Tackling growth barriers ‘could boost economy by £82 billion’

Tackling the key causes of the UK’s poor productivity performance could provide an £82 billion boost to the economy, according to a business group.

Addressing “underlying barriers that are holding back growth” including poor mobile and transport connectivity and the affordable housing crisis would boost productivity levels, the Building Back Britain Commission said.

In a report to government, the group called on policymakers to work more closely with the private sector to attract investment “that targets specific barriers to growth in different areas of the country”.

The commission, which was formed last year, is made up of ten large businesses including British Land, Haleon, Mastercard, Microsoft, London Gatwick and VodafoneThree. It says its aim is to “produce new analysis and ideas to help unlock economic growth, boost productivity and create more opportunities for people in every part of the country”.

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The report, produced by economists at WPI Strategy, suggests that increasing the productivity levels in 146 local authorities by 1 per cent could deliver a £82 billion boost to the economy over the next five years.

Historically, UK labour productivity has grown by about 2 per cent per year but since the 2008-09 financial crisis it has largely stagnated, a trend known as the “productivity puzzle”.

The commission’s recommendations included the creation of a “pipeline fund” to help to speed up planning decisions. The fund would be “privately financed and independently administered” and used to allocate experienced planners to local authorities that have a shortage in their own teams, they proposed.

The criteria for what is considered nationally significant infrastructure should be expanded to include 5G masts and fibre infrastructure to smooth the planning process, the commission said.

It also called for the creation of a “skills passport’’ to track “career readiness competencies, including data literacy and AI fluency, so all young people are equipped for the evolving workplace”.

A productivity council should be set up in the Treasury to work closely with the private sector to deliver the plans, the commission added.

Claire Ainsley, chairwoman of the commission and former director of policy to Sir Keir Starmer, said: “The government must act early in this parliament to close the productivity gap if it is to deliver growth and raise living standards. The solutions are clear, cost-effective and ready to implement. Our businesses stand ready to partner with government to get this done. We’ve shown that smart, targeted policies can yield big returns.”

Simon Carter, chief executive of British Land, said that if the government’s target to deliver 1.5 million homes during this parliament is to be met “we must find new solutions. Directing public and private-sector investment towards recruitment and training of new local authority planners and deploying these resources to the most capacity-strained local authorities, would directly address one of the biggest barriers to delivery: planning delays.”