UK has become the sick man of Europe since 2010. Politicians must get a grip on the economy

Discussions about the economy, and particularly productivity growth, feel pretty abstract, an argument for academics and policy commentators. But it matters because it affects how much money people have in their pockets. The last 14 years are proof of this, and it has left people everywhere worse off.

What is it though that the next government could do differently to make the next 10 years more prosperous than the last for people from Manchester to Milton Keynes?

There will be national level policies that will have an impact across the country. Initiatives to encourage more business investment will be in controversial. A closer trading relationship with Europe is likely to be more contested despite the obvious benefits.

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Another desperately needed but politically difficult change is reform of the planning system. The root problem of the current system is that it assesses applications in a discretionary, case-by-case basis. Whether it is approved is at the whims of the people assessing the bid. Why does this create problems? Because it makes the process very uncertain. And uncertainty is a killer for investment.

The opposite of this system is not a free for all, but one where the rules are defined up front. If an application passes these rules, then the expectation should be that it is approved. We might then have a fighting chance of building the 4.3 million missing homes that haven’t been constructed since the current system was introduced after the Second World War.

But there will also need to be policies for specific places too. A hallmark of policy in this area, as in the decades before it, has been a hotchpotch of funds, pots and initiatives that have seemingly achieved little more than feed a stream of government press releases. But there are two policies that the next government should carry on with.

The first is the plan for the economy set out by the government in 2022 in its flagship document on levelling up.

The strategy is good because, like anything that actually merits being called a strategy, it makes choices. It understands that different places play different roles in the national economy, and it identifies the underperformance of the UK’s largest cities outside of London as being a particular problem.

The problem so far though is that very little policy action or funding has been assigned to deliver this plan in the two years since it was published.

The second is to continue with the devolution agenda. Since 2010, there have been great strides made in this area in England, with most major cities now having a directly-elected mayor like Andy Burnham in Manchester with a degree of control over policies that affect their areas.

The powers the mayors have though fall well short of cities in other countries, and this means there aren’t many levers they can pull to help bring the economic boost their cities desperately need. The aim for the next government should be to give Greater Manchester and the West Midlands at least some control over taxes in their areas, which they can use to reinvest in their economies.

The UK has become the sick man of Europe since 2010, and this has been felt in every part of the country. And this has happened while politicians have argued about the UK’s relationship with Europe and immigration. While discussions on the economy may feel abstract, their impacts are very real. It’s now time that economic growth took priority. 

Paul Swinney is director of policy and research at Centre for Cities.

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