January 2025
Mind The Growth Gap
What politicians are missing when it comes to growth
“If you're telling me that you go for growth…I need to see the evidence. And it's the evidence that I never see [from] politicians. Show me the evidence, ‘cause I don't see it in my wage packet every month, and I don't see an improvement in schools, the infrastructure, the potholes in the roads, in the NHS.”
– Female, swing voter, Derby
Foreword
Co-Chair of the Labour Growth Group
By Chris Curtis MP
Economic growth is the most important mission of this government, and for good reason.
Growth is not just a matter of figures on a balance sheet; it is about the future prosperity of our country and the wellbeing of every family within it. Growth is the engine that powers our ability to invest in public services, create good jobs, and improve living standards. Without it, we cannot hope to build the fairer, more prosperous society that we in the Labour Party wants to see.
Across all our constituencies, we can see the damage that stagnation under the last Government has caused. If the UK economy had grown at the OECD average over the past decade, it would be £140 billion larger today. This would mean that every household would earn several thousand pounds more per year, shielding them from the burden of rising prices, and net an additional £50 billion in tax revenues to fund our public services. That extra funding could mean a functioning NHS, schools that provide everyone with the best opportunities in life, and fewer children growing up in poverty.
This is why growth matters: it touches every corner of our society and every aspect of our lives.
Moreover, economic growth is not just an economic imperative; it is a political one. History and political science show that sustained growth is one of the most important factors in securing public support and re-election. For Labour, delivering real and tangible economic progress is the foundation upon which we can build trust with the electorate and ensure we remain in government to continue making a difference.
But growth will not come without effort, nor without making difficult decisions. If we are to reignite the engine of our economy, we must be prepared to take bold and often controversial steps. This means addressing long-standing issues, such as reforming our planning system and modernising outdated regulatory frameworks, to unlock the potential of our businesses and communities. It means embracing, rather than fearing, investment in the new technologies that will create a more prosperous and productive country. These are not always easy conversations to have, but they are necessary ones.
At the same time, politics is about taking people with us on this journey. Too often, economic debates are conducted in a way that feels alien to many. Jargon and technical terms are obscuring the real-world implications of policies, leaving people disconnected from the decisions that affect their lives. The last Parliament saw the biggest fall in living standards since the end of the Second World War, and this has been viscerally felt by the electorate, particularly after many years of declining investment. The windfall from growth must be felt in people’s lives. They will mark our homework on the things they see everyday: their bills, their NHS, and their roads.
That is why I am delighted to support this new project, which seeks to bridge that gap. By engaging with people in a way that is clear, relatable, and grounded in their everyday experiences, we can ensure that everyone is part of the journey towards a stronger, fairer economy.
Together, we can make the case for growth, not just as an abstract goal but as a shared mission that benefits us all. By doing so, we will not only secure the prosperity of our nation but also rebuild the trust and confidence of the people we were elected to serve.
Our report reveals the growth gap: the gap between what politicians think good growth looks like, and what people actually want. Rather than deciding ourselves what good growth is, we went directly to the public to find out. We haven’t just diagnosed the problem – we’ve set out how to bridge the growth gap too. Below are our findings from the survey and focus groups.
Executive Summary
The background:
The cost-of-living crisis is people’s biggest concern. 57% see the cost-of-living as one of the biggest causes of low economic growth. Reducing the cost-of-living is seen as the most convincing reason to grow the economy.
People fear that growth will worsen inequality or put profits over people. 46% worry that growth will widen that gap between the rich and poor, and there is also deep scepticism of politicians from all parties.
Aspiration is on life support. 75% choose financial security in a straight choice against ‘aspiration’ to earn and succeed. People are surviving, not thriving, and fear a rising tide that only benefits the successful will leave them behind.
The growth gap:
People don’t feel a growing economy will improve their lives. The public, especially swing voters, want to feel the benefits of growth on a household level.
People don’t wake up in the morning and check the GDP figures. They measure growth by what is viscerally felt – by what they have left at the end of the month.
Even successful growth could be taken as a sign of failure. Growth on paper that isn’t felt in people’s day-to-day lives is worse than none at all: it’s evidence that people have been locked out of a growing economy. It’s “your GDP” not “my GDP”.
Bridging the growth gap:
Put people first. Know the policies that intuitively resonate with people. To grow the economy, people want better mental and physical healthcare, fewer potholes and more transport links, and opportunity in the form of skills and training.
For the less intuitive policies like housebuilding and clean energy, the “putting people first” principle helps join up the policy to people’s lives. Shape policies and make arguments that show how they will lower the cost of living.
People want an active, stable government that is prepared to invest in ordinary people and work with other countries. 53% want an active government, 44% want a stable government, with ordinary people seen as the drivers of growth – not national or local politicians. An open government, willing to work with other countries, was a top choice among Conservative-Labour switchers.
The clock is ticking. More than 70% expect to feel the benefits of growth within 4 years, while almost 50% of swing voters expect to feel them within 2 years.
The proof is in the pudding:
The public won’t measure growth by GDP. They’ll measure it by whether the cost of living has come down, whether public services have improved and whether their local area is thriving. This means changes to their lives that facilitate more spending, more freedom, and more opportunity.
An impression of change is not enough. There are no shortcuts: people need to feel better off. So politicians can’t just throw money at surface appearances, such as sprucing up the high streets – without money to spend on them, people just feel more left behind. It inadvertently bolsters the growth gap.
Recommendations
Recognise economic growth as a means not an end. This means clear messaging from the Government on how this growth will be achieved – the policies that are being actively prioritised and why they will succeed. It also means a relentless focus on the tangible rewards that these policies will deliver for people’s personal finances and the state of the places they live.
Apply a laser focus to the cost-of-living crisis. Right now, voters experience the economy entirely through this lens. They live on a ratio between monthly income and their monthly outgoings, a ratio which has recently tilted dramatically against them. Every action must be evaluated in terms of what it does to rebalance this in voters’ favour.
Invest in people. Voters take a “people first” approach to growth. Policy and messaging must focus on creating a skilled and healthy workforce, to boost productivity and purchasing power. In policy fields where the link is unclear, like clean power and housebuilding, policies should be related back to what they deliver for people: i.e. lower bills and lower housing costs, respectively.
Confront the age of insecurity first... To halt the feeling of decline, the Government must address the age of insecurity by assuaging the public’s economic fears. This means making the cost-of-living bearable, repairing the safety net of public services, and plugging gaps in the industrial base.
…But be clear about the opportunities that can come afterwards. Voters haven’t given up on the chance of something better in the future: there is a space for more positive messages. Economically, this means demonstrating active willingness to invest in people, alongside a clear ability to provide the political stability that will let voters make plans and take risks.
Introduction
Director of the Good Growth Foundation
By Praful Nargund
This is the Good Growth Foundation’s first report, which I hope will set the stage for future conversations on what “good growth” looks like. We have examined what the public wants to see from economic growth, what an improved economy might look and feel like, and how to pass their benchmarks for successful growth.
More than 30 years after it was coined, James Carville’s phrase - “It’s the economy, stupid” - is still used as a shorthand to articulate the importance of the economy to the electorate. However, this too often clouds our thinking with assumptions of the past. Namely, that an improved economy will naturally lead to electoral success. This report is our first step in resetting that conversation. We go beyond diagnosing the problem by setting out what needs to change to achieve growth that works for good.
The trust that a growing economy will improve people’s living standards is broken, and it has been a long time coming. The financial crisis, Brexit and Covid are all part of a series of events that have undermined the social contract on growth and have ushered in a new age of insecurity. Many feel that when we talk about growth, we are not talking about them. They see it as the rich getting richer, while they are left behind. They worry about profits before people, and they fear rising costs.
These views have been shaped by experience. While incomes have flatlined, returns on capital have remained healthy. Prices have risen, taxes have increased, public services are in crisis and work has become ever more insecure. People have seen industries like tech and finance expand, but they have not shared in their success. Combined with a corroded trust in politics, this means that even if a government manages to achieve growth, it might struggle to get credit for it. We call this “the growth gap” - an expanding chasm between how politicians measure growth and how people do.
Despite the difficult context, a clear path to bridge that gap has emerged in our research. People want to see an active government that backs ordinary people to once again pursue opportunity. Policies that squarely address the cost-of-living crisis, open up training and help people to stay healthy, give people the freedom and security, the breathing space, to have aspiration again. Our report details what this might mean in practice and how to join it up to the electorate’s lived experience.
