Filed under: Economics
This morning I joined activists from the World Development Movement who were protesting outside the Department for International Development against plans to channel climate change aid to Bangladesh through the World Bank.
I welcome the UK government’s offer of bilateral aid to Bangladesh for climate change adaptation, but like the Bangladesh government I fail to see the need for a multilateral organisation like the World Bank to control the Multi Donor Trust Fund for Climate Change (MDTF) that the UK proposes should administer the aid.
The strings the World Bank may attach to the aid are clearly a concern for the Bangladesh government – and rightly so, given the Bank’s record of insisting on the adoption of neo-liberal policies as a condition for economic assistance to developing countries. And the exhorbitant fees charged by the World Bank for administering the fund would divert money away from the basic task of dealing with the consequences of global warming.
Bangladesh already has Trust Fund of its own and is in the process of setting up a management team for it. The Bangladesh government proposes that the MDTF should be managed by the same unit. While there is no objection to the World Bank acting as a technical consultant on behalf of the donors, the administration of the aid should be in the hands of a national unit.
It is important that these concerns are addressed at the donor conference currently under way in Dhaka and that we show full confidence the civilian government elected in Bangladesh. So it is a big yes to bilateral aid but a no to control by the World Bank.
February 15, 2010
I was pleased to see that Monday’s Evening Standard carried a report of Boris Johnson’s decision to allow the closure of the GLA’s offices in Delhi and Mumbai, which were set up by Ken Livingstone to promote the capital’s interests in one of the developing world’s largest and fastest growing economies.
Hopefully other sections of the media will take up this issue, because it is an important one for Londoners and for the capital’s business community in particular. As the Economist recently reported, the developing countries have grown in global importance economically due to their having escaped the worst consequences of the recession. So it’s vital that the Mayor should play an active role in promoting London in India.
I’d heard rumours that the GLA’s India offices were no longer functioning, so I tabled questions to Boris about it at Mayor’s Question Time last month. In a written reply he admitted that the offices in Delhi and Mumbai have not been staffed since last year, although he hadn’t bothered to inform Londoners that this was the case, and we would still be none the wiser if he hadn’t been challenged over it at MQT.
Boris’s vacillations and u-turns over the issue of the GLA’s international offices have been a sight to see. During his mayoral election campaign he initially condemned the offices as a waste of public money and said he would shut them down. In a December 2007 radio interview with Nick Ferarri, he was asked: “Would you continue bureaux in Venezuela, Delhi, Beijing and everywhere else? Yes or no.” Boris answered emphatically: “No.”
This went down well with anti-Livingstone journalists like Andrew Gilligan and Nick Cohen, and with parochially-minded Tory councillors lacking any concern for London’s strategic interests, but the business community recognised how damaging the closure of the international offices would be to the capital.
At a business hustings in March 2008, organised by London First, Ken Livingstone went onto the offensive over this issue. He told the meeting:
“The greatest challenge facing London businesses is globalisation, and therefore maintaining London as the most international and diverse business city in the world. To meet this challenge London has to build its position not only in traditional markets, such as the US, but in the huge new markets of India and China.
“Nothing therefore more clearly symbolises the difference between myself and Boris Johnson for London businesses, and the future of our city, than my opening offices to promote London in the US, China and India and Boris Johnson’s pledge to close down all offices promoting London abroad.”
The following month the London Chamber of Commerce and Industry announced that they had commissioned a ComRes survey of 238 London businesses which found that 67 per cent of companies said that the GLA should have offices in India and China to promote trade and inward investment into London.
Peter Bishop, LCCI international trade director, was quoted as saying: “These figures demonstrate that London firms are convinced of the value of operating these overseas ‘business embassies’. Strong business relations with the emerging economies of India and China are vital for the capital’s economic growth, creating jobs and attracting investment and tourism.
“In 2006 India was the second largest investor in London and Indian tourists outnumbered those from Japan. The London Chamber of Commerce hopes that all the candidates for next month’s mayoral election will take note of these results and pledge to keep these offices open.”
Faced with this opposition, Boris backed off and changed his line. In an interview with the Ethnic Minority Business Group (UK), he stated: “Whilst we fully endorse the representation of London overseas, we are also committed to reviewing the GLA’s offices abroad to ensure that London is getting maximum value from the money being spent on them. This review will be conducted as part of our larger investigation of the GLA and its agencies’ financial expenditures.”
Boris’s promised review was launched in May 2008, shortly after his election victory, and was headed by his then deputy Ian Clement.
At the time, Boris told the Standard: “We have started the process of considering which of the Greater London Authority’s international offices perform a useful strategic function and deliver value for money…. We will consider the role of the Indian and Chinese offices in encouraging inward investment and business opportunities for London. We are eager to get on and review the international offices’ role in increasing foreign investment and employment, delivering value for money and ensuring London takes full advantage of emerging international markets.”
