The government’s “empty” plan for growth. Last week Chancellor Jeremy Hunt gave a speech on the government’s plans to boost economic growth, focusing on “four E’s” of enterprise, education, employment and everywhere”. However, the speech was received poorly by business lobby groups who complained it offered no new policies. Kitty Ussher, chief economist at the Institute of Directors, said the speech should have included another E: “empty”.
Reducing buffers against financial shocks. The Solvency II reforms are part of the Chancellor’s 30 ‘Edinburgh Reforms’ that seek to deregulate the UK financial sector and “unlock investment and turbocharge growth in towns and cities across the UK.” The Solvency II regime regulates how much capital insurers have to keep as an extra buffer against shocks, to protect policyholders and the overall system in case of insolvency. It also restricts the capacity of insurers to invest in certain types of assets. The government is proposing to reduce the buffer capital by 65% for life insurers and 30% for general insurers, which British insurers estimate could release over £100bn over the next ten years.
Growing the green economy without risking financial and climate crises. The UK government’s deregulatory approach deviates from the growing international consensus around the use of active industrial policy to crowd-in private capital and channel investment in growth areas. For instance, the “biggest climate spending package in US history”, the Inflation Reduction Act, includes £369bn in tax breaks to direct private investment in low-carbon energy and electric vehicles. Earlier this month the European Commission pledged to make “unprecedented” investments in clean technologies and relax state-aid rules to compete with the US package.
UK Poverty 2023. The Joseph Rowntree Foundation has published its UK Poverty 2023 report which examines the characteristics and impacts of poverty across the UK. It found that 20% of the overall UK population were in poverty in 2020/21 and that nearly half of families in receipt of Universal Credit were in poverty.
Lessons from Germany. The UK needs a “German-style levelling up” programme to boost the fortunes of northern cities, argues Greater Manchester Mayor Andy Burnham. Speaking ahead of last week’s Convention of the North, Burnham called for a “version of the Barnett formula” for the north and to convert funding for Greater Manchester and other areas to a single grant as seen in Scotland and Wales. See our Weekly Updates from last week for more on Round 2 of the Levelling Up Fund.
Platform Protest in Germany. The Leeds Index of Platform Labour Protest has published the second in its series of country reports, examining how platform workers in Germany are trying to improve their working conditions. It outlines how strikes, public demonstrations and the formation of more works councils in the platform economy has advanced “the search for collective agreements” across the sector.
Support for strikes. Two in three Britons agree with the “key fairness arguments in favour of the strikes”, according to new polling commissioned by the Fairness Foundation, with the “huge CEO-worker pay gap the most popular fairness argument for strikes”. The research, conducted by Opinium, finds that 81% of people are concerned that people are “not getting fair pay for a day’s work”.
Benefits and low-paid work. More stringent benefit rules have pushed British people into “dead-end, low-paid jobs”, according to the Institute for Fiscal Studies (IFS). The research found that while benefit changes had “increased the incentives to find a job”, these jobs were often “part-time, low-paid and had scant chance of career progression”.
BBC impartiality review. The BBC has published the first review of its 10-Point Impartiality Plan examining its coverage of taxation, public spending, government borrowing and debt. Through interviews of 100 people inside and outside the BBC and reviews of 11,000 pieces of BBC content, it found that journalists often "lack understanding of basic economics or lack confidence reporting it" and often doesn’t make it clear that policies or phrases such as “fiscal rules” are political choices, not inevitable outcomes. For a summary of the key findings, see our Twitter thread. We will be covering the review in more detail in next week’s Focus.
Tax evasion and avoidance. Former government minister Nadhim Zahawi is not alone in being “careless” with his taxes, argues Tax Justice UK’s Robert Palmer. HMRC misses out on £6.1 billion a year due to people “failing to take reasonable care” with their tax returns. The tax system allows some people to pay very low levels of tax, argues Palmer, with income from wealth being taxed at much lower rates than income from work.
Drax influencing. Biomass power station operator Drax, “the UK’s largest single source of carbon dioxide” is “applying intense pressure across government departments to influence energy policy in its favour”, according to new research by DeSmog. A set of documents seen by DeSmog suggest that Drax is lobbying senior ministers and “pushing for answers” on bioenergy with carbon capture and storage (BECCS) which experts say is “costly and unproven”. DeSmog’s Phoebe Cooke has summarised the findings in a Twitter thread.
Elite polluters. The richest 10% of people are responsible for almost half of the annual greenhouse gas emissions behind climate change, according to a UN-backed report led by Thomas Piketty. “The concentration of emissions created a “strong incentive for policies” targeting the most polluting individuals, such as wealth taxes”, the report argued.