In a recent 3-part series (part 1, part 2, part 3) I set out some remarks about the pursuit of ‘beneficial economic growth’, and why it needs to be systematic, rather than tokenistic or riddled with ‘solutions looking for problems’. Below is a summary.

‘The economy’ is still the No1 policy concern of the general public, and it was the central ‘cure all’ of the current Labour government when it was elected. The government did not, however, set out its approach systematically, or tell us ‘how’, thus leaving everything to hard-pressed civil servants. The coming dire budget is but one consequence.

QUALITY OF GROWTH

Economic policy throughout government should focus on the quality of growth, not just the quantity. Key quality attributes include fiscal, environmental and social sustainability.

DYSFUNCTIONAL INSTITUTIONS

Economic regulation and promotion is spread across government, and can be harmfully contradictory and dysfunctional. The institutional set up for orchestrating beneficial growth aims, is confusing, and ineffective. The interdependence of reforms seems not to be taken into account. There are many lessons from overseas.

CONCENTRATED FINANCE AND FINANCIALISATION

Investment banks, banks and non-bank-financial institutions, should be providing services to businesses, which should be the master not the servant of finance.  Extreme concentration in international finance (eg via index funds) has led to excessive financialisation, opaque cartelisation, and systemic risks. De-monopolisation and reforms to transparency and capital market rules, are the main remedies.

SCLEROTIC STATE

Few in the UK would disagree that the UK state is sclerotic. But why so ? Excessive secrecy and a lack of transparency and accountability is one factor. The major hidden culprits are … excessive contracting out, appalling procurement practices and lawful conflicts of interest. Coupled with the culture of ‘generalism’ in government and obsessive ‘commercial confidentiality’, this is catastrophic. Transparency, and major changes in the parliamentary supervision of governmental employees/departments, with more accountable value-for-money criteria, are the first reform steps.

LAND AVAILABILITY

There is no shortage of public and private land for commerce and housing in the UK. There are vast swathes of suitable land, mostly controlled by the MoD, and ministries, especially Transport and Crown Estates, some hoarded unused territories bigger than small towns. Ultimate beneficial ownership for all land needs transparency, and officials concealing land should be a criminal offence.

MONOPOLY BANKING

Commercial and retail banking in the UK is unusual. It is heavily concentrated and relatively unresponsive. Very few loans are made for development of businesses. Property and derivatives dominate. Prudential regulations need reform, and a range of measures are needed to improve both competition and transparency, so we have smaller banks and specialised banks.

TRADE POLICY

International trade negotiations mismatch trade terms with the UK’s evolving strengths. International commerce promotion is amateurish, with confusing roles and ineffective institutional structures. Trade facilitation is opaque, over-centralised and poorly managed. Institutional and policy reforms are long overdue. Reform aims are clear, and there is much to learn from other countries’ practices.

COMMERCIAL LAW

Much of UK commercial law is simultaneously disconnected from its Common Law roots, and is poorly updated for the modern context. It is key for growth however. Diversity and flexibility in legal forms is absent. To many questionable practices prevail, in big and small companies. It is too easy to focus on financial engineering, quasi-fraud and hiding trickery. Reforms should be focused on all the well known problems and rigidities, rather than tinkering with small processes.

INFRASTRUCTURE, AND DECENTRALISATION

The UK has an over-centralised system of financing and approving infrastructure projects, which benefits neither local people not economic aims. Central government provides financing, local government faces the local wrath, but can do little. The fiscal benefits are de-linked from costs, so prioritisation is often political. The problem cannot be solved without fiscal decentralisation, so the costs and benefits can be better linked, and longer term planning improved.

There is much else to be reformed, including the commercial-legal system, the principles of effective economic regulation, planning, research & development, governmental procurement, and the UK’s chronic skills and economic participation problem. All are entirely reformable.

* Paul Reynolds works with multilateral organisations as an independent adviser on international relations, economics, and senior governance.