What does ‘building back better’ actually mean? Nicholas Stern, Sam Unsworth, Anna Valero, Dimitri Zenghelis, James Rydge and Nick Robins (LSE) set out the actions the government needs to take to deliver a sustainable recovery

Robins, Nick

Rydge, James

Stern, Nicholas

Unsworth, Sam

Valero, Anna

Zenghelis, Dimitri

English

LSE Research Online

An	LSE	action	plan	for	a	strong	and	sustainablerecoveryWhat	does	‘building	back	better’	actually	mean?	Nicholas	Stern,	Sam	Unsworth,	Anna	Valero,	DimitriZenghelis,	James	Rydge	and	Nick	Robins	(LSE)	set	out	the	actions	the	government	needs	to	take	to	deliver	asustainable	recovery.The	UK	and	the	world	have	suffered	disruption	and	hardship	from	the	COVID-19	pandemic	on	an	immense	scale.Together	with	the	tragic	consequences	of	the	health	crisis,	there	is	now	a	real	risk	of	protracted	global	depression.Strong	and	timely	action	can	increase	confidence,	steer	expectations	and	channel	productive	private	and	publicinvestment	into	a	sustainable,	inclusive	and	resilient	recovery	across	the	UK.The	Rue	de	Rivoli,	Paris,	May	2020.	Photo:	Jonathan	Sarago/MEAE/	France	Diplomatie	via	aCC-BY-NC-SA	2.0	licenceSuch	a	recovery	should	be	guided	by	a	clear	vision	and	strategy	involving	both	the	public	and	private	sectors,	andcan	be	framed	by	and	embody	the	government’s	previously	stated	goals	of	levelling	up	across	the	UK;	boostingproductivity;	investing	in	infrastructure;	reaching	net-zero	greenhouse	gas	emissions	by	2050;	and	forging	a	newrole	for	‘Global	Britain’.	This	should	be	embedded	in	an	understanding	of,	and	commitment	to,	‘building	back	better’.Several	critical	actions	by	the	government	are	needed	to	deliver	a	strong	and	sustainable	recovery.	These	do	notform	an	exhaustive	list,	but	should	be	at	the	core	of	a	coherent	strategy	and	policy	framework	driving	towards	thesegoals	across	the	entire	economy.	Furthermore,	these	actions	and	priorities	are	key	to	sustainable,	resilient	andinclusive	growth	in	the	UK	beyond	the	recovery	over	the	next	few	decades.•	A	clear	macroeconomic	vision	to	restore	confidence,	create	jobs	and	grow	the	economy	out	of	post-COVID	recession	and	debt	by	supporting	activity	in	the	short	term	and	expanding	productive	capacity	in	themedium	term.	There	will	be	a	need	to	ensure	fiscal	and	monetary	policy	work	together	to	guide	liquidity	and	savingstowards	the	growth	of	productive	sectors.LSE Covid 19 Blog: An LSE action plan for a strong and sustainable recovery Page 1 of 3		Date originally posted: 2020-07-08Permalink: https://blogs.lse.ac.uk/covid19/2020/07/08/an-lse-action-plan-for-a-strong-and-sustainable-recovery/Blog homepage: https://blogs.lse.ac.uk/covid19/•	Institutional	reform	to	expand	capacity,	build	back	better,	create	new	opportunities	for	all	and	managelong-run	risks.	This	requires	building	a	credible	industrial	strategy	to	drive	the	economy	forward,	rolling	out	newnetworks	and	ensuring	all	investment	is	compatible	with	a	resource	efficient,	low-carbon	economy.	Policy	reform	isrequired,	both	to	deal	with	the	UK’s	other	pre-COVID	challenges,	and	in	order	to	make	investments	as	productiveand	sustainable	as	possible.	Measures	should	cover	pricing	and	regulation,	industrial	policy,	innovation,	labourmarkets,	skills	and	education,	competition	policy,	and	foreign	policy.	This	programme	of	reform	will	also	requiredevolution	to	deliver	greater	policy	and	fiscal	autonomy	to	cities	and	regions,	building	on	the	Cities	and	LocalGovernment	Devolution	Act	2016.•	Build	capacity	and	resilience	by	investing	in	vital	assets	necessary	for	an	innovative,	prosperous	andcompetitive	economy.	These	are	mutually	enhancing	and	include:o	Physical	capital,	boosted	by	leveraging	private	finance	through	creating	new	markets	andestablishing	a	new	National	Investment	Bank.	The	Bank	could	crowd	in	private	finance	andbring	forward	sustainable	infrastructure	projects	at	scale.	Strategic	investments	in	projects,	such	as	retrofittingbuildings	to	make	them	more	efficient	and	resilient,	can	create	new	jobs	now	and	build	capacity,	for	instance	inbroadband	infrastructure,	for	a	smart,	digital	future.	