David Boyle is an advisor to the RSA’s Inclusive Growth Commission, writing here in a personal capacity.
Theresa May’s conference speech was strong on gesture but, unsurprisingly perhaps, a bit light on detail, and especially when it comes to putting the beef behind her economic objectives – but those economic objectives are surprisingly far-reaching.
All politicians talk about a “stronger, brighter future”, as she did. All talk, to some extent, about the need to “set markets right”. But not all of them set sail in a new direction entirely, to make sure that the rewards of success are shared in ways they haven’t been for a generation.
Looking back, we may see her speech as the funeral oration for ‘trickle down economics’. And not before time: policy-makers have seen for years that the rewards don’t trickle nearly enough, but have pretended they do because that’s what the rhetoric said and that’s what the accepted policy levers implied.
Now we have something else. Let’s for the sake of argument call it ‘Theresanomics’. But Whitehall has to put some flesh on the bone, and they are likely to find out that it is going to mean some big changes.
If we can get it right, the Royal Society of Arts Inclusive Growth Commission argues, the rewards may be huge. If every area in the UK had the same GVA (Gross Value Added) per head of population at least as high as the current national average, the narrow economic value would be £191.5 billion.
Nor does that include the savings in public services if the rewards of economic success really begin to spread.
It is true that, in a population of 70 million, it can’t be beyond the wit of policy-makers to train enough nurses and doctors to meet the needs of the NHS. But does she realise what kind of investment that will involve? Does she realise that food prices will rise because of the dearth of cheap foreign labour?
But then, if she doesn’t know yet, she has at least asked the Treasury to come up with a detailed agenda. The Inclusive Growth Commission is wrestling with similar issues, and has just published their ‘emerging findings’.
Philip Hammond’s Autumn Statement looks set to propose a new burst of investment. But it will need to be more ambitious investment in skills and people, which will only work effectively if it is largely devolved. It is pretty clear that investing in roads or transport, by themselves, will not spread the fruits of success – see Barking: brilliant connections, little benefit.
There is also a challenge about business-friendly technical education. Concentrating on grammar schools risks falling into the perennial mistake of UK policy for generations – when the real problem is not academic, but the lack of effective, high-status, vocational education.
Anyone who truly believes it will be enough to tackle the abuse of the big corporate tax avoiders, will have some day to confront the problem that there is a dwindling local banking infrastructure, and that new employment practices too often shrink assets, careers, training and prospects rather than increasing them. Both of these undermine inclusive growth where it matters.
And, most of all, if you don’t measure inclusive growth – if you don’t build it into your decision-making and investment appraisals – it is hardly surprising that the rewards get hoovered up by the wealthiest.
May might be right or wrong in her detailed diagnosis. We can see that there has been huge investment in physical capital, in city centre regeneration, or transport infrastructure, over the past generation. We can also see that it is which increased property prices but left whole communities of local people untouched – often simply pricing them out.
Meanwhile, the effort to revitalise our human capital has been fragmented, centralised and half-hearted. Poverty and inequalities have persisted, undermining productivity and dragging down the economic potential of our towns and cities.
If Theresanomics is going to mark a break from the past, it will have to confront some uncomfortable truths about the economic assumptions of recent decades. And that process has really only just begun.
You can find out more about the Inclusive Growth Commission here.