Businesses are fundamental to any economy. They come in all shapes and sizes, from sole traders to multinational giants. But in recent years there has been growing criticism, both of the way some businesses behave, and of how they are governed. Much of this has come from within the business community itself.

A key argument is that many large businesses have lost their sense of ‘purpose’. Increasingly focused on financial metrics of success, many are now seen as prioritising short-term returns above long-term investment, and the interests of their shareholders above those of their wider ‘stakeholders’, such as their workers and consumers.

Partly as a consequence, new models of business have become more prominent. These include companies committed to an explicit statement of purpose. New types of ‘stakeholder’ corporate governance and financial investing are on the agenda, along with new forms of ownership giving a greater stake to workers. In these and other ways, an increasing number of businesses are seeking to change their impact on society and the environment. But some critics have expressed doubt as to whether some of these initiatives are far-reaching enough.

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. According to the Gini coefficient, income inequality has stayed relatively flat since 2000, but other measures tell a different story.

First, the income gap between richer and poorer households has been increasing in absolute terms, even if measures of relative inequality like the Gini coefficient have stayed stable. Second, you can measure relative inequality itself in different ways. If we focus on the poorest 20% of households, for example, we see that incomes for this group are now no higher than they were 15 years ago, while the average household has seen its income rise 9% over this period. Similarly, the Gini coefficient hides the accelerating rise of the richest 1%, who now take 8% of all national income (compared to 3% in 1970 and 6% in 1990). Third, changing the way we measure income - such as by factoring in housing costs, or income from capital gains or inheritance - can reveal a widening disparity even over the past decade.

Wealth is far more unevenly distributed than income. Between 2016 and 2018, the wealthiest 12% of households owned half of the UK�۪s wealth, while the least wealthy 30% of households held just 2%. In the past decade, the wealth gap has increased: the wealthiest 10% hold �2.5m more in wealth per household than the least wealthy, a significant increase from the �1.5m gap in 2006-08. For the most part, income and wealth are tightly linked, meaning that the households most exposed to income shocks often do not have savings to fall back on. This goes some way to explain the increase in low income households turning to debt to cover essential needs - rent, food, utility bills - over the past decade.

Covid-19 lockdowns have caused incomes to evaporate for many sectors and households, as businesses are closed and economic activity falls. Many people are reliant on government grants and loans to avoid insolvency and defaulting on debts. The challenge is to prevent these debt burdens from leading to a financial crisis.

There are also concerns about equity; one analysis toward the beginning of the pandemic estimated that nearly half of the government�۪s furlough scheme would be spent on rent and debt repayments, ���amounting to an implicit bail-out of landlords and banks".

Central banks can cut interest rates still further, and continue to use asset purchasing programmes to shore up the wider system - otherwise known as quantitative easing. Governments can guarantee or write off all or a portion of loans made to corporations and households, and can also help to increase the incomes of households or corporations to ensure they are able to service their debts in the short term.

Taxes on finance, currencies and banking can serve a number of important purposes. They can reduce volatility in markets and reduce excessive speculative activity.

They guide towards or against particular types of financial activity ��� for example discouraging high risk parts of the industry that serve little direct social purpose, like high-frequency trading. They can also raise revenues that can be spent by the state on delivering wider economic objectives, such as a more inclusive finance system and funding the net-zero transition.

This is particularly relevant in the aftermath of an economic crisis such as that triggered by Covid-19, where the state has needed to act to prevent or minimise financial collapses.

Since the financial crash policymakers have adopted a macroprudential approach to financial regulation focused on combating systemic risk, rather than a microprudential approach focused on individual institutions.

These measures have helped to reduce the risk of failure in the banking system in wealthier nations but banks are increasingly struggling to meet their regulatory requirements during the pandemic. The economic shock triggered by Covid-19 has exposed some remaining problems across the system ��� for example, many large financial institutions outside the realm of traditional banking remain under-regulated, such as hedge funds.

Proposals for better regulation of the financial system can be crudely divided into two areas. First, those that might help the system keep working in the event of an economic crisis, including changing capital requirements and lowering dividend payouts in lean times. Second, longer-term reforms to build both resilience and ensure wider social and environmental purpose. Many of these are outlined below.

The UK�۪s banking system is unusual in its dominance by commercial banks.  Many other countries have a more diverse range of banks ��� more publicly-owned banks at the national and local levels, and a more thriving cooperative and mutual banking sector.  

Such a network of ���stakeholder banks�۪ can help a country�۪s financial resilience, ensure that lending reaches the parts of the economy left behind by mainstream finance, and deliver targeted investment to meet national or local strategic economic goals such as the green economy.

The UK is one of the most geographically unequal countries in the industrialised world. Large disparities in wealth, opportunities and health exist within and between regions. Longstanding areas of urban deprivation have the highest levels of unemployment.

Compared to many other countries, local areas lack wide-ranging powers and resources. National decisions from the recent past, most notably austerity, have further undermined the ability of people and places to shape their own resilient economic future. Between 2010 and 2018, local authorities have seen 24% cuts to their funding with cuts falling disproportionately on councils in more deprived areas. Many of the bodies that do exist, such as Local Enterprise Partnerships, are criticised as undemocratic, under resourced and lacking the appropriate powers to make effective change.

Giving greater power to local authorities and communities is not just about reversing past cuts. Two leading ideas are to reform and reinvigorate local and regional governance, including through greater devolution within England; and for local leaders to pioneer Community Wealth Building, economic strategies that seek to keep as much wealth as possible circulating around the local economy.

There are major challenges for the development of new medicines in the coming years. Foremost among them is the need to ensure that treatments and vaccines are widely available and fairly priced.

The threat of antibiotic resistance is a major looming health crisis. It has been driven by the overuse of existing antibiotics and the lack of innovation in new ones. The drive for profits in the global pharmaceutical industry remains at the heart of the problem. The challenge is how to align this with the public interest.  

The Covid-19 crisis has revealed the difficulties of global cooperation on pharmaceutical development. The UN�۪s attempt to set up an information pooling scheme to share intellectual property around vaccines has been strongly resisted by the industry. Rich countries are prioritising vaccine development for their own populations first.

Proposals for reform fall into three main categories. First, more publicly-directed pharmaceutical development models. Second, greater global cooperation on vaccines development and distribution. Third, limiting the risks of antibiotic resistance by reducing their overuse in human and animal medicine.

Far more money needs to be mobilised to avoid the worst impacts of the environmental emergency. Not only must investment in green activity increase, funding for environmentally destructive activity must decrease.

Governments are committing to a green recovery from the pandemic and interest rates are at a record low - so a range of voices argue that there is a case for greater public and private spending on sustainable investments.

Evidence shows that sustainable investments deliver high financial returns and can create lots of quality jobs, offering an opportunity to improve social and economic outcomes as well as restoring the environment.

The UK has committed to reducing emissions to net zero by 2050. This means having a balance between the emissions produced and those taken from the atmosphere. Many consider 2050 too late given the urgency of climate emergency.

Economic decisions taken in response to the pandemic may help accelerate, or further slow, the transition to an environmentally sustainable economy. Demands for a green recovery are adding new urgency to existing calls for industrial strategy and economic policy to prioritise sustainability.

Before the pandemic environmental groups said 2% of GDP needed to be spent in the UK to adequately tackle the climate and environmental emergency. Without similar action around the world there will be little hope of avoiding the most destructive consequences of the emergency.