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The Government must make smarter investment decisions to fulfil its goal of becoming the fastest-growing economy in the G7, chartered accountancy body ICAEW has said.
In a letter sent to the Chancellor ahead of her statement tomorrow, ICAEW called for a “step change” in how the Government chooses to invest, with greater emphasis placed on unlocking private investment.
Seven in 10 (72%) ICAEW members polled called for better investment targeting to lower the cost of capital for difficult infrastructure projects rather than replacing capital on projects the private sector is likely to invest in anyway. Further, 85% of members said poorly-targeted Government investment risks displacing private sector funding without generating additional economic benefits.
The ICAEW also urged the Government to prioritise investment in skills and abandon policies that could undermine economic growth, such as the reported scrapping of funding for Level 7 apprenticeships, which 46% of members said would impact their organisation.
Alan Vallance, ICAEW chief executive, said: “There must be a step change in the way the Government invests if it is serious about kickstarting the economic growth needed for the UK to be the fastest-growing economy in the G7. The evidence is clear – our members have told us that investment, when poorly targeted, can crowd out funding from the private sector.
“A smarter approach to investment, which focuses on unlocking private funds and prioritises spending on skills, technology and infrastructure, would be a smarter use of taxpayers’ money. Meanwhile, the biggest barrier to AI adoption among our members is concern about risks and reliability – this must be tackled head on so we can harness its potential faster.”
However, he added: “A highly-skilled workforce is fundamental to achieving growth, and to achieve this, businesses must be encouraged to invest in skills. Scrapping funding for Level 7 apprenticeships would undermine this ambition and be a hammer blow to the thousands of people from less advantaged backgrounds who use this route into a professional career.”
