The UK’s future economic outlook is at the forefront of public debate. It is consistently rated as the top priority by the public, taking precedence even over the state of the health service. The cost-of-living crisis brought about by the highest rates of inflation in several decades, the increase in interest rates by the Bank of England, and the tight squeeze put on public, private and household budgets, have all put the path to growth high on the agenda of government and opposition politicians.
The centrality and importance of restoring growth to addressing other urgent policy needs is clear: without economic dynamism, productivity improvements and sustainable, consistent wealth creation, the public services on which we all rely will lack the dependable, long-term investment and tax revenues they require to operate successfully.
To debate these issues and help to drive the national conversation around growth forward, the New Statesman recently gathered a panel of esteemed experts as part of its Politics Live 2023 conference, which took place in front of an audience of policy-making professionals in Westminster in June. Jonathan Reynolds, the shadow business and industrial strategy secretary, and John Glen, the Chief Secretary to the Treasury, were joined by two leaders in the private sector: Ben Lucas, managing director of MSD (UK and Ireland), a multinational pharmaceutical company; and William Vereker, chair of Santander UK, the financial services firm. The event was sponsored by MSD and chaired by Alona Ferber, editor of Spotlight, the New Statesman‘s policy supplement.
Opening the discussion, Reynolds told delegates that economic growth was “the central question”, not only for any future elections, but also for “how successful” any new government would be. “It is integral to any kind of success in maintaining public services and living standards. So we have to make the UK more competitive,” he said. He ended his introductory comments by outlining Labour’s plans for industrial strategy, planning reform, skills boosts, devolution and public investment as core potential catalysts for growth..
In response, Glen defended the current government’s record, highlighting the global, external forces that have marred economic forecasts across the developed world. “The inflationary pressure is massive and we are relentlessly focusing on it,” he said. He drew attention to some of the more positive accolades that the UK has attracted from international institutions.
Glen was also keen to note the importance to the country’s economy of life sciences and financial services, the sectors represented by Lucas and Vereker. Life sciences, he said, was “a sector where the UK has a distinct strength… a massively important growth industry of the future… with 6,500 businesses and 290,000 jobs”, before outlining measures taken to streamline clinical trials, improve funding streams and stimulate bio-manufacturing.
Vereker emphasised the centrality of productivity in boosting growth and listed three key things that would maintain the UK’s position as an attractive destination for inward investment, along with domestic savers and pension funds. The proportion of pension funds invested into UK businesses had lowered significantly over the last few decades, he told the conference, and that needed to be reversed to boost investment in British industry.
“Stable and predictable policy-making must be kept at the core,” he said, adding that constant flux had had a negative impact. “There also needs to be a predictable tax regime – not necessarily low, but predictable.” Vereker also brought up the importance of access to skills and talent for businesses, raising the issue of education and training policies, and the tight immigration regime for talented individuals wishing to move to the UK to live and work.
Lucas thanked the panel and told delegates that MSD was grateful for the opportunity to sponsor the event. The company is, he said, “a world-leading, international investor and researcher and developer of innovative medicines and vaccines… and most people in this room will have been touched by MSD innovations in some way.”
He detailed MSD’s crucial role in national immunisation programmes and cancer treatments, as well as some of the inward investment the organisation was engaged in. “We’re investing at grassroots level to support the NHS to help manage through these really challenging times”, he said. “With hundreds of clinical trials we’re supporting patients and helping get access quickly to the most innovative medicines.”
The role of MSD in boosting growth, Lucas concluded, was two-fold: not only was investment in innovation, research and development increasing the wealth of the country directly, but also the improvement in health outcomes and healthy life expectancy was helping to boost productivity and the health of the nation’s workforce. “There’s a cross-party alliance that the life sciences sector is a crown jewel to be invested in and treasured,” he added. “The £36bn contribution to GDP is crucial, and if we can continue along the lines of both the industrial strategy proposals of the Labour Party, and the current Life Sciences Vision of the Conservatives, we could potentially double that over the coming decades.” However, he struck a note of caution by saying that other countries were moving faster in building a positive investment environment for the industry, and that that needed to change.
The New Statesman event concluded with an insightful Q&A session from the audience, in which contributors developed a consensus on the need for partnership and collaboration between the public and private sectors to foster sustained growth. “Innovation is hugely important,” Lucas summarised towards the end of the event. “The UK can be a leader on this. We have the ability to do it. We have a really strong academic base that can tie in with a commercial base. If you can create the right environment the investment will come.”
MSD has provided funding support for this activity.
Job code: GB-NON-07758
Date of preparation: July 2023
[See also: For economic growth, send the men home]