The UK has been failing to show sufficient “hunger and appetite” for inward investment as laborious regulatory processes and siloed Whitehall departments prompt companies to divert spending to other countries, the Treasury’s new growth minister has warned.
Lord Spencer Livermore said the Treasury will play a new oversight role corralling civil servants so that departments adhere to common objectives and involve business leaders from the start of policy development as Britain competes more aggressively for foreign investment.
One answer being developed further is a so-called “concierge service” that could help executives navigate bureaucratic procedures, added Livermore, who has been designated the Treasury’s growth minister and financial secretary under chancellor Rachel Reeves.
The plans come after the Labour government’s new “growth mission board” met for the first time on Tuesday to set out priorities for boosting growth.
With new foreign direct investment projects near a 12-year low in the UK, the government faces a formidable task rekindling it as ministers set themselves a goal of achieving the highest economic growth rate among G7 nations.
In an interview with the Financial Times, Livermore said the government needed to find ways of breaking down some “very big obstacles” to inward investment in the UK.
These included a reputation for political instability, laborious planning rules, and insufficient appetite for corporate investment.
“Other countries, we repeatedly hear, have in the past been more hungry for [investment],” Livermore said. “They roll out the red carpet for investors, they remove bureaucracy and red tape, and make it an easier . . . straightforward process.”
As a result, investors would say “why would you come here rather than somewhere else?” he added.
Reeves has promised to run a “pro-business” Treasury and officials at 1 Horse Guards Road have spoken of a “genuine change in ethos in the way we think about engaging with business”.
The Treasury, said Livermore, will shift to being focused not only on developing policies but on ensuring they are followed through by other departments as it sets up a “growth delivery unit” and breaks down silos within Whitehall.
He pushed back at the “cliché” of the “dead hand” of the Treasury, saying it could be a “galvanising, catalytic force” for growth.
His new position, Livermore said, was one of “relatively few vantage points where you can see all of the different levers of the growth mission”.
He faces a ferocious challenge given the UK’s lengthy period of near stagnation, with GDP per head still 1 per cent below the fourth quarter of 2019 in the first three months of 2024.
The growth mission board has not set a formal timescale for achieving its growth goals, Livermore said.
He declined to comment when asked if he expects the Office for Budget Responsibility, the UK fiscal watchdog, to upgrade its potential annual growth estimate, which is 1.6 per cent towards the end of the parliament, in response to Labour’s reforms.
But he warned the job of turning the economy around would not be a rapid one, referring to Prime Minister Keir Starmer’s talk of a decade of national renewal.
“You can’t undo the damage quickly,” he said. “It is not an overnight turnaround.”
As part of that effort, Reeves on Monday met pensions industry bosses to discuss ways to channel more retirement savings into UK infrastructure projects and the wider economy.
The discussions were part of the wider bid by the Treasury since the July 4 election to engage with business leaders more effectively in what Livermore called the “co-creation” of policies.
The growth mission board is chaired by Reeves, and alongside Livermore its members include business secretary Jonathan Reynolds and Cabinet Office minister Pat McFadden.
Livermore said the board’s work will span seven “pillars” that were agreed on Tuesday, which include economic stability, infrastructure and planning, skills and workforce development, industrial strategy, and the drive towards net zero carbon emissions.
The industrial strategy component, which Reynolds will champion, will aim to identify industries where the UK has a competitive advantage and there are “barriers or market failures” that are impeding it.
A special adviser to Gordon Brown when he was chancellor, Livermore also served as director of strategy in Number 10 when Brown was prime minister, and was head of strategy during Labour’s unsuccessful 2015 election campaign.
His private sector work included roles at Saatchi & Saatchi, Teneo Blue Rubicon and management consultancy McKinsey.
Livermore, 49, who was raised in a working-class background in Essex, said his years outside the public sector had taught him that “wealth doesn’t come from government”.
As such, businesses will be involved from the get-go when it came to devising new government initiatives.
“You don’t develop a policy in a black box within the Whitehall, and you go up to [businesses] and say, ‘What do you think of this?’” he said. “You involve them right from the beginning.”