This week Keir Starmer set out the ‘six steps’ Labour would take if it wins the next general election. They’re understandably focused on things like cutting NHS waiting lists and recruiting more police officers and teachers, but the fallout has been all about how we would pay for those promises.
Jeremy Hunt hit back, releasing a dossier claiming Labour had a £38bn black hole in its costings and would have to increase taxes as a result. He then hinted at another cut to National Insurance before the next election. Labour then returned fire, claiming that the Conservatives had their own £46bn unfunded tax plan in their promise to scrap National Insurance altogether.
We don’t have a horse in this race, but I mention it to remind our intelligent readers (who are no doubt already aware) that when it comes to elections, it really is the economy, stupid.
A few years ago, Sam Bowman and Stian Westlake made the case in Reviving Economic Thinking on the Right that the Conservative Party needed to refocus its efforts on economic growth. The lessons of that excellent paper are as relevant today as when they wrote it, and their policy prescriptions as applicable to people of all political persuasions.
As they stated (and the current polls attest): “Slow productivity growth is not just economically toxic but politically toxic too: it leads to a sense of malaise and that the system is not working for ordinary people. Conversely, strong productivity growth cures all sorts of problems. Faster productivity growth would lead to higher wages, better returns for savers and pensioners, lower taxes, and lower deficits with higher public investment. And, perhaps, more confidence in the liberal economic model.”
In many ways, running a country is very different to running a business. However, the best politicians are similar to the best entrepreneurs in their ability to focus on what really matters. Whoever wins the next election will be pulled in many directions – many superficially worthwhile. But nothing is more important than raising productivity, as without this there will be no money for spending pledges or tax cuts.
In our own report Building Blocks we took a step back to share what we think is needed: addressing under-agglomeration, alleviating fiscal headaches, accelerating innovation and acquiring new skills. On Tuesday 4 June we’ll get back into the weeds, launching the first report of the Private Business Commission. But, once again, it’s all about raising productivity.
Of course, no political party would say they’re against increasing productivity. But to actually deliver, the next government must ruthlessly pursue it from day one. Both for our benefit, of course; but also so the fruits of their labour are realised by the time of the next election.
All Aboard
This week we held the AGM for the All-Party Parliamentary Group (APPG) for Entrepreneurship, which we are the Secretariat of. Seema Malhotra MP was re-elected as Chair; and Lord Bilimoria, Lord Leigh of Hurley and Jo Gideon MP were re-elected as Vice-Chairs. We also have a growing list of Members too long to mention.
Seema, who is the shadow skills minister, was also interviewed in FE Week this week. It’s worth reading in full, but I want to just focus on a policy mentioned in the article: “Training providers are desperate to understand the nuts-and-bolts of Labour’s biggest and most controversial skills policy: replacing the apprenticeship levy with a growth and skills levy that businesses could spend on non-apprenticeship training.”
I don’t think this is controversial at all.
As we wrote with Enterprise Nation in Access All Areas: People: “Apprenticeships in all age groups have fallen considerably despite the Apprenticeship Levy. To increase uptake, the government should widen the scope to include other forms of accredited training. Consequently, as suggested by others – including the British Retail Consortium, CIPD, and the Learning and Work Institute – the Levy should be reformed into a broader Skills Levy and better focused on younger people.”
Metro Elite
In case you missed it, Eamonn Ives, our Head of Research, wrote a cracking May Digest for the All-Party Parliamentary Group (APPG) for Entrepreneurship, setting out why localism matters.
Eamonn thinks there are strong grounds to believe metro mayors can have a meaningful economic impact: “the OECD suggests that cities with fragmented governance structures have productivity levels that are up to 6% lower than those that do not, while polling data from the think tank Centre for Cities shows that people living under a metro mayor support further powers being devolved down from central government.”