The new UK government should pursue a policy of “investment-led growth” rather than waiting for economic conditions to improve, according to the brains behind Labour's flagship “missions”.
Mariana Mazzucato, the economist who inspired Prime Minister Keir Starmer's pledge of a “mission-led” government, warned Labour that a tight hold on the purse-strings could delay “vital investments”.
Mr Starmer is promising a long-term focus on Labour's economic, health, crime, clean energy and equality “missions” in place of day-to-day political battles.
Boosting the UK's economic growth is the “number one mission”, Mr Starmer told a meeting of regional mayors at Downing Street during his first week in office.
However, Labour has also hit back at accusations of a tax-and-spend agenda by vowing to stick to “non-negotiable” fiscal rules under Chancellor of the Exchequer Rachel Reeves.
“We can't wait for growth to invest – it's like waiting for a car to move before adding fuel,” Ms Mazzucato said.
“Investment-led growth is key to expanding productive economic capacity.”
Ms Mazzucato, a University College London professor, has called for a “directed economy” in which government plays an active role. She sees the Apollo moon landings as a prime example of how a country can throw the resources of government and business behind an ambitious goal.
The author of a book called Mission Economy, she has also hailed the UAE as an example of the “all-of-government” thinking she wants to see in Britain.
Speaking at the Majlis Mohamed bin Zayed in 2022, she praised the UAE's space, energy and education policies.
The UAE has been “really ahead of the game on the space mission, your Hope Mars mission, which I find very inspirational,” she said.
“I’m very excited when I come here to speak to all the different people who’ve been involved both in the Hope Mars mission, but also that are really thinking about the role of technology and the changing government structures.
“I’ve been coming to the UAE now for quite some years. One of the reasons I have found it so interesting has been precisely this open discussion about the need to do government differently.”
New figures showed on Thursday that the British economy grew by 0.4 per cent in May, after flatlining in April.
Growth of 0.9 per cent in the three months to May is the highest quarterly figure since February 2022.
Mr Starmer's government has moved early to set up a national wealth fund and relax planning laws to encourage house-building and onshore wind farms.
But Labour should go further to get the private sector on board with its missions, Ms Mazzucato wrote in Prospect magazine.
“Business access to public sector funding should be conditional on mission alignment and with requirements designed to maximise public value,” she said.
While in opposition, Labour scaled back its green investment pledges due to what Mr Starmer called worsened economic conditions.
It still plans to put money into solar and wind power, nuclear energy and hydrogen and allocate £8.3 billion ($10.72 billion) to a new publicly owned company called Great British Energy.
Labour has pledged not to expand North Sea oil and gas drilling but government sources denied reports that Energy Secretary Ed Miliband has ordered an immediate freeze.
The North Sea Transition Authority, which issues oil and gas licences, had said before the election that “a small number” were still being considered.
A spokesman for the authority told The National on Thursday that this remains the case.
