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Unstable markets may require intervention to stabilise prices, including guaranteed price schemes and buffer stocks.

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1.5.8 Government intervention in markets

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Reasons for Government Intervention in Markets

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For the first time the UK has moved into the top 10 in a list of the world's most attractive markets for infrastructure investment.

More investor-friendly financing and taxation have helped the UK climb three places up the ladder over the past two years, according to data released by Arcadis an asset design and consultancy business.

Projects that have helped raise the UK's appeal and status include Beijing Construction Engineering Group's investment in Manchester's airport city, Canadian pension fund La Caisse buying into the huge London Array wind farm in Kent and EDF's long-delayed £16bn Hinkley C nuclear power plant in Somerset.

Arcadis uses a business model that includes the ease of doing business, tax rates, growth in the economy, government policy, the quality of existing infrastructure projects and the availability of debt finance, to compile the league table.

The UK has been helped by marginal improvements in meeting the criteria along with the financing and tax yardsticks in winning promotion but Arcadis warns that the Government will have to try harder to maintain its new status. Steve Bromhead, UK head of infrastructure at Arcadis, said: "The Government needs to provide long-term clarity over infrastructure policy and look at the over- prescriptive nature of regulation in several key sectors."

He warns that supply chain problems and inflationary pressures risk making the UK look less attractive while the slowdown in energy investment and delays in completing projects are proving a turn-off for foreign investors.

Singapore with its integrated strategic plan has retained its place at the top of the league table despite limited investment opportunities. Two fast-expanding Gulf states, Qatar and the United Arab Emirates, with its Dubai and Abu Dhabi hubs, are in second and third place. Sweden, fourth, and Norway, fifth, are the only two other European countries in the top 10.

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UK in top 10 nations for infrastructure investing

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For the first time the UK has moved into the top 10 in a list of the world's most attractive markets for infrastructure investment. More investor-friendly financing and taxation have helped the UK climb three places up the ladder over the past two years, according to data released by Arcadis an asset design and consultancy business.

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The development of new technology for low-carbon aircraft engines is to benefit from a £45m joint Government and industry investment.

Nick Clegg, the Deputy Prime Minister, said three projects, led by British engineering giant Rolls-Royce through the Aerospace Technology Institute (ATI), would be funded to research and develop ways to reduce carbon emissions by using lightweight composite materials to make new engines.

Government and businesses have invested heavily in aerospace in recent years in a bid to maintain the industry's position as the biggest in Europe, and second globally only to the US.

Three years ago the Government and companies in the sector pledged £1bn each as part of the Aerospace Growth Partnership (AGP) to boost exports and promote competition. The £2bn investment is estimated to secure 115,000 high-value jobs.

One of the investments was the ATI, which opened last year, and aims to develop the next generation of faster, quieter and more energy-efficient aircraft, to maintain the position.

Aerospace has been one of the industries driving the UK's economic recovery, contributing £24bn to the economy.

"We should be really proud that the UK is the number one aerospace industry in Europe and a world leader in innovation, Mr Clegg said.

"The Government's investment of £45 million alongside industry will help to ensure the UK continues to build and design the planes of the future.

"I am working hard in the Coalition to ensure that aerospace continues to boost growth in the North East and across the country, building a stronger economy and doing it fairly."

The research will focus on changing parts of the engine design to make it more efficient, as well as reducing the time it takes to build the engine, the Government said.

"These new technologies are vital to reducing emissions and underline the aerospace industry's commitment to improving the environment," said Gary Elliott, chief executive of ATI.

Mr Clegg made the announcement alongside Vince Cable, Business Secretary, as the duo opened a £100m Rolls-Royce aerospace factory in Washington, Tyne and Wear.

The new factory will make more than 2,500 fan and turbine discs a year which are used in every engine. It will also safeguard hundreds of highly-skilled manufacturing jobs in the North East.

"The UK is at the forefront of the global aerospace industry, and investments such as this new factory from Rolls-Royce will help to keep us there," Mr Cable said.

"The projects that we are funding through our aerospace industrial strategy will ensure that Britain develops the efficient and environmentally friendly aircraft of the future, while keeping highly-skilled manufacturing jobs here in Britain."

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Government announces £45m investment in low-carbon aircraft

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The development of new technology for low-carbon aircraft engines is to benefit from a £45m joint Government and industry investment. Nick Clegg, the Deputy Prime Minister, said three projects, led by British engineering giant Rolls-Royce through the Aerospace Technology Institute (ATI), would be funded to research and develop ways to reduce carbon emissions by using lightweight composite materials to make new engines.

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Government ministers will have their first taste of greener driving soon, with the first of a new fleet of electric vehicles to replace older fuel-guzzling ministerial cars.

