Institute for Global Prosperity shapes an economic strategy for the UK

Rayhaan Lorgat

Throughout the last 15 months, the Institute for Global Prosperity has been working with The British Academy, academics and senior civil servants at HM Treasury and the Department for Business and Trade to shape an economic strategy for the UK against a backdrop of global, economic and geopolitical uncertainty.

Professor Henrietta Moore co-chaired a Working Group on Sustainability and Social Value with Professor Dominic Abrams (University of Kent) as part of the British Academy’s Economic Strategy programme consisting of the following working groups:

1.      International Trade and Geopolitics;

2.      Research & Development (R&D) and Innovation;

3.      Skills;

4.      Sustainability and Social Value

Together with a distinguished group of academics, the Working Group met for a series of insightful discussions on a range of topics including the socially embedded economy, whole-systems approaches, social protections, decent work, national security, social infrastructure and tapped into further areas like digital transformation, social innovation, AI and industrial policy.

The Working Group’s discussion paper ‘The importance of social investment for UK economic strategy’ summarises the key points from the discussions throughout 2024. The central argument of the paper calls for investments in people’s health, wellbeing, education and quality of life as well as taking the necessary steps to improve social solidarity and cohesion. We argue that this will unlock cascading benefits or positive spillovers that will in turn drive our growth and productivity.

For example, investing in people’s health enables people to contribute economically through participation in the labour force as well as socially and environmentally by engaging in prosocial or socially regenerative activities. It also reduces the burden on the health service and costs to the economy by focussing on prevention. A recent report by Cancer Research UK has found that premature deaths due to cancer costs the UK economy £10.3bn and 350,000 years of lost productivity each year.

Our key policy recommendations also included considering both the short-to-medium term and long-term horizons.

Short-to-medium term

·       Adopt as consistent and standard practice a wider set of comprehensive and holistic economic, social and environmental indicators to complement and contextualise GDP.

·       Embed social and environmental value in investment decision-making and policy development processes.

·       Adopt a systems approach to enable joined-up policymaking across departments, supported through the establishment of an independent Office for Social and Sustainable Responsibility.

Long-term

·       Enable a more participatory and inclusive policymaking process recognising the diversity of participation and breadth of inclusion required for an integrated economic strategy.

·       Reframe the official policy discourse on investment, to more clearly recognise the value of public spending in areas such as health, education, social security and social cohesion in delivering enhanced growth and productivity.

The Chancellor unveiled the Spending Review on 11 June to set out departmental budgets for day‑to‑day spending until 2028‑29, and for capital investment until 2029‑30. While higher funding for the NHS, regions and cities, housing, transport and capital projects is welcomed, it remains to be seen whether this will translate into better public services and improvements in quality of life for people on the ground. Others have argued that that the Government should have pushed the devolution agenda further. The former Chief Economist of the Bank of England and outgoing CEO of the RSA stated that allowing councils to implement a tourist tax for investment in cultural assets should have been considered and deemed it as a “missed opportunity”.

The Government has also subsequently published its infrastructure strategy with £725bn allocated towards investments across 10 years as well as its industrial strategy which is targeting eight high-growth sectors: Advanced Manufacturing, Clean Energy Industries, Creative Industries, Defence, Digital and Technologies, Financial Services, Life Sciences, and Professional and Business Services. A 10-year health plan with new neighbourhood health centres rolled out across the next decade signals a move towards a place-based approach, aligning with the working group’s recommendation of taking a “context-specific approach towards social investments.”

A novel aspect of the infrastructure strategy is that for the first time it looks at the connections between different types of infrastructure from physical and economic infrastructure (transport, water and energy) to housing and social infrastructure (hospitals, education and justice) which links to our recommendations on adopting a whole-systems or systems-thinking approach. Meanwhile the industrial strategy focussing on 8 sectors resonates with the programme’s Synthesis Paper summarising the key recommendations of the four working groups which makes the case that the UK should be investing in its deep assets and where it has a comparative advantage.

Read the Social Investment paper

Read the Synthesis paper

Photo by Markus Spiske on Unsplash