Growth Commission response to The Spending Review

Growth Commission member Ewen Stewart has issued the following response to the Spending Review statement delivered by Rachel Reeves:

“Today’s Spending Review shows scant evidence that the Chancellor understands how sustainable growth is achieved. It focused on centralised spending rather than seeking to grow the cake. There was nothing to encourage private endeavour and no rolling back of regulation, at a time when the Government is saddling the country with more employment regulation without any sign of an improvement in public sector productivity. It was all about state control and direction, which will do nothing to strengthen the weak edifice that is the UK economy.

“The Chancellor claims to have put growth at the heart of her thinking. Unfortunately almost everything she has done since taking office has had the opposite effect. Today’s Spending Review embeds this further, strengthening state control while weakening private enterprise and individual choice.

“Public spending remains out of control and is set to grow at a further 2.3% in real terms, a rate far faster than that of the private sector, with an estimated budget increase announced for 2025-6 that equates to public spending of over £48,000 per household. Does that represent anywhere close to good value for the quality of service received?

“Today the state accounts for 45% of the entire output of the UK, up from less than a third at the start of Tony Blair’s premiership. The private sector is in structural decline, challenged by unprecedented taxes and regulation of which greatly increased employer’s NICs is but the latest example – but public spending, without any announced productivity controls, continues to grow apace.

“On top of that, the UK borrowed £148 billion last year and this year the indications are, despite significant tax rises, that the outcome will be equally bad. This is not sustainable: it is crowding out private sector activity and with it the long-term security of the tax base.

“Spending remains very weakly controlled, with little obvious benefit to the taxpayer. The UK economy remains one of the G20 laggards on almost any time horizon, be it one, three, five, ten or twenty years – little wonder when a competitive private sector is swapped for a largely unproductive and unaccountable public one. I fear that today’s announcements further move the dial in the wrong direction.”