How Labour could crack the UK's growth conundrum
Planning and state procurement are key to productivity, says David C. Stevenson


One of the best recent efforts to tackle our longstanding productivity and growth problem comes from the Resolution Foundation’s Simon Pittaway. He focuses on three explanations: energy, technology and healthcare. On energy, Pittaway notes that the US enjoys cheap natural gas prices, while we grapple with substantially higher electricity costs.
With regard to technology, Pittaway thinks that adopting it is a real challenge. Either side of Covid, US firms raised spending on software twice as fast as their British counterparts. He sees a similar pattern in spending on research and development (R&D).
Then there is the toughest nut of all to crack: healthcare. The NHS has a terrible record on productivity, a problem that even the health secretary, Wes Streeting, acknowledges. This is a huge, messy problem: the NHS represents 9% of UK GDP. So how can we improve matters? Former legal academic Lawrence Newport offers an interesting perspective.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Growth from the grassroots
Newport addresses the growth challenge via a new campaigning group called Looking for Growth (LFG). A grassroots organisation, it describes itself as “a movement of founders, professionals, and tradespeople pushing for pro-growth policies. We don’t wait for action – we make it happen”.
Unlike the growing number of think tanks dedicated to the growth agenda (the latest is the Centre for British Progress), LFG is pushing a campaigning model with local chapters full of entrepreneurs and activists, encouraging growth policies even at the local level. LFG has also been building cross-party support for a series of bold initiatives represented by a proposed bill ready to be put before Parliament. Newport argues that this campaigning-focused, cross-party model is essential, as significant changes must be based on popular support.
One key insight is that it’s not always apparent that large portions of the UK electorate back a pro-growth agenda, particularly if it entails more construction and affects the environment. Does Newport believe the average UK voter cares about GDP or productivity growth? “Voters care about how expensive their bills are, how little money they seem to have year after year. They care deeply about the cost of goods and the future trajectory of this country. They like industry and industrious people. But terms like GDP, or economic growth, or even productivity, have been overused by politicians attempting to sound as though life is improving, even when it feels worse for voters. If anything, these terms are met with suspicion by voters – after all, what does it mean to talk about a productivity problem, if I feel like I’ve worked hard every year but seen little change to my cost of living.”
Newport agrees that the root causes of stagnating productivity are complex. However, he also insists that politics plays a part, not least the dearth of talent in politics (with leaders unable or unwilling to make brave decisions) and a civil service that rewards inaction and discourages innovation. He echoes many of the criticisms of so-called state capacity made by former chief adviser Dominic Cummings (who works with him).
If a government cannot deliver on its promises quickly, there’s clearly a blockage in “state capacity”. “You need to be able to rely on the courts to give judgments quickly on a functioning visa system, on responses by regulators, [or] on government to step in or strip back blockers when they [thwart or delay] well-placed innovation and opportunities”.
Newport is quick to accept that the Labour government was handed a pretty awful set of circumstances. “However, they are not treating our situation as the national emergency it is. We are in decline, losing talent abroad, having some of the world’s highest energy prices, and in a cost-of-living crisis. Their reforms are slow to arrive, will be extremely slow to roll out and they are nowhere near as ambitious or radical as the moment calls for. They are not doing enough. Not even close.”
Criticism is one thing; working out what to do is another. But Newport has an answer. He is the author of a bill focused on growth that could be adopted at once: it’s called the LFG National Priority Infrastructure bill and streamlines planning for nuclear power stations, overhead electricity cables and data centres. Streamlining development and construction programmes is exactly what the French did to ensure that the Notre-Dame cathedral could be renovated within five years. “Despite experts claiming it was impossible, they did it. If France can do it, we can too.”
So, equipped with a magic wand and brandishing his Infrastructure bill, what would Newport do now? First, he’d streamline planning, citing the fact that it takes just two days to put up a wind turbine, but years and vast sums devoted to planning beforehand.
Next, focus on government procurement. “It’s a nightmare to deal with government contracts – this makes our civil service slow, risk-averse, and the awful processes mean that only the same few incumbent players are consistently rewarded with government contracts. It is a system built to slow us down and discourage startups and innovation.”
Finally, give talent an incentive to enter politics, civil service, and policy-making. “We need... high-agency, thoughtful, and brave people to enter politics and the civil service. This means getting rid of bad performers, increasing pay, giving civil servants a clear mission, and selecting political candidates for their dedication to improving the country and... record of brave decision-making.”
Maybe some of those future bright civil servants might even be able to work out how to solve the chronic NHS productivity problem?
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com
David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space.
Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business.
David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust.
In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.
-
Two in five Brits won’t be able to cover basic costs in retirement
Millions face a bleak retirement, as a new report from Scottish Widows indicates a significant number will not reach the minimum income level necessary for a basic standard of financial wellbeing in their later years.
-
Filtronic: a UK success story cashing in on the space race
Filtronic has become an all-too-rare Aim success story since it moved down to the junior market
-
UK equities: where to find a great British bargain
UK equities are staging a comeback, but there’s still plenty of value out there, says Rupert Hargreaves
-
Is the UK housing market doomed to stagnation?
Opinion Housing is the mirror image of Britain’s moribund stock market. A crash would be the best outcome
-
Here are four reasons why Britain’s house price crash is coming
Opinion The pressure on house prices and property can only get worse with the economy turning down and taxes rising, says Matthew Lynn
-
'Reeves should cut cash ISA limit and revive Brit ISA,' says Merryn Somerset Webb
Opinion Cash ISAs are mostly pointless and always expensive, says Merryn Somerset Webb
-
Will the global boom in defence spending drive economic growth?
Defence spending is soaring, and politicians in the UK and Europe are telling voters it will be a major boost to economic growth. But is that really the case?
-
Farming isn't for the faint-hearted – there are no profits to harvest
Opinion Farming may look appealing, but turning a profit is extremely hard. No wonder many farmers are attracted to the Sustainable Farming Incentive, says Max King
-
Rising FTSE 100 gives Rachel Reeves a win at last
Opinion The FTSE 100 index of leading shares has broken through 9,000 for the first time. That’s not as impressive as it appears, and its future is looking grim.
-
'Labour’s next bright idea is a wealth tax – but it won't work'
Opinion A wealth tax will make Britain poorer and accelerate the exodus of the wealthy, says Matthew Lynn.