I would like to thank JL Partners for their fantastic work assisting us on this project and the Labour Growth Group for their input and support. Thank you to the Good Growth Foundation team, who have zealously signed up to our mission, and to all the informal advisers who have contributed to shaping this project and have spread the word.
This report marks the beginning of the Good Growth Foundation’s mission to tackle the UK’s growth gap. Over the next year, we will explore specific policies that focus on workforce, trade and business. All of our research will be grounded in the views of the public, offering a roadmap that resonates with people and business.
Growth cannot just be numbers on a page; it must be felt in people’s lives. We’ve shown that the public wants a government that is bold, active, and focused on making growth tangible: bringing down the cost of living, creating more opportunities, and rebuilding trust. That is the challenge we’re taking on – and we’re just getting started.
Section 2
About this report
Britain has a growth problem, and it’s worse than you think. The last 15 years mark a failure in British policy and politics.
We are poorer than our past selves and poorer than our present neighbours.[1] This is a slow-burning disaster, which the cost-of-living crisis has only accelerated. The new Government has inherited an economy in decline and must now reverse it – both for its own political survival and to fix the country.
Ordinary people know this. They know the country’s economy is not in a good place. They see it in sky high bills and stagnating wages. They see it on their high streets, in shuttered shops and petty crime. And they see it in the services they need, with classrooms crumbling and the 8am bunfight for a GP’s appointment a regular ordeal.
They know, too, that money is central to solving this nightmare – be it in their own personal finances or in the services they receive. The ‘pie’ is too small, they acknowledge. ‘Growth’ is a good thing and is urgently needed.
But push them further – ask them what they really think about growth and what it really means to them – and things become much less clear. James Carville’s pithy phrase “It’s the economy, stupid”, with its promise that GDP equals personal prosperity (and thus political success) – is a relic of the past. That social contract has been broken. People know Britain’s economy can perform “well” on the world stage while its citizens see little of this prosperity at the checkout or the petrol pump.
Other truisms of political economy – be it “a rising tide lifts all boats” or the notion of money “trickling down” – can also be binned. In an insecure world with a broken social contract, voters suspect that growth is something that can be split and diluted or otherwise diverted away from them.
To address this, politicians must understand and talk about growth in the electorate’s terms, not their own. Otherwise, even if they achieve the difficult task of growing the economy, it will mean nothing to the people they are there to serve and whose votes they depend upon.
This report sets out the challenges that exist here, and the ways the Government can overcome them – making growth into something meaningful for ordinary citizens. It is based on five focus groups with key swing voters, and a sixth focus group with Labour-Reform voters. This was done alongside a nationally representative poll of the public across Great Britain.
We start by looking at the public opinion backdrop, against which the debate on growth is happening. It then examines “the growth gap” by which, in this context, economic success translates into political failure. It follows this up by looking at how governments – including the present Labour Government – can join the dots, explaining the levers they are using to deliver growth. And it lastly looks at how they can get credit for growth when it occurs.
The challenge, therefore, is not just to grow the economy, but to establish a common language and frame of reference for how to do this and why it will make a difference.
“If we don’t grow economically, or I mean not just economically, just as a country, if we don’t grow and adapt then we get left behind.”
– Male, swing voter, Wakefield and Rothwell
Methodology
2.1
Our opinion research consisted of the following:
A poll of 2,004 GB adults
Weighted by age, gender, region, education, 2024 general election vote, ethnicity and political attention
Online panel
27th to 29th November 2024
5 focus groups with swing voters, and 1 focus group with Labour-Reform voters
1x groups with Conservative-Labour switchers in Derby
1x group with Conservative-Labour switchers in Wakefield and Rothwell.
2x groups with Conservative-Labour switchers in Bexleyheath
1x group with Conservative-Labour switchers in Swindon
1x group with Labour-Reform voters in Swindon
Mix of online and in-person, equal balance of men and women
Conducted in November 2024, in aftermath of the budget
This was delivered by polling company JL Partners. Full research details available on request.
[1] Great Britain? How We Get Our Future Back, Torsten Bell, The Bodley Head, London, 2024
Section 3
The crisis backdrop
The Labour Government not only needs to grow the British economy – in itself a big ask – but to do so in a way that voters notice and understand. With this in mind, we began our research by asking a number of questions about the current economic backdrop. Four contextual factors emerge from this.
“It’s the cost-of-living, stupid”
3.1
Firstly, the cost-of-living crisis underpins every aspect of how people currently see the economy. Yes, incomes have stagnated in the long run. But they have done so in ways that are incremental and intangible. Outgoings, by contrast, have soared over a much shorter period and in a manner that’s immediately obvious. When their salaries stand still between one decade and the next with interest rates near zero, it can be hard for voters to notice. When the cost of a loaf of bread goes up by 10p between two weekly shops, they sit up and pay attention.
“You go shopping and it's just more and more expensive, isn't it? Things that you paid probably one pound a year ago, it's now three pounds. So, you know, I don't see, personally, any growth in that.”
– Female, swing voter, Derby
Voters’ concern about the cost-of-living ran through our research like a stick of rock. When we asked our survey respondents about the main positives of economic growth, the top two answers were “lower cost-of-living” (45%) and “higher living standards” (38%). Tellingly, the answer “higher wages” was sixth, chosen by just 27% – suggesting that getting a bigger pay packet is only seen as part of the solution.
This view was ubiquitous, cutting across age, education and politics. And Conservative-Labour swing voters were more likely than average to feel this way.
What’s more, the cost-of-living crisis is seen as a cause of the economy flatlining, because it means nobody can spend or save (and thus the economy cannot prosper). Ask the British people what they blame for recent poor growth and it comes on top. Indeed, as the table below shows, 57% chose cost-of-living in their top three causes of our current economic woes, with the second most popular choice being high energy prices at 44% – another cost-of-living problem. Conservative-Labour swing voters were again especially likely to take this view.
Hence, the cost-of-living is the all-consuming issue, eclipsing everything else. It explains what people think has gone wrong with the economy, and why they are suspicious of growth as a silver bullet.
In this context, many voters are waiting for prices to come down. They see this as a much more likely prospect than wages going up. And they also see it as more intuitive, representing the return of an age when things cost what they “should”.
“We're all desperate... We all want to see our day-to-day life get better, and I think we're all okay if there's a longer term plan. But I don't think any of us can wait five years for our food prices to come down, you know.”
– Female, swing voter, Derby
“If you put the minimum wage up, all the shops then put the groceries up to pay the people that are on minimum wage what they need. So in effect, it doesn't really change anything.”
– Female, Reform voter, Swindon
Given that price deflation is unlikely – at least at the pace or scale that voters want – and economically destructive, these findings draw into focus the challenge. Politicians need to make the argument that growth can be part of the solution, by raising wages and incomes to a degree that makes the current prices bearable, while avoiding negative side effects. And they need to explain how they will do this in the timescales the electorate is working on.
Aspiration on life support
3.2
Once upon a time, growth and aspiration were bedfellows. Economic prosperity at the national level allowed people to thrive and progress. But our groups revealed a deep undercurrent of gloom about economic advancement. There was nostalgia throughout the groups, even when the “good old days” were just a few years ago, and this often spilled into a more overt pessimism.
This came largely because people were simply worried about surviving – concerned that prices and bills are “going to go up again” and that they will be left high and dry. Rocked by the surge in the cost-of-living, they were desperate for financial security and felt trapped in the present, unable to make any savings for the future.
Does this mean that “aspiration” in the traditional sense is no longer a useful framing for growth? We tested this explicitly, using a direct choice between an “aspirational” framing and a “security” framing. As the chart shows, financial security came top among all political and demographic groups. When people are worried about getting by, aspiration doesn’t come into the conversation.
However, the demographic break-down is interesting, showing a significantly larger appetite for the aspirational framing among younger groups. The biggest medium-term challenge for the Government is to square this circle; enough economic security so people can feel they and their children have a future again. Enough safety so people can aspire.
“With growth there wouldn’t be so much depression that people are getting in this country, you know? [...] we hear about it every single day [...] it's purely because they've got so much in your head on a daily basis, because you're worried about everything you're worried about [...], can I pay the mortgage at the end of the month? Can I […] afford to put the gas on, the electric on?”
