The next prime minister should focus on a long-term economic growth plan to boost productivity as the government’s “chop and change” strategy raises concerns for the UK economy, MPs warned.
The Treasury committee said the U-turn the government made by scrapping the Industrial Strategy for a Plan for Growth is one example on lack of long-term thinking in economic strategy.
“More importantly, we are particularly concerned at the ‘chop and change’ and lack of long-termism in growth strategy and policy, without which businesses themselves are unable to plan and invest themselves,” it said.
“It was suggested that there was a lack of detail and a lack of collaboration with businesses and regional bodies, and that there was no overall strategic vision of what the UK’s economic problems were, how they should be prioritised, and what policies and interventions were therefore effective.”
MPs said it is “not clear how the Plan for Growth offers an advance on its predecessor” as it called for “renewed coordination” of growth strategy across government departments.
“We have a new chancellor and shortly will have a new prime minister. Getting a grip on productivity will be key to kickstarting economic growth and stimulating greater business investment in the UK. The evidence that we received suggests there needs to be greater stability and long-term certainty in government policy making,” Mel Stride, chair of the Treasury committee, said.
Business investment has fallen since 2016 in the UK, with the committee pointing out that a significant part of the country’s productivity shortfall is due to a 'long tail' of low-productivity firms, usually small businesses, with relatively poor digital adoption and management skills.
In a report, MPs claimed “coherence and stability in the government’s growth policy” will be key to improving investment.
The committee is also calling for additional resourcing for long COVID treatment, to enable those suffering from long-term sickness to re-enter the workforce in greater numbers.
“It’s also imperative that the government takes action to help the large number of people suffering from long-COVID, many of whom are likely to wish to return to work. Prioritising investment in this area is likely to have a tangible benefit on the UK’s tight labour market, which will help in the fight against inflation,” Stride added.
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