and international collaboration gave us the Covid-19 vaccine”.
~~Podcast on vaccine nationalism and IP rights. Listen to Common Wealth’s Miriam Brett and Tahir Amin from the Initiative for Medicines, Access & Knowledge on the New Economics Foundation’s Weekly Economics Podcast for more on these issues.