Redesigning the Engine: The IFG’s Roadmap for UK Economic Growth
The UK government has made economic growth its "national mission," yet the machinery of the state—the "Centre"—is currently ill-equipped to deliver it. The Institute for Government (IFG) identifies a disconnect between high-level political ambition and the technical execution required to move the needle on national productivity
Summary of Findings
Fragmentation of Power: Economic policy is currently split between the Treasury, the Department for Business and Trade, and the Cabinet Office, leading to "siloed" thinking and conflicting objectives
. The "Brain Drain" in Whitehall: High staff turnover in civil service roles means that institutional memory and deep sector expertise are lost, resulting in policy "churn" rather than long-term strategy
. Weak Implementation: There is a significant gap between announcing a growth policy (like "Levelling Up") and the actual delivery of infrastructure and business support at a local level
.
Core Recommendations
A "Growth Unit" at the Centre: Establishing a powerful, permanent unit (likely within the Cabinet Office or Treasury) to coordinate growth strategy across all departments
. Long-term Funding Cycles: Moving away from annual budgets toward multi-year funding to give businesses and local governments the certainty needed for investment
. Empowering Local Leaders: Devolving more fiscal and decision-making powers to Mayors and local authorities who understand the specific growth drivers of their regions
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Critical Review via Theory of Constraints (TOC)
To evaluate these recommendations, we can apply the Theory of Constraints, which posits that any system is limited by its weakest link (the constraint).
1. Current Reality Tree (CRT): Identifying the Undesirable Effects (UDEs)
A CRT analysis reveals that the IFG’s identified symptoms—siloed departments, high turnover, and short-termism—are not the root causes but UDEs.
UDE 1: Policy Churn (Departments constantly change direction).
UDE 2: Low Private Investment (Businesses are afraid of "U-turns").
UDE 3: Infrastructure Delays (Planning and funding are misaligned).
The Constraint: The Treasury’s "Gatekeeper" Model. By controlling all spending through a narrow, short-term fiscal lens, the Treasury inadvertently chokes off the long-term, high-risk investments necessary for growth.
2. Evaporating Cloud (Conflict Resolution)
The core conflict (The Cloud) in UK growth policy is:
Requirement A: Maintain strict fiscal discipline to avoid market instability.
Requirement B: Invest aggressively in long-term infrastructure and R&D to drive growth.
The Conflict: These two requirements compete for the same limited pool of capital and political will. The IFG’s recommendation of a "Growth Unit" attempts to "evaporate" this conflict by creating a body that prioritizes growth alongside fiscal discipline.
The Real Root Cause: The "Stability-Growth" Paradox
While the IFG suggests structural reforms (new units, better funding), the real root cause for the lack of growth in the UK is a cultural and systemic obsession with risk aversion.
The UK's political and administrative system is designed to prevent failure rather than facilitate success. This manifest in:
Planning Paralysis: A planning system that prioritizes local vetoes over national growth.
Fiscal Conservatism: A "bean-counting" culture in Whitehall that values immediate cost-savings over long-term value creation.
Governance Inconsistency: Every few years, a new Prime Minister or Chancellor reshuffles the growth deck, resetting the clock for private investors.
https://www.instituteforgovernment.org.uk/sites/default/files/2026-01/how-the-centre-of-government-can-design-better-growth-policy.pdf
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