By-and-large, when policymakers are making decisions, they are not willing to accept that it might take 10, 20, or 30 years for the country to realise the return on investment. Consistency and coordination are the nutrients needed to achieve long-term growth. Yet the UK economy is stagnating – at the expense of present and future generations – because of the lack of anything resembling a strategy.
For example, we have had at least 18 changes in capital allowances since 1984, and 16 housing ministers in 13 years. Some children born in 2022 saw the same
number of Prime Ministers over one year as the average adult has seen in 20. The constant changes in policy direction affect the ability of businesses and individuals to plan.
Companies surely have similar concerns – especially those looking to make very long-term capital commitments. The fact that Britain is at the bottom of the league table among the G7 for business investment is telling, and even apparent success stories such as the financial sector invest less (relative to their value-added) than is the case among our peers. The problems are all too well-known: the dysfunctionality of the planning system; lengthy procurement processes concerned only with the lowest possible cost; the struggle to create public-private partnerships; entirely inadequate infrastructure upgrades; ‘policy by press release’.
Bidwells is to be commended for tackling such an important and consistently challenging topic with such energy and optimism. And they are right to identify key areas of the economy that sit within their sphere of influence as drivers of the UK’s Productivity Engine.
Space – the foundation of their report – and the infrastructure required to jump-start our economic performance have been a focus of my research. While there is no single ‘silver bullet’ that will ensure our future prosperity, targeting the determinants of growth is essential if the UK’s productivity is to begin to improve
again.
How to appropriately manage available land, in towns and cities, for housing, offices, laboratories or logistics, and create the enabling environment for green infrastructure to upgrade and overlay our existing infrastructure, is a key piece of the productivity puzzle. Accelerating productivity will require coordination. This is likely to involve further devolved powers or perhaps vehicles to enable action at an appropriate scale, such as development corporations, which could be genuine
agents of change.
We will also need to witness a greater degree of cross-sector collaboration, as the importance of the interdependence of different factors influencing productivity is better understood.
Right now, however, there is no mystery about the barriers to productivity that are holding back the UK’s potential: the lack of resources for R&D-intensive industries and the scarcity of purpose-built labs; the sporadic and inadequate upgrades to transport, grid and utility infrastructure, the profound housing crisis; the piecemeal approach to renewables and the environment; the inefficient, non-strategic and shortterm utilisation of landed assets. All are obvious and necessary areas for reform.
