London, 4 September 2024 - A new report, ‘Economic growth and productivity: the ideas’, features nine ideas for sparking economic growth in the UK. Each idea is drawn from consultation with leading economists and researchers with a focus on how to re-energise the UK’s stagnant economy, one of key ‘missions’ of the new government.

The report is published today by Nesta, a research and innovation think tank, as part of its UK Options 2040 programme. In total, 30 economists from a variety of professional backgrounds and perspectives contributed to the report. The featured ideas for stimulating growth focused on key themes: institutional design, planning and infrastructure, skills and workforce and supporting businesses.

1. Establish an enduring new independent growth institution. The UK government could create a new institution, similar to the Climate Change Committee, to advise on and scrutinise long-term growth policy. The institution would be independent of government, like the OBR, but publicly funded. It would conduct research and hold government to account for delivering on growth ambitions.
2. Empower functional economic areas by providing regional and local governments in England with a route to devolution and fiscal agency. The UK government could commit to a long-term programme of devolving greater powers to regional authorities to help them tailor policy to local needs. Central government should accelerate the creation of combined authorities, devolve more powers over time, and build vital capacity in local government.
3. Tackle the housing crisis by moving to a zone-led planning system that simplifies the rules for developers. The UK government could reform the planning system to make it easier to build new homes. It could replace the current discretionary system with a zone-led system, where local authorities define zones with clear rules for development that reduce uncertainty and risk for developers, front-loading the public engagement process.
4. Improve land use efficiency by introducing a land value tax. The UK government could introduce a new tax on the value of land and replace existing property taxes such as stamp duty and council tax. A land value tax would disincentivise practices that distort the housing system and prevent development - like land banking - and encourage both higher-density development and better use of existing housing stocks.
5. Reduce labour market inactivity by harnessing data and AI to proactively support people into employment. The UK government could use data and AI to better understand and address the rise in economic inactivity. By combining data from different sources, it could identify individuals at risk of leaving the workforce to take preventative action and provide more tailored support for those out of work.
6. Improve the transparency of the labour market to improve job quality. The UK government could create a publicly available system for measuring and reporting on job quality. This would require developing metrics that capture the employee experience (such as retention rates), using existing public data and potentially supplementing it with employee feedback.
7. Introduce regionally specific migration routes. The UK government could give regional authorities greater flexibility and agency to shape migration policy. This would enable regions to attract and retain workers with the skills needed in their local economies.
8. Create ultra-low-cost energy zones to support industry. The UK government could create geographically defined zones where energy is cheaper for businesses, supporting place-based development of high-productivity industries which are energy-intensive. This could mean reforming the wholesale electricity market to make pricing more location-specific and providing targeted support to further reduce energy costs in these zones.
9. Embrace experimentation by developing a productivity innovation fund to understand the most effective interventions for bolstering business productivity. Government could create a large-scale fund dedicated to supporting experimentation with productivity-enhancing policies and activities. This fund would enable the government to test different approaches, learn from what works and improve the evidence base for future policymaking.

The publication will be followed by Policy Live (Thursday 12 September), a new event focused on exploring potential policy solutions to some of the biggest challenges faced by the UK. Organised by Nesta and BIT (The Behavioural Insights Team) the one-day programme will convene influential leaders and emerging voices from across governments, the civil service, NGOs and the private sector.

Notes to editors

• For more information on the analysis or to speak to one of the experts involved, please contact Kieran Lowe, Media Lead, on 020 7438 2576 or [email protected].
• The ideas are set out in more detail in the ‘Economic growth and productivity: the ideas’ report. The ideas in the report are not necessarily endorsed by Nesta.
• Many of the policy levers shaping economic growth and productivity are reserved to the UK Government, such as macroeconomic policy and employment. However, areas like transport and housing are under the jurisdiction of the devolved governments. The below ideas are directed at the UK Government, meaning where an issue is devolved this would impact England only. Furthermore, the UK and devolved governments have shown differing policy priorities for tackling low productivity and growth – the ideas in this report are intended to reflect the priorities and rhetoric of the UK Government, but many could be adopted by devolved governments.
• We are grateful to Professor David Halpern for his contribution to this work and Lord Gus O’Donnell for sponsoring the UK 2040 Options project, and the following for their time and insight on these ideas: Dame Kate Barker, Adam Bell (Stonehaven), Emily Beynon (Octopus Energy), Dame Carol Black, Anthony Breach (Centre for Cities), Emma Burns (Octopus Energy), Dr Adam Coutts (University of Cambridge), Dr Tony Curzon-Price, Sam Dumitriu (Britain Remade), Dr William Fleming (University of Oxford Wellbeing Research Centre), Ben Franklin (Centre for Progressive Policy), Professor Ricardo Hausmann (Harvard Growth Lab), Professor Christian Hilber (London School of Economics), Professor Ashwin Kumar (Institute for Public Policy Research), Professor Philip McCann (University of Manchester), Tracey Mattinson, Professor John Muellbauer (University of Oxford), Louise Murphy (Resolution Foundation), Joe Owen (Institute for Government), James Phipps (Innovation Growth Lab), Andy Regan (Nesta) Lord David Sainsbury, Andrew Sissons (Nesta), Will Somerville (Migration Policy Institute), Anna Stansbury (MIT Sloan), Dr Madeleine Sumption (Migration Policy Observatory), Dr Gemma Tetlow (Institute for Government), Anna Valero, Professor John van Reenen (London School of Economics), Giles Wilkes (Institute for Government), Tony Wilson (Institute for Employment Studies).