The world faces many serious, interconnected environmental crises, such as the degradation of soil health, pollution and the mass extinction of species. These combine with climate breakdown to present an unprecedented set of economic and social risks to all countries. This is a profound challenge for governance and business and has been described as the ���defining challenge of our time�.
Taking this risk seriously will require far more than just treating these crises as isolated policy issues. Historically, responsibility for the environment has tended to be the focus of specific government departments. Business-friendly approaches, such as voluntary agreements and promoting deregulation, have often been prioritised over deeper change.
Many organisations have proposed economy-wide measures or approaches that would seek to hardwire environmental limits into the daily activity of governments and business. These include the UN�۪s 17 Sustainable Development Goals (SDGs), which are a potentially transformative global agenda for 2030 on poverty, development and the environment, but have not yet been adequately implemented by countries including the UK.
Other policy approaches include the concept of a circular economy, under which linear, throwaway business models are replaced with ones that regenerate nature and re-circulate materials. Other ideas include the better economic valuation of nature, incorporating this value into economic decision making, although this is practically and ethically complex.
IPPR warns that we are already living in the age of environmental breakdown which may cause the collapse of society and the economy, but also warns that decision-makers and key institutions are not taking this critical threat seriously.
The UKSSD network, which brought together organisations working on the SDGs, assesses the UK�۪s progress, finding that it is only performing well on less than a quarter of the targets. Bond find a similar story for the UK�۪s global contribution.
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�ۍIPPR proposes a Sustainable Economy Act for the UK, which would set a range of environmental limits on economic activity. Separately it proposes a number of new institutions to manage the risk of environmental breakdown and increase resilience, including a nationwide Future Generations Act modelled on the Welsh Act.
The UK has one of the highest levels of income inequality in Europe, with a sharp and sustained 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.
The income gaps between richer and poorer households have been increasing in absolute terms, even if measures of relative inequality have remained stable. 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.
The Gini coefficient hides the "runaway rise" of the richest 1%, who now take 8% of all national income (compared to 3% in 1970 and 6% in 1990). Changing the way we measure income, 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. From 2016 to 2018, the wealthiest 12% of households owned half of the UK�۪s wealth, while the least wealthy 30% of households held 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 to 2008.
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.
A review by the British Academy, bringing together 200 academics and headed by the Government's chief scientific adviser Sir Patrick Vallance, argued ���failure to understand the scale of the challenge ahead and deliver changes would result in a rapid slide towards poorer societal health, more extreme patterns of inequality and fragmenting national unity.�
The IFS Deaton Review's New Year Message summarises how inequalities widened in 2020 and outlined the action needed in 2021 to address this.
Analysis published by the LSE of 18 OECD countries over the last 50 years suggests that tax cuts on the rich have not had a significant impact on unemployment or growth, while they have increased income inequality.
The Resolution Foundation has found that the first wave of furlough pushed 2 million employees below minimum wage, while 1 in 8 furloughed workers have defaulted on a payment, heralding a private debt crisis for lower-income households.
The pandemic has sharpened the pre-existing economic disparity between men and women. Women are more likely to have lost work and income. They are more likely to work in low-paid, insecure frontline roles; out of over 1 million “high risk, poverty pay” workers, 98% are women. In many of the sectors that face longer-term instability due to Covid-19 - retail, hospitality, tourism - women are overrepresented.
Meanwhile, as our public services are placed under unprecedented strain, women are picking up the slack with even more unpaid domestic and care work. During school closures, for instance, 70% of mothers reported being completely or mostly responsible for homeschooling, and mothers were 50% more likely to be interrupted during paid work hours. This has exacerbated the uneven burden of care, which exerts a toll on women’s mental health and threatens to undermine their economic prospects over the long-term, compounding the lack of recent progress in closing the gender pay gap before the pandemic.
At the most extreme, more women are now suffering from domestic violence - visits to Refuge’s National Domestic Abuse Helpline website have increased by 950% since the onset of the pandemic. Low income and migrant status both significantly increase women’s vulnerability to domestic abuse, underlining the need for policymakers to understand how gender intersects with other axes of inequality.
The Fawcett Society has collected evidence on the social and economic impacts of coronavirus on women and how these intersect with other axes of inequality.
