House price inflation

“Temporary price stabilisation mechanism” for rising energy bills? The FT reported that “the Treasury is exploring a radical intervention in the power market”, where the government would make payments to energy suppliers when wholesale gas prices pass a certain threshold to protect households from higher bills. The Treasury hopes to recoup some of the funding when and if wholesale gas prices drop “below the agreed level”. (Gas prices are predicted to stay high for the next two years)

• Fuel poverty. Citizens Advice finds that the expected increase in the energy price cap in April rise will leave single adults on benefits spending a third of the basic rate of Universal Credit on energy bills, Pointing out that lower-income households spend almost three times more (11%) of their budgets on energy than people in the highest income decile (4%), the IFS notes that an additional £3bn will be needed in benefit payments to protect claimants, 
• Policy measures. The Resolution Foundation argued for a policy package to compensate low-income households including expanding the Warm Homes Discount; temporarily moving environmental levy costs to general taxation; and spreading the cost of supplier failure over three years.
• A windfall tax? An alliance of 27 charities wrote to the PM and Chancellor last week calling for a windfall tax on the oil and gas sector to fund support for the most vulnerable households and improve home energy efficiency. New research from Common Wealth finds that BP, Shell and the “Big 6” have paid out £190bn to their shareholders since 2010, over 60% more than the £118bn they’ve paid in taxes. The authors argue that this demonstrates the “clear, pragmatic case for a windfall tax”. 
• Against a windfall tax. Annabel Denham, Director of Communications for the Institute of Economic Affairs, makes the case against a windfall tax on energy firms, blaming government interventions (such as the energy price cap and Climate Change Act) for rising energy prices. (The IEA’s Andy Mayer sets out in the Telegraph a free-market solution to the energy crisis.)

The energy transition won’t be smooth. Fatih Birol, Executive Director of the International Energy Agency, explained that, though “today’s market fluctuations cannot be traced back to climate policies, that does not mean that the road to net zero emissions will be smooth”, making the case for renewable energy and energy efficiency investment. (For more on the importance of energy efficiency see this thread). 

• Difficult politics. Ian Bremmer and Cliff Kupchan explain for the Eurasia Group that “in 2022, long-term decarbonization targets will collide with short-term energy needs” and force governments to make unpleasant choices: “mollify anxious voters with policy that delays climate goals or tough it out in a hostile and unpredictable energy market environment”. 
• Oil and gas licences. BIES has launched a consultation on the design of a new policy framework (“climate compatibility checkpoint”) to ensure any future oil and gas licences are “aligned with government’s climate change commitments”. Business Secretary Kwasi Kwarteng justified the move stating that “turning off the taps would put energy security + British jobs at risk - and leave us more reliant on foreign imports”. But Uplift’s Tessa Khan retorted that issuing new oil and gas licences violates the International Energy Agency’s carbon budget for keeping 1.5°C alive and also “leaves oil & gas workers at the whims of investors who are ditching stranded assets”. (For more on fossil fuel extraction and net zero, read our previous digest exploring the IEA’s groundbreaking report.)
• Options for securing resilient energy supply without violating net zero. NEF’s Michael Pugh explains that their two campaigns for a Living Income and a Great Homes Upgrade “offer the long-term answers we need” for solving the cost of living crisis.
• The path not followed. Former BEIS civil servant Tim Lord estimates that if the government hadn’t “effectively banned onshore wind due to backbench pressure”, energy bills would have been around £60 per year lower per household. Oxford economist Dieter Helm’s Cost of energy: independent review set out how to decarbonise the UK’s energy markets as well as maintaining security of supply back in 2017, but the report was shelved by the government. 

The case for a wealth tax. Oxfam’s annual report on global inequality finds that the world's 10 richest men doubled their wealth over the course of the pandemic. The OECD has found that more than 6-% of citizens in OECD countries want their government to tackle inequality through higher taxes, 

• Millionaires for Humanity. Djaffar Shalchi, founder of Millionaires for Humanity, argued governments should tax the wealth of multimillionaires to help fund the achievement of the Sustainable Development Goals (SDGs). Guardian columnist Owen Jones argued that a wealth tax could play a “pivotal role in the post-Covid recovery”, helping to fund the NHS and the transition to a green economy.
• ‘Trickle-down’ economics? A new peer-reviewed paper in Socio-Economic Review studied the economic consequences of major tax cuts for the rich. It finds that “tax cuts for the rich lead to higher income inequality in both the short- and medium-term…such reforms do not have any significant effect on economic growth or unemployment.” 

Global minimum corporation tax: consultation on Pillar 2.  Last week the UK government launched a consultation on the domestic implementation of the 15% global minimum corporation tax for large multinationals. (Deadline 4th April.)

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Legislative and policy changes threatening human rights. The Institute for Race Relations is publishing articles from a five-part series each day this week to explain government moves in key policy areas which threaten human rights. Monday’s criticised the Nationality and Borders bill (summary thread here) and other topics this week cover ministerial impunity and the rule of law, free expression and equalities and human rights. A Twitter thread from the Runnymede Trust outlined the “onslaught of legislation in parliament this month” threatening the civil rights of ethnic minority people.

Jobs recovery. The UK recovery continues to be marked by labour market unevenness, according to new analysis of job posting figures from Indeed. The effect of Omicron on the hospitality sector is highlighted as one of the key factors impacting recent figures.

• Expected adjustment. The falling vacancy levels should not surprise us, says Torsten Bell of the Resolution Foundation who argues that the tight labour market was the result of a series of temporary factors and businesses have adjusted.
• Great Upgrade. The ‘Great Resignation’ phenomenon in the United State should actually be seen as a ‘Great Upgrade’, as workers are leaving to get better jobs, argues US National Economic Council Deputy Director Bharat Ramamurti. The Brookings Institute agrees, arguing that resignation rates are benefitting both workers and the economy.

4 Day Week. Autonomy have launched a new Four-Day Week pilot programme across the UK, working in partnership with 4 Day Week Global, Cambridge University, Oxford University, Boston College, and the 4 Day Week UK campaign. It was announced that the UK branch of the camera Canon has joined the pilot. 

• Shorter school week. Reducing the school week to 4.5 days by reallocating lessons boosts the morale of teachers according to a trial reported by Autonomy.

Worker ownership. Labour backbencher Christina Rees has introduced a new 10-minute rule bill that would introduce a UK version of the Italian Marcora law, allowing workers to buy out struggling firms.

The impact of poor sick pay. Next has joined IKEA and Morrisons in announcing they will cut the sick pay of unvaccinated staff. A new study on the impact of low sick pay by the TUC found over 250,000 workers in private companies were self-isolating last month, with 210,000 having to rely on SSP and 57,900 receiving no sick pay at all.

High earners? New polling commissioned by the New Statesman has found that most of the public consider £40,000 a high salary, while under £20,000 is considered a low salary by a majority. (The median level of full-time earnings is now £31,000.) The polling also found that the public consider salary a more meaningful indicator of social class than inherited wealth.

IPPR State of the North report. IPPR North has this week published its annual State of the North report, setting out how far we are from achieving ‘levelling up’. (Twitter thread here.) IPPR’s Executive Director Carys Roberts called for further devolved power to ‘unlock this potential’. 

• Labour and devolution of power. Speaking at the Fabian Society conference, Labour’s Shadow Chancellor, Rachel Reeves pushed for further devolution across the UK, arguing that more powerful locally elected politicians lead to ‘more bang for your buck’. In his speech to the conference, Keir Starmer highlighted the importance of building ‘community power’ and praised the Wigan Deal as an example of best practice. (He also said that wellbeing would be considered as important as economic output under Labour.) he said. 
• Conservatism and community power. Calls for devolved ‘local power’ are not necessarily progressive, argues a new report by Municipal Enquiry. Recent conservative movements for community-based service provision do not take sufficient account of structural inequalities or existing funding gaps, they argue.

Covid deaths in ‘left behind’ areas. The APPG for ‘Left Behind’ Neighbourhoods has published a report on the health implications of living in deprived and ‘left behind’ areas. The report found that people in these areas were 46% more likely to have died from Covid-19 than in the rest of England. The report suggests incorporating a strand on health inequality reduction in the government’s levelling up strategy, including increased NHS funding in these areas. 

• Impact of infrastructure on health. The report stated that ‘left behind’ areas are defined by their lack of ‘social infrastructure’, meaning that networks ‘within and beyond the community’ are limited and that this has a direct impact on health outcomes. Bringing these neighbourhoods up to ‘England’s average’ could add an extra £29.8bn to the economy each year, it argued.

Cuts to bus services. Local bus services across the country are threatened with a funding cliff edge, says Silviya Barrett of the Campaign for Better Transport. With bus use in decline due to the pandemic, private operators are finding that many routes are not commercially viable. To compensate for loss of revenue, the government has provided support via the Covid-19 Bus Service Support Grant, but this is due to expire at the end of March. 

Mapping ownership in Manchester. Researchers have used Freedom of Information Requests to map the privatisation of public land in Manchester. Dr Tom Gillespie and Dr Jonathan Silver, in partnership with Greater Manchester Housing Action, have created the map to improve transparency and debate around public land use in the city. 

• AirBnB. A new report has found that AirBnB listings in Manchester have risen by 226% in four years. The report uses data from the Inside AirBnB campaign group who argue that AirBnB is ‘disrupting housing and communities’.

Government taken to court on net zero. Friends of the Earth and ClientEarth have launched legal action against the government, arguing that the Net Zero strategy does not contain the policies needed to achieve emissions reductions and is therefore in breach of the government’s legal obligations.

• The politics of net zero. A new report from the Institute for Government looks at the challenge facing the government in the aftermath of the COP summit and with energy prices continuing to rise. The report argues that if the government does not reconcile the net zero objective with other political priorities then it risks destroying the fragile cross party consensus on net zero.

Green New Deal. The New Economics Foundation has published a new report which sets out a five point plan for how government can simultaneously tackle the challenges of levelling up and decarbonisation through a Green New Deal. The report launch is accompanied by a video which explains the interlinkage of these two agendas. NEF’s Frank van Lerven summarised the argument in a Twitter thread.

Climate risks. The Government has published a new climate change risk assessment, which finds that a temperature rise of 2 degrees would result in economic damage of 1% of GDP by 2045, with eight individual risks exceeding £1bn per year in damage. Joss Garman, UK Director of the European Climate Foundation, pointed out that the costs of climate change impacts to the UK are now estimated to be “more than all of the climate policy costs combined”.

Carillion, competition policy and audit reform. KPMG has admitted to misleading regulators in the audit of Carillion at a tribunal by the Financial Reporting Council. Lord Prem Sikka explains why the “Big 4” accounting firms’ “power must be curtailed. They need to be broken-up. Their partners need to be made personally liable for the harms they inflict.” 

EU poised to curtail power of Big Tech. France has said it will use its six months presidency as head of the Council of the EU to advance the Digital Services and Digital Markets Acts. President Macron said: “The French presidency must be a moment of truth for the regulation and accountability of digital platforms”.

• New Competition Policy. Read previous Digests for more information about the emerging paradigm shift in competition policy and the ongoing battle to regulate Big Tech platforms.