The replacement is part of a £5m investment in the government's fleet of vehicles that will result in electric cars and vans being used more widely across the public sector.

However, the initial roll-out will be small with just 140 low emissions vehicles, 64 of which will be 100% electric. Only four ministerial cars will be being replaced in the first round.

Baroness Kramer, transport minister, said the roll-out was "an important step" that would save money on fuel and help to improve air quality and tackle climate change, with lower greenhouse gas emissions and air pollutants. Many of the vehicles, including the minsiterial cars, will be Nissan Leaf models, which are 100% electric and built in the UK.

Danny Alexander, chief secretary to the Treasury, who recently launched a government prize worth £10m for the development of a new electric battery, said: "This is the right thing to do for both the environment and the taxpayer."

The initial £5m investment is part of a broader £500m package of measures to promote ultra low-emission vehicles.

Kramer said the government's aim was to demonstrate the usefulness of an electric vehicle fleet. The government announcement comes as a new report suggested on Tuesday that a mass switch to electric cars could cut the UK's oil imports 40% by 2030.

Take-up of electric vehicles has been slow, in part because of a lack of charging infrastructure, and because of the limited range of the vehicles. But the latter has improved and charging points are now being built by councils and in public places such as supermarket car-parks.

However, the cars are still more expensive to buy than petrol and diesel-driven vehicles, and lower oil prices mean there is less relative advantage in fuel costs at present.

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Ministers' cars to be swapped for electric versions in green drive

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Government ministers will have their first taste of greener driving soon, with the first of a new fleet of electric vehicles to replace older fuel-guzzling ministerial cars. The replacement is part of a £5m investment in the government's fleet of vehicles that will result in electric cars and vans being used more widely across the public sector.

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Haze level, PSI in S'pore hits highest level since 2006 - 17Jun2013

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SINGAPORE: A day filled with hazy skies and smoky air. That's what Singaporeans experienced for much of Monday, as strong burning smell wafted across the island. The 3-hourly PSI breached 100, crossing into the unhealthy range, to 105 at 3pm. It hit 152 at 9pm, the highest level since 2006 when the index reached a peak of 150.

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Teachers say they are seeing "Victorian conditions" with pupils arriving at school hungry and not wearing the right clothes needed for the weather.

The NASUWT teachers' union says schools and teachers are increasingly having to deal with the consequences of poor housing and poverty.

Teachers reported bringing in their own food to school to give to children.

The Conservatives said the number of children in poverty had fallen by 300,000 under the coalition government.

The Liberal Democrats said they had helped families by introducing free school meals for all infant children.

Tristram Hunt, Labour's shadow education secretary, warned of the "quiet indignity of poverty that can wreak havoc with a child's confidence".

He said poverty was one of the "biggest barriers" to pupils achieving in school.

Socks and coats

Claims about poverty in the school-age population were heard at the NASUWT teachers' union annual conference in Cardiff.

The union asked members for their experiences and received almost 2,500 responses.

It was not a representative sample of teachers, but among those replying more than two in three reported seeing pupils come to school hungry.

"Children in 2015 should not be hungry and coming to school with no socks on and no coats - some children are living in Victorian conditions - in the inner cities," said one unnamed teacher.

Almost one in four of the teachers who responded said they had brought in food for pupils who were hungry, and an even higher proportion had seen the school feeding pupils.

More than three in four had seen pupils arriving at school with "inappropriate clothing" such as no socks or coats in bad weather.

Similar numbers claimed that a bad diet meant that pupils were unable to concentrate on their work.

More children were being sent home with letters about unpaid school meals and pupils who were sick were still being sent to school because parents could not afford to take time off work, claimed teachers.

The comments from the survey suggest teachers felt that they were having to cope with the wider problems linked to family hardship, such as children living in temporary accommodation or relying on food banks.

Healthy food

"Poverty and homelessness take a physical and emotional toll on children. They often cannot concentrate when they are in school because they are tired and hungry, have no space to do homework," said NASUWT general secretary Chris Keates.

"Schools cannot be expected to pick up the pieces."

Speaking at her own union's conference in Harrogate, National Union of Teachers president Philipa Harvey said: "Many of us will have provided breakfast for children so that they can cope with the demands of a school day as well as the teachers and other staff who are providing school uniform, books, coats."

A Liberal Democrat spokesman said that as part of the coalition government they had introduced "free early years education for the poorest two year olds, and free school meals for all infant children".

"We agree that there is more to do to ease the squeeze on family budgets and build a fairer society. We will cut income tax by a further £400 for low and middle earners, and ensure more families can access free childcare.