– Female, swing voter, Swindon
Corroded trust
3.3
The focus groups demonstrated clearly that many have lost faith in politicians in recent years. This clearly applied to the outgoing Conservative Government, but cynicism and a mood of anti-politics has quickly caught up with the new Labour administration, too.
“What they [Labour] said in the manifesto, they've just changed it completely. Yeah, not putting taxes up. This is certainly what they've done. And they put it up, probably in the worst way they could have with the pensioners.”
– Male, swing voter, Bexleyheath
“It seems there are no policies from the Government at the moment.”
– Male, swing voter, Wakefield and Rothwell
Our fieldwork took place five months into Keir Starmer’s premiership, and in the immediate aftermath of Rachel Reeves’ first budget. Yet, there was already a deep disaffection at play – stemming from broad cynicism about politics. Getting a hearing in this context is hard, especially in a field like economic growth, which many voters find abstract.
As the chart below shows, 52% had a net-negative view of Labour’s plans for the economy – more than twice as many as had a positive take. This was a little lower among those who had switched over and voted Labour, but not by much.
At times, a fear for Labourites has been that the economy is the “home turf” of the Conservative Party and the right.[2] But our focus groups suggested that growth was instead associated with “mainstream” politicians of both Labour and the Conservative Party. It was seen as something universally desirable, which everyone promises but few can deliver.
As we shall see shortly, the public are often unwilling to acknowledge politicians’ role in growth. The risk is that public disaffection towards growth as a concept and mainstream politicians as a group dovetails with a more general mood of anti-politics. This could hand the impetus to populists with anti-growth policies, preventing mainstream politicians from getting the credit they deserve for economic successes.
“Economic growth is something that happens to other people”
3.4
A final challenge for the growth context was the strong feeling that growth always benefits someone else. This comes in a post-2008 environment, where incomes haven’t grown and where child poverty has risen, even as the portion of people in work has increased.[3] Meanwhile the rich have got richer and the previous trend of growing life expectancy has stalled, with the healthy life expectancy between Britain’s poorest and richest areas now separated by nearly 20 years.[4]
“Twenty or thirty years ago I think the benefits were a little bit more fairly seen by most of the population, but it seems over the last ten years or so it’s skewed more to the hyper-wealthy being more, benefiting from any growth in economies, and the poorer people being more marginalised.”
– Male, swing voter, Wakefield and Rothwell
“It feels to me like it’s the wealthy who are gaining the most from a successful economy at the moment, and the other people are getting squeezed out.”
– Male, swing voter, Wakefield and Rothwell
Asked about the biggest drawbacks of growth, a fear of putting “profits before people” came top (with 48% placing it in the top three). A worry that it “may worsen inequality between rich people and poor people” (46%) came joint second, along with “may worsen inequality between different parts of the UK” (46%).
This fear that growth will be inegalitarian was remarkably constant, running across supporters of all political parties – including Reform. As the table below shows, voters who usually back smaller parties were especially concerned. And swing Conservative-Labour voters were notably more worried than average about inequality between individuals.
In focus groups, this was almost always the first thing mentioned when the economy was raised. Growth was seen as abstract – something that would benefit richer people than those we were speaking to or benefit those living in richer regions and cities. Big companies and the affluent were expected to hoover up any benefits. The well has been poisoned by the inequality of wealth distribution in recent decades.
“A lot of focus often is in London, in the businesses in The City there, and I think some other areas do get forgotten about in all of this.”
– Female, swing voter, Derby
Likewise, when asked who would benefit from growth, 41% thought the wealthy would benefit – whereas 14% thought the same for people on low incomes. There is a clear sense that the system is geared in favour of the rich and powerful.
There was a geographical element too, which went beyond north versus south. Often, it was neighbouring towns and cities being pitted against one another.
“Basically, for Wakefield… we’ve got a big city next to us, Leeds, so most investment goes over there.”
– Female, swing voter, Derby
This leads us to one of the most challenging paradoxes about growth that politicians today face: the idea that GDP growth is actually evidence of failure. So baked-in is inequality – so impossible to alter – that actually growing the economy can be seen as a bad thing, which will just make matters worse.
[2] Ed Miliband election speech: neither Labour nor the Tories can play away, Prospect, Jonathan Todd, 5 January 2015
[3] Child poverty: trends and policy options, Institute for Fiscal Studies, Anna Henry & Tom Wernham, 3 October 2024
[4] Map of healthy life expectancy at birth, The Health Foundation, 6 January 2022
Section 4
The growth gap
Growing the economy is not enough by itself. The four contextual factors above – the primacy of the cost-of-living crisis, the halt of aspiration, corroded trust in politicians, and the growing anger at inequality – create a hostile environment for leaders making pro-growth arguments and decision-makers advocating for pro-growth policies. Furthermore, if growth is achieved, they make it vanishingly difficult for politicians to get credit – the phenomenon which we call here “the growth gap”.
What is the growth gap?
4.1
The growth gap is the product of a perfect storm in voter opinion. Growth won’t trickle down; services will not improve; aspiring for more is futile; politicians cannot and will not be able to change this; and if they do it will be someone else – someone rich – who benefits. Hence, when a government succeeds in delivering growth, it is not noticed. A chasm opens up. This growth gap can emerge for several reasons:
Growth happens on paper, but because it does not feed through to people’s everyday lives, it fuels resentment and mistrust of politics.
Growth is seen to benefit other people - it feels inaccessible and people fear it might create more inequality;
Growth happens but it hasn’t made people feel anymore financially secure, so they feel disconnected and forgotten;
Growth happens in certain places and for certain people, but voters do not credit government for enabling it - instead crediting ordinary people and local SMEs.
The factors raised in the previous section all feed into this. The cost-of-living in particular has the potential to create a major growth gap, if rising prices cancel out the benefits of growth.
The result is meaningless growth: growth that seems to take place beyond the lives of ordinary people, and which the Government is thought to have played no part in.
There is a clear parallel with Brexit here. While Britain was part of the EU, it did better than it does today but the benefits did not resonate with people and were not communicated properly or shared fairly. “That’s your bloody GDP, not ours,”[5] as one heckler famously shouted during the referendum, frustrated with how the tangible economic benefits of EU membership had yet to reach them.
This apparent logical inconsistency – that a government could successfully grow the economy but fail to satisfy voters’ economic concerns – can be explained, if we pay close attention to how voters perceive and understand growth.
“If the country is prospering, it doesn't necessarily mean that there's going to be more money in my wage packet.”
– Male, swing voter, Wakefield and Rothwell
One of the questions we posed in our survey tied directly into this. We asked who took credit for growth when it did happen. The most frequently chosen option, as the chart above shows, was “ordinary” people, cited among the top three by 53%. National government came fifth, by comparison, chosen by just 27%. And local government ranked even lower (23%).
This is evidence of the growth gap already in effect, in terms of how people think about politicians and governments’ agency. There is a predisposition to assume politicians do nothing to stimulate growth and that when it happens it’s by accident. This creates a gap between a GDP increase on a spreadsheet on one hand, and a decision for which a policy-maker can be credited on the other.
A couple of examples
4.2
Labour’s current plans to create growth are backed by a strong body of evidence.[6] But a number of them are at risk of falling into the growth gap.
For instance, the Government plans to build 1.5 million homes. But the big risk here is that people do not see how this growth is good for them. They do not join the dots between the policies, the growth created and the benefit to their daily lives. When we asked in our survey about government policies to improve economic growth, “making housebuilding easier” ranked close to the bottom.
In our focus groups it became clear why this was. People didn’t relate construction to growth. They had seen construction and stagnation happen at the same time.
“More construction, more housing, more concrete doesn’t mean the country is growing […] it doesn’t help me right now.”
– Male, swing voter, Bexleyheath
Another government policy which currently falls into the growth gap is devolution. This was considered even less likely than housebuilding to grow the economy. In focus groups, people were reluctant to give credit to devolved leaderships or local authorities and feared extra layers of more of “the same” politicians. This has echoes of the Dominic Cummings led campaign against devolution in the North East in 2004, which used the strapline “politicians talk, we pay”[7].
Hence, across several growth levers that the Government has signalled it wants to pull, people don’t actually make the link with the economy. The public are only convinced on these policy areas if clear connections to their lives are drawn: that building more houses will make homes affordable; that building clean energy will lower bills; that devolution will deliver good local services. These are not intuitive drivers of economic growth in the minds of voters, but they can benefit from them through a lower cost of living and better public services.
