In Great Britain? Torsten Bell critiques the UK’s short-term political thinking under the recent 14-year stint of Conservative leadership, linking it to low investment and stagnating productivity. According to Phil Bell, though the book stops short of unravelling the political rationale for such myopic policymaking, it sets out a hopeful and persuasive set of medium-term reforms for boosting productivity and reducing inequality.
Great Britain? How We Get Our Future Back. Torsten Bell. The Bodley Head. 2024.
Conservatives are supposed to be long-termist. According to Great Britain? by Torsten Bell, however, the last 14 years of Conservative government is characterised by short-term thinking. The EU referendum was David Cameron’s short-sighted attempt to ward off UKIP and the Liz Truss mini-budget was an attempted short-cut to growth. But Bell’s main focus is how short-term thinking has led to a country desperately lacking investment.
Bell’s main focus is how short-term thinking has led to a country desperately lacking investment.
The diagnosis is familiar. Britain has been bottom of the G7 in investment for 24 of the last 30 years, while private investment is a whole “league below” (108-109) our nearest competitors, despite the fact that the returns on private investment are higher in the UK than elsewhere. This is because Britain’s variant of capitalism includes limited worker voice, is particularly “hands off” and focused on short-term profit. Owners of British companies are more likely to be foreign (up from 10 per cent in 1990 to 55 per cent in 2020) (111) and more fragmented. They therefore have less incentive to invest in the long run. One reason for the short-termist structure of UK companies is the closure of “Defined Benefit” pension funds to new savers (112). They used to act as large and active owners of UK companies but now invest more in government bonds. The replacement “Defined Contribution” schemes are less likely to hold UK company shares and only do so indirectly. Of the £2 trillion in total UK pension assets only two per cent are UK equities (112).
Lack of both public and private investment partly explains why it takes German, French and American workers four days to produce the same output as a British worker in five.
Productivity, the key protagonist in Britain’s stagnating growth story, is closely linked to investment. For example, since we invest less in MRI scanners and other medical equipment than comparable countries, this means doctors can be less productive. Lack of both public and private investment partly explains why it takes German, French and American workers four days to produce the same output as a British worker in five. If there is a key to economic growth, then this may be it (114). As Paul Krugman has noted “Productivity isn’t everything, but, in the long run, it is almost everything.” The productivity of cities outside London should be the major cause for concern, according to Bell. Birmingham, Belfast and Manchester actually have productivity levels below the national average. Edinburgh is the only outlier.
There is no quick fix to boost productivity in these cities, and Bell argues for a systemic approach, including combining investment in housing, offices and transport. Most of the solutions proposed in this book are medium-term, which aligns with Starmer’s messaging (“A decade of national renewal”) and his Fabian roots (the Fabian symbol is a tortoise). Bell, who was selected as Labour candidate for Swansea West shortly after writing the book, was formerly Head of Policy for Ed Miliband and Director of the influential Resolution Foundation think tank.
Rather than boosterism, he calls for a Britain that has ‘more normal’ productivity, wealth equality and standards of living compared to competitors.
This book will therefore be studied for clues as to what a Labour administration will do. Bell is a reformer. He jokingly described his approach on Twitter as “radical incrementalism”. Rather than boosterism, he calls for a Britain that has “more normal” productivity, wealth equality and standards of living compared to competitors. He calls the two-child benefit cap a “poverty guarantee” and finds flaws in the Universal Credit system. However, he argues that reforming the latter would be more pragmatic and efficient than scrapping it.
He is allergic to policies aimed at short-term political gain. The tax system is a textbook case of policy being infected by political short-term political thinking. In an attempt to raise government revenue without increasing headline tax rates, politicians have taken the country on a “rollercoaster” and created a “dog’s dinner” tax system with too many loopholes. This is particularly true of personal allowance and corporation tax. Rather than increasing the quantity of tax, Bell argues for improving the “quality” of the tax system. One of the more radical proposals is to focus more on wealth taxes (such as capital gains tax) rather than income tax, echoing Miliband’s Mansion tax from 2015.
Perhaps the central policy idea in the book is to separate public investment from day-to-day spending on the government balance sheet, and replace the three per cent total borrowing target with a target for tax revenues to cover this day-to-day spending. This “current budget balance” would reduce the incentive for politicians to swap longer-term public investment to cover day-to-day spending shortfalls. Additionally, Bell argues that we should take a more nuanced view of government fiscal health by considering public assets alongside debt.
Bell doesn’t do the job of explaining how the Labour administration should resist the forces that led the Conservatives to be so short-termist. There is a reason politicians don’t want to be seen to raise tax or why they choose to pay for nurses instead of investing in equipment which will pay back returns in a decade.
This is a compelling set of solutions, and surely most voters would like to see a political system more considerate of the medium-term, but Bell doesn’t do the job of explaining how the Labour administration should resist the forces that led the Conservatives to be so short-termist. There is a reason politicians don’t want to be seen to raise tax or why they choose to pay for nurses instead of investing in equipment which will pay back returns in a decade. Separating public and day-to-day investment on the national balance sheet seems sensible, but as with many sensible policies our political system is unable to implement, there is political work to be done to enable it.
Indeed, the short termism of the Conservative government is part of a wider trend, according to Jonathan White’s In the Long Run. Our political attention span is disintegrating: news cycles are becoming faster and social media feedback loops shorter. Dominic Cummings called his solution to this “the random announcement generator”. In this environment elections are increasingly narrated as the election to end all elections (think James Cleverly’s claim that Starmer winning would lead to a “permanent Labour government” or Biden’s claim that a Trump presidency would have “virtually no limits”.) At the same time as our dopamine-fuelled political systems lurch from crisis to crisis, we face a series of unprecedentedly long-term challenges (including climate breakdown and funding our welfare system with an ageing population). At this juncture, a democracy which has lost faith in the future is in serious trouble.
Bell’s book provides a hopeful vision of how an administration could counteract a politics that is unable to face the future.
Bell’s book provides a hopeful vision of how an administration could counteract a politics that is unable to face the future. It is clear, though, that there are structural reasons why governments struggle to move on from “politics as emergency” and expand the time horizons of their democracies to match the challenges they face. Keynes famously said that “in the long run we are all dead”, and new governments can face all-encompassing immediate crises (just ask Boris Johnson). But Bell has set out a persuasive set of solutions for a government bracing itself most of all for the medium term.
Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.
Image: Keir Starmer on Flickr, licensed under CC BY-NC-ND 2.0.
