The Sunday Times reported last weekend that the leader of the Labour Party, Keir Starmer, will announce a set of “missions” that would define a future Labour government. These missions are likely to be both the core aspirations of a Labour government if it comes to power, and the defining features of an election campaign. According to the Sunday Times, one of these will be an economic mission with the other four focussing on the NHS, crime, climate change and education. This is good news for anyone interested in the UK’s economic progress (or lack of it). At IPPR we have long-called for a mission-oriented strategy to overhaul the UK economy.
Popularised by UCL economist Prof Mariana Mazzucato, the idea of missions is a powerful response to the crises that our societies face. A mission approach recognises that our economy has a rate of growth, but it can also grow in different directions. Our economy could develop in a way that is emissions-heavy or dependant on low-paid labour. Or it could develop in a way that is fairer and greener. A mission should provide a clear and measurable goal that shapes the action of a government. It should be an ambition that different parts of government can align around and provide a clear steer for collaboration and partnership between business and government.
What is abundantly clear is that Labour’s missions need to steer the UK away from the failures of the current “sticking-plaster” economic thinking and towards renewal.
The list of economic warnings facing the UK is long and damning. The IMF predicts that the UK will be the only major economy to shrink over the next year, performing worse than even Russia, and remaining the only G7 economy yet to exceed its pre-pandemic output. The Bank of England forecasts that UK economic growth will not return to its 2019 pre-pandemic rate until 2026 at the earliest – seven years of contraction. As reported by the Financial Times, the UK is set to be the only country in the developed world with employment still below its pre-pandemic level at the start of 2023. Perhaps most damningly, on the back of stagnant or falling wages since the financial crisis in 2008, it will be 2025 before real incomes are forecast by the OBR to reach their pre-pandemic levels .
The chancellor of the exchequer, Jeremy Hunt, says the UK is up against the same economic headwinds facing all western nations. But that doesn’t explain why, when confronted by the same economic challenges as other countries, the UK repeatedly fares worse than our competitors.
For Labour’s missions to shift the UK economy out of its rut of the past 15 years, it will have to set out not just ambitious targets, but also it would deliver these in a way that is a break from the policies of the past. That means shifting decisively away from the defining features of the post-2008, austerity economics which stretch beyond a failure to stimulate demand to include:
too much reliance on a “just trust the market” mentality
the false economy of cuts to one public service that drive up costs to another
constant chopping and changing of policy, with businesses never sure what to expect next
and a failure (or unwillingness) to make strategic choices that set a clear direction for policy and investment.
We can see these features repeated across the UK’s missed economic opportunities. We can see them in the government’s decision to sell the UK’s largest gas storage facility to the private sector. Often infrastructure for national resilience will struggle to generate a financial return and is therefore hard to run on a for-profit basis in a commercial market. All-too-predictably the facility was closed leaving the UK with the smallest gas reserves in Europe on the eve of a gas-price-crisis. We can see them in the ongoing saga of British steel-making. Instead of putting in place a long-term plan for high-quality steel-making in the UK, the sector has lurched from crisis to crisis that may have cost more in repeated bailouts than it otherwise would have cost to put in place a serious plan.
To shift out of this mindset, Labour’s missions should act as a goal above and beyond simple market efficiency. They should prompt government not to ask “What is lowest cost?” but “What takes us in the right direction?”
Instead, missions should be galvanising, stretching goals, on a scale equal to the challenges we face, and sustained for the long term. A smart governing strategy means focussing on a small, achievable number of missions spanning departments and industries that drive delivery and collaboration. The best current example of this is the target to hit net zero, prompting all parts of government to move in the same direction, crowding in business investment too by fostering expectations of future growth opportunities. But we need these in other areas too: the UK could also have guiding missions to reduce regional inequality, the number of children living in poverty, or health disparities, for example.
Target problems with wide societal relevance (e.g. public health, living standards) Aim to solve long-term challenges that have no “magic bullet” solution (e.g. climate change)
Set a clear direction and be targeted, measurable and time-bound
Be ambitious and stretching to best spur action
Encourage collaboration and innovation within and outside government.
Crucially, solving the complex, interconnected challenges of our time such as climate change, technological transition, or regional inequality, will call for us to move beyond a dichotomy between big- and small-state which is no longer fit for purpose. We need an agile and strategic state willing to step in to shape (and even create) markets for social and economic benefits.
Contrary to critics’ claims, a more active state won’t squash economic growth - there’s now some agreement that it can help "crowd in" the private sector by stimulating new areas of economic activity with catalytic public investments. The CBI’s Tony Danker has advocated for “market-making” government policies to unlock private sector green transition. By this he doesn’t mean the state doing less, but doing more of what only the state can do. From establishing regulation and standards, setting up institutions, shaping incentives and more, it plays a powerful role in setting the architecture of the marketplace. Businesses have previously welcomed the prospect of government adopting a mission-oriented approach because it would set a clear direction of travel, helping foster areas of future growth and profit to drive investment and demonstrating the stability needed for a healthy investment environment.
The UK economy faces broad and sustained challenges. True, there are international factors impacting our economy, but many of our problems are of our own making. We can do things differently – the economy can work differently. But to achieve this we know we cannot continue with the failed policies and mindset that have got us to where we are today - looking at a lost decade of economic stagnation and potentially facing another. We need to do something differently to reshape our economy.
At IPPR we believe that now is the moment to set ambitious missions as a vital tool to help shift our economy away from inequality and decline, and towards prosperity and justice.
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