"Free school meals help children learn, make sure children eat more healthy food, and save parents money. So we will also aim to extend free school meals to all children in primary school."

A Conservative spokesman said under the coalition government "the number of children living in poverty has fallen by 300,000".

He added that because of the pupil premium, the poorest pupils are getting an extra £2.5bn targeted at their education each year, which is already closing the attainment gap with their peers.

"Because of our policies, there are more jobs than ever before, wages are rising faster than prices and with the lowest inflation on record, family budgets are starting to go further.

"The NASUWT should recognise how the Conservatives have rescued the economy, and through that, delivering the jobs that secure a better future for families."

Labour's Tristram Hunt, speaking to the NASUWT conference, had pledged that Labour would renew the aim to eradicate child poverty by 2020.

He told delegates: "If a child has no food to eat, no safe and warm space to call their own, no books to read, no uniform to wear, no money for transport to school, then that child cannot possibly be learning at their full potential."

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Teachers say they are seeing "Victorian conditions" with pupils arriving at school hungry and not wearing the right clothes needed for the weather. The NASUWT teachers' union says schools and teachers are increasingly having to deal with the consequences of poor housing and poverty.

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The UK risks becoming a "permanently divided" society unless "radical new approaches" are taken by the next government, a report suggests.

The Social Mobility and Child Poverty Commission also claims the target to reduce child poverty by half by 2020 will not be met.

Chairman Alan Milburn said the three largest Westminster parties were being "less than frank" on the issue.

He said housing costs and youth unemployment needed to be tackled.

Mr Milburn, a former Labour minister, said the current government had "discredited existing child poverty targets and failed to put in place new ones", creating an "unholy mess".

'Relative poverty'

The existing targets were put in place in 2010 by the last Labour government. Currently, a child is classed as being in relative poverty if his or her family income is less than 60% of median earnings. (Here's an explanation of how the median is worked out.)

The House of Commons Scottish Affairs Committee defined absolute poverty as "the lack of sufficient resources with which to keep body and soul together".

According to the commission's report "absolute child poverty increased by 300,000 between 2010-11 and 2012-13" and "independent experts expect child poverty to increase significantly over the next few years". It also says that "working poverty after housing costs is rising".

It says 1.4 million children are now in "relative poverty" due to the effects of rising rents and mortgage costs since 2010, despite the rate of relative poverty in the general population falling to its lowest level since 1984.
What the report says is going well:

Relative poverty at a 30-year low

Unemployment down to 6.2%

85% support on childcare costs for eligible families

Twice as many poor children achieving the basics at GCSE than in 2005

The Pupil Premium - giving additional funding to schools with poorer pupils to help close the attainment gap

7% increase since 2011/12 in 'Good' or 'Outstanding' FE colleges

Number of children in workless households is at an all-time low

40% of young people entering higher education

£735 million invested in widening participation in higher education

The report also says that 20% of Scottish children and 24% of Welsh children live in absolute poverty.

The prime minister's official spokesman said: "It is through greater employment opportunities for the households in which children grow up that we can best address this issue."

Deputy Prime Minister Nick Clegg said he shared Mr Milburn's "despair", and claimed "the Conservatives have basically decided to turn their back on child poverty".

The report offers a series of recommendations that - if implemented by 2020 - would "prevent Britain becoming a permanently divided society and ensure there is a social recovery alongside the economic recovery".

The recommendations include:

Reform child poverty targets

'Working poor' exempted from austerity measures

Higher pay for the best teachers to go to the most challenging schools

All children to be school-ready at age five by 2025

National parenting campaign to be launched

Illiteracy and innumeracy ended for primary-school leavers by 2025

Long-term youth unemployment ended by 2020

Britain to become a Living Wage country by 2025

Number of housing options increased

Unpaid internships ended by 2020

Cap on student numbers at individual universities to be removed

Mr Milburn told BBC Breakfast the risk is that young people today "simply do not have the opportunity to progress".

And speaking to BBC Radio 4's Today programme, he also said that what was needed in government was a "more rounded sense of what makes people poor".

The report says that currently two out of every three 5-year-olds eligible for free school meals is "not school-ready". The report advises a "national parenting campaign" to resolve this problem, in which key parenting skills would be developed in five strands: reading, responding, playing, talking, and caring.

The campaign would be financed by removing childcare tax breaks from families where one parent earns more than £100,000.

Mr Milburn added: "What every political party needs to do is reconcile very good social ends and fiscal and other policies they want to pursue.

