Beyond COvid: The Digest

"Build Back Greener"

October 12, 2020
SUMMARY
  • Our In Focus section this week analyses the Government's pledge to "build back greener", following the Prime Minister's Conservative Party Conference speech last week.
  • "Robots don't get sick": Register for our panel discussion on automation and Covid-19 with Dr Carl Frey here.
  • Read our In Brief and Reflections sections for the latest research and analysis around economic recovery and reform Beyond Covid.
  • To get in touch with feedback or suggestions for next week's Digest, email Michael on michael@beyond-covid.org.

In Focus: "Building Back Greener"

  • In his party conference address week, the Prime Minister announced a £160m investment package into offshore wind as the first stage of his ten-point plan to “build back greener”.
  • ~~The FT reports that future announcements will cover hydrogen fuel, carbon capture and storage, and bringing forward the ban on diesel cars - but that Johnson’s promise to increase the 2030 target for offshore power generation to 40GW is a repeat of his manifesto pledge in the 2019 General Election.
  • ~~It is hoped that the rest of the plan, expected by November, conforms to the Committee on Climate Change recommendations on the urgent action needed to meet the UK’s net zero target (summary here).
  • A new direction of travel? Johnson’s speech marked the first time a party leader centred climate in their conference address, and the Government’s adoption of a full-throated green recovery narrative was tentatively welcomed by green groups. But there is concern over whether the Government’s rhetorical commitment to “building back greener” will be backed by the necessary policy steps and funding commitments.
  • On the offshore wind pledge itself, The Economist writes that “meeting the 40GW target will be a stretch” and that the proposed investment sums are “trifling” compared to the £45bn of investment needed on the Government’s own estimates.
  • ~~Institute for Government Senior Fellow Jill Rutter argues that offshore wind is not enough to decarbonise housing, and more broadly that decarbonising the power sector is one of the easiest challenges of meeting the net zero target as it involves “no discernible change for the public” - concluding that Johnson “needs to convert his high-blown rhetoric into a practical plan of action.
  • ~~George Monbiot notes that Johnson’s claim that 40GW could power every home in the country is a “clever distraction” - as domestic energy consumption constitutes only 2/3s of total demand.
  • "Drop in the ocean". More broadly, environmental policy experts are concerned that Johnson will not provide the level of funding required to reach the net zero decarbonisation target.
  • ~~IPPR estimate that an extra £33bn in public investment per year (on top of the current £17bn per year) is needed to meet the country’s climate and environmental targets.
  • ~~Germany announced in June that it would incorporate €40bn of green investment into its Covid-19 recovery package for 2020/21. The UK’s Covid-19 recovery plan announced in summer, by contrast, contained no “green recovery” measures save for £3bn for home insulation.
  • Role of the state: A key theme in Johnson’s speech was that the expansion of government spending under emergency measures must be temporary - “there comes a moment when the state must stand back and let the private sector get on with it”.
  • ~~Economist Mariana Mazzucato has argued that his speech reveals “a poor understanding of the history of innovation” and that such an approach would be “the wrong vision for our post-pandemic recovery”, laying out the pivotal role that the state must play in her Financial Times article.
  • Green taxation. It is also reported that Chancellor Rishi Sunak is considering implementing a carbon tax to help in the push to net zero while raising revenue. Some green groups fear this approach could ultimately undermine the Government’s ability to reach net zero because of political pressures - cf. France's gilets jaunes. (Carbon Brief summary).
  • ~~The Guardian has argued that a further danger of ‘green taxes’ is that they end up being valued by the revenue they bring in - and not according to their environmental benefits - as part of its editorial on the need for the Government to centre environmental targets over GDP in policymaking.

In brief

  • Furlough Changes: The Chancellor announced that businesses forced to shut under local lockdown measures would be eligible for £3000 of financial support, plus government payment of ⅔ of wages to keep employees on furlough.
  • ~~The New Statesman’s Steven Bush has argued this new furlough system creates “perverse incentives and palpable unfairness”.
  • ~~New IPPR analysis estimates that 1.8 million “viable jobs” will be jeoprdized by the Chancellor’s job support schemes.
  • No return to austerity: The IMF called on governments to increase public investment to aid an economic recovery and create jobs.
  • ~~This stands in contrast to Rishi Sunak’s conference speech, where he warned of the need to make ‘hard choices’ to tackle the national debt.
  • ~~The FT interviewed IMF head Kristalina Georgieva, covering the organisation’s pivot away from advocating austerity as a solution to economic downturns.
  • Green Finance: Blackrock has released a sovereign bond ETF which factors in countries’ GHG emissions and exposure to risk from climate change. Coal-reliant Germany is one of the “biggest losers” of the new financial instrument's 'green weighting'.
  • Bailouts: The National Audit Office warned of up to £26bn in losses to the taxpayer resulting from the government’s coronavirus loan scheme for small businesses, while the top 5 banks have made £1bn from the scheme.
  • ~~Rentier power. IPPR Director Carys Roberts has criticised the “Bounce Back Loans” scheme for “socialising risk and privatising profits”, drawing on previous IPPR analysis warning that the Government support measures risk funneling money to the wealthiest, “exacerbating inequalities between the working poor and the asset-owning wealthy”.
  • ~~The UCL Institute for Innovation and Public Purpose’s Laurie Macfarlane has argued that the Government’s focus on protecting landlords and other rentiers is leading to “social calamity”.
  • Inequality: A report from Swiss bank UBS found that the world’s richest saw their wealth increase by 27% to $10.2trn from April to July this year (BBC).
  • ~~A new report from Autonomy and the High Pay Centre proposed a government-mandated maximum wage to redistribute wealth and save industries, which 54% of the public support.
  • Data Governance: Investigative journalist Stefan Simanowitz criticised the Government's recently launched Genome UK strategy, warning that it allows private companies to access 65 million people’s NHS data and calling for public scrutiny (Twitter explainer thread).
  • ~~James Meadway’s report for the IPPR outlines the key issues over the ownership of data during the pandemic and proposes policies to ensure data is used for collective benefit.
  • Environmental breakdown: New analysis from insurance firm Swiss Re finds that a fifth of the world’s countries are at risk of ecosystem collapse.

Reflections

  • Attenborough on capitalism: On BBC Radio 5 Live’s new podcast ‘What Planet Are We On?’, Sir David Attenborough argued that “the excesses the capitalist system has brought us have got to be curbed somehow” to prevent environmental breakdown.
  • Beyond neoliberalism: Neil Fligstein and Steven Vogel wrote for the Boston Review, outlining the contours of the new political economy needed to foster recovery from Covid-19.
  • International debt crisis: David Malpass, President of the World Bank Group, gave a speech on reversing global inequality - in which he argued that the sovereign debt of the world’s poorest countries can act as a “debtors’ prison”.
  • ~~The FTs Editorial Board called for a new international debt architecture to prevent a debt crisis in emerging economies.
  • ~~The Jubilee Debt Campaign launched a Debt Data Portal in August to track the external debt payments of developing countries - finding 52 countries in a debt crisis even before impact of the Covid-19. Director Sarah-Jayne Clifton has called for “urgent action to cancel payments… and to rein in irresponsible lending to stop debt crises coming back to haunt us every decade”.

View more
Economics on the international stage
October 19, 2020
Read
A gender-equal economy
October 5, 2020
Read
Winter Economy Plan
September 28, 2020
Read
Push to move "beyond GDP growth" gathers momentum
September 21, 2020
Read