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3 March 2023

To succeed, Keir Starmer needs to be much more than “business friendly”

Labour should forge a new settlement that prioritises the common good over private profit.

By Mariana Mazzucato

In his essay for the New Statesman this week, Keir Starmer called for an end to “sticking-plaster politics” and for a mission-driven government guided by five bold goals. Labour’s ambitious policy agenda requires new economic thinking about how to bring public purpose to the centre of policymaking – moving from a market-fixing approach (plasters) to a market-shaping one that enables investment-led, inclusive and sustainable growth.

The fundamental idea of a mission-oriented approach is to transform broad challenges into concrete goals that require different sectors to work together, be it on eliminating the digital divide, building net zero regions, or ensuring our health systems are better prepared for the next pandemic. This is fundamentally different from a narrow, sector-based industrial or economic policy.

Starmer rightly points out that the issues that matter to people do not fit into a “neat policy category”. To tackle the grand challenges of our time we need collaboration across government departments, sectors and supply chains. As with the Apollo mission and moon landing, which required not only innovation in aerospace but also in nutrition, materials, electronics and software, challenges such as climate change are not only about renewable energy but a whole range of other sectors.

Missions are not new in the UK. In 2019, following my work with the European Commission – which introduced a mission instrument into the Horizon Europe programme and resulted in five mission areas on climate adaptation, cancer, restoring our ocean and waters, climate neutral cities and healthy soil – I worked closely with Greg Clark, then the UK’s business secretary, to craft a British industrial strategy oriented around challenges instead of sectors. Those chosen by the department were clean growth, an ageing society, the future of urban mobility and the data economy. The idea was to use these to catalyse investment-led growth across many more sectors than were previously defined as “key sectors” by the Conservative-Liberal Democrat coalition government. Unfortunately, after setting up the challenge teams, the strategy was abandoned – with many of the civil servants reshuffled after Brexit.

It is encouraging to see Starmer revive this approach. Articulating a mission-oriented vision is, however, just the start. Advancing these missions will require embracing new ways of thinking and working, especially in redesigning Britain’s troubled public-private relationships. (The UK’s unconditional £600m bailout package for EasyJet in 2021 being one recent example.) The challenge is not to be “business friendly” – a line used by Labour leaders in the past to prove they were serious about the economy – but to drive dynamic and purposeful partnerships oriented around shared goals. An ecosystem can be symbiotic or parasitic: in implementing a mission-oriented approach, it will be critical to socialise both risks and rewards between different economic actors.

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Fundamentally, this requires a new social contract between the state, the private sector and civil society, including labour – one that aligns partnerships around shared goals and maximises “the common good”. This means attaching clear conditions to public funding. In this way, the government can ensure that businesses receiving public funds provide equitable access to their products and services, share profits with government, reinvest in the economy, and adhere to the highest labour standards. The US government’s recent Chips and Science Act contains conditions, notably on profit sharing, that can be embedded in industrial policy – some of which are following the EU’s lead. In the UK, R&D investment should be made a condition of businesses being able to access public funds.

Another key question is around the state’s capacity to realise the full potential of its missions. As I argue in my recent book with Rosie Collington, The Big Con: How the Consulting Industry Weakens our Businesses, Infantilizes our Governments and Warps our Economics, we have witnessed the “infantilisation” of government due to the continued outsourcing of that capacity to consultants. The ability to use outcomes-based procurement and to welcome risk-taking and experimentation are just two examples of the implementation capacity that the UK government has lost and now needs. Notably, in a study of 120 NHS hospitals, management consultants were shown to have made services less efficient. At the same time, the Parliamentary Public Accounts Committee’s recent inquiry into the UK’s test-and-trace programme – for which the consultancy firm Deloitte was paid an astounding £1m per day – found that the NHS lacked the skills needed to deliver the programme internally. What’s more, missions require an all-of-government approach, which means they should be governed centrally from the Cabinet Office, to ensure that silos are broken down and ministries collaborate effectively.

[Hear also: The big consultancy con, with Mariana Mazzucato]

Getting the missions right is also critical. Let me home in on two of Starmer’s missions: the NHS and growth. Labour’s drive to modernise the NHS is welcome. After years of underinvestment, we know that the cost of inaction is greater than the cost of action. And as the World Health Organisation Council on the Economics of Health for All, which I chair, has stated, health inequity is not just a moral failure; it is an economic catastrophe. However, Labour’s goal of strengthening the NHS would be better served by a mission related to health for all people in the UK, rather than one focused on NHS reform. The NHS is a vital national institution and must be a central actor in achieving the broader, more ambitious goal of health for all, which crucially can bring innovation policy together with health policy and galvanise action across a much wider range of actors and sectors.

Starmer’s mission to “[s]ecure the highest sustained growth in the G7” would be better defined as a policy priority. In an era of economic stagnation, the quest for growth is hardly unique to the UK. Yet governments have often been most successful in catalysing growth while pursuing other goals – rather than when treating growth itself as the mission. For example, Nasa’s mission to land a man on the moon and bring him back again returned $5-7 in economic spillovers for every dollar invested. This is because the array of problems that needed to be solved led to innovation in areas ranging from camera phones to home insulation. If coordinated well, all of Labour’s missions can contribute to boosting the UK’s growth.

Keir Starmer’s five missions signal a serious commitment to lifting the government’s gaze higher – a commitment to developing a proactive public sector that does not rely on short-term repair work. But success depends on the details. Missions are about transforming government from within and strengthening its systems, while giving the economy a new direction. These missions will require a new confidence and capacity within government, a new deal with the private sector and labour, and a clear articulation of challenge-oriented goals. It will not be easy, but if done right, this approach can lift the UK out of a tumultuous decade and on to a path of more inclusive and sustainable growth.

Mariana Mazzucato is a professor at University College London and author of “Mission Economy: A Moonshot Guide to Changing Capitalism and co-author of “The Big Con: How the Consulting Industry Weakens our Businesses, Infantilizes our Governments and Warps our Economies“.

Read more:

Keir Starmer essay: This is what I believe

Keir Starmer is living in Liz Truss’s world

Keir Starmer interview: “Am I aiming to be just a one-term prime minister? No, of course not”

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This article appears in the 08 Mar 2023 issue of the New Statesman, Why universities are making us stupid