A cautionary tale from America
4.3
The growth gap occurs when economic success translates into political failure. It is exacerbated when leaders crow about successes which voters do not feel in their own pockets.
The clear and worrying point of reference here is the United States, where, in 2024, economic upsurges did almost nothing to help the incumbent party at the ballot box. GDP advances arrived at the same time as a cost-of-living crisis, which was not seen as something that could be solved by growth. While Americans were struggling to pay for groceries, they gave the Federal Government precious little thanks for adding over 700,000 extra jobs in manufacturing.[8]
The same goes for the Inflation Reduction Act (IRA) or the American Rescue Plan Act. These policies helped spark America’s remarkable GDP growth and exemplary recovery out of COVID.[9] But they did nothing politically for the Democrats. The failure to act on the cost-of-living was so severe that these became unspeakable policies during the campaign – hailing the success of the IRA policy when inflation persisted was politically unconscionable.
“I don’t care what the numbers say”
4.4
One abiding theme to emphasise is the importance of humanising the economy, rather than allowing growth to be a numbers game. Voters see economic prosperity in a very subjective way – “how does it affect my life day-to-day?” – and are suspicious of politicians who talk about the concept in more abstract terms.
Starting with the importance of the individual and their own direct relation to growth was a standout finding from our qualitative research. Prices of everyday items falling? Having more cash to spend? Being able to treat yourself? These are the things that matter.
This came out in more subtle ways too. When asked what the best measure of economic growth was, respondents’ top choice was productivity (37%) followed by wage growth (32%). These were both ahead of GDP, the conventional gold standard for measuring economic performance (25%).
The preference for these more tangible, labour productivity measures is telling. An individual person does not have a GDP, but a person can be productive and take home a wage packet. The success of these measures reflects the way that, throughout our research, abstract terms and framings were always seen as secondary to more personal metrics.
“If my life is getting noticeably better, that’s economic growth – if it isn’t, I don’t care what the numbers say, that’s not growth.”
– Female, swing voter, Bexleyheath
This implies that the UK Government is right to be moving away from its pledge to achieve the “highest growth in the G7” and towards more relatable measures.
“Are we even in the G7?”
– Male, swing voter, Bexleyheath
And it implies, more broadly, that growth is only meaningful and noticeable on an individual level, in terms of its effects on daily life. It is not enough to raise GDP – growth must have actually done something for voters in their lives for them to care about it.
Ultimately, growth is not an end in itself. The existence of the growth gap shows the sometimes yawning chasm between what matters to voters and what matters to politicians. If Labour are to succeed they must be precise, shaping their messages and policies in a way that makes people realise and appreciate how growth has helped them. Politicians who fail to do this will fall prey to the growth gap.
The remainder of this report looks at how the growth gap can be closed. Part 5 looks at how leaders can join the dots – connecting a policy lever that does not automatically link in voters’ minds to the economy, like housebuilding and devolution, to the concept of growth. We explore some existing public policies, and how they can be made more intuitive.
Part 6 looks at the signs, outcomes and markers that the public uses to gauge the economic health of the country. These are the “barometer factors” that voters see as symptoms of a growing economy.
[5] The new divide: Hard or soft Brexit?, BBC News, Mark Mardell, 7 July 2016
[6] Larger than local decision-making: putting housing at the heart of growth ambitions, Savills, 22 May 2024
[7] Knife-edge in north-east referendum, The Guardian, Peter Hetherington, 15 October 2004
[8] Manufacturing Booms Thanks to Biden-Harris Administration Investments, U.S. Department of Commerce, 30 October 2024
[9]After Biden’s first year, the US economy is surprisingly healthy. His prospects are not, The Guardian, Adam Tooze, 20 January 2022
Section 5
One question: “How?”
As we’ve seen, the public gives little credit to politicians when it comes to growth. Often, economic prosperity is regarded as the sort of empty promise politicians make all too often. To show that it is part of a coherent strategy, not potluck, politicians need to explain how they will grow the economy.
“If you're telling me that you go for growth [...] I need to see the evidence. And it's the evidence that I never see [from] politicians. Show me the evidence, ‘cause I don't see it in my wage packet every month, and I don't see an improvement in schools, the infrastructure, the potholes in the roads, in the NHS.”
– Female, swing voter, Derby
What will Labour do that the Conservatives did not, given that both governments have gone for growth? What are the levers Keir Starmer and Rachel Reeves can and should pull? And how can these be connected back to the economy when – as the housing and devolution examples above showed – the link is not automatically there?
This matters so that pro-growth policies reflect what the electorate is looking for. But it also matters if the Government wishes to demonstrate cause and effect – i.e. that its economic successes are more than just a happy coincidence.
Strong, stable…and willing to intervene
5.1
One of the key areas our research explored was the type of government that people believe is best-placed to deliver growth. This is about politics and leadership more than policy and economics. It relates closely to Labour’s driving pitch in the 2024 election, which aligned Conservative chaos with the state of the economy.
5.1.1 Investing, intervening and borrowing
One finding from our question sticks out like a sore thumb. Voters felt most strongly – and negatively – about “a hard-headed government that takes tough choices and balances the books”. It ranked bottom in this question about how a government might achieve growth and performed particularly badly with older age groups.
This suggests serious voter fatigue with the harsh language of tough choices. Notably, our fieldwork took place when the Government was announcing the removal of Winter Fuel payments for pensioners. Exactly what “tough choices” meant was likely fresh in voters’ minds – and also tallies with the age skew.
Labour’s focus in the run-up to the election was very much on fiscal rectitude, summed up by their fiscal rules. Given the success of the accusation that the party had “maxed out the national credit card” last time in office, this was a sound electoral approach. People still require reassurance that the Government has a close eye on the purse-strings, but they are not convinced that this will inherently do anything to grow the economy.
Opportunity for the Government can be seen in the most popular response to our question, which was a government with “willingness to invest in places and people”. Voters want the Government to intervene when things are failing and invest when things are broken.
A still more sophisticated understanding of the electoral terrain for Labour is possible. Crucial findings emerged from the breakdown of responses to the question how a government might behave when seeking growth. While, as might be expected, those who voted Labour, Liberal Democrat and Green in 2024 strongly supported government investment as a tool for growth. Those who backed the Conservatives and Reform in July were much more sceptical. However, one group of voters gave a particularly interesting response.
Conservative-Labour switchers – those the Labour Party won in their droves in 2024 – are very sceptical of the tax-cutting and deregulation that Conservative and Reform voters favour.
We drilled deeper into this in our survey. Respondents were offered a forced choice question: high growth stimulated by high borrowing versus low growth with lower borrowing.
Among the electorate as a whole, the result was a dead heat. As the chart above shows, the breakdown of responses between different groups may give the government pause for thought about “borrow to invest” approaches, with older people and non-graduates less keen.
But the response with the all-important Conservative-Labour switchers is enlightening. Those voters, who we’ve just seen are sceptical of tax cutting, are even keener than the electorate as a whole on borrowing to invest.
Ultimately, there is a narrow political path for the Government to walk here. But our research points a way for Labour to keep its 2024 coalition together, while developing a new narrative about how it is delivering growth.
5.1.2 Stability
“A stable government, willing to keep things on an even keel and avoid turmoil” is the second most desirable trait according to our research. People are sick of the exhausting upheaval and drama of the last few years.
This came through even more strongly in the focus groups. Swing voters were often fatalistic about the economy and doubted that any government had it in its gift to guarantee growth. But they conceded that providing stability, predictability and continuity were some of the things our leaders do have control over. They also acknowledged that this could create the conditions for businesses to settle and take risks, and for consumers to save, spend and feel confident.
“If I was thinking strategically, it has to be providing a stable government to attract investment, because that really should lead all the other things in the right direction.”
– Female, swing voter, Derby
“You’ve got to compare Britain with, say, Russia, or North Korea, or China. There’s no comparison. I think we don’t appreciate on the whole, foreigners at least view our government as a stable one.”
– Male, swing voter, Wakefield and Rothwell
It’s worth remembering that, after the cost-of-living crisis, government instability is the single biggest thing which Brits blame for the poor state of the economy (see chart below). Even those who ultimately voted Conservative in 2024 acknowledged that the five year rollercoaster ride in Westminster since 2019 had not helped the economy.
If this Government remains stable over the next four to five years, it will feed the voter perception that Labour can do better than the Conservatives on the economy.