"It is no good willing the ends and not willing the means."
What the report says is not going so well:

4 in 10 children missing out on "good parenting"

6 out of 10 poor children not getting the basics at GCSE

Only 15% of workplaces offering apprenticeships

8% of 16-17-year-olds and 16% of 18-24-year-olds still not in education, employment or training

Long-term youth unemployment (more than one year) double the level it was before the recession

1 in 5 children living in absolute poverty

£40 a week fall in average earnings since April 2009

Home ownership for those younger than 25 has halved in the past 20 years

Most advantaged are six times more likely to go to university

Top employers recruit from an average of 20 out of over 115 universities

Over a quarter of employers use unpaid interns

The commission proposes that the UK government give the Office for Budget Responsibility "a new role to report on the poverty and social mobility impacts of budgets", as well as advocating that "all political parties come forward with a clear set of plans before the election next year for what they will cut and how they will avoid negative impacts on social mobility and child poverty".

The report says 20.8% of families with children are now renting private accommodation, up from 5.7% in 1988.

The commission recommends combating the "poverty premium", which "forces the poorest families to pay the highest prices for life's essentials", by extending the Warm Homes Discount (which gives a discount on energy bills to some low-income families with children) and the Green Deal (which provides loans to households for to insulate their property and cut heating costs).

It says the government should work with other suppliers to "standardise access to discounts".

Mr Milburn said the aim of government policies should be to get people "from welfare to work and then from low pay to living pay".

The commission says the next government's goal should be to end youth unemployment by 2020. It argues a "Day One" re-engagement service for those who enter the job market for the first time or lose a job should be introduced, and by 2020 half of all employers with more than 10 employees should be offering apprenticeships.

The report also claims five million people currently earn less than a living wage.
'Plainly absurd'
He said that Labour's promise to raise the minimum wage to £8 an hour by 2020 was a "good step forward", but "not as ambitious as one would hope it would be", adding that if the "historic trend" in minimum wage rises had continued since 2008, the rate would be £8.23 an hour by 2020.

But Ian Murray, Labour's shadow minister for trade and investment, said: "Labour's pledge to raise the National Minimum Wage to £8 in 2019 is good news for millions of people across the country. To suggest otherwise is plainly absurd. We are the party that introduced the minimum wage and Labour is the only major party with a plan to strengthen it further."

Mr Milburn also criticised Chancellor George Osborne for promising to freeze working-age benefits for two years, saying this would have a negative impact on the "working poor".

Matthew Reed, chief executive of the Children's Society, said that a failure to end child poverty by 2020 would be a "national disgrace" that reflected "repeated failures by successive governments to back up words with action.

And Barnardo's Javed Khan said: "It's shocking that poverty looms for a record number of children by 2020, no matter how hard their families work. Surely now it's time for the UK Government to change its 'slash-and-burn' approach to welfare reform."

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The UK risks becoming a "permanently divided" society unless "radical new approaches" are taken by the next government, a report suggests. The Social Mobility and Child Poverty Commission also claims the target to reduce child poverty by half by 2020 will not be met.

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Minimum wage and price floors | Microeconomics | Khan Academy

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Rent control and deadweight loss | Microeconomics | Khan Academy

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Tragedy of the commons | Consumer and producer surplus | Microeconomics | Khan Academy

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In law and economics, the Coase theorem () describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property.

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AS/IB 21) State (Direct) Provision - A look at state or direct provision to solve merit and public good market failure

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State Provision (Direct Provision) and Market Failure

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State Provision (Direct Provision) and Market Failure - How to draw the State Provision (Direct Provision) and Market Failure diagram Twitter Page - https://twitter.com/econplusdal Facebook Page - https://www.facebook.com/EconplusDal-1651992015061685/?ref=aymt_homepage_panel State Provision Theory Video - https://www.youtube.com/watch?v=Sda6dR_3o5M

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Unit 1 Micro: Government Intervention in Markets

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Revision notes on government intervention in markets

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Pollution Taxes and Negative Externalities

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This short revision tutorial looks at the use of polluter-pays taxes to help correct for market failure

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Analysis of Maximum Prices I A Level and IB Economics

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​This revision video takes students through a basic analysis of the impact on wages and employment of a minimum wage introduced into the labour market. It includes a comment on the importance of elasticity of labour demand in determining the employment consequences of a higher pay floor.

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This is a recording of an AS (Year 1) micro revision webinar looking at evaluation of government intervention in markets designed to correct for market failure. Good evaluation questions the effectiveness of intervention and we also look at some examples of government failure.

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Topical Examples of Government Intervention in Action | Economics | tutor2u

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We've just flicked the switch on moving all our digital resources to instant digital download - via our new subject stores. For every subject you can now access each digital resource as soon as it is ordered. This will always be the latest edition of each resource too (and we'll update you automatically if there is an upgraded version to use).

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Producer Subsidies I A Level and IB Economics