About the G7 and G8 Research Group
Type: Constitutional monarchy
Political Party in Government: Labour Party
Next General Election due before: June 7, 2006
Microeconomics and public sector reform will be at the top of the United Kingdom's platform at the G8 Summit. At a glance, the economy is booming in the UK and all indicators are positive. Economic growth was 2.6 per cent in the year to 2001Q1, a figure which is consistent with the Budget forecast for growth of 2¼ -2¾% in 2001 and beyond. Other economic indicators, such as service sector output, industrial production and business and manufacturing investments have all increased over the past year. Nevertheless, with its largest trading partners-all in the G8-facing sharp declines in growth, the UK remains at risk. It is for this reason that Chancellor Gordon Brown suggested microeconomic reforms to be implemented.
The UK is experiencing the longest period of sustained low inflation since the 1960s. In May, interest rates were cut by ¼ percentage point, to 5¼ per cent. The previous change - a quarter-point cut - took place in April 2001. The official interest rates have not been so low for so long since the 1960s and the long-term interest rates are at their lowest levels for over 35 years.
Employment in the UK is at a record high. April 2001 figures show an increase of 67,000 on the previous 3 months, and up 261,000 on a year earlier. The ILO unemployment rate (5.0%) is the lowest rate since 1979. ILO unemployment fell 65,000 to 1.48m in the three months to April (compared with previous three months), and was down 198,000 on a year earlier. The social benefits claimant count in May was 0.977 million, down 3,200 on April. The claimant rate (3.2%) is the lowest since September 1975. March, 2001 figures show that over 290,000 young people have moved into work through the New Deal.
Around 150,000 young workers will be able to take advantage of the new National Minimum Wage youth hourly rate which came into force on June 1, 2001. The rate increased from £3.00 to £3.20.
A priority for the Blair government is the delivery of improved public services. The state of public finances in the UK looks good with the Budget 2001 being at least as tight as set out in the Budget 2000 and the Pre-Budget Report. There was a budget surplus of £20.2 billion in 2000-01. Public sector net debt peaked as a percentage of GDP in 1997, having risen sharply during the early 1990s. It has fallen from 44.0 per cent at the end of financial year 1996-97 to 31.7 per cent at the end of 2000-01.
While the Blair government has been criticised by many traditional labour supporters as being too fiscally conservative, they are committed to delivering high quality public services. Priorities for the 2002 Spending Review include:
The British government has implemented a series of consultations aimed at various sectors of the economy. Two examples of the consultative process are the review of the supply of scientists and engineers and new proposals to increase saving and asset partnerships for all. The review of the supply of scientists and engineers will examine the numbers of scientists and engineers in the UK, the jobs they do, and it will also look at the skills needed by businesses for their R&D activities, focusing on the skill gained by science and engineering graduate, postgraduate and PhD students. A major focus of the work will be to investigate how businesses and universities communicate and collaborate in providing relevant training to students. With respect to the proposals to increase saving and asset partnership for all, the Government believes that saving and asset ownership is an important complement to the three main pillars of its welfare strategy: work and skills, income, and public services. The Government has done much to extend the benefits of saving and asset ownership through Individual Saving Accounts, Stakeholder Pensions and the Pension Credit. But there is strong evidence to suggest that households on lower incomes are not saving enough for themselves, or their children, to enjoy the benefits and opportunities of asset ownership. The review will examine options for policies designed to increase rates of saving and asset ownership, both among the lower-income households of today, and in generations of families to come.
Given the positive economic outlook in the UK and their recent status as being Europe's number one location to invest, look for the UK to stress the importance of building the economy upon a strong social framework and developing new and innovative ways to combat social dependency and responding to the increasingly globalised nature of both individual countries' economies and the world economy.
After refroming the UK's government bureaucracy, one of the largest initiatives of the Blair government is reforming the National Health Service (NHS).
Prior to and during the recent national election, the Blair government came under fire for the state of the National Health Service (NHS). While Mr. Blair acknowledged that improvements had been made, he also conceded that there remained much work to be done so that all Britons could have proper access to health services. To this end, and to the government's credit, several announcements have been made recently.
