Thursday, 26 July 2012

A plan G for the economy

While yesterday's fall in GDP has taken centre stage in political debate at the moment, it was hardly that big a surprise. The drop in GDP is blamed on a 10% reduction in the construction sector. Yet a fall in construction was predictable as the Olympics projects drew to a close, and there was a failure to make shorter term infrastructure investment. What surprises me though is that we seem to have forgotten that the Olympic investment probably provided an early unintended cushion to the global financial crisis.

Now we have calls for a Plan V, even though Vince Cable, the consummate politician has made it clear he is at one with the Chancellor.  Well let's be honest, who in their right mind would want to take on the economic strategy at the minute - is it not better to be in a position where others argue you would do a better job and you can ride the crest of the popularity wave without being called to account.

However, there is no doubt we are in a bit of a mess and some politically palatable solution is required - so, for what it's worth, here are ten suggestions for a Plan G:
  1. Forget the talk of longer-term rail, road and social housing investment - the planning processes alone would take too long and the employment benefits, while required, will only give a political benefit to the next parliament;
  2. Make use of public expenditure opportunities which will not be perceived as U-turns but responses to unpredicted events and welcomed by many, for example, immediate flood response investment;
  3. Complete a national audit of 'good to go' construction projects, and invest, prioritised on the opportunity to deliver significant manual labour uptake, therefore reducing unemployment of unskilled workforce.
  4. Immediately cap the interest rates on credit cards - Libor manipulation facilitated inflated and unreasonable rates and have led to banks reaping supra-normal profits, while at the same time holding back retail consumer expenditure and encouraging consumers to payback rather than spend at the minute;
  5. Stop public sector redundancy agenda but replace with short term compulsory earlier retirement regime thereby reducing the double 'lump sum' cost of a redundancy payment and later pension lump sum;
  6. Review that NHS policy on vaccine procurement to remove barriers to lower cost options; 
  7. Implement a national procurement strategy which has objectives of small lot procurement and speedy payment;      
  8. Rather than focus on a government 'black list of suppliers', place on those companies obligations, if they want to retain government business, to development partnership convergence plans which demonstrate how they can really help the UK's economic goals;  
  9. Place a presumption of specifying by outcomes on all public procurement, thereby stimulating innovation and cost reduction;
  10. Adopt SROI as a core public procurement policy.
So, that's my suggestion for a Plan G, what's yours?

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