The UK must focus on three priority areas in the decade ahead – Telegraph.co.uk

Material incentives for infrastructure investments should be considered as
part of future Budgets. For example, it may be appropriate to introduce
significant capital allowances. The UK should also consider a programme of
transport infrastructure upgrades and maintenance, such as the US has done.

While there is a clear need for private sector funding for infrastructure
projects, we should remember that the UK Government owns some £700bn of land
and buildings. Sales of certain government assets could potentially be used
to fund a bigger public contribution to infrastructure without increasing
borrowing. A drive to improve and speed up the planning system could help
both public and private infrastructure investment avoid potential obstacles.

Despite cuts to public sector spending it is also important to ensure that the
significant contribution to GDP of the UK’s major cities is supported and
particularly their increasing role in infrastructure investment as plans are
pushed forward for radical decentralisation. This was best illustrated in
the Budget by the Government’s response to Lord Heseltine’s report and the
proposal for a Single Local Growth Fund. Countries such as Germany and the
US have benefited from strong decentralisation and it is hoped that the
Heseltine proposals can similarly benefit the UK.

Strong leadership is required in cities, working closely with private and
voluntary sector leaders to provide local access to the resources and tools
needed to drive growth and to support effective investment in key areas such
as housing, skills and infrastructure. As well as the current range of
initiatives and programmes available to support investment, developing local
growth funds could provide a single focal point for investors and businesses
and may make it easier for institutional investors to access opportunities
that historically would have been met by the banks. As we approach future
spending rounds, spending on providing affordable and suitable housing is
also needed.

But it’s not only more and smarter infrastructure investment that UK plc
needs. Now that the competitive advantage of countries such as China is
being eroded, the re-shoring of manufacturing and services presents another
opportunity to boost UK growth.

High oil costs make shipping goods less profitable and lead times are long. In
industries where response times are critical, such as clothing, being based
in Europe is a significant advantage. The higher pace of wage inflation in
some countries compared with the UK also offers mid-term re-shoring
potential. Lower cost regions of the UK could attract investment if they
position themselves as alternative locations. A “Welcome Home” campaign
directed at UK companies abroad would be money well spent .

Last, but by no means least, the skills of the workforce will determine
whether the opportunities for growth are taken up. Investment is needed in
talent to acquire the necessary skills for a 21st century economy, and a
focus on vocational training including apprenticeships will be important.

The challenge is to drive productivity gains by narrowing the skills gap.
Workers need to have the skills to match their talents to the opportunities
available in our high-value industries, applying their new capabilities
throughout their working careers and raising the economy’s overall
productivity. We need good jobs to match good growth. Government needs to
work with businesses and with local government to tailor skills support to
meet business needs.

None of the decisions required fits easily within the boundaries of five-year
political terms. All transcend the period of a single government. However,
what is clear from the conversations I have with business leaders across the
UK is that there is a quiet optimism in the boardrooms of Britain. What UK
plc wants is consistency of policy, including a consistent tax regime, and a
clear direction of travel to provide the confidence to invest. Good
cross-party initiatives can play a key role here.

I believe that a determined focus on infrastructure, the re-shoring of
economic activity and the up-skilling of the workforce over the next decade
will provide the highest returns in the pursuit of growth.

Ian Powell is chairman and senior partner at PwC