Labour must summon the courage to put British people’s needs before Whitehall orthodoxy
Nvidia chief executive Jensen Huang has predicted the UK will be an 'AI superpower' (Associated Press / Alamy)
4 min read
Repairing Britain’s broken economy by bringing back sustained economic growth has been the core mission of this Labour government. It may sound abstract, distant from the lives of everyday people, but it is the cornerstone on which the success or failure of this government rests
Take the period between 2010 and 2024. If growth had matched the OECD average, the UK economy would be £140bn larger. Thousands of pounds more in the pay packets of working families, and £58bn extra for the Treasury.
Humanising how we talk about growth is important, but those numbers mean greater security for families and a very different backdrop on tax and spend. Unless we reverse the long-term stagnation of growth, the politically difficult choices of today become impossible by the end of the decade.
Over a year into the project, heading into a high-stakes autumn with a Budget navigating fraught fiscal terrain, now is the time to take stock. It has become ever more apparent that the era of Tory drift did more long-term damage to the economy than we realised.
This drift was characterised by politicians repeatedly picking the anti-growth option when faced with hard trade-offs. Ducking reform of the state and regulators, giving in to Nimbys (Not In My Backyard) on planning, and protecting incumbents instead of fostering start-ups and challengers. Of course there was the disaster of the Liz Truss experiment, but the original sin lay in David Cameron and George Osborne slashing state capacity while investing nothing for the long term, even when credit was nearly free.
Their short-termism has left us having to accelerate initiatives like the Oxford-Cambridge Arc or a third runway at Heathrow that should have been delivered long ago. We have had to devote significant capacity to catching up on the last decade before we can even begin to grasp the opportunities that will shape the decades to come.
This analysis of the scale of the challenge led us in the Labour Growth Group to embark on a project to create a modern Beveridge Report for the economy. Attacking the barriers to building, energy abundance, business dynamism and regional rebalancing, all of which are being constructed by a state so mired in inertia, regulation and judicial constraint that it can no longer deliver.
The overall direction is correct, but the tempo and ambition must now rise
There are already areas of progress beginning to bear fruit. The recent announcement of over £31bn of investment from the world’s largest tech companies came with a prediction from Nvidia’s Jensen Huang that the UK would become an “AI superpower”. As a primarily services-based economy, the UK is among the best placed to benefit from this revolution. Ministers have also launched the most serious planning reform effort in a generation, begun rolling back the sprawl of unaccountable quangos, and the Nuclear Regulatory Taskforce is working at pace to accelerate clean power projects. The overall direction is correct, but the tempo and ambition must now rise.
We are seeing industry still struggling under the burdens imposed in the dying days of the previous administration, and our regions let down by crumbling infrastructure as new projects are trapped in a sclerotic mess of a system. In Canada, the One Canada Economy Act is aiming to create a clear, democratically accountable route to delivering infrastructure that underpins that nation’s resilience. We will need something just as ambitious here if we are to build the energy networks, transport links and industrial sites that growth depends on. Meanwhile, the regions also require genuine devolution, giving local leaders the ability to raise and invest their own funds rather than constantly pleading to the centre.
All of this will demand political courage and the determination to put the core needs of the British people before entrenched interests or Whitehall orthodoxy. But the risk of not fixing Britain’s growth dilemma is far greater than that of being radical enough to take it on. Drift has defined Britain for too long – it is our job now to end it.
