We are pleased to announce the publication of our newest working paper, which you can access here via the Mossavar-Rahmani Center for Business and Government.
Abstract
Why doesn’t the British economy grow anymore? That’s not just a question about the recent recession, it’s been the fundamental debate ever since the financial crisis, and – unlike the recession – it’s not going away any time soon.
In fact, the Office for Budget Responsibility says this sickly performance will continue throughout this decade, alongside weak public finances and vital services starved of cash. Without stronger growth, talk of reducing the tax burden is a pipe dream.
But the solution is staring us in the face. Compared to other countries, Britain’s feeble growth stands out because – outside London – our cities have performed particularly badly. Whereas if our non-London cities could catch up with the growth of their European counterparts, the UK would be £55bn richer and generate £13bn a year in extra tax revenue.
How do we achieve that? Our Harvard-Kings research asked three former Prime Ministers, five former Chancellors and dozens of other local and central government leaders alongside in-depth economic analysis. Today we set out a ten-point plan for reform.
The starting point must be a UK plan for growth, led nationally by the Prime and the Chancellor but actively shaped and delivered by local leaders. After the centralisation and disastrous policy instability of recent decades – which all these former political leaders now regret – we need an agreed plan we can stick to.
To work it must reverse years of under-investment in local transport, innovation and STEM skills outside the South-East which has stunted the growth of non-London city-regions. Decisions on spending and planning should be made outside London by strong local leaders with the tools and mandate to do the job.
They say, ‘if it ain’t broke, don’t fix it’, but when it comes to the mayoral model, the mantra needs to be: ‘if it’s working, extend it’. All parts of the countries should have Combined Authorities with elected Mayors in the next Parliament, accompanied by long-term budgets and greater financial freedoms – with nowhere left out. Mayors and First Ministers should bring their voice to Westminster too, via the House of Lords.
These are big changes. But if the next government wants to kick-start growth and achieve all the other goals that depend on it, they can’t be ducked.
Every previous political leader we spoke to wished they’d acted earlier to achieve that consensus. For this to work for the next twenty years, the two main parties must commit to a common agenda that lasts beyond one Parliament. We’ve got to get beyond political leaders expressing regret after their time in office that they didn’t do more.
The first and most important test will be the commitments made by the main parties in their respective manifestos. It’s time to rise to the challenge.