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FT editor Roula Khalaf selects her favorite stories in this weekly newsletter.
The writer is the Prime Minister of the United Kingdom.
Westminster’s theatrical impulses have long seemed out of step with the need to communicate a stable plan for change. And nowhere is this tension more stark than at budget time. In recent years we have seen successive chancellors pull increasingly worn-out “rabbits” out of hats as government policy revolved under an ever-changing cast of prime ministers.
The damage this chaos caused to our growth and our standing with investors cannot be underestimated. And we should also not underestimate the investment premium that political stability can attract in an increasingly volatile world. That’s why our recent international investment summit celebrated £63 billion worth of private investment in the British economy. But I want that to be just the beginning. The decisive election result has given us a golden opportunity to put this country on the path to sustainable growth: a decade of national renewal. What I hear over and over again in my conversations with companies and CEOs is the enormous value of certainty. That is exactly what this government offers.
It was a work that Rachel Reeves, Britain’s first female chancellor, continued this week. Make no mistake: the decisions he made have avoided devastating austerity in our public services and a disastrous trajectory for our public finances, had we stuck to the Tory plans. She wiped the slate clean, fixed our foundation, and began the determined work of rebuilding. But everything he did was based on that firm commitment to economic stability and political certainty.
Our strict fiscal rules, which we will comply with two years early, ensure stability by guaranteeing that daily costs will be covered by income. Meanwhile, our “corporate tax roadmap” will provide boardrooms with a stable and competitive framework for long-term investment. Corporation tax has been fixed, capital allowances for full expenditure have been maintained and crucial allowances for initial investment, such as the Business Investment Scheme, have been extended until 2035. This is vital for new businesses. I am determined that Britain maintains its position as Europe’s leading technology sector and a global leader for entrepreneurs. Future growth depends on supporting risk takers during a transformative era of artificial intelligence.
However, while we have always said that economic stability is the first step in our growth mission, the Budget also opened the door to the next stage of our plan: reform. Just as we cannot tax and spend to achieve prosperity, we cannot simply spend to improve public services. That is why reform is an essential pillar of this government’s agenda. Reform of our creaking central State. Reform of our public services. And reforming our economy, with a modern supply-side agenda ready to take advantage of our new investment climate.
Retailers plagued by theft; rarely functioning transportation infrastructure; 6 million people waiting for NHS treatment: these are not just social challenges; They are also profound economic supply challenges. Our investment this week will begin that work. And our partnership approach to industrial policy means we can minimize the risk of this crowding out valuable private sector activities. After all, we know that growth is a shared mission.
But investment is only part of the answer: if we want Britain to grow again, then we need to get Britain working again. The Budget sets aside new money for welfare reforms that will help people get back to work. Finally, making work pay will be good for long-term productivity. However, perhaps most importantly for growth, we will also get Britain building again.
I have spoken to hundreds of prominent CEOs over the past few years and I am convinced that the biggest supply-side challenge we face is the way arrogant regulators and a dysfunctional planning regime combine to stop the building of our country. . Homes, warehouses, laboratories, grid connections: billions and billions of private investments in the infrastructure of tomorrow are hampered or completely blocked in this way. We have ambitious plans to break down those barriers.
Mandatory housing targets have been reinstated. Planning reforms are underway, including the release of “grey belt” land. Clean energy projects have been approved quickly, a sign of our intent. The new planning passports will grant default permission on certain brownfield sites. And a rapid overhaul of regulators is underway that will eliminate bureaucracy that stifles growth.
This process involves detailed and often painstaking work. For this reason, it is not yet ready to be included in the OBR’s growth forecast. However, we must be optimistic about the potential. A “big construction” could prove to be as transformative for workers as the Big Bang was for the City of London in the 1980s.
This Government is determined to make the UK one of the best places to invest and do business, not just in Europe but in the world. Only by working in partnership with the private sector can we deliver change, fix the NHS, rebuild Britain and deliver on our promise of a decade of national renewal.