Redesigning the Engine: The IFG’s Roadmap for UK Economic Growth

 

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.

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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:

1. Planning Paralysis: A planning system that prioritizes local vetoes over national growth.

2. Fiscal Conservatism: A "bean-counting" culture in Whitehall that values immediate cost-savings over long-term value creation.

3. 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

From Promises to Progress: Why UK Transport Needs 'Skin in the Game' Accountability

From Promises to Progress: Why UK Transport Needs 'Skin in the Game' Accountability

The news cycle is a familiar tune: government announces billions for new transport projects, only for the opposition to retort, "We were going to do that anyway!" Amidst this political bickering and claims of grand spending, a nagging question lingers for the public: Will these projects actually get built, on time and on budget?

This constant political jostling and the slow pace of delivery are not just frustrating; they highlight a deep-seated problem in public sector project management. Using the lens of the Theory of Constraints, we can pinpoint the root of this "dip" in public trust and propose a radical solution: "Skin in the Game" accountability.

The Unwelcome Realities: Undesirable Effects (UDEs)

Our current reality is plagued by several Undesirable Effects (UDEs):

• Political Gridlock: Constant accusations of "stealing ideas" or "re-announcing" projects, leading to public cynicism.
• PR Blunders: Staged events with awkward backdrops and unenthusiastic audiences, undermining the very message they seek to convey.
• The "Long Wait" Syndrome: Announcements of massive projects that take years, even decades, to materialize, fostering a sense of "nothing ever gets done."
• Funding Discrepancies: Money announced in budgets isn't always fully allocated or delivered on the ground by previous governments.
• Regional Imbalance Debate: Ongoing arguments about investment rules (like the "Green Book") favoring some regions over others.

At the Heart of the Matter: The Core Conflict

These UDEs reveal a fundamental conflict at the heart of government infrastructure delivery:

Government wants to (A) deliver tangible, impactful, long-term public benefit through major projects to drive growth and improve lives.1

BUT, it also needs to (B) secure immediate political credit and avoid criticism within a short electoral cycle and an impatient news environment.

The conflict arises because:

• (D) Delivering true long-term benefit requires huge, complex projects with long planning and construction phases.
• (D') Securing immediate credit requires quick, undeniable "wins" and announcements that are perceived as entirely "new" and effective now.

The long gestation period of impactful projects (D) clashes directly with the need for quick, undeniable political wins (D'). This often leads to either grand promises with slow delivery, or minor, superficial wins that don't address core needs. The public is left saying: "They always promise the earth, but we never see the trains or the better roads!"

Cracking the Code: The "Skin in the Game" Injection

To shatter this perpetual conflict and inject real momentum, we propose a dramatic, less traditional, and faster injection: Enhanced "Performance Pledges with Penalties" – High-Stakes Accountability with Skin in the Game.

This isn't just about promises; it's about making politicians and the civil servants responsible for delivery personally invested in success, with clear, tangible consequences for failure.

The Injection Defined: This radical approach demands that not just politicians, but also the senior civil servants and project leads overseeing major transport initiatives, publicly commit to specific, measurable milestones. Crucially, they link these commitments to personal and professional consequences if targets are missed.

Actionable Steps for "Skin in the Game":

1. Joint Public Vows:

   • For each critical initial phase (e.g., groundbreaking, securing key permits, awarding major contracts, completing initial sections of track), the responsible Cabinet Minister/local Mayor will stand shoulder-to-shoulder with the Permanent Secretary of the Department for Transport and the Chief Project Engineer/CEO of the relevant agency.
   • They will jointly issue a high-profile, legally recognized pledge committing to complete that specific milestone by a concrete, publicly stated date.

2. Tiered, Tangible Consequences:

   • For Political Figures: If a pledged milestone is missed:
     • Immediate Public Apology: The responsible Minister/Mayor will hold a dedicated press conference to issue an unreserved apology, detailing why the target was missed and what specific corrective actions will be taken, rather than deflecting blame.
     • Charitable Contribution: A pre-agreed, symbolic portion of their annual discretionary fund, or a public donation from a designated fund (e.g., one month's equivalent of their expenses allowance), will be made to a local community charity directly impacted by the project's delay. This isn't a fine, but a demonstration of direct consequence.
     • Portfolio Review: Repeated or critical failures on major pledges will trigger an official, transparent review of their suitability to retain that specific ministerial portfolio.
   • For Senior Civil Servants/Project Managers: If a pledged milestone is missed due to internal inefficiency or mismanagement:
     • Performance Pay Reduction: A significant portion (e.g., 20-30%) of their annual performance bonus or a fixed percentage of their salary will be withheld or directly contributed to a local community project fund in the affected area.
     • Professional Accountability: A formal note will be placed on their professional record detailing the missed target, impacting future career progression.
     • Direct Public Engagement: They will be required to face affected local communities directly to explain delays and outline recovery plans, rather than allowing politicians to take all the heat.

3. Real-time Transparency:

   • A publicly accessible, real-time digital dashboard will be launched, clearly showing each pledged milestone, the responsible officials, and live progress updates (e.g., "Groundbreaking: 90% complete," "Permit X: Submitted, awaiting review").

Soundbites for Action:

• Minister: "Today, I, [Minister's Name], along with [Permanent Secretary's Name] and [Project Lead's Name], pledge that the first phase of the [Project Name] will commence by [Specific Date]. If we fail, I commit to a public apology and a donation to [Local Charity Name]."
• Project Lead: "My team and I are staking our professional reputations, and a portion of our annual remuneration, on delivering this critical milestone on time. We are fully invested."

The Dramatic Impact:

This radical shift creates an unprecedented level of commitment and accountability. No longer are announcements mere political rhetoric; they are personal and professional commitments with real consequences.

• Shifting Internal Culture: The direct "skin in the game" for civil servants transforms internal incentives. Bureaucratic processes will yield to urgent, results-driven delivery, fostering a shared sense of ownership from Downing Street down to the construction site. You'll hear project teams saying: "Suddenly, those deadlines feel very real!"
• Restoring Public Trust: When citizens see officials putting their personal reputations and even financial incentives on the line, it rebuilds fractured trust. It signals that this government is serious about delivery, not just promises. A weary voter might say: "Finally, they're not just talking the talk, they're putting their money where their mouth is!"
• Driving Media Narrative: Every pledge and every progress update (or explanation for a delay) becomes a tangible news story. Successes are amplified, while any failures are met with immediate, public accountability, preventing the political opposition from merely claiming "they were going to do it anyway."

Desired Effects (DEs):

• (DE10) Builds profound public trust through demonstrated commitment and shared accountability.
• (DE11) Drives internal government urgency and efficiency by creating direct personal and professional consequences for delays.
• (DE12) Forces a laser focus on achievable, time-bound initial steps, accelerating tangible work.
• (DE16) Transforms public perception from bureaucratic inertia to dynamic, accountable governance.
• (DE17) Fosters greater collaboration and shared ownership between the political and administrative arms of government.
• (DE18) Provides clear, measurable benchmarks for success that can be communicated transparently to the public.

By implementing this "Skin in the Game" injection, the UK government can move beyond the cyclical blame game and truly deliver on its ambitious transport promises, securing not just project completion, but the invaluable currency of public confidence.