A July survey of 19,950 mothers from campaign group Pregnant Then Screwed found significant employer discrimination against mothers, e.g. 15% of mothers had been or were expecting to be made redundant during the pandemic, 46% of which said that lack of childcare provision played a role in their redundancy.
In the quarter of a century since 1996, UK house prices have risen 161%: from around 4.5 times average household income then to around 8 times now. In 2018 renters spent 33% of their household income on rent, rising to 40% in London.
Affordability is a nationwide problem, with rural areas having a higher ‘affordability gap’ than urban areas. It is particularly acute in England, where in 2017 new build homes were unaffordable to 84% of renting families.
Unaffordable housing is linked to a sharp fall in home ownership, especially among young people and families with children, and to an increase in homelessness. Prior to the pandemic, the number of rough sleepers had more than doubled since 2010.
It is now estimated that more than 8m people in England – around 1 in 7 – are living in an unaffordable, insecure or unsuitable home. A range of different types and tenure of housing are needed – not just homes to buy, but better and more affordable social and privately-rented accommodation.
The National Housing Federation has conducted a ‘state of the nation’ assessment of the housing crisis, finding high house prices and rents, unsuitable or poor quality homes, and the overall shortage of new homes. It reveals that more than 3.6m people are living in overcrowded homes, 2.5m people can’t afford their rent or mortgage and another 2.5m adults are stuck living with parents, an ex-partner, or friends because they can’t afford to move out.
The housing charity Shelter analyses the particularly acute housing crisis in London, where rising private rents and a fall in the number of social homes has left tens of thousands of families struggling with unaffordable and insecure housing, and nearly 1 in 50 adults now homeless.
The Commission on Housing and Wellbeing analysed the need for a new approach to housing in Scotland, showing how better homes could contribute to improving neighbourhood and community, economic wellbeing, health and education and environmental sustainability.
Automation and artificial intelligence both promise to raise living standards, both through improved goods and services (e.g. more accurate medical diagnoses, for a non-consumerist example) and through improving the productivity and reducing the toil of workers.
Some fear, however, that technological advancement in these areas will have negative ramifications for the labour market. At the extreme end of these concerns is that much of human labour will be rendered obsolete, leading to technological “mass” unemployment. Sceptics highlight that similar arguments have been made in the past and that new technologies could create as many jobs as they destroy, but that nonetheless these developments threaten to exacerbate inequality and alienation in the labour market.
Proposals for how we should respond to these threats vary according to the analysis. Most speak to the need to manage automation to mitigate its impact on inequality, both between workers and between workers and capital owners. Those who believe that the majority of labour could be fully automated further propose the development of institutions that either better share available work (through shorter working time, for instance) or support humans in its absence (e.g. UBI).
Recent research published by the IMF (Jan 2021) examines how the Covid-19 pandemic could interact with longer-term trends of automation, concluding that “concerns about the rise of the robots amid the COVID-19 pandemic seem justified”.
The IPPR Commission on Economic Justice outlined proposals for “managing automation” to ensure that automation does not exacerbate existing inequalities and concentrate wealth in the hands of capital owners.
Dr Carl Benedikt Frey, a leading scholar of automation director of the Oxford Martin School’s Future of Work research programme, examines in his book The Technology Trap how the history of technological revolutions can shed light on the political and economic challenges of automation, and warns against increasing inequality. (Lecture here.)
MIT economist Professor Daron Acemoglu argues that the American tax code’s privileged treatment of capital is encouraging firms to embrace inefficient levels of automation at workers’ expense, demonstrating the importance of correct policy for managing the challenge of automation.
The Institute for the Future of Work launched a project to develop best practice guidance for businesses as they introduce technology to balance employee concerns about work intensity, surveillance and work-life balance.
There is nothing inherently fixed about working Mondays to Fridays – indeed ‘normal’ work hours have changed considerably over time, with the ‘weekend’ as we know it one of many successful union- and worker-led demands for less time at work. The shorter working week has been a longstanding proposal for helping reduce work-associated pollution, increase the wellbeing of workers and reclaiming time for leisure and important unpaid activity such as care.
It is increasingly central to proposals for economic rebuilding after Covid, with its advocates – including a growing number of governments and companies – seeing it as a way to ‘build back better’ after the virus by better sharing available work and improving work-life balance. Its supporters also claim it would address the UK’s poor labour productivity relative to international peers.