London’s business community lobbied heavily for the offices to be retained. In a submission to Boris’s review the LCCI stated:
“Closing the offices in India and China as part of a cost-cutting exercise would be short-sighted and send entirely the wrong signals to potential investors and importers in two of London’s most important potential markets. The GLA may save £1 million, but it is London firms that may ultimately end up paying a much higher price. If the Mayor is not out there promoting London, someone else will be promoting New York, Paris, or Sydney instead.”
The review was supposed to be completed by autumn 2008. However, as is often the way with Boris, he missed the deadline and the results were not announced till the following January, when a press release from the Mayor reported that “the review found the rationale for London to have offices in key emerging markets is fundamentally sound”.
Boris’s press release quoted Ian Clement as saying: “It is absolutely essential given the current financial crisis that we do everything within our power to promote the capital in major markets around the world to ensure London emerges strongly from the downturn.
“We have taken a serious look at whether taxpayers’ money is being spent wisely and how to get the best possible deal for Londoners. The review has found that the GLA’s offices do play an important role in promoting London’s interests, from supporting the capital’s businesses to enhancing the image of our city around the world.”
Under the headline “Boris saves City Hall ‘embassies’”, the Evening Standard hailed the decision to retain the GLA’s overseas offices, reporting that the Mayor had decided to retain the offices “because they are a good way of promoting London abroad during the economic downturn”.
But it turns out that this was just eyewash. In response to my questions, Boris now concedes that the GLA’s representatives in Mumbai and Delhi “resigned last year and have not yet been replaced”, and that the offices will remain closed pending a decision on whether to reopen them. So much for Boris’s supposed commitment to promoting London abroad during the economic downturn.
Both Boris himself, and a spokesperson for the Mayor quoted in the Evening Standard report, have claimed that a review of the India offices is under way. They omit to mention that a review has already been held and that it came out unequivocally in favour of keeping the offices open. Boris has ignored the results of that review, mothballed the India offices and has now apparently launched a second review which he perhaps hopes will come up with a result more to his liking.
Some people take the view that Boris is a total opportunist who lacks any ideology other than a commitment to furthering his own political career. There is some truth to this. But Boris is not entirely without political principles. He remains an adherent of a Thatcherite free-market philosophy that deprecates state intervention and is concerned only with cutting the costs of government without any regard for the consequences. This has been exacerbated by Boris’s personal inclination to what might be politely termed a laid-back, hands-off attitude towards his duties as Mayor. It has resulted in a lethargic, non-interventionist administration which stands in sharp contrast to the energetic, proactive approach of Ken’s mayoralty.
As the scandal of the India offices shows, this combination of laissez-faire and laziness is proving seriously damaging to the interests of London.
February 10, 2010
Boris Johnson started the year by hitting Londoners with record public transport fare increases of up to 20 per cent on a single bus journey and 18 per cent on some outer London tube fares. These are the biggest real-terms fare increases in the history of Transport of London.
The direct result of the London Mayor’s decision will be a big, late-recession hit on the finances of public transport users (especially those on lower incomes who spend a higher proportion of their incomes on travel).
People are rightly pointing out the injustice of public sector workers being urged to forego pay increases while Boris wades in with a massive 20 per cent hike in their bus fares. And what do commuters get for their increased fares? The Mayor who promised “more bang for your buck” is actually proposing a reduction in bus services by eight million kilometres. This is on top of his decision to start reducing the number of London’s police officers (455 fewer by 2012/13) and firefighters (16 less during 2010-11).
This is all in contrast to his natural, instinctive defence of those “masters of the universe”, the investment bankers on whom we have become dangerously dependent. Appearing oblivious to the public revulsion at the bonuses, excess and peril in which they placed our economy, Boris went in to bat for the City (leading figures from which helped fund his election campaign).
Obama has come out so strongly in favour of re-regulating financial services that the Tories nationally have realigned themselves with the United States government. But Boris is still “instinctively anxious” (David Cameron had to deny a split over the issue) and continues to warn somewhat hysterically that bankers could leave London in their thousands. This claim looks more dubious by the day as big firms cut their year-end payments as a result of Alistair Darling’s reforms and the property market looks up.
How Britain and the world emerges from the economic crisis and what regulatory shape our financial services take is set to be a key battleground in the coming months. Will Boris Johnson continue to rail against any Government action and increased regulation? The same City figures who financed his bid for the mayoralty also fund the Tory Party and may expect similar levels of support.
It’s clear that, in the capital, the Tory Mayor had no more hesitation in clobbering the travelling public with massive fare rises than he had in jumping to defend the financial services from any kind of Government action.
Is this what we can expect from the Tories nationally? In opposition, they have taken a populist line in support of Obama’s proposals. But let’s watch this space.
First published in Tribune, 31 January 2010
January 29, 2010
During my recent trip to China to attend a conference on air quality in Shanghai it became quite clear to me that, while the first phase of the recession has not yet come to a close in the UK, with possible further economic gloom still ahead, along its east coast China is still booming. That is not surprising given that China’s annual GDP growth rate stands at 6-8 per cent while our economy is undergoing potentially a 4 per cent contraction.