It	could	be	established	quickly	and	play	an	important	part	in	theextensive	refinancing	necessary	as	we	move	into	the	recovery	phase.o	Human	capital,	enhanced	by	creating	the	skills	and	jobs	necessary	for	the	21st	century.This	means	reskilling	workers	to	enable	those	affected	by	change	to	participate	in	the	neweconomy	–	thereby	‘levelling	up’	opportunities	and	regions	by	investing	in	people.	This	alsoincludes	avoiding	labour	market	scarring	by	providing	job	guarantees	–	including	in	sustainable	projects	–	for	thoseat	risk	of	unemployment,	alongside	investment	in	further	education	and	lifelong	learning.	A	strong	focus	ondisadvantaged	students,	who	risk	falling	further	behind,	should	be	central.o	Knowledge	capital	and	innovation,	fostered	by	accelerating	the	drive	to	reach	a	target	forR&D	investment	of	2.4%	of	GDP	through	a	mixture	of	increased	funding	and	furtherincentives	for	business	innovation,	including	enhanced	incentives	for	clean	innovation.	Thegovernment	should	accelerate	the	establishment	of	a	clean	innovation	mission	through	a	revised	IndustrialStrategy.	It	should	also	strengthen	the	UK’s	research	and	development	capabilities	and	collaboration	betweenuniversities,	industry	and	local	policymakers.	The	UK’s	research	is	a	vital	element	in	its	comparative	advantage	andfuture	as	‘Global	Britain’.	It	is	essential	to	enhance	R&D	and	take	more	of	it	through	to	innovation.o	Natural	capital,	strengthened	directly	through	carefully	designed	ecosystems	creation,preservation	and	restoration	projects.	This	means	investing	in	land	restoration,	trees	andwater	management	and	curbing	pollution.	This	must	be	supported	indirectly	through	projectssuch	as	active	and	accessible	travel	infrastructure	which	result	in	cleaner	air,	improved	healthand	expanded	green	spaces.	Reforms	to	agricultural	support	will	play	an	important	role.o	Social	capital,	enhanced	by	developing	a	vision	and	strategy	for	an	inclusive	andsustainable	recovery	that	can	gain	support	from	businesses	and	communities	and	createsopportunities	for	all.	There	cannot	be	a	return	to	austerity	based	on	cuts	in	public	spending	and	undermining	thequality	and	resilience	of	public	services.	To	achieve	this,	it	will	be	important	to	involve	local	Mayors	and	keystakeholders	with	local	knowledge	in	the	design	of	the	recovery	package	and	to	utilise	the	latest	innovations	inpublic	participation,	such	as	Citizens’	Assemblies.	Consideration	must	be	given	to	embedding	sustainablebehaviour	such	as	virtual	working	and	pedestrianisation	of	streets.	Participation,	equity	and	opportunity	areinterwoven	with	social	cohesion.A	well-designed	package	for	a	sustainable	recovery	should	help	to	redefine	and	strengthen	the	UK’s	place	in	theworld.	As	the	UK	assumes	the	leadership	of	the	G7	and	works	to	deliver	a	successful	and	ambitious	COP26	in2021,	a	domestic	economic	recovery	that	is	strong,	sustainable,	inclusive	and	resilient	will	provide	added	credibilityto	foster	and	lead	collaborative	efforts	to	build	global	sustainability	and	resilience,	and	accelerate	the	transition	tozero-carbon	economic	growth.This	is	an	extract	from	Strategy,	investment	and	policy	for	a	strong	and	sustainable	recovery:	an	LSE,	Centre	forEconomic	Performance	and	Grantham	Research	Institute	on	Climate	Change	and	the	Environment	briefing.	Itrepresents	the	views	of	the	authors	and	not	those	of	the	COVID-19	blog,	nor	LSE.LSE Covid 19 Blog: An LSE action plan for a strong and sustainable recovery Page 2 of 3		Date originally posted: 2020-07-08Permalink: https://blogs.lse.ac.uk/covid19/2020/07/08/an-lse-action-plan-for-a-strong-and-sustainable-recovery/Blog homepage: https://blogs.lse.ac.uk/covid19/LSE Covid 19 Blog: An LSE action plan for a strong and sustainable recovery Page 3 of 3		Date originally posted: 2020-07-08Permalink: https://blogs.lse.ac.uk/covid19/2020/07/08/an-lse-action-plan-for-a-strong-and-sustainable-recovery/Blog homepage: https://blogs.lse.ac.uk/covid19/

An LSE action plan for a strong and sustainable recovery

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An LSE action plan for a strong and sustainable recovery

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