During its first mandate, the Blair government established foundations for change in the NHS. Now, new structures will help deliver higher standards of care. The new NHS plan is one for investment in the NHS with sustained increases in funding. This is a Plan for reform with far reaching changes across the NHS. The purpose and vision of this NHS Plan is to give the people of Britain a health service fit for the 21st century: a health service designed around the patient. There are four key areas where progress will be focussed. Clinical priorities will see increased funding and support for services provided to patients with cancer and heart disease, to the elderly and to those with mental illness. Second, the number of GPs will be increased as fast as possible alongside expansion in nursing and other primary care professions. Third, there will be more investment in ambulance services, in accident and emergency departments and in expanding NHS Direct. The Government will also work to integrate these services so that better, faster care is available for patients. Inappropriate trolley waits for admission and assessment will by then have been ended. Finally, the government will focus on reducing waiting times for treatment.
For the first time doctors and Ministers have agreed a statement on how standards of care will be raised in the NHS. The Government, the medical profession and the NHS have signed up to implement a programme of quality assurance and quality improvement and to work together to implement the priorities and analyse the needs of patients and the NHS system. The agreement recognizes that the professions, the Government and the public share a common interest and commitment to improving the quality of services for patients. Minor disagreements on points of details must not be allowed to obscure this common goal.
Finally, the British government has recognized that work-related stress is a significant social problem that is s responsible for the loss of 6.5 million working days each year, costing employers around £370 million and society as a whole as much as £3.75 billion. An estimated half a million people in Britain are suffering from work-related stress, anxiety or depression at levels that make them ill.
Although this is a primarily domestic issue, the NHS is looked upon by other countries as a model of health service delivery. Recognized defficiencies within the NHS have prompted the changes by the Blair government. It will be interesting to see how other countries react to the changes.
The United Kingdom is committed to moving the environment up on the G8 agenda. More specifically, Britain hopes to lead the discussion for common policy and ways to combat environmental threats such as global warming and the depletion of natural energy resources. With the United States moving out of the Kyoto Protocol-a global initiative launched in 1997 to reduce the overall emission of carbon dioxide (CO2)-Britain has its work cut out for itself. While Britain will not denounce the American position, it will continue to voice its support for the convention and to implement its provisions domestically. Already, the government has set a target to cut its emission to 12.5% below 1990 levels by 2008-2010, 7.3% above the 5.2% fixed in Kyoto. To reach this goal, the UK has set out strategic measures to improve business use of energy, stimulate investment in "green technologies" and cut costs. Amongst these measures are included the Climate Change Levy, the Carbon Trust and the Domestic Emissions Trading Scheme scheduled to start in 2003-2004. The Climate Change Levy is aimed at improving efficiency in energy intensive sectors. One constructive feature of the Levy is that it exempts good quality combined heat and power as well as renewable sources of energy, further promoting clean and healthy power flows. The Carbon Trust is to use £100+ million collected by the Climate Change Levy to speed up the adoption of cost effective, low carbon technologies and the Domestic Emissions Trading Scheme is to provide £300million of financial incentives to energy producers. These measures are taking the government closer to its ambitious emission reduction targets which, while aiding the global environment, are setting strains on energy sectors within Britain
The most pressing domestic environmental issue at present is the need for energy security. Today, the UK has abundant coal, natural gas and oil reserves, with energy production accounting for 10% of GDP. This is predicted to change as the government's resolve to trim down on CO2 emissions has coincided with the decision to set electricity supplies to generate 10% of energy from renewable sources and for the doubling of combined heat and power by the year 2010. Tony Blair recently launched the first comprehensive review of energy needs in twenty years, appointing the Performance and Innovation Unit (PIU) to find means with which to provide more efficient and less costly energy that will not harm the environment. Initial findings of the PIU have revealed that by the year 2006, the United Kingdom will have increased its oil imports from the current 2% to 15% in order to meet growing demand. For this reason, speculation has risen that the restoration of nuclear energy will occur in the long-term, alarming environmentalists around the world. The G8 Summit will offer a good chance for Tony Blair to campaign for further investment in energy research and for the possibility of the revival of nuclear power in Britain.
To accomplish its goal of moving the environment up on the G8 agenda, the United Kingdom will have to promote mutual responsibility for the environment and collective action to combat new challenges present. In order to meet its domestic needs, it must address the issues of climate change and renewable energy at the Summit. Britain will also try to garner support for the Rio+10 Conference on the environment, which is to take place in South Africa in the year 2001.
Crime and drugs has consistently been on the table during G8 discussions. On the domestic front, the Blair government has implemented tough policies on crime and drugs. The Government's aim is to reduce crime and the fear of crime and to dispense justice fairly. The government's policies have not only attacked crime and drugs, but they have also attempted to tackle the causes of crime. Part of their approach lies in their belief that offending flourishes in a climate of family breakdown, drugs, unemployment, and lack of decent education. To this end, the government has implemented programs that deal with crime, but also incorporate measures to tackle unemployment, education and reduce drug use and access to drugs.
