Net zero targets moved back, HS2 curtailed or even cancelled. The chopping and changing of public policies adds to the general disruption, when policy is supposed to act as a shock absorber and reduce uncertainty. Underpinning this chronic condition is the UK’s addiction to short-term thinking and endless tinkering. We get panic and paralysis, but nothing gets done.
As a country we seem obsessed with the short term. In public life, almost all decisions follow either the business cycle of quarterly reporting or the electoral cycle at a time when we need a fundamental transformation. We fret over the risk of a technical recession – which amounts to two consecutive quarters of contraction in economic activity. But the real issue is decades of stagnating growth, flatlining productivity, low wages and a collapse in both public and business investment.
Barely a year ago, Liz Truss and her chancellor, Kwasi Kwarteng, tried to kick-start the economy by combining an unfunded spending bonanza with radical tax cuts. The unintended consequence would have been a pre-election boom followed by a post-election bust. But in the actual event, the UK economy teetered on the edge of a financial crash; the libertarian rocket detonated upon contact with reality. The lack of a credible longer-term economic plan triggered a run on the pound and the imminent meltdown of the financial system.
Oddly, however, this episode wasn’t an exception. It encapsulates the short-term outlook of global finance. Instead of channelling capital into productive activities up and down the country, the City of London is a gigantic wheel that makes money spin ever faster. Powered by computers that process trades in nanoseconds, it generates growing volumes of untethered capital. It speculates on marginal price movements of currencies or commodities rather than investing people’s hard-earned savings in order to generate more enduring value. Periodically this wheel spins out of control. We get lending manias, then “everything bubbles” of overpriced assets such as housing or banking shares. And finally, panics and crashes, as with the 2008 financial crisis – but the tab is picked up by the taxpayers who bail out banks “too big to fail”.
Of course, the City creates jobs, generates taxes and exports financial services worth billions. But too much of it is a speculative frenzy to extract ever-greater rents for asset owners. Those without assets, meanwhile, are stuck in a vicious circle of low wages and dependency on high welfare support – at risk of precarity whenever welfare is “rationalised”.
Our political system fares no better. The front benches of the main political parties focus on the 24/7 media cycle instead of constructive responses to the country’s deep-seated problems, of increasing inequalities in income and assets, and an over-centralised state that cannot build sufficient housing or transport infrastructure. Almost all decisions are based on short-term electoral calculation, dressed up as “long-term decisions for a brighter future”, this year’s Tory party conference slogan – which is a euphemism that would make George Orwell spin in his grave. Almost exactly 60 years to the day of Harold Wilson’s white heat of technology speech, which advocated for lasting national renewal based on science and innovation, contemporary UK politics is a lot of white noise.
Very few public institutions uphold a long-term outlook. The endless chopping and churning is convenient to those who hoard power and wealth – but means we are not growing national assets or fostering social cohesion. Yet, paradoxically, the more short-term the approach, the longer it takes to complete ambitious projects such as London’s Elizabeth Line and, indeed, HS2. Poor planning and unrealistic delivery deadlines lead to delays and repeated cost overruns. In each case, successive governments set up an institutional mechanism that lost control of the costs but also rewarded failure: 40 managers in charge of HS2 earned more than £150,000 per year – the chief executive received a salary of more than £670,000. Churn begets churn as policy increasingly resembles a control, alt and delete logic.
What is to be done? The solution is neither unaccountable technocracy nor reckless populism. Rather, we need to create institutions that focus on the public good over the medium and long run. We need public benefit companies, which can be entrusted to build large infrastructure projects and run the UK’s utilities – from water to the railways and our broadband infrastructure, similar to Scottish Water. In some European countries, such as France and Italy, there are several thousand public benefit corporations in sectors like food, wine, healthcare, machinery, training and education. Instead of extortionate market profiteering or wasteful state nationalisation, public benefit companies place social purpose at the heart of their business operation.
A more targeted regulatory regime could enforce tough statutory universal service obligations. Water companies that currently pollute our rivers and seas would have to meet public interest targets on leaks, pollution and capacity, or else face the suspension of their operating licences. Their boards would be composed of business figures and recognised experts in their fields. To avert an unaccountable technocracy, public benefit companies would be accountable to parliament, their heads summonable to House of Commons select committees.
Then, we might just have a chance of breaking this doom-cycle of boom and bust.