From what I saw during my brief stay there, street life in the evenings in Shanghai seemed very lively, and the confidence in evidence on the street was also expressed by the politicians l met on the trip. They pointed out how we had been forced to bail out our banks when they did not have to, despite years of western complaints about the lack of transparency in China’s banking system. This is a clear sign that the world is moving away from the Washington consensus to a new paradigm of development where state intervention is more acceptable.
But what does China’s boom mean for London? Clearly Shanghai is a serious challenger to our status as a global financial centre and will be even more so after the Shanghai Expo, which will take place between May and October 2010. Some 70 million people are expected to attend this event, which is being promoted around the theme of “Better City and Better Life”.
The sad thing is that the UK is not part of China’s boom nor are we likely to be, a reflection of the global shift in economic power from the West to the East (see Anthony Hilton’s recent article in the Evening Standard). We certainly need to be out there promoting ourselves during the Shanghai Expo at the very least. We also have to be prepared to learn from China, as l did on the environmental front from their use of electronic street signs to inform the public about levels of noise and air pollution. This is something l hope we can duplicate on the streets of London.
August 1, 2009
The creation of a “low carbon” economy that will provide jobs and clean up industry is now a crucial policy objective for countries trying to spend their way out of the world economic downturn. A recent report by HSBC calculates that the United States is allocating 12 per cent of its fiscal stimulus to the green economy and China, 34 per cent.
There is a compelling scientific, economic and strategic case for low carbon development and the first movers have a lot to gain with worldwide investment in renewable energy having grown by 65 per cent a year since 2004, and projected to reach $600 billion a year by 2020.
China’s 11th Five-Year Plan (2006-10) includes a target to reduce energy intensity by 20 per cent during that period. This would translate to a saving of emissions around four times greater than the European Union’s current commitment under the Kyoto Protocol.
But despite these ambitious objectives China’s total greenhouse gas (GHG) emissions are already on par with those of the US and rising fast. This is clearly driven by the imperative of economic growth for China’s 1.3 billion people. China thus faces a qualitatively different challenge to the one that faced by industrializing nations in the past: of combining rapid industrialization, urbanization and poverty reduction with the transition to a low carbon economy.
No country has ever done this before, but the Chinese appreciate that carrying out the work of energy conservation and emission reduction and coping with climate change is a requirement of the Scientific Development Concept.
In response to the challenge of achieving a low carbon economy in China, a number of research institutes working with Chatham House in London have developed the concept of low carbon zones (LCZs). These will aim to stimulate transformational regional political leadership in a similar fashion to the special economic zones (SEZs) in the early 1980s, which gave certain regions the power to introduce more liberal economic regulations than the rest of the country, with some spectacular results.
Under the LCZ scheme, designated regions could be granted similar powers to experiment with a low carbon policy. To qualify for the LCZ status, regional leaders would have to commit to low carbon standards beyond the existing benchmarks at the national level.
These LCZs could then attract hi-tech foreign direct investment through measures such as strong patent protection, tax incentives and targeted recruitment of skilled workers. They could attract new types of carbon finance, too, by building the institutional capacity required to support local emissions trading schemes, drawing on international experience and underpinned by strong monitoring and reporting systems.
Furthermore, allowing them to pilot harmonization of standards with Europe in key low carbon sectors such as vehicle emissions, energy using products and construction would help facilitate Chinese exports and enhance trade and investment flows in the LCZs.
A second variant of the LCZ can be found in the UK, where there are similar proposals but on a smaller scale and mainly in the context of local rather than regional government. Cities are massive producers of carbon dioxide not just from traffic, but also from more energy use in buildings. So it is not surprising to hear calls to introduce a rolling program of LCZs aimed at dramatically improving the energy efficiency of all buildings — public and commercial premises and especially houses.
Here a precedent exists in the smokeless zones of the 1950s, which reduced pollution arising from the use of coal after the smog of 1952 killed 4,000 people in London. These LCZs could be rolled out across the country incrementally, with local authorities declaring an area to be an LCZ. Private sector partners would then be invited to deliver the actual service.
These partners would assess each building or house for energy efficiency and design and implement individual energy saving regimes. Within a specified time, it would become mandatory for all properties in the zone to reach the minimum ratings of energy efficiency.
A range of technologies and measures is available to ensure that energy efficiency addresses the whole property, and many of the measures will pay for themselves through lower bills. Focusing the zones on neighborhoods has great advantages because there are economies to be made from concentrating on defined areas and scope — for example, by introducing combined heat and power plants. This second form of LCZ was proposed by the last administration at London’s City Hall by the then deputy mayor.
Designing and implementing effective policies to drive the transition to a low carbon economy and share the costs equitably is a major political challenge for governments across the world. As we pursue the low carbon route to future economic development, LCZs both in their Chinese and UK variants offer an important means of dealing with the challenges ahead.
Published in China Daily, 5 May 2009
May 8, 2009
Previous page