For instance, the Government has set strategies to deal with young offenders, drugs and petty offending because allowing small crimes to go unpunished leads to greater disorder. Tackling poverty and social exclusion, truancy and unemployment are crucial to the government's plans to reduce crime.
These are just a few of the many initiatives implemented by the Blair government. They are committed to making British society safer and healthier and this often means that initiatives involve partnerships including those between police and the community, the community and the criminal justice system and the community and local government. Recent statistics show a 10 per cent lower crime rate in 1999 than that in 1997. It seems that both the individual initiatives and the government's strategy on crime and drugs as a whole involve integration, whether that be between crime reduction programs and education or by tailoring police services and programs in a particular district to the needs of the particular community. While change will undoubtedly take time, this government seems to have made a positive impact on crime reduction and has introduced several innovative plans to combat drug use and access to drugs, especially among young people, and to ensure that adequate treatment programs are in place.
Although we do not expect the United Kingdom to address the following issues at the Summit itself, they are prominent issues on the domestic front and may form the basis of bilateral discussions at the Summit.
The Foot and Mouth (FMD) disease that took the British isle by storm earlier this year has affected several sectors of the British economy. Namely, the food, agriculture and tourist industries, prompting the government to take a closer look at farming practices and different manners to contain animal diseases.
In the early days of this crisis-Britain's primary policy issue of the inter-summit period-the main concerns that arose had to do with fears of food supply shortages, low numbers of veterinary staff and stopping the spread of the disease. By the end of March, the cabinet sessions revealed that the initial efforts that had been exerted to contain the spread of FMD in the two areas of Britain most affected by the disease were being increased.
The Department for the Environment, Food and Rural Affairs has opened up a facility for testing blood samples for FMD in cattle and sheep with the hopes to restore Infected Areas to their regular status and to once again boost the tourist industry.
One other area of concern for the government is the illegal importation of food by foreigners, which greatly accelerated pace of infection of FMD.
Recent race riots in Leeds do not reflect the reputation of the UK being a relatively diverse and tolerant and society. To tackle this and other racially motivated situations, the government has made a commitment to combating hate crime by introducing new offences of racial harassment and racially-motivated violence to give the police and the courts the powers they need to tackle this blight in our society.
Over the past 18 months, the British government has introduced several programs or initiatives that are aimed at having the workforce or certain segments of it be representative of the cultural make up of British society.
In March, 2000, the government announced the creation of the position of Senior Advisor: Diversity Strategy and Equal Opportunities to aid in increasing the number and profile of ethnic minorities, disabled persons and women within the civil service. The aim of the program is not only to increase representation of these groups, but to ensure that the civil service more accurately reflects the society which it serves, and which recognises the valuable contribution which people from all backgrounds have to make.
The British government has paired its educational priorities with cultural diversity issues. In a Feburary 2001 speech the, Prime Minister set out four key points in the Government's strategy for modernising secondary education - Diversity, Standards, Vocational skills and Greater autonomy for successful schools. With respect to the diversity component of this strategy, the Prime Minister said that: "Diversity must become the norm, not the exception, so that we move to a system of distinct and diverse schools, each with a centre of excellence. We will promote a radical extension of diversity…"
Overall, the UK is making positive steps in both education and cultural diversity showing that it is important to integrate all aspects of society and that education is key to building a successful future for British citizens and the country as a whole.
The British government has consistently been active in providing financial and non-monetary resources in aid of development, but their performance has been improving drastically since Tony Blair came into power in 1997. New figures from the OECD reveal that the UK has risen to become the fourth largest donor to poor countries, with its highest ever spent on official development assistance. The increased spending has enabled the government to not only to take a more active role in international negotiations but to influence other donors and help mobilise the international system to meet the international development targets which form the core of our policies.
As with many of their policies and approaches, the British government shows an integrated approach to development and aid in addressing the priority health problems of the poor, improving their access to healthcare, services and products. This includes investing in strong, efficient and effective health systems, a more effective global response to HIV/AIDS and challenging Britain's OECD partners to "lead by example" and improve access to their markets for products from developing countries since poverty reduction strategies for developing countries need to go hand in hand with improved access to global markets for developing country exports.
Prepared by Denisse Rudich and Allison Smith
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