Advocates of the shorter working week emphasise that a reduction in working time is not a silver bullet, and that supporting reforms are needed to ensure it doesn’t exacerbate wider injustices. For instance, a key feature of most proposals is that a reduction in working time should not be accompanied by a reduction in pay, especially for low earners.
A widely cited template for a shorter working week is the German Kurzarbeit (short-work) scheme (summarised here by the New Economics Foundation), which has been resurrected in the light of Covid to help support workers through its employment impacts; the German industrial union, IG Metall, secured an agreement to move its members to a 28-hour working week. In New Zealand, Jacinda Arden has proposed a 4-day week as a way to rebuild New Zealand's economy after Covid, and there are many other examples.
The shorter working week is part of the International Labor Organisation’s concept of ‘time sovereignty’ for workers, which aims to reframe the concept of workers’ time to give them greater autonomy.
A survey by productivity charity Be the Business found one in five small British firms are at least actively considering a four day week. Nearly 300,000 small and medium-sized UK businesses and over 840,000 employees are already working a four-day week and over 1 million UK firms and 3 million employees could move to a four-day week in the near future.
A comprehensive report from Autonomy and the 4 Day Week campaign situates the shorter working week as a response to some of the fundamental factors changing the nature of work in the UK, such as precarious work, the threat of automation, and inequalities. More recently, in response to the pandemic, Autonomy has proposed a reduction in working time to tackle rising unemployment.
Responding to claims that moving to a four-day week would cost the public sector £17 billion annually, Autonomy calculates that that the net cost would be £3.55 billion or less – noting that this doesn’t take into account the wider benefits of the associated creation of 500,000 new jobs across the public sector.
Since the 1970s, in common with many other countries, the UK has seen a declining share of national income go into wages and salaries and a rising proportion returned to the owners of capital and assets. This period has coincided with a dramatic fall in trade union membership.
Many economists argue that the two are closely connected. Through collective bargaining, trade unions are able to raise workers’ wages and to improve their working conditions. Where unions are absent, employers have greater relative power.
This recognition has led to calls for a revival of trade unionism and of collective bargaining. In a more fragmented workforce where many workers are now self-employed or on precarious contracts this is difficult, but many trade unions have been finding ways to organise insecure workers.
The New Economics Foundation and the University of Greenwich have set out the economic case for trade unions, demonstrating the relationship between wage levels and union membership.
The TUC has called for a series of reforms to make it easier for workers to negotiate collectively with their employer, and to broaden the scope of collective bargaining rights to include all pay and conditions, including working time and holidays and equality issues.
Arguing that stronger trade unions can boost productivity, particularly when the fruits of automation need to be more fairly shared, IPPR argues for easier statutory recognition to enable firm-level collective bargaining, accompanied by sectoral collective bargaining in low-paid sectors.
The Centre for Labour and Social Studies’ (CLASS) Work in 2021: A Tale of Two Economies brings together analysis of ONS data, interviews with trade union reps and a survey to paint a picture of workers’ differentiated experiences of the pandemic and how they are organising in response.
Proposals for Universal Basic Services take the principles underlying the NHS - the universal provision of healthcare, free at the point of need - and argue these should be applied to a wider range of public services, such as transport, shelter, food and information (e.g. Internet access).
UBS is often contrasted to UBI (above). While the two proposals are not diametrically opposed, the difference in focus leaves room for disagreement. Some UBS supporters argue, for instance, that the best way to spend our resources and political capital in ensuring people’s core needs are met is in the radical expansion of public services, and that unconditional cash transfers would not achieve the same uplift in living standards.
Conversely, while many progressive proponents of UBI support wider and improved provision of public services - e.g. health, social care, education, information - they take issue with some proposed universal basic services (e.g. food provision) and argue that cash transfers are a more efficient, less paternalistic route to ensuring some basic needs are met.
The most comprehensive case for Universal Basic Services can be found in the UCL Institute for Global Prosperity’s (IGP) literature review on the theory and practice of UBS (2019). The review builds on the Institute’s original 2017 proposal, the first articulation of UBS.
Professor Dame Henrietta Moore, founder and director of the Institute for Global Prosperity, writes on how UBS could invigorate local economies in the context of Covid-19 and the work IGP has been doing with local authorities in this area.
UBS supporter Anna Coote and UBI supporter Barb Jacobson debate the merits of their proposals with Ayeisha Thomas-Smith for the NEF podcast.
