After ten years of fiscal tightening in the UK, the Prime Minister and the Chancellor have promised the ending of austerity. The recent Budget allocated the bulk of additional public spending to the NHS, funded out of windfall tax receipts. Other public services – notably education and skills and the criminal justice system – will have to wait until the Spending Review to learn their fate, and that will hinge on the Brexit deal. The Chancellor’s announcement that the government will not enter into further PFI contracts suggests that additional costs may go onto the public sector balance sheet. This will mean that the question of how the UK invests sufficiently in social infrastructure as much as physical infrastructure will be the defining challenge of the post-Brexit age.
A lack of investment in social infrastructure restrains inclusive growth by putting both businesses and public services under pressure. The UK skills deficit is holding back recruitment (businesses struggle to fill 22% of vacancies due to skills shortages). UK employers need further access to a wider range of skills to be more competitive and ensure career progression for their employees and diversity in the workplace. The lack of access to affordable childcare, and mental and physical health services that underpin resilience and quality of life are still a question mark for the future of public services too. According to the Centre for Mental Health the annual cost of mental health problems at work in the UK has grown from £26 billion to almost £35 billion in the last ten years and additional spending on the NHS still won’t be enough for services to keep pace with public demand. The OBR financial sustainability report also shows that the sheer cost of ageing means that health, pensions, social care and debt interest costs could eventually swallow the entirety of tax revenues.
So how can we invest in inclusive growth, where economic and social policy are flip sides of the same coin – each driving productivity and shared prosperity? And what are the respective roles of government, business and the wider set of actors?
This discussion with Lord Jim O’Neill, Bruce Katz and Vicky Pryce will explore innovative ways of financing and structuring inclusive growth, at a local, national and global level.
Lord Jim O'Neill
Lord Jim O’Neill is currently the vice-chair of the Northern Powerhouse Partnership, a member of Shelter Social Housing Commission and the Chair of Chatham House. He worked for Goldman Sachs from 1995 until April 2013, spending most of his time there as Chief Economist, where he became best known for coining the term BRIC. He chaired the Cities Growth Commission in the UK until October 2014 when it provided its final recommendations. He led an independent review into antimicrobial resistance (AMR) for David Cameron from late 2014 to September 2016 and remains focused on this challenge. Since leaving government in September 2016, having been Commercial Secretary to the Treasury, Jim moved to the crossbenches of the House of Lords.
Bruce Katz is the Founding Director of the Nowak Metro Finance Lab at Drexel University in Philadelphia and is the coauthor of The New Localism: How Cities Can Thrive in the Age of Populism. Previously he served as inaugural Centennial Scholar at Brookings Institution and as vice president and director of Brooking’s Metropolitan Policy Program for 20 years. He is a member of the RSA City Growth Commission in the United Kingdom and a Visiting Professor in Practice at London School of Economics. Katz previously served as chief of staff to the secretary of Housing and Urban Development and staff director of the Senate Subcommittee on Housing and Urban Affairs. Katz co-led the Obama administration’s housing and urban transition team. He is coauthor of The Metropolitan Revolution, editor or coeditor of several books on urban and metropolitan issues, and a frequent media commentator.
Vicky Pryce is a Board Member at the Centre for Economics and Business Research (CEBR), having earlier been CEBR’s Chief Economic Advisor. She was previously Senior Managing Director at FTI Consulting (2010-2013), Director General for Economics at the Department for Business, Innovation and Skills (BIS)(2002-2010) and Joint Head of the UK Government Economic Service. Before that she was Partner at London Economics and Partner and Chief Economist at KPMG after holding senior economic positions in banking and the oil sector. She has held a number of academic posts, including Visiting Professorships at Queen Mary, University of London, Imperial College Business School and Cass Business School.