Beyond COvid: The Digest

Local recovery plans

June 22, 2020
SUMMARY

The focus is on rebuilding local economies this week, following our webinar with Andy Burnham, Sarah Longlands (IPPR North) and Neil McInroy (Centre for Local Economic Strategies). In light of new regional-level evidence of the uneven economic impact of Covid-19 and lockdown, we look at how proposals for meaningful devolution of power, an increased role for the UK's Metro Mayors and a "community wealth building" approach could help ensure that our recovery from Covid-19 can meshes with the Government's commitments to tackle regional inequality.

In other news, TaxWatch UK and CarbonBrief have both published useful trackers - of UK government support for businesses and green recovery plans across the globe, respectively - and our reflections section this week features articles on the case for nationalising the fossil fuel industry and on the drag that private sector debt exerts on our economies.

Focus: strategies for local recovery

  • Think tank Autonomy have processed official data sources to construct detailed, local authority-level figures for unemployment, ahead of the detailed Office for National Statistics release later in the year.
  • ~~Longstanding areas of urban deprivation have the highest levels of unemployment, with Blackpool suffering the highest unemployment rate in the country. The BBC has explored the experience of Britain’s coastal resorts during the pandemic.
  • ~~But more affluent places in the Home Counties have seen the biggest increases in unemployment as a result of the crisis, with Surrey, Wokingham, Windsor and Maidenhead, Bracknell, and Windsor and Maidenhead all registering 200% or more increases in their unemployment rates since the crisis began.
  • This variety of experience matches the forecasts made in the early stages of the crisis, including from the Centre for Cities, which expected urban areas with significant dependencies on the industries worst affected by the crisis (both lockdown and export demand slump) to also be the worst affected.
  • ~~Local authorities have suffered dramatic funding cuts in the last decade. Between 2010 and 2018, local authorities have seen 24% cuts to their funding (after taking account of population growth and changing responsibilities), with cuts falling disproportionately on councils in more deprived areas.
  • ~~Local authority evidence from the Job Retention Scheme suggests high take-up in areas where the industrial structure would predict a major unemployment shock, with one in three workers in Crawley (dependent on aviation) on the scheme. Employees outside of urban areas are more likely to be on the JRS scheme.
  • ~~70% of self-employed workers have taken up the Self-employed Income Support Scheme, a rate which varies across local authority areas. Areas of generally lower average wages and de-industrialisation were more likely to see a high take-up among the self-employed. The dramatic variation in economic outcomes, pre-covid, is analysed in the Centre for Economic Performance’s latest CentrePiece.
  • CLES and the Democracy Collaborative have argued for a post-covid approach to recovery centred on the transfer of power and resources to local communities and governments.
  • ~~A companion report, Owning the Future, makes the case for ‘community wealth building’ as the organising principle for post-covid recovery, underlined the necessity to support the “foundational economy” of essential local services (including healthcare, food supply, or hairdressers, and covering public and private sectors).
  • ~~This is also highlighted by the Foundational Economy Alliance in their response to the crisis.
       
  • Nesta have argued that the Metro Mayors, collectively representing some 20 million people, should have a key role in organising the recovery from covid, with their wide mandates, bigger organisational capacity and relative autonomy from Westminster providing space to design recovery plans tailored to local and regional needs.
  • ~~Andy Burnham, the mayor of Greater Manchester, and Steve Rotheram, the mayor of Liverpool city region, have argued that there can be no return to “business as usual” in the recovery period, pushing instead for expansions of fossil fuel-free transport, the promotion of public spaces, and greater use of renewable energy.
  • ~~The West Midlands Combined Authority (WCMA) have approved a “green recovery” programme to achieve net zero across the region by 2041, ahead of the legally-mandated 2050 target. The plan commits the 18 councils and three local enterprise partnerships in the WMCA, “to developing and rolling out a retrofitting scheme for “old and cold” homes across the region; accelerating its roll-out of charging infrastructure for electric vehicles (EVs) and expanding active transport initiatives.”

From recovery to reform: rebuilding local economies after Covid-19

  • This week’s Beyond Covid webinar saw Greater Manchester Metro Mayor Andy Burnham, Sarah Longland from IPPR North, and Neil McInroy from the Centre for Local Economic Strategies discussing the critical role of local and regional governments in implementing strategies to build back better after the crisis.
  • Andy highlighted the way in which the government’s centralising tendencies helped undermine its covid-19 response- a problem made worse by years of austerity - and laid out some of the ways in which local authorities and Metro Mayors could respond more boldly to the crisis.
  • Sarah and Neil spoke of the need for meaningful devolution, with a broader remit for devolved authorities beyond seeing narrowly-defined local economic growth as the target.

In brief

  • A new IPPR report on the natural assets of the North of England argues that these assets have been undervalued and underinvested in over many years.
  • TaxWatch UK are tracking the handouts made to companies under the UK government’s various bailout schemes, logging the amounts requested or received, the purpose of the funding - and any issues of significant public concern about the company.
  • Carbon Brief has produced an interactive tracker of different “green recovery” plans across the globe. They will be updating it over time, and the tracker also includes a useful glossary of the different policies proposed.
  • A coalition of business groups, technology firms and universities are lobbying the Prime Minister to create a new £100m “International Centre for AI, Energy and Climate”. With data analytics increasingly seen as critical to reducing environmental impacts, for instance in new Smart Grids, the coalition argues that AI should be at the centre of any green recovery.
  • The pensions “triple lock” is reported to be under scrutiny by the Treasury. This was introduced by the 2010-15 Coalition government to guaranteed consistent rises in the value of the Basic State Pension, but an anomaly in its operation threatens to create very significant costs during the pandemic.
  • ~~The triple lock has been highlighted for removal or modification by previous Conservative Chancellors, but the high political costs of doing so have usually stayed their hand. The TUC has argued that it has played an essential role in raising pensioner incomes today, and will be of most benefit to those who retire in the future.
  • A new report from the Worldwide Fund for Nature (WWF) highlights the potential for post-Brexit trade deals to increase the risk of covid-like pandemics if protections on agriculture and food welfare standards are undermined. The relationship between intensive farming practices, international trade, and increasingly frequent epidemics and pandemics is well-established.
  • New research from LSE and Warwick shows that some of the wealthiest people in Britain are paying an effective tax rate of just 20% - well below the rate paid by some of the poorest people in work. A coalition of 15 charities and NGOs, including Oxfam UK and Christian Aid, last week called for progressive reform of the tax system to deal with some of these glaring tax inequalities.
  • The Vienna Institute for International Economics have published a 2 trillion euro, EU-wide green recovery plan, including the construction of “ultrafast” rail across the continent.

Reflections

View more
Economics on the international stage
October 19, 2020
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"Build Back Greener"
October 12, 2020
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A gender-equal economy
October 5, 2020
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Winter Economy Plan
September 28, 2020
Read