Professor Guy Standing argues against the idea that Universal Basic Services are an alternative to UBI, engaging with a number of arguments that UBS supporters make against Basic Income.
Universal Basic Income (UBI) is a regular cash payment made to all (universal) without means-testing or work-requirements (unconditional). UBI has received increased attention during the pandemic as a means of supporting incomes through the economic crisis - avoiding the problems of gaps in coverage highlighted by ExcludedUK and others - but some propose that UBI could form a central part of our social security system in the long-run.
Supporters of UBI argue it would make our social security system easier to understand and reduce the bureaucracy, intrusiveness and stigma associated with claiming conditional benefits. They also claim the security it offers would support workers in making better long-term choices, recognise valuable unpaid work (e.g. care work) and be robust to the threat of ‘technological unemployment’. Critics of UBI question its cost and benefits relative to more targeted social security. Progressive criticism points to potential negative implications for the wider social security system and provision of public services, while conservative criticism tends to emphasise the danger of reducing incentives to work.
There are significant differences between various UBI proposals, concerning e.g. the size of the payment (would it be below or above subsistence level?) and to what extent it would either replace existing social security. There are no examples of UBI being implemented at a state-level, though there have been a number of trials and experiments, especially in recent years.
The House of Commons Library’s research briefing on “The introduction of a basic income” (Oct 2020) offers a great overview of the debate around introducing basic income in the UK, highlighting research from the University of Bath as the most detailed work on what a UBI scheme in a British context would look like.
Professor Guy Standing outlined the moral and practical case for “Basic Income as Common Dividends” (2019) in his independent report to the Shadow Chancellor on piloting a basic income scheme in the UK.
A policy paper for the Women’s Budget Group Commission for a Gender-Equal Economy examines the pros and cons of basic income from a feminist perspective, and reviews recent proposals in this area.
The Basic Income Earth Network (BIEN) website features the latest news and research from supporters of UBI around the world.
The Liberal Democrats and the Green Party are both committed to campaigning for UBI, and in October 2020 a cross-party group of over 500 parliamentarians and councillors wrote to the Government calling for UBI trials.
The New Economics Foundation’s Anna Coote offers a critique of UBI from a progressive perspective, and argues that Universal Basic Services (below) would be a better route to radical social security reform, while Harvard political theorist Alyssa Battastoni wrote for Dissent on the “false promise” of UBI for radicals.
The two main provisions for children in the social security system are Child Benefit and the child element of Universal Credit (or child tax credits in the legacy benefits system). Child Benefit is issued for all children, although there is a reduced effective rate for all children after the eldest and families with one or more higher income earners (over £50,000 p.a.).
Means-tested support for families through Universal Credit or child tax credits is largely limited to two children. As of July, this “two child limit” affected 911,000 children. This aspect of government child support has faced particular scrutiny for increasing financial pressures on larger families, in which the rise in child poverty over the last decade has been concentrated. It has also been criticised for the pressure it places on survivors of abuse under the “non-consensual sex exemption”.
The backdrop to this is a sharp uptick in the cost of childcare and the financial fragility of the childcare sector. Before the pandemic, childcare costs had increased 3x as quickly as wages since 2008 and a number of providers faced closure. This has been exacerbated by Covid-19; now 25% of providers fear closure in the next year.
The Child Poverty Action Group’s (CPAG) work “2020 Vision: Ending child poverty for good” brings together contributions from a wide range of experts and policymakers and outlines a “child poverty strategy” (in chapter 19 of the report). Their recommendations are wide-ranging - with respect to social security, they advocate removing the two-child limit and benefits cap and a universal programme of pre-school childcare.
IPPR and the Trades Union Congress make the case for a “family stimulus” (Oct 2020), modelling the benefits of either doubling child benefit or scrapping the two-child limit and benefits cap for means-tested child support. They also outline proposals for targeted investment in childcare infrastructure.
The New Economics Foundation has made the case for a Childcare Infrastructure Fund to sustain the childcare sector in the face of both Covid-related and longer-term pressures. (See also Sophie McBain’s reporting for the New Statesman and Women’s Budget Group analysis on the state of the childcare sector).
The Women’s Budget Group have outlined how certain aspects of social security - including the two child limit (and linked ‘rape clause’) and the distribution of UC at a household level - fail survivors of domestic violence and abuse across the four nations of the UK.