Looking at the year behind us and the one stretching ahead, it’s easy to feel despondent. Millions are in the grip of a cost-of-living crisis; the UK’s growth rate remains well below our advanced economy peers, and living standards are not expected to recover for years. Public services are creaking at the seams, with endless train delays and cancellations, NHS waiting lists at record levels and asylum applications failing to be processed. Conversations about “broken Britain” and the state of the NHS are now commonly heard on trains and in pubs.
If there is a positive side to all this, it's that the economic value of public services is becoming crystal clear. Health is the most visceral example, with around 2.5 million people not in work or looking for work due to health problems – the highest ever. The nation’s poor health and its economic impacts are not just the result of a lack of investment in the NHS, but a long-term failure to address the wider determinants of poor health including insecure work, deep education and skills inequalities and poor quality social and rental housing. It also reflects the extent to which local government services have been hollowed out; they provided many of the services critical for preventing ill health.
As a thinktank dedicated to inclusive growth, at CPP we’ve long made the case for properly funded, effectively managed public services as a vital ingredient for prosperity. And while it’s clear we are a long way from this when looking at the state of Britain’s healthcare, schools, transport and childcare, the link between the current situation and our sluggish growth rate – and the need for a different approach – is beginning to be understood more widely.
A powerful example is childcare, where its importance as an economic asset continues to pick up momentum. After years in which it has felt like an uphill struggle to direct political attention towards the prohibitively high cost of childcare in the UK, there are finally signs that this will become a high-profile issue at the next election. CPP’s previous work on the earnings lost by women who drop out of the labour market due to high childcare costs has been influential in making the economic case for investment and reform, and we’ll be revisiting this issue this spring.
Devolution is another area where political parties agree on principal, if not on policy. The UK is currently one of the most centralized countries in amongst advanced economies – hampering the ability of local leaders and institutions to devise policies and solutions for their areas, which they know far better than Whitehall. At CPP, we know that effective devolution is critical to making inclusive growth a reality, so it is encouraging to see this issue firmly on the political agenda, not least in the form of Labour’s ambitious proposed Take Back Control Bill. The cross-party Inclusive Growth Network that CPP hosts, made up of 14 local and combined authorities across the UK, is a testament to how much can be achieved at a local level to build inclusive economies.
While the country faces profound challenges, here at CPP we are energised by the fact that policymakers and the public are warming to some of the principles we know are needed to create sustainable and inclusive growth across the UK. Our two main programmes of work for 2023 will build on this momentum. Though the case for investment in public services is clear, the political reality is that any future government will need to think creatively about what to prioritise and how this is funded. So we’ll be asking how the UK can fund the level and type of investment needed to deliver inclusive growth: including by asking, what kind of tax and spend framework could deliver it? We will draw on international and historical examples of taxing different forms of income and wealth, to consider how our fiscal framework could be reimagined so that as well as funding investment, it puts our economy on a more sustainable and productive footing in the long run.
Our second programme of work will be looking at how business investment can drive inclusive growth. Investment by the private sector – in skills, jobs and infrastructure – is a key ingredient for growth. But the UK has long suffered very low levels of business investment, and reversing this trend will be critical to the success of any government that wants to drive growth. CPP will be looking at the barriers that prevent business investment, and what can be done to remove them. This will include exploring how to better nurture and harness high value-added sectors in places with low productivity rates, as well as thinking about how to encourage more investment in the foundational economy, sometimes known as the ‘everyday economy’: the many jobs across the country that involve providing the goods and services we all need. The programme will build on previous CPP work on industrial strategy and our initial thinking on university-led industrial clusters, which my colleague Ross has recently written about.
A busy year lies ahead. Sign up to CPP’s newsletter to receive updates on our publications and events. And if you’d like to discuss any of the plans outlined here, please get in touch: email@example.com.