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Strengthening the social safety net

Strengthening the social safety net

  • New commission: Yesterday, Conservative-aligned think tank Bright Blue launched a cross-party commission to advise on reforms to the social security system. The commission brings together Conservative MPs Shaun Bailey and Stephen Crabb alongside Labour's Baroness Lister, the TUC's Anjum Klair, campaigner Jack Monroe and other academic and civil society figures. (Guardian coverage)
  • ~~No return to the 2010s. Bright Blue Chief Executive Ryan Shorthouse commented: "After the last economic crisis in the late 2000s, those claiming working-aged benefits experienced deep and disproportionate cuts to their incomes as the Government repaired the public finances. That can't happen again."

  • Budget 2021. Shorthouse's statement contrasts with the Chancellor's relatively austere stance on social security at the March Budget - only deciding to extend the £20/week Universal Credit uplift at the eleventh hour, before a cliff-edge reduction in September that the Institute for Fiscal Studies' Paul Johnson has branded "remarkable" and "unanswerable".
  • ~~What would ending the uplift mean? The Resolution Foundation highlights that ending the uplift as planned would see the basic level of benefits cut to levels last seen in the 1990s, right as unemployment is set to peak, which they argue would be both"disastrous for family incomes" and "bad macroeconomics (pp. 23-24).
  • ~~Select committee response. Stephen Timms MP, head of the Work and Pensions Committee, has warned that ending the uplift in September "will be very difficult to justify" and criticised the Government for having "once again" ignored the needs of those on pre-UC 'legacy benefits', including many disabled people and carers.
  • ~~The uplift is not enough. Even with the uplift, analysis from the New Economics Foundation finds that ~21 million people are set to fall into hardship by May, while the Joseph Rowntree Foundation has argued the Chancellor's social security and housing decisions will mean "more people are swept into poverty".

  • Longer-term reform. In addition to assessing the changes to social security introduced during the early stages of the pandemic, the commission hopes to: "consider which principles and approaches should guide future policies on social security, and develop a policy programme supported by the public and policymakers from across the political spectrum".

  • Momentum for change. The commission comes amid increased scrutiny of Britain's social security system during the pandemic, leading to calls for reform from across the political spectrum. Last year, for instance, the cross-party House of Lords Economic Affairs Committee published a comprehensive overview of the failings of the social security system in its report "Universal Credit isn't working". The authors argue that UC has "undermined the security and wellbeing of the poorest in our society" and outline a suite of recommendations to improve the system. Other proposals for reform include:
  • ~~Trades Union Congress: The TUC (represented on Bright Blue's commission) has called for a suite of reforms, including raising the basic level of UC and legacy benefits to 80% of the national living wage; removing the five-week wait for first payment, conditionality requirements, and 'No Recourse to Public Funds' restrictions on migrants' access to support; and reform of Statutory Sick Pay so that it is paid at the Real Living Wage and that low-income workers can access it.
  • ~~Minimum income guarantee: The New Economics Foundation (NEF) outlines how Universal Credit can be reformed to address the immediate crisis and improve the system over the longer-term in their "Universal Credit in the Time of Coronavirus" briefing, which proposes a Minimum Income Guarantee, amongst other measures.
  • ~~Supporting families: In view of rising child poverty, the TUC and IPPR made 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.

  • Investment in public services. One question for the Bright Blue commissioners is whether their examination of the social safety net goes beyond the welfare system to include public services. Many have argued that cuts to public services have increased the strain on households and the social security system, and that provision of welfare and services like social care should be seen as part of the same system and examined holistically (e.g. NEF's Alfie Stirling and Sarah Bedford).

  • Universal Basics. Earlier this month, NEF's Anna Coote and Compass's Neal Lawson called for enhanced public services integrated with a basic income to form part of a new social guarantee after the pandemic. The article is notable, given that - as the authors note - UBI and UBS have often been framed as mutually exclusive alternatives in debates around social security reform.
  • ~~Universal Basic Income. 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.
  • ~~Universal Basic Services. 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.

Macroeconomics, recovery and economic targets

  • Decade of upheaval. The British Academy has warned that society will continue to feels the effects of Covid-19 for a decade or more without urgent policy reform in its new multi-disciplinary evidence review, following consultation with over 200 experts. The accompanying policy analysis reviews the gaps in public policy making that the Government must address in such a reform. (Guardian coverage here)

  • State of health and care. IPPR published its State of health and care: The NHS Long Term Plan after Covid-19 report recommending a package of six changes that together form a "£12 billion blueprint to 'build back better' health and care", including an urgent 5% pay rise for NHS staff, social care free at the point of need for all and a living wage guarantee for care workers and changes to immigration rules. (Twitter thread summary here/New Statesman coverage here)

  • Practical guide for wellbeing economics. WEAll have produced a Wellbeing Economy Policy Design Guide to help policymakers design innovative policies, visions, frameworks and measurements to build more just and sustainable economies through wellbeing economics.
  • ~~Scottish wellbeing budgets. WEAll also produced a report calling for the introduction of wellbeing budgets by the Scottish Government. The report focuses on redirecting finances and tackling root causes of inequality and poverty in Scotland as part of the recovery effort.

Environment

  • EU Green Recovery Tracker. The Wuppertal Institute and E3G have produced a green recovery tracker to monitor national recovery plans and their effect on climate change mitigation efforts. The tracker contains deep-dives into specific countries to highlight good and bad practices, knowledge hubs of relevant documents and a sectoral analysis tool to allow for international comparisons.

  • ECB Climate stress test. The European Central Bank has undertaken a climate stress test of 4 million companies and 2,000 banks, showing a "super major-wave of defaults by corporate banks is on the way without a 'timely and effective' transition to a greener economy". The climate stress test is a first of its kind, and the most comprehensive, combining a comprehensive dataset of millions of companies with data on bank exposures and a set of climate and economic development scenarios. (Thread here)

  • Industrial Decarbonisation Strategy. The Government released its Industrial Decarbonisation Strategy, including an industrial decarbonisation roadmap that could create or support 80,000 jobs over the next 30 years, by catalysing the growth of new low carbon industries in the UK and helping existing high-carbon industries transition to a greener future. (Key takeaways here)

  • An emergency plan on green jobs for young people. Friends of the Earth published a report estimating the economic scarring from unemployed young people during the pandemic in the UK. The report looks at the green skills gaps and shortages by sector and developed a Green Apprenticeships proposal to create 250,000 Green Apprenticeships over the next 3 years in renewable energy, woodland creation and domestic retrofits.

  • Greenwashing risk. The Former CIO of asset management firm Blackrock argued that the financial sector is greenwashing the public using a "dangerous and self-serving 'free markets self correct' thesis that only serves to delay overdue systemic reforms... making sustainable investing merely PR, which is a distraction from the problem of climate change."
  • ~~Preventing greenwashing. Finance Innovation Lab's Jesse Griffiths explained that putting a social or environmental mission at the heart of purpose-driven investment requires different ownership and governance structures alongside mission-focussed culture and leadership.

Industrial strategy

  • Advanced Research and Invention Agency. Dominic Cummings appeared before the HoC Science and Technology Select Committee last week to answer questions about the UK۪'s £800 million Advanced Research and Invention Agency, an independent scientific research agency to fund "high-risk, high-reward" research projects. (Select Committee hearing here)
  • ~~Outside of ministerial control... The agency is set to be at arm's length from ministerial direction and won't be led by any of the 'Grand Challenges' that guided the government's Industrial Strategy under Theresa May. This goes against the recommendation of Mariana Mazzucato and the HoC Science and Technology Select Committee to "focus on 'mission-based' or 'challenge-led' research, aligned with the long-term goals of the nation"
  • ~~...but Director appointed by BEIS. Instead, ARIA's director will have significant control over the allocation of research funding and will be exempt from rules designed to prevent taxpayers' money being spent on risky projects. BEIS will begin the recruitment process soon.  

  • Plan for Growth vs Industrial Strategy. Commenting on the Government's decision to scrap the Industrial Strategy Council, IIPP's Mariana Mazzucato, Laurie Macfarlane and IPPR's George Dibb argued: "Without a coherent, transparent, and publicly accountable framework to steer government policy, the UK risks descending further into cronyism or repeating past mistakes... The Johnson government's new plan appears to be a restatement of the challenges outlined in May's industrial strategy, but with a less thorough framework for policy responses."

  • An industrial strategy for care. CLES's Isaac Stanley and Common Wealth's Adrienne Buller and Mathew Lawrence released a report outlining a people-centred industrial strategy for a care-led recovery in England. The report is backed by UNISON and the TUC calls for councils ending the use of private care providers, a living wage for care workers and properly funding care through progressive taxation. (Independent coverage here)

Work and incomes

  • "The end for bogus self employment". GMB wins its fourth court battle with Uber over the rights of their workers to holiday time, pension plan auto-enrolment, guaranteed minimum wage and the entitlement to breaks. GMB suggests that "other gig economy companies should take note".
  • ~~Dispute over 'working time'. The FT's editorial board argued that "Uber has taken a half-step on workers' rights", as Uber has conceded their staff are workers and not self employed, but will only pay them a minimum wage for when they are assigned to trips, and not for the full time use of the app as the Supreme Court ruled.

  • Long Covid in the labour market. The Resolution Foundation published its third report analysing the impact of the pandemic on the labour market. Headline findings include that half of British workers suffered a real-terms pay cut in 2020 and sharp falls in pay growth for young workers. The authors advocate for a "gradual, conditional and differentiated withdrawal" of the JRS, better targeted support for the self employed and a variety of initiatives to tackle youth and long term unemployment. (Guardian coverage here)

  • Shorter working-time saves jobs. A new study published by Eurofound found short-time working schemes "buffered the impact of COVID-19 on the labour market" and called for "establishing permanent short-time working or similar systems that can be activated in crisis situations".

Ownership

  • Imperialism and asset ownership. Christine Berry's latest piece for Autonomy argued that asset ownership in the UK economy cannot be understood outside of Britain's imperial past.

  • Privatisation of Natwest continues. The government sold off £1.1bn of shares in NatWest, crystalling a loss of 1.8bn to taxpayers in a move the Treasury described as an "important step" in returning the bank to private ownership.