The UK needs to drastically improve its ‘fundamentals’ in housing, energy, transport and digital infrastructure in order to attract private investment, and today’s summit is the right place to start, says Dan Tomlinson MP
Warren Buffet said “the best investment you can make is in yourself”, and the UK seems to be finally learning that lesson as we head into the government’s International Investment Summit.
There’s only so long a country can live off its past without everything breaking, as the UK is currently finding out. For years now, the UK firms have under-invested relative to our peers; this has contributed to flat-lining productivity, and a living standards catastrophe for families, with average pay stagnating for two decades.
That’s why the Investment Summit is so welcome. Economic stability with Labour forms the bedrock of a higher investment economy, but crucial too is creating a climate and culture of investment. Because, as the Chancellor said in Liverpool at the Labour Party conference: “growth is the challenge and investment is the solution.”
Investment is crucial for making all of us better off. Companies can boost worker productivity by digitising internal systems, using AI tools and buying new machinery and equipment. It’s also about seeding and scaling new companies. While the UK is home to some of the world’s top universities and researchers, we struggle to translate this discovery into billion dollar companies.
But perhaps most importantly, investment includes the energy, housing and infrastructure on which the rest of the economy depends. This government is right to focus on the fundamental investments the UK requires to underpin firms’ ability to invest and grow.
Fixing the fundamentals
As argued by several economists in a recent ‘UK Growth Survey’, the UK needs to drastically improve its ‘fundamentals’ in housing, energy, transport and digital infrastructure in order to attract private investment. Affordable housing and transport links means workers can move to where jobs are, making business investment more attractive. Cheaper energy boosts returns on investment in industry, and will be particularly important if the UK doesn’t want to lag behind on electric vehicles, AI data centres and heat pumps, which all require greater energy production.
The previous government blocked public investment through austerity and blocked private investment through unnecessary regulation: from the UK’s burdensome planning regime to an outright ban on investments like onshore wind.
Keir Starmer and Rachel Reeves are taking the right decisions to reverse this downward trend. This is important because we will not raise living standards or have a sustainable route to funding public services in the UK without growth.
The UK Investment Summit is the right place to start. Previous government’s “f**k business” approach was childish and counterproductive. Major companies have left the UK due to a lack of support from ministers. The Investment Summit is a chance to send the right signal to the private sector.
Previous government’s “f**k business” approach was childish and counterproductive
Additional public investment, done carefully, can ‘crowd in’ private investment by instilling confidence and reducing the risk of private investment. This approach has worked, as seen with Crossrail in London – now the UK’s most used railway line, nuclear energy in France and US grants for electric vehicles which ultimately led to Tesla. That’s why it’s so important that the Chancellor has introduced a £7.3bn national wealth fund to crowd in £3 of private capital for every £1 of public investment.
And we are already making headway in reforming planning so the UK’s fundamentals improve, so we can bring down the UK’s internationally high energy and housing costs, which are effectively a tax on inward investment.
The country has turned its back on decline with the Tories, and now it’s time for us to make progress with a Labour government set on partnering with business so we invest in the future once again.
Dan Tomlinson is MP for Chipping Barnet