The road to wealth
To make people in the UK wealthier, the government would need to balance short-term growth stimulus with long-term productivity improvements.
Productivity is the foundation of wealth because wealth per person grows when productivity rises. Measures might include infrastructure investment to improve transport, broadband, energy grids, and housing supply to cut bottlenecks.
Skills and education could be addressed by expanding vocational training, apprenticeships, and lifelong learning to close skills gaps. Increases in R&D funding could be achieved by creating incentives for private sector innovation, especially in emerging industries such as AI, green tech, biotech, and fintech.
Businesses and investment could be supported by tax incentives for investment, and by keeping or expanding ‘full expensing’ for capital investment.
Red tape could be cut for SMEs to simplify compliance and access to finance. The UK needs a stable regulatory environment because businesses invest more when rules are predictable.
We could encourage exports and trade by strengthening trade deals with the US, the EU, and fast-growing markets in Asia and Africa). We should explore ways to promote British services and goods abroad, especially in finance, education, and creative industries. We could help SMEs entering export markets with export credit and advisory services.
At home, we need to improve housing and living standards. The planning laws have to be reformed to increase supply, reduce housing costs, and boost mobility. We need affordable housing near jobs to enable workers to take opportunities.
More efficient energy will cut bills and free disposable income for spending and saving.
Tax and welfare policy has to be smarter to reward work. This means lower marginal tax rates on low- and middle-income earners. Taxes need to be simplified to reduce distortions and improve incentives. Welfare support has to be employment-friendly, with tapering benefits so people are not penalized for working more.
Savings and investment by individuals can be encouraged by expanding ISAs and pension incentives to boost personal wealth accumulation. Financial literacy programmes should be available so people can invest productively, instead of just holding cash. Share ownership schemes should be further encouraged to give workers a direct stake in their companies.
Investing in nuclear energy and exploiting local energy sources (including fracking) can cut dependence on imports and improve energy security. Lower long-term energy costs will help make UK industry more competitive.
The upshot is that to make the UK wealthier, the focus should be on productivity, skills, innovation, housing, and trade, while also ensuring modest taxation and incentives for work and investment. Short-term boosts help, but sustainable growth requires long-term reforms.
The problem with growth is that while most of us know that steps such as these could achieve it, government seems to lack the resolve and the nous to implement them.
Madsen Pirie