IN the next decade, Brexit will not be the biggest challenge to the UK Government and our nation. Fast globalisation of trade and massive technological change will create bigger challenges and bigger opportunities even than Brexit.
In the past 30 years, that globalisation has raised half the world out of poverty, but that trend is not secure. We, as a nation, need to be ready to act, both politically to ensure that free trade remains central to the world’s economic operating systems, and commercially to seize the advantages.
Brexit is the catalyst in that process; it is not the outcome. To exploit the opportunities given to us by Brexit, we need to overhaul British society and the British economy.
High-quality public services, education, healthcare, social support and the rule of law are vital parts of a decent society, but the Government can provide them only if they have the resources to pay for them.
The key issue that determines the affluence of citizens, the delivery of public services and even the level of opportunity in society is one boring technical term: productivity. From shortly after the war in 1948, when they started measuring it, until 2008, productivity in this country grew by 2.25 per cent a year. It bounced around a bit, but never by very much. Since 2008, it has been at 0.5 per cent. How do we deal with that? Take research. The past 30 years, under governments of all persuasions, have seen the UK decline from one the most research-intensive economies to one of the least.
In the past decade, China has overtaken us, and South Korea now spends three times as much as we do. The Queen’s Speech committed to establishing the UK as a world leader in science with greater investment – so far so good.
In my view, we need to do even more than that. In the short term, we need to double the amount of research spend not just by the Government, but by the private sector. In the longer run, we need to treble that joint expenditure. We should also address the things that we have not been so good at. It is easy to put money into genetics, artificial intelligence, self-driving cars or IT – the things we are historically world leaders in – but we should also try to ensure that that money goes where it will make a big difference by improving the things that we have not been so good at.
Historically, we have not been so good at what is called translational research. That means taking a good idea from the laboratory and making a great product, which leads to a great company, which leads to more and more jobs, more wealth creation, more tax and the rest of it. We would do well to build on some of the great institutions that we currently have.
The University of Sheffield Advanced Manufacturing Research Centre, which is essentially an aviation-based operation, is doing fantastic, world-class, world-beating work. Maybe we should even look to build a Massachusetts Institute of Technology of the North.
In the friendliest possible way, we are not doing what some of our competitors, including the Chinese, the Uruguayans, believe it or not, and the Belgians, are doing, which is seizing an opportunity. Technology is such that we ought to be re-engineering the classroom. We ought to think hard about looking closely at all the things China has done.
And where productivity is low, jobs are scarce and, of course, wages are low, Parliament needs to attack. It argues for targeted policies like freeports and, unglamorous, smaller infrastructure projects. We must de-bottleneck the whole economy, because that is much more likely to be effective than grand vanity projects. Perhaps we should cancel HS2 to pay for it.
A strategy of modestly sized infrastructure projects – road, rail, air and broadband – will help but, again, it will not be enough by itself. We need to make it more attractive to stay in the regions. We need to turn more of our regional towns and cities into magnet towns and cities, places that attract talent, money and enterprise.
Finally, house building has simply not kept up with the huge increase in population over the past 20 years. The Government is actively thinking about garden villages and garden towns, and we should step up that programme. If we allowed every planning authority to nominate one garden village or garden town of between 1,500 and 5,000 houses, which is big enough to be viable for a school and shops, and so on, we would not solve, but we would seriously mitigate, our housing problem.
The problem of productivity is a tough one to tackle, but tackle it we must. Research, investment, education, infrastructure, magnet cities and garden villages all have a contribution to make. If we do all of that, we will have a very good chance of making the Prime Minister’s promise of a golden future a reality for all our citizens.
David Davis is a former Brexit Secretary. The Haltemprice and Howden MP spoke in the Queen’s Speech debate – this is an edited version.