5.1.3 Open versus closed
Another key finding from the “type of government” question was the appeal, among Conservative-Labour switchers, of “an open government, willing to work with other countries and attract foreign and private investment”. This was their top choice, a little surprisingly, with 49% of them placing it as their first or second favourite form of government.
Which “other countries” and regions do voters want the UK to work with more? Europe tops the list here, with America just behind. What’s especially interesting is that Conservative-Labour switchers – the group who Labour successfully converted back in July – are especially positive about working more closely with Europe. In fact, they’re more open even than the electorate as a whole, as the chart below shows.
This willingness to see Europe as a trading partner is high among other groups where Labour has previously been vulnerable, and who were particularly likely to vote for Brexit in 2016. Older voters in particular see economic mileage in the European relationship.
“I think Brexit had an impact on that growth in the economy. Rules changed, particularly the European economy already [...] you've taken away a huge market.”
– Male, swing voter, Bexleyheath
However, these findings should be treated with a little caution. For one thing, our survey shows that voters’ feelings towards large multinational companies are lukewarm at best. Openness to international trade should not be read as warmth towards big businesses based abroad.
For another, there remain significant groups who see immigration as a big problem for the economy. They see it as a cause of the UK’s weak growth up to now and they see it as a downside of future growth. 31% of respondents see a major downside of growth as being the possibility that it will increase immigration – rising to 46% among 2024 Reform voters. And 27% see recent high immigration as the cause of our economic woes – again rising significantly with Reform voters, to 49%.
There is clearly a significant minority – currently rallying around Nigel Farage – who subscribe to the idea that more people means less to go round. In our focus groups, swing voters and Reform voters expressed immigration as a zero-sum game, particularly in relation to asylum seekers. Right now, Labour would be foolish to ignore this completely.
Nevertheless, the voters that Labour needs to hold onto most have a clear desire for a pragmatic and constructive approach to our neighbours. The belligerent and isolationist policies of Reform leave these swing voters cold and there are clear and positive steps to be taken when it comes to establishing better dialogue.
“We need to start educating our youngsters for better jobs, and we need industry to come back into this country and people that are well qualified. We don't need to keep bringing in foreigners to do all our work. We need to teach our own people.”
– Male, swing voter, Swindon
People-first growth policies
5.2
Some of Labour’s current growth policies come across intuitively to voters. The public doesn't need much evidence that these things will support growth – they just get it.
Invariably, the policies in this category are those that invest in people in some form. The keystone concept is growth that delivers for people by putting faith in them and making it easier for them to fulfil their potential. This is not the same as growth on a graph. It is not a question of spin. It is growth driven by ordinary people.
The chart above shows the support for 13 different growth initiatives, a number of which are already being implemented by the Government. Almost all of the more popular options put people at their core in some way. Three offer training and educational opportunities. Two improve people’s mental and physical health. One makes it easier to get about and another supports the condition of people at work.
“With growth there's more local businesses and then I feel like there's more opportunities to get other jobs as well.”
– Male, Reform voter, Swindon
Strikingly, once you dig into the data, almost all of these were especially popular among Conservative-Labour switchers, the old and Reform voters. The idea of opportunities for the future are not the preserve of the young or the left-leaning.
5.2.1 Skills
The most obvious levers to pull, voters think, lie in skills and training. Investing in skills and education was the most popular response when we asked about measures people would support to grow the economy. This is more comprehensive than just investing in universities. It’s about giving people across bands of age and social class the tools to adapt and grow in a rapidly changing, insecure world.
It is often assumed that creating more jobs will be seen by people as an economic good. But what good is a newly created job to you if you have no chance of getting it? It is things like apprenticeships, on-the-job training and other vocational options that offer people the leg up they need to capitalise. One voter in Wakefield put this succinctly: “It’s not just the physical infrastructure it’s the human resource improvement also.”
This investment in human resources goes hand in hand with an economy that grows in a way people care about. This is particularly true in light of our finding (reported in section 4) that voters consider ordinary people to be the most important drivers of growth. The focus on this area of investment was even more marked among swing voters.
Towards the end of our survey, we tested a range of slogans using a conjoint analysis. We ran different policy pledges and slogans against each other to establish a winner. The best performing slogan was “Opportunity for All”, a sentiment that’s closely linked to skills.
“You've got apprenticeships, you've got more people out working rather than sitting in a classroom. Lots of kids do a lot better out and working than they do in a classroom. And industry [...]would flourish if they have skilled workers.”
– Female, swing voter, Swindon
“If you look throughout like big cities, like almost all of them, [...] like Birmingham, London have universities, and you know that place is booming.”
– Male, Reform voter, Swindon
Investing in skills and opportunity is clearly a hugely popular lever, trusted as a way of achieving economic growth. This is because it offers agency and personal progression. It puts people in the driving seat of an economic recovery, rather than casting them as passengers.
5.2.2 Health
The UK’s combined NHS waiting list is at 7.5 million. GP numbers are falling relative to the population and strikes have caused over a million doctor’s appointments to be rescheduled.[10]
This means people waiting for operations cannot work. It means people take days off to go to GP appointments because it’s the only time they can get. It means people who want to work are out of work with anxiety or depression because they can’t get the treatment and support they need. The net effect is that 3 million adults are economically inactive in the UK.
This is not framed by the Government as an economic problem. But our findings suggest that voters see it this way, with interventions to improve health consistently seen as positive methods to strengthen the economy. The public understands the knock-on effect of poor healthcare provision, both physical and mental, and how it spills out beyond a narrow definition of “health”.
“We need the NHS to keep the people fit and working [...] otherwise, there’s no taxes being paid.”
– Female, Reform voter, Swindon
“At the end of the month, there’s not much left, so if that changes through growth, everybody’s happier.”
– Male, swing voter, Wakefield and Rothwell
“The mental and physical health services [...] - that’s key to growth as a country, and the current situation is fairly critical [...] that would be my main priority, sorting that out. A healthier, more secure feeling population would hopefully drive growth.”
– Male, swing voter, Wakefield and Rothwell
Indeed, one of the most striking findings, when we pitted policy pledges against each other using a conjoint method, was the importance placed on health as an economic lever. “Invest in people’s health” was joint winner amongst competing plans for the economy, with the closely related “rebuild public services” chosen third.
One swing voter in Derby explained that “sometimes people… have to have longer than necessary off work because they can’t get that doctor’s appointment they need”. Another put it even more starkly: “the intangible changes [from growth] are going to be…more happiness and less suicides”. Voters right across the country want the chance to get off waiting lists and get on with their lives. They know that growth will follow if they’re able to do this.
5.2.3 Transport and roads
Another key lever to pull is investment in transport. People in Britain spend a lot of unhappy time travelling. Whether it’s long traffic jams, roads cratered with potholes, cancelled trains or non-existent local buses, there’s plenty of frustration to go around.
It is important to emphasise the crucial role of cars and roads in this. The focus groups showed that people do not see transport purely as public transport. The actual experience of most people in Britain – and the voters Labour needs – involves cars.
“You go to European cities and you can go up and down the country for a tenner or something like that. But in Derby you can't do that and it’s in the middle of the country, really it's crazy that you've got to rely on a car.”
– Female, swing voter, Derby
People accordingly see transport as a key lever to pull in creating growth. It ranks third among our growth levers above, and scores even more highly when you drill down to the local level. When we asked for the most important causes of a strong local economy, “good transport links” came top by some margin – as the chart below shows. It did particularly well among the groups Labour really needs to do well with next time round, such as older voters and those drawn to Reform.
Voters know what it feels like to be stranded and are aware of the knock on effect it has on their ability to work, earn and contribute. Improving transport has a clear and tangible impact on voters at the local level.
5.2.4 Industrial strategy (and types of industry)
When we asked in the focus groups about investing in some of Britain’s most successful industries, the response of participants were eye-opening:
“I would say we don’t need to invest in digital sectors. I think that's already something that's quite advanced. [...] that's the least important, because I feel like that's what had the most amount of input already.”
– Male, Reform Voter, Swindon
“Because there’s probably enough money and investment from the private sector out there to push that forward without the Government leading on it, so that would be [...] the least amount of benefit.”
– Male, swing voter, Wakefield and Rothwell
This reflected the opinion of others. Amongst voters in Wakefield, many questioned the need for government involvement in digital economies. Those in Swindon feared prioritising digital growth could harm physical retail and community spaces.
