The 2017 LSE (London School of Economics) Growth Commission sets out a new blueprint for inclusive and sustainable growth in the UK that deals with the challenges facing the UK, old and new.
Jobs and Skills
In a world of rapidly changing technologies and labour markets, it is essential to develop systems of lifelong learning to promote greater security and adaptability for workers. It is crucial to help individuals and firms invest in skills through improvements in the education and training system, and the ability to finance it.
Yet Britain’s tax system and labour laws are biased in favour of self-employment and investing in buildings and machines, rather than people. Tax reforms for the self-employed and a skills and training tax credit system are recommended to support companies’ investment in people and to create opportunities for people to invest in themselves. Boosting skills and wages in this way is key to supporting inclusive growth.
The UK needs an industrial strategy – the government is right to focus here - but there are gaps between this vital area and monetary, fiscal and competition policy. Industrial strategy decisions should be based on a new British State Aid law, clear operational rules and competitive tendering, independent oversight, and statutory publication of the analysis supporting decisions.
The new industrial strategy should include an overarching plan on infrastructure, innovation and tackling shortages at all skill levels – including a focus on particular lagging groups and places. It is particularly important to remedy basic skills deficiencies and to recognize the potential growth benefits from achieving gender parity in the workforce.
Britain’s strength is in services, and two-thirds of the country’s trade is with the United States and the European Union. Negotiations must focus here: a trade deal with the United States is needed, as is a new EU trade agreement with a 'services passport' at its core.
The UK must continue to engage strongly in international institutions for trade, investment, aid and public goods. Immigration policy and practice must ensure that the UK’s skills shortages do not intensify.
Finance and Growth
The UK is a world-leading financial centre – yet despite its strength there is a shortage of competition. The UK should launch a set of financial reforms based on promoting access, competition and long-termism in finance.
Reforms should focus on access to finance for businesses and innovation, including flexible regulation of challenger banks, increased support for the FinTech sector, reform of equity markets, a boosted role for the British Business Bank and a new infrastructure bank.
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