Comment

Gordon Brown is right – Britain needs to get on a ‘war footing’ to help the economy (and here’s how...)

There is never ‘a good election to lose’ if you’re in the thick of it. But whoever wins is going to need to hit the ground running to avoid becoming mired in fiscal quicksand and economic torpor, warns James Moore

Monday 11 March 2024 18:21 GMT
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Former prime ministers John Major and Gordon Brown at the launch of the final report of the Institute for Government’s year-long Commission on the Centre of Government
Former prime ministers John Major and Gordon Brown at the launch of the final report of the Institute for Government’s year-long Commission on the Centre of Government (PA Wire)

We need to think with almost military precision about how we can put our economy on a war footing.”

Hearing that from former prime minister and chancellor Gordon Brown, my immediate thought was... “Oh no. Really?” The casual use of military metaphors (you may remember we heard them a lot during the pandemic) is far too prevalent. Particularly now. My second thought, however, was... “Hang on. He’s right.”

Semantics aside, what Brown had to say in his speech at the Institute for Government on the launch of its report, titled “Power with Purpose” – the conclusion of a year-long commission – was designed to emphasise the scale of the UK’s economic problems.

He wasn’t wrong. The challenges faced by an incoming government are truly formidable.

Britain has an ageing population, crisis-wracked public services, a rising tax burden, poor productivity, and dismally low levels of investment. The current chancellor, Jeremy Hunt, indulged in a national insurance giveaway in his latest Budget – but fiscal drag (by which progressively more people find themselves moving into higher tax brackets through the freezing of thresholds) means that what he gave with one hand, he was taking away with the other.

Neither of the two main parties seems prepared to be honest about the economic and fiscal difficulties the nation faces. The same is true of the smaller ones. To properly address these problems, the economy needs to perform much better than it is expected to over the coming years.

As is usually the case with chancellors – whichever party is in power – Hunt tried to claim that Britain, though mired in a recession and enduring a brutal cost of living crisis, is at least doing better than the countries across the Channel.

The trouble with economic statistics is that you can usually find evidence of the government having manipulated them to make itself look as good as (or better than) the folks next door. But those comparisons are irrelevant, even if you accept them at face value.

The bald figures confronting UK plc are bad, and expectations are dreadfully low. We may well be coming out of recession, but if Britain’s output managed to grow by a torpid 1 per cent this year, it would represent a major result. According to the Office for Budget Responsibility, GDP growth should hit 2 per cent in the middle of the decade only to fall back towards “its assumed trend rate of around [1.6] per cent by 2028”. That, remember, is assuming all goes well. And it simply isn’t good enough.

Faced with that, Brown was quite correct to state that we are in a “make or break decade for our economy”. Because... we are. Numbers like that are maybe half of what we used to enjoy. If you combine them with our ageing population, creaking public services, and that high and rising tax burden, you have a recipe for a looming fiscal crunch.

A “turnaround plan” is desperately needed. “We can’t go on as we are,” said Brown, in what was really a statement of the bleeding obvious. Which brings us to the way government works – and how it might deliver such a plan.

What is absolutely vital is investment. Nothing will improve without (a lot) more of it. It is quite true that the current system is not well equipped to address the slow-moving crisis we face, or to steer the country onto a more productive course.

Brown noted that the Treasury, for example, too easily rests on its laurels as a finance department whose job it is to put together the Budget, bring down debt, and make the numbers add up. It needs to become much more of an economic department that works in tandem with the other economic departments.

Some may see a certain irony in that, coming from Brown. But he was at least trying to find a constructive way forward, in contrast with more recent efforts aimed at civil service reform.

“The disruptors are back”, crowed a headline I remember from one outlet during Boris Johnson’s time in No 10. Trouble is, Dominic Cummings and co never clearly stated what their disruptive efforts were ultimately designed to achieve. Is it any surprise that their beloved “levelling up” has been such a dud? A good slogan, but there was no policy to back it – no real plan for how to make it work.

That was then, and this is now. There is never “a good election to lose” if you’re in the thick of it. But whoever wins is going to need to hit the ground running to avoid becoming mired in fiscal quicksand and economic torpor. Now is the time to start thinking about how to address that.

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