But, if the benefits of technology were more widespread, these perceptions could be improved. Tech and digital is more than just a private sector, it provides tools which can be utilised to make everyone’s working lives better.
The ambivalence about one of Britain’s fastest growing sectors tells a deeper story about how people see the role of government. They believe it is there to plug gaps, not build on assets.
This means that swing voters are lukewarm, at best, about investment in thriving sectors like digital, which they believe will do well anyway. They bemoan the lack of support for traditional sectors that have struggled. Investing more in manufacturing and factories was the fourth most popular government intervention. “We don't manufacture anymore do we?” asked one swing voter in Bexleyheath.
At a personal level, this makes sense. In areas with deep historical ties to specific industries, industrial decline is still an open wound. In others, the manufacture of a product you can see and touch – be it a car, a chocolate bar or a plate – feels more tangible and real than the industries of the future.
Yet in economic terms, the UK is in a race to capitalise on new industries. This is where government investment will go furthest and fastest. Steps need to be taken, therefore, which either frame new industries using more traditional language or align new sectors with a broader industrial strategy that supports the areas where it is most needed.
By thinking differently about the UK’s industrial strategy, the embrace of new technologies can be cast as a way for Britain to reconnect with a past in which it made, sold and did more on home soil.
5.2.5 Taxation
Lastly, it is worth focusing briefly on taxation. “Cutting taxes on the wealthy and businesses” was by far the least popular of the potential growth levers we floated with the public, as the table above shows. But when we asked voters about barriers to future growth, high taxes were chosen as one of the three biggest blocks by 47% of those surveyed. As the chart below shows, this was more than any other potential barrier by some margin.
“I think Labour's new taxation that they introduced yesterday is definitely starting to target people who can afford to be taxed, rather than people who are struggling and can't afford basic things. It just does seem a bit fairer that they're targeting inheritance parts and things like that, where people aren't relying on it to live off anyway.”
– Female, swing voter, Derby
“Regardless, if you earn 10 grand to 20 grand to 50 grand, it's all taxed. If you reduce their tax. Everyone gets a benefit. Everyone then is able to spend more money. That's how you stimulate growth. So, I think if you've had that success, that's why I'd say it looks like to me, less tax, more money for myself, more money to do what I need to do with it. You've got growth.”
– Male, swing voter, Bexleyheath
How do we make sense of this apparent contradiction? The reality, which came through in our qualitative research, is that a yawning chasm exists between how voters see taxes on big businesses and the wealthy, and how they see taxes on everyone else. Tax cuts for ordinary people would, it’s assumed, support growth by putting money in pockets and easing the cost-of-living. Tax cuts for the rich and multinationals would be foolish and unfair.
This is a conundrum that the new Government has already been faced with – attempting to shield the electorate from tax rises, whilst raising the revenue to fix services. It was illustrated by debates after the Budget about farmers’ inheritance tax, National Insurance increases on employers and the definition of “working people".[11]
The findings in our research do not make this any easier. Intuitively, voters see tax cuts for themselves as a route to growth – something the Government would struggle to deliver without cutting services – yet are implacably opposed to tax cuts for large businesses.
Whilst this finding creates more problems than it solves for the Government, it does raise interesting questions about whether they could consider steps in the future like increasing corporation tax, without taking a hit in the polls.
“It depends on who they're cutting tax from, because if you cut it from this a billionaire who has like, five homes and all over the country, they're not going to spend that money [...] whereas if you're cutting it from people in the middle class/working class, then they’re going to spend that money because they're going to have more disposable income.”
– Female, swing voter, Bexleyheath
Less intuitive policies
5.3
We have already touched on, in section 4, policy areas where the growth gap is largest; where the connection between the lever and its impact on the economy is least clear to people. These not-so-intuitive policies are seen by voters as irrelevant to growth. The causal link is not there.
The chart below shows support for a range of broad policy priorities as potential drivers of growth. Bottom of the list are housebuilding and devolution. Only a little higher up is ‘investment in green industries’.
What is notable is not just the comparatively high pushback these policies received, but the large number with no idea or no strong opinion (shaded grey). People could not see why these initiatives – whatever their merits – were being cast as growth policies at all.
5.3.1 Building homes
Housebuilding suffers significantly from the growth gap. It is regarded as something that has been happening across the country for years, with no discernible impact on people’s finances. If anything, the new luxury developments that voters see going up are seen to place extra pressure on services.
“I think it's quite easy to build a house. I don’t see why you need to make that easier. I think you need to make it more affordable.”
– Female, swing voter, Bexleyheath
The electorate want the Government’s housebuilding policy to provide affordable and high-quality homes, and, in focus groups, view developers in extremely bad faith. They don’t see it as a vehicle for creating jobs in building or engineering, and the logic that says it does often fails to land.
Thus, housebuilding exemplifies the growth gap paradigm. It is seen as a box-ticking exercise benefiting developers rather than the country as a whole. The previous “builders versus blockers” framing from the Government potentially played into this.
This is not to say people do not recognise housing shortages – just that they do not see housing as a growth lever and do not want housebuilding for the sake of it. Rather, they are in favour of housebuilding if it makes homes more affordable. This came up over and over again in the focus groups, and has obvious links to the cost of living – which is people’s number one priority.
“We need opportunities to buy housing as well, getting off the rental [market].”
– Male, Reform voter, Swindon
Policy must therefore be bent towards building far more homes where prices are highest to ensure they become more affordable. It must be made clear not only that building houses has a direct impact on affordability, but that it does so here, that is, within the scope of people’s daily lives.
Rather than focusing on housing as a growth lever, decision-makers need to focus on what it will deliver: lower housing costs for people.
5.3.2 Clean Power
Clean power is another area where the growth gap must be bridged. It’s a lever that can deliver energy independence for the UK and lower bills for families.[12] In policy terms, it’s a way of overcoming the high energy prices that – voters tell us – are amongst the biggest barriers to growing the economy (see chart below).
In theory, then, green energy should be a popular lever. British energy independence taps into the desire voters have for security in their lives. People have been badly affected by energy price volatility and protection from future price shocks is an important framing device.
“Investing in clean energy is where I would go first, give us control of our energy market a little bit more, make us less reliant on other sources for our energy, and hopefully lower household heating and cooking bills, which is possibly one of my biggest outgoings nowadays.”
– Male, swing voter, Wakefield and Rothwell
Yet voters do not see how investing in clean power will grow the economy, and it comes low on their list of policy priorities. When we asked about measures that could improve economic growth, it was the 11th most popular choice of thirteen.
Our qualitative work identified the same pattern. Focus group members recognised the long-term value of clean power but noted the high upfront costs of technologies like electric vehicles and solar panels. They felt that added costs would be unbearable, and while decarbonisation is worthy, their concern was not the jobs it would create - it needs to deliver lower prices. The growth gap was in full force.
This is partly because of a persistent worry that green policies are expensive. As we saw in section 5.2.4, framings are far more likely to succeed when they focus on the “industry” aspect rather than the “green” element.
Notably, Conservative-Labour swing voters were more susceptible than other groups to the idea that “Labour are prioritising a radical plan for Net Zero over ordinary household budgets”. The argument that decarbonising will reduce costs has not been won, and in many voters’ minds there remains a tension between the economy and the environment.
Beyond this framing issue, however, it’s important to recognise a deeper non-sequitur at the heart of the clean power policy. The economic logic says building clean power infrastructure is a pro-growth policy because it creates jobs and investment in areas away from London – be it offshore wind, clean steel plants or electric battery factories. The voter logic hopes that clean power will bring down bills, providing more disposable income and allowing people to spend again. If this is what the Government is claiming then this is what the Government should be aiming to deliver.
This needs to be squared, in order for the policy to fulfil its potential and overcome the growth gap.
5.3.3 Devolution
Another growth gap area is devolution, which is among the hardest terrains for the Government to push its growth agenda. This is a policy topic where Labour is making significant headway and generating a lot of discussion. However, the public is not currently connecting the issue to the economy.
When we asked in our survey what the most important causes of a strong local economy were, devolved local leadership was ranked last, on 8% (see chart below). Respondents were also sceptical of devolving power as a way to grow the economy – ranking it ninth out of nine options.
The qualitative findings here are also interesting. When pitched greater devolved powers for local government, some people had major reservations in light of recent council bankruptcies. Whether it was Birmingham, Thurrock, Nottingham or Croydon, news had cut-through and travelled fast.
