Elvis Presley called it: we’re caught in a trap
Hard to know what’s the biggest political story of the week. But I’ll tell you what I think is the most interesting. The cost of living crunch caused many to push the government to delay its National Insurance increase. Sounds sensible. The PM and Chancellor said no – the increase was needed to fund the NHS and social care. Sounds sensible.?
We have, for very sensible reasons, found ourselves caught in a trap. We can’t afford to cut spending, or bring taxes down, while growth remains low.
So how do we get out?
This week, we also had the anniversary of Brexit. Brexit was always a two-part plan. Part one, leave – and believe it or not, that was supposed to be the simple part. Part two, a focus on growth and competitiveness. And on that front, we haven’t even started.
What’s happened to the ambition?
?The government has a new talking point. Apparently we’re the fastest growing economy in the G7. Never has the truth revealed so little! We are in the middle of an unprecedented V-shape recovery. It’s pretty hard to take the blame for the pandemic crash, nor the credit for the inevitable bounce back.
?If you want to judge UK growth you need to look at what happens after the next 18 months’ worth of recovery. At that point, according to the independent Office for Budget Responsibility (OBR), the UK will grow at 1.3 – 1.7%. Given we got used to growing at 2 – 2.5% in the nineties and noughties, that’s a pretty pessimistic account of where we’re headed.
I think we all need to fight against it. It’s lowballing our ambitions and lowballing the UK’s potential, and we’re on the verge of tipping into another decade of flatlining productivity.
?Of course, the government is in a tough spot. Today’s high spending, high taxes and low growth is a vicious cycle that’s hard to break.?And when faced with rising waiting lists in the NHS, backlogs in the courts, pressure on schools and on transport, the government is repeatedly looking to taxes to pay for it all.
It won’t work. And, my speech tried to set out another way.?
Think big
While government may say we can’t afford to spend more on growth, I say we can’t afford not to. Simply put, we will not pay down today’s debt, extend public services and reduce taxes on 1.6% growth.
Businesses need to step up and invest more. In net zero. In innovation and digital transformation. In exports. In skills. In the health and wellbeing of their workforce.
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But their ambition needs to be unlocked by a government that lays the right foundations.
Economic policy from the government has been far too conservative, with a small c. This is post Covid, post Brexit, Net Zero Britain. The boldness of our policy should be commensurate with the scale of the challenge and opportunities. And we’ve seen that only in snippets – a tax Super Deduction; an offshore wind global success story; new bootcamps to tackle today’s skills reality.
But it can’t stop there.
In the speech, I set out five proposals that would stimulate business investment and innovation.
Using the six-point Corporation Tax rise next year as the moment to introduce a 100% investment deduction permanently. It’s what those of you in sales know as using a price rise to introduce a discount and win customers.?
Turning the Apprenticeship Levy into a far fuller Skills Challenge Fund. Where firms’ levy funds can be used to respond to current skills shortages and build skills for the future in flexible and high-quality programming. ?
Banging together those in government who work on the skills gaps in our economy with those who think about immigration needs. Believe it or not, they are in completely different departments.?
?Alongside what should now be familiar calls to lead on green growth, and using the opportunities of Brexit to become the smartest and most future-focused regulator in the world, these are just five bold ideas that represent the kind of policy bets we need to make now to get far better results.
Imagine if all our think tanks, our leading academics, our finest entrepreneurs were all invited by government to join a campaign – bolder ideas for a faster-growing Britain.?
Radical thinking needs to go up. Higher than the spending and taxes we’re struggling to afford now.
Growth is the only option. Choose growth.
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Great article and you're right. Time for bolder vision, rapidly enacted in the form of policies to address skills gaps, reward long-term investment, encourage growth.
Delivering Innovation Through Applied Artificial Intelligence Solutions and Ecosystems // Veteran
2 年This is amazing! Regardless of the difficult circumstances, as seen by growing taxes and living costs, we should choose growth. We have no other choice except to grow. We can either have growth or something else more spending, greater taxes, higher living costs but not both. The lack of growth is the most pressing issue confronting today's generation and economy. We're all seeking for growth, but it's not simple to get by. We can address a lot of problems if we have progress. Poverty can be reduced, education can be improved, health care can be improved, and so on. I'm delighted you shared this useful information with us.
FTSE Chief People Officer, Entrepreneur/Founder, Interim CPO, Consultant, Advisor and Coach. Leading People-work in some of the most progressive companies in the world, including Getty Images, Sky and Ascential
2 年Yes Yes Yes Yes Yes This is a time for bold moves.
Strategy advice and high impact support to leaders of businesses with ~￡3m to ￡14m turnover or ambitions to get there soon! I help them understand and drive the equity value in their business. Coach/consultant/CXO.
2 年Yes yes yes. Thank you for giving a voice to the frustration of entrepreneurs and the business world. We must be more ambitious. Back to the Seventies is not an aspiration.