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The new UK government must set a “clear, permanent and consistent path” for business – IED

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The IED Manifesto states that with the right levels of funding and resources, local governments could drive nationwide growth by eliminating the social, regional and financial inequalities that exist between places. Source: Summit Art Creations via Shutterstock

As the UK approaches the July 4 general election, businesses and local governments are considering how changes in government policy can help boost inward investment, productivity and economic growth.

One of the bodies concerned with what needs to be done to help businesses in the UK thrive is the Institute of Economic Development (IED), the professional body for economic development specialists.

Like political parties, the IED issued its own manifesto. Titled Grow locally, grow nationallycalls for councils to be given statutory powers over economic development.

Commenting on GlobalData Thematic intelligence podcast, Nigel Wilcock, IED’s executive director, said it was “clear that the new government must set a clear, steady and coherent path” to boost inward investment, productivity and growth, while meeting net zero targets.

The need for consistency

Assessing the state of the British economy, Wilcock said he felt the economy’s financial position had been damaged by heavy spending as a result of the pandemic, as well as Brexit, high inflation and the cost of living crisis. In his opinion, this results in low economic growth and lack of investment in economic infrastructure.

“I think over the last decade or so we have suffered from all sorts of measures being introduced and then taken off the table, as well as the lack of a coherent approach to economic development,” Wilcock said.

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He added that partially canceled plans for Britain’s HS2 high-speed rail project and the UK’s withdrawal from several environmental policies had created a confusing environment for businesses looking to invest.

“There are many, many people who will be looking for new locations and opportunities resulting from HS2 and then all of a sudden the government’s sham policy will be taken off the table,” he said.

Similarly, on the subject of net zero emissions, Wilcock commented: “If the government changes its approach and targets for low carbon technologies, then companies that want to make significant investments will suddenly be discouraged from doing so.”

“I think all political actors must stick to the announcements they make. “We cannot have a situation where an obvious set of infrastructure has been announced and then not rolled out further.”

Degeneration

The IED manifesto states that placing a legal obligation on local authorities to address economic development would create an accountability structure that supports stability and encourages investors.

But Wilcock noted that “Britain is hugely centralized” and the focus is on London distorting the national economic agenda. He believes that the failure to take into account the strengths and opportunities of different regions across the country means the UK is not making the most of what each region could achieve in terms of both the economy and net zero.

He pointed to opportunities for offshore renewables in the north and nuclear in the west, but said plans lacking regional understanding meant these opportunities were not being exploited.

“To leverage the real strengths of these regions and understand what investments need to be made, it’s best done at the local level,” Wilcock said.

The IED manifesto also calls for skills activation, seeking to empower local governments to train and upskill workers in their local areas and to work with local employers. The suggestion is an attempt to address the low levels of productivity seen in the UK, which Wilcock believes can be addressed by improving attractiveness to inward investment.