“I look at Birmingham as an example, where the year they've raised council tax up to something like 20% to get back what they've been spending [...] If you were to go even further up north and you see where they've devolved, Glasgow itself is crumbling.”
– Male, Labour Hero Voter, Bexleyheath
It was telling that mayors and combined authorities were never raised by our focus groups. Even Bexleyheath participants, who have had a Mayor of London for 25 years, did not mention their regional leadership or the Greater London Authority. Far more salient were their immediate local council services, such as SEND provision.
At the same time, swing and Reform voters were attracted to more devolution as a means to support local areas, and grow the economy. Labour voters in Swindon thought local authorities were better able to tailor growth initiatives to their communities’ needs while Reform voters saw it as a way to empower Swindon’s residents. In Derby and Wakefield people also “got” the argument that local decision-makers knew their areas better, although they remained concerned about whether these decision-makers would struggle to handle the extra resources.
“I think I'd go for the powers of the local government. Obviously [...] they know more about what's going on in a city and what needs doing and fixing.”
– Female, swing voter, Derby
“I just think every town or city has their own sort of demographic. I think if it's sort of kept local, they've got to be in your favour sort of thing, if that makes sense, it’s their fight.”
– Female, swing voter, Bexleyheath
The devolution agenda must therefore be rooted in the improvement of local areas and services. The passage of reform has to be shaped by the delivery of tangible benefits in order to demonstrate competence. Voters, particularly those that the Government needs to retain, are hesitant about further powers to local and regional government when there is no obvious advantage to their lives.
More than any other area, devolution is a policy area where the story needs to be spelled out. Framed correctly, it can potentially tap into the sentiments our research revealed elsewhere, such as the role of ordinary people and local businesses in driving growth. This way it will be seen as not just an additional layer of government, but as something that’s about outcomes and people.
5.3.4 Jobs
A final area to touch upon is jobs. This isn’t a policy theme in quite the way that housing or clean power are. But it also falls into the growth gap. Jobs are the driver of the economic benefits for many of our policy levers, the subtext being "more jobs equals growth”. Yet promising jobs isn’t actually the easy win one might expect.
As the charts below show, when we asked in abstract about the positives of economic growth (left), jobs came third, chosen as a top option by 30%. However, when we asked people about possible changes for the UK right now (right), this number halved and it fell sharply down the rankings. Only 16% chose “more jobs” as a top option.
This reflects the decline we have seen in people’s desire for aspiration and the rise of financial security. The steady, benevolent increase of economic expansion no longer gives people the certainty that they can make ends meet. People are not looking for a time of plenty (a world of increasing jobs), but for a time of preservation (holding on to what they have). The focus groups made this clear, with voters often struggling to imagine promotions or pay rises.
“I can't see my wages changing working for the NHS, regardless of what happens with the country, you know. I'd have to work in the right industry [...] so if I was selling cars and the car industry was booming for example.”
– Female, swing voter, Derby
The jobs conundrum also ties into the economic challenges of the moment. The problem most people have is not unemployment but stagnating incomes, low pay and unstable work. The promise of “more jobs” risks being a solution in search of a problem.
The US example again casts a shadow here. President Joe Biden’s recovery from COVID created jobs and avoided recession, but that success was eclipsed by the high cost-of-living.
5.3.5 Make the case or change the policy
One dilemma, particularly for less intuitive growth policies, is what to change: framing or policy? Take the example of housing and clean power. The real growth lever is a Keynesian one (e.g. stimulating employment through building), but the economic benefit voters imagine relates more to household finances (e.g. reduce housing and energy costs so people have more disposable income).
There is a decision to be made in each case. Should the true growth rationale of the initiative be explained? Or should the substance of the policy be altered, so it’s more likely to achieve the outcome voters are expecting as quickly as possible (i.e. cheaper housing or lower bills)?
Devolution is slightly different, but rubs up against a similar logic. The true benefit relates to a stronger local voice and more tailored policy-making, but the benefit voters imagine is about simplifying local government and improving their “customer experience” with the state. Which outcome should be prioritised?
These dilemmas apply to some more intuitive policies, too. Transport in particular is understood by voters as a way of getting them from A to B quicker and more cheaply. They don’t see it as a Keynesian initiative to get the country building. But because the policy is more intuitive, the choice between altering framing and policy substance is less stark.
They also notice, correctly, that advances in all three over the past decade have done little to improve the cost-of-living. The UK has seen more devolution, more green energy and more new-builds over the past few years. But what difference have these made to their own finances? Very little.
5.3.6 Specific policy changes to meet voter expectations
Below are some policy suggestions, in the three less intuitive areas. Based on conversations with experts, these look at how policy could better meet voter demands.
Housing-building
Make homes affordable
To have an impact on housing costs the Government must build far more homes where prices are the highest. Their approach needs to grasp the geography of housing demand, going beyond the current path of planning reform.
This will have the best impact for growth by supporting agglomeration, and it would also raise the greatest amount of cash to redistribute across the country with better public services and transport.
This has been successfully delivered in places such as Auckland where upzoning since 2016 has already delivered falls in house prices and rents.
Devolution
Improve public services
The public have shown that they are more concerned about the outcomes rather than the process of devolution. To realise the transformation in skills, health and transport the public want, the Government should simplify its approach to institutional reform.
Extending mayoralties to every part of England risks delaying the real gains that can be made in delivery. Instead, it is essential that local government is unitarised quickly, and that government boundaries reflect local economic geographies. This will give local leadership the best chance to improve their places quickly for the benefit of their communities.
Clean power
Cut energy costs
Voters are supportive of Net Zero, but are anxious about their energy bills. This means that when delivering 95% clean power, very close attention needs to be paid to preventing network costs from increasing prices for consumers.
Changes that lower bills should be prioritised, such as market reform to lower the wholesale price of energy. For instance 20-year rather than 10-year CfDs, could cut costs for wind power. Also moving the policy costs of bills onto general taxation would lower energy prices and more equitably spread the burden.
Enable people to feel the broader benefits of Net Zero through the Chancellor’s changes to the fiscal rules and PSNFL. Consumers could be provided with interest-free loans to buy electric vehicles and heat pumps, helping them make savings by lowering the costs of driving and heating their homes.
[10] Counting the cost of NHS strikes, The King’s Fund, Siva Anandaciva, 23 February 2024
[11] What is a 'working person', according to Labour, BBC News, Faarea Masud, 28 October
[12] Clean Power 2030: Advice on achieving clean power for Great Britain by 2030, National Energy System Operator, 4 November 2024
Section 6
“The proof is in the pudding”
It is vital to separate the question of how growth is delivered from the outcomes that growth will deliver. This is important, apart from anything else, because it’s about the pay-off people get from growth. Is it the pay-off they’re looking for? If not, politicians will struggle to get credit.
Ideally, the policies would be intuitive, the outcomes tangible and the messaging drawing a clear link between the two. This would establish that growth has happened and benefited voters by design, not by chance.
“They all state what they're going to do, what they're going to say, but the proof is in the pudding, isn't it? It's, you know, we'll see in the years to come as to whether you know that's actually going to pan out, and I think that's what people are fed up with. You know, they promise this, they promise that, they get into power, and they only half deliver.”
– Female, swing voter, Derby
In the end, as one voter put it, the proof of economic success will be in the pudding. It will be the outcomes people see and feel. Only by understanding this can governments ensure policies deliver and, crucially, are noticed.
The core logic
6.1
A simple, deeply intuitive logic runs through how voters think about growth. It is intimately connected with the cost-of-living.
The dominant experience in their lives right now is that the joy has gone because prices are so high. The result of this is that luxuries are beyond reach, foreign holidays unattainable, even takeaways are things of the past. Days out at theme parks have become days out at the local park. Shopping, football matches, trips to the cinema, beauty treatments, visits to the pub – all are just no longer possible.
While economists suggest this was partly the result of wage stagnation over a long period, the public see it as the consequence of a sharp and unexpected rise in prices post-Covid.[13] Mortgages and rental costs, food and drink, petrol, water, gas and electric: everything has gone up. The stark shift in the balance of income and costs is keeping people down. This includes those who already had little and cut back their spending to the essentials, and those who felt financially comfortable just a few years ago.
This is the prism – the cost-of-living and family finances – through which voters see almost every policy: how will it affect my rent, bills, and food costs? Their hunch is that that prices are more likely to go down than their wages miraculously go up. Our focus groups found that even if their pay did rise, they believe that prices would increase in tandem, cancelling out the raise or even outstripping it. But they are open to any policy that might restore the right balance between income and outgoings. So money in their pocket will be the benchmark against which growth is measured.
Should this balance be restored, then people believe growth will be stimulated because the country will be able to spend again. Ready cash will mean that going to the shops becomes easier, as will eating in restaurants or going to gigs.
This will eventually percolate through, via taxes, to public services and the NHS. But the first noticeable change will be in the state of high streets and the public realm. Shuttered shops will reopen, empty town centres will fill with people. Crime will fall, as public spaces are taken back from anti-social behaviour. And other forms of visible deprivation will retreat as well.
“Poor growth looks like more shops closing, more services getting stopped, less improvements to local areas …everything just has a knock-on effect. If people don't have spare money at the end of the month to spend on their classes, luxuries, going clothes shopping or going to the cinema, things are just going to close.”
– Female, swing voter, Derby
The logic of the above may not tally with economic reality, but it is important to understand it as a diagnosis and theory-of-change that many swing voters are bought into. In particular, it explains why growth policies can get a lukewarm response and why people are gloomy about the prospects for growth. The cost-of-living crisis is a live and immediate issue – the only game in town – and yet people fear that growth strategies might not deliver results, even if they succeed.
Indeed, the chart above shows the length of time voters expect for growth to bear fruits in their own lives. If growth returns, more than two thirds of the public expect to feel the benefits by the time of the next election. Swing voters, in particular, tend to be very transactional when it comes to government. They are looking for evidence of results, with 49% expecting to feel the benefits of growth within two years and nearly 80% expecting to feel the benefits of growth within the Parliament. With the anticipation that growth will result in tangible gains in people’s day-to-day lives, it is worth looking at quick wins that can help to deliver this.
Outcomes step-by-step
6.2
The outcomes people want to see in their own lives, therefore, follow a fairly simple process. This is set out below, and mirrors the core voter logic described above. There are three steps or phases, although these bleed into each other and overlap in obvious ways.
6.2.1 Ending the cost-of-living crisis
The cost-of-living runs through our findings. We have already seen how important it is. But it is worth emphasising again that this is the primary outcome – almost the only outcome – people care about.
“I think the reality is, for the normal people, we want to feel the benefit in our pocket, and that we, at the moment, everybody's had to cut back so much, it'd be nice to have finances to do more, but because we haven't got the finances to do more, things like eating out, going to the cinema, are cut back.”
– Female, Reform voter, Swindon
The chart below shows the popularity of a range of arguments we tested as reasons to grow the economy. “To lower the cost-of-living” is seen as the most convincing by a country mile. “To raise living standards” comes in a clear second, a goal that is tied inextricably to the cost-of-living.
As we have seen, for voters this is first and foremost about costs – as opposed to income. Raising wages was far less popular.
Voters acknowledge the need for higher pay, but their first priority is about suppressing living costs in whatever ways the Government can. It is also about controlling inflation. The latter, as they see it, is effectively a proxy for “prices in the shops”.
“More money for public services” comes third, and there is no doubt that people get the logic: more growth means more tax revenue and so more money for the NHS and other public services. However, the link is not as compelling as lowering the cost of living, reflecting the widespread and intolerable financial insecurity people currently face.
6.2.2 Putting money in people’s pockets
The “money in the pocket” test leads on from the cost-of-living and is in many ways the same thing. It is about disposable income and how much people have coming in.
The word cloud below shows some of the key phrases people used when asked unprompted about the main positives of economic growth. The phrase “money in your pocket” came up again and again as the main way they expected to experience economic prosperity.
When we spoke to swing voters from Bexleyheath, we asked a specific question on the cost-of-living: would a £200 increase in their weekly wage make them feel more comfortable? Strikingly, this was not considered at all enough – a more realistic figure being an additional £2,000 a month to feel secure and able to save. Any less, and people felt the increase would simply be eaten up by ever-increasing bills.
This exercise drew into focus the structural nature of the challenge and showed the insufficiency of the sorts of small retail policies attempted by the previous Government.
“I’d have more money in my pocket, and things aren't going up and up [...] when I go to fill my car in 10 years, it's not going to cost me 100 pounds, as opposed to, you know, 50 pounds. So therefore I've got more in my pocket to [...] treat myself.”
– Female, swing voter, Derby
6.2.3 High streets and the public realm
High streets and the public realm are a central barometer of the economic health of a nation or a community. For voters, “a busy high street” is the standout marker that a town or city is doing well, as the chart below shows. Clean streets, low crime and lots of activities to enjoy all feature prominently as well. However, it is not enough for people to see their high streets restored - people want to, and have to, be better off to support their local area in the first place. They understand this as essential to “get growth”. As articulated earlier in this paper, this is how the public think the cost-of-living crisis is the cause for economic stagnation.
“To get growth, people have money to put into things. They have to be able to actually go out and use their money. Whereas everyone, now, all of their money is going into bills, food shopping [...] as opposed to the niceties and you see it in the high streets, you see it in clubs and stuff.”
– Female, Labour Swing voter, Bexleyheath
“[When imagining years of growth] there’s more businesses, a boom in high streets, more income for going out and socialising, and being able to really afford it.”
- Female, swing voter, Bexleyheath
There is an intuitive understanding of the vicious cycle spun out by price rises. When people’s earnings are taken up by essential bills and they have cut back on any luxuries or niceties, it is small wonder that local businesses and employers are going under as well.[14]
Voters know that a good high street is symptomatic of the disposable income in their pockets. Town centres are reliant on their ability to support local enterprises and small businesses. A thriving locality depends on having more to go round – more in people’s pockets. Swing voters come from an economy where people have enough left over at the end of the week to go out and do things, where there is a need and an appetite for public amenities. If personal finances rebound and high streets are restored, aimlessness and deprivation have been washed away.
“Places would just look better, for a start, you know, you'd see it, wouldn't you? Shops aren't closing down, they would all be open and flourishing. There’s people in the town centres with facilities to go to.”
– Female, swing voter, Derby
Visual markers of success do not come before people’s personal financial security. You cannot put the cart before the horse. But pleasant high streets are seen as a direct consequence of people having a little more to go round – money to visit the shops, for example. They are a sign, for voters, of the cost-of-living crisis being over, and the green shoots of recovery starting to show. They demonstrate that people are again free to spend, enjoy life and come together.
Conversely, our survey found that the opposite traits are seen as the outward signs of economic failure – as the chart above shows. Empty shops, derelict buildings and petty crime are all signifiers that a place is failing. If there is money in people’s pockets but these issues remain then people may doubt whether the economy has really grown. The growth gap could again loom large. Have things really improved, people may ask? Or have they just been lucky?
“[Growth in Swindon means] more people on the street, more shops open and not boarded up. People spending money because they've got money to spend, so they're going into the shops.”
– Female, swing voter, Swindon
Visible yardsticks of local prosperity are important for measuring the health of an economy. However, the public knows that these local improvements will be driven by them having the room to breathe and spend a bit more. It is not enough to polish up high streets with flower pots or tweak business rates. The restoration of local businesses depends on the financial security and confidence of their would-be customers. Otherwise, it risks once again being a signal that someone else is doing well, not them.
[13] Wage Controversies: Real Wage Stagnation, Inequality and Labour Market Institutions, LSE Public Policy Review, Stephen Machin, 1 March 2024
[14] Six Reasons Behind the Decline Of The UK High Street, Myers Clark, 14 December
Section 7
Recommendations
This report is the start, not the end. Over the coming months the Good Growth Foundation will explore in more detail the repercussions of these findings. However, we can already make several key recommendations on how to avoid falling into the growth gap.
Recognise economic growth as a means not an end
7.1
For many voters, growth is an abstract or even an irrelevant idea. Most do not care how large the UK’s economy is compared to other countries or how well it’s performing on paper. Growth is only important in terms of what it can do for the cost-of-living, public services, opportunities and living standards.
To make growth tangible and real, leaders need to differentiate how they will achieve growth from the rewards that growth will deliver. So:
Be clear about the growth policies that are being prioritised and why. This requires joining the dots to explain how these will make people’s lives better. On housebuilding, for example, it has to be about affordability – more houses so you can afford to buy your own home. Otