What is it? Last week, HM Treasury published the landmark Dasgupta Review - the Final Report of the Independent Review on the Economics of Biodiversity. It is the first time a finance ministry has published a comprehensive analysis of the relationship between economics and the protection of Nature (capitalised in the Review).
~~Summary. The Review’s own short “headline messages” document can be found here. Our summary: the demands on Nature are dangerously unsustainable as a result of “deep-rooted, widespread institutional failure”. “Transformative change” is needed urgently, and for this “we cannot rely on technology alone: consumption and production patterns will need to be fundamentally restructured”. Key steps are to “change our measures of economic success” - at the very least, de-emphasising GDP - to incorporate the value of Nature and the cost of its degradation, and to transform our finance and education systems.
~~Analysis. James Murray, editor-in-chief of Business Green, offers an excellent overview of the report and surrounding debates. UCL IIPP’s Katie Kedward offers a more focussed, in-depth analysis of the Review’s implications for central banks and financial supervisors (Twitter).
Reception. The report was welcomed by a wide range of economists and environmentalists, including Nobel Prizewinner Joseph Stiglitz: “It provides, for the first time, a framework for the difficult global decisions we must have on how to restore sustainability, not just in climate but in all dimensions of the environment”.
~~Government: Boris Johnson gave the review an “early welcome” but the minister of the department that published the report - Rishi Sunak - has not made any public comment. He left it to a junior Treasury minister.
Natural capital. The most controversial aspect of the Review is its embrace of “natural capital” approaches to giving Nature a monetary value. The Review calls for an alternative headline measure of economic success - “inclusive wealth” - to acknowledge that GDP does not incorporate the value of the natural world. Its rationale is that by putting a value on biodiversity and other key functions, we would move away from the current situation where we “pay people more to exploit Nature than protect it” to the tune, it estimates, of USD $4-6 trillion per year.
~~Background: The idea of natural capital is explained by proponent economist Dieter Helm here.
Critiques and alternatives. George Monbiot issued a searing critique of the Review and attempts to “put a price on nature”, arguing that natural capital approaches encourage a counterproductive “commodification” of the natural world.
~~Natural and man-made capital. One particularly interesting point is that natural capital approaches seem to imply a degree of substitutability both within natural capital and between natural capital and man-made capital, which is fiercely contested (see e.g. research from Oxford Martin School).
~~Economists as ecology experts? At the Dasgupta Review launch event, David Attenborough claimed that economists understand the importance of biodiversity more than ecologists do, which was criticised as “galling and absurd” by Doughnut Economics proponent Kate Raworth. Her critique of natural capital approaches is here (video).
In defence of the Review. Other environmentalists and progressives welcomed the Dasgupta Review, highlighting its calls for complementary approaches to natural capital for protecting Nature.
~~Step in the right direction. James Murray in Business Green argues that though “natural capital” approaches are imperfect, the all-too-normal alternative is that the value of the natural world is simply ignored in economic decision-making - the Review’s proposals are a step in the right direction.
~~Other approaches to protecting Nature. Environmental campaigner Guy Shrubsole notes that the review does not simply call for the environment to be given a monetary value, but makes the case for “putting large parts of the biosphere off-limits to the market” and - radically for a report published by the Treasury - points out that material economic growth is inevitably bounded by environmental limits.
Weekly Updates
Fiscal policy
Budget 2021. The Chancellor is now expected to use his March Budget to outline a blueprint for a long-term “endemic recovery plan”, which is “likely to mean high state spending for a decade” as the country learns to live with the virus in the post-pandemic phase.
~~Public opinion. The Times coverage includes results from pollster BritainThinks finding public support for boosting public services, paying key workers more and redistributing wealth. Only 21% of people favour cutting public service spending to pay down the debt, with 57% in disagreement.
Budget tax reform proposals. The FT’s Martin Wolf argued that the Chancellor has an opportunity for “radical fiscal reform that will make today’s system less distorting economically and raise more money”, exploring proposals for carbon taxes, land value taxes, cash flow destination taxes, wealth taxes and property tax reform.
~~Online sales tax and excess profits tax. The Telegraph suggested that the Treasury is looking into an online sales tax and an excess profits tax ready for an autumn Budget after the expected relaxation of Covid restrictions.
Benefit claims up and council tax revenues down. The IFS found a£1.3bn fall in expected council tax revenue in 2020-21 relative to pre-Covid forecasts. Councils in Greater London and deprived parts of England are experiencing the largest impacts.
~~‘Levelling-up the tax system’. Onward’s Will Tanner was quoted in the Telegraph explaining how to rebalance property taxes to address regional inequality: “Council tax is actively working against levelling up: as a share of disposable income, Londoners pay half as much in council tax as households in the North East.”
Understanding asset ownership. Christine Berry introduced her new series for Autonomy on the ‘landlord economy’: “an economic system built on rising asset prices (especially in housing), and a political system structurally favouring their owners”.
Reforming corporate governance. Kwasi Kwarteng is set to publish a white paper with “far reaching overhaul of corporate governance” following accounting scandals in recent years, proposing new rules to report on environmental and social obligations and extending the remit of the audit regulator to cover thousands of additional companies.
~~Deeper issues of structure and ownership. Common Wealth welcomed the move and proposed an agenda for reform that reshapes company purpose and ends shareholder primacy, embeds stakeholder voice in governance and transforms the ownership of companies.
CBI calls for paradigm shift. CBI Chief Tony Danker has called for a “1945-style reboot” of the economy in response to Covid-19, with the “government, businesses and trade unions working together on a fightback plan”.
Greening the National Infrastructure Bank. A group of leaders representing UK business, investors, trade unions, academia and civil society wrote to the Chancellor to propose design objectives for the new National Infrastructure Bank, including a ‘mission-driven’ legal mandate to achieve the levelling up agenda and net-zero goals.
Firms borrow for “survival rather than growth”. The Guardian’s Richard Partington explained how the scale of new debts taken on by firms could hold back Britain’s economic recovery, if firms prioritise debt repayment over investment.
Health, Covid-19 and public services
Reversing NHS marketisation. A leaked document reveals the government’s plans to reverse Cameron-era reforms to the NHS, with a forthcoming Health White Paper draft proposing that NHS commissioners would no longer be forced to put health services out to tender in the private sector market. (BBC coverage here)
~~Social Value within NHS procurement. On CLES’s blog last year, Tom Lloyd Goodwin explained how NHS reforms could address the wider determinants of health by unlocking the power of health institutions as ‘anchors’.
~~The NHS after the pandemic: Professors Sir Chris Ham, Allyson Pollock and David McCoy spoke to Beyond Covid last year about Covid-19 could change the way the NHS is run. (Video)
Hostile environment. A coalition of 140 medical organisations, charities and faith groups have called on the Government to do more to ensure that migrants are able to access the vaccine and other healthcare without fear of ‘hostile environment’ measures.
~~Migrants during Covid-19. The calls follow the Government’s announcement that immigration checks will not be carried out when registering for a GP, but the coalition have highlighted that “longstanding and entrenched barriers to healthcare” for migrants will continue to undermine vaccination efforts - as shown by recent Joint Council for the Welfare of Immigrants analysis.
‘Radical insourcing of public services’. Following accusations of ‘cronyism’ surrounding the government’s procurement practices during the pandemic, Labour has proposed a “radical programme of ‘insourcing’ to bring public services back under democratic control”. (See a video of Rachel Reeves’ full speech here.) Last year, Cameron’s former speech writer and Times columnist Clare Foges called for a rebuilding of public sector capacity to “stop the coronavirus gravy train”.
~~Value for money? CLES’s paper on the role of public procurement in promoting public values called for “social licensing schemes” - to ensure suppliers to the public sector pay fair taxes, pay the Living Wage and act on robust zero-carbon policies.
“Another year of disease, lockdowns and death”. Former Exec Director of the Adam Smith Institute Sam Bowman argued that Rishi Sunak’s failure to push for elimination of Covid last summer may make him the most dangerous man in government, reiterating that early attempts to ease lockdown restrictions will risk more vaccine-resistant mutations and prolong the pandemic.
~~Vaccines aren’t a silver bullet. Providing commentary on the government’s hesitation around travel restrictions, Simon Wren Lewis explained why vaccines alone are not enough to tackle the health crisis.
Covid-19 Trauma Recovery Plan. EveryDoctor UK launched a campaign for a National Covid-19 Trauma Recovery Plan to “reflect the enormous toll that every community has paid - especially NHS staff - and prevent a repeat of this happening ever again”.
Local economies and poverty
The future of town centres. IPPR North released the final report of the Liverpool City Region Town Centres Commission, which asks the question: “What are town centres for post-Covid?”.
“The debts that divide us”. The Resolution Foundation published results of an online survey assessing the changes in disposable income of Universal Credit claimants over the pandemic. The results explore how removing the £20 a week uplift will affect the private debt crisis.
First deep coal mine in 30 years. The FT’s editorial board argued how the Government’s plans to open a coal mine in Cumbria tarnishes the UK’s green credentials and “risks undermining Britain’s international standing as host of the UN COP26 climate summit”.
~~Green jobs not brown jobs. Over 70 organisations wrote to the Prime Minister calling for a public enquiry into the plans. Signed by NEF, Greenpeace, Friends of the Earth, the Cumbria Wildlife Trust and others, the letter acknowledges the need to create jobs in deprived regions but urges the government to look to new low carbon technologies rather than the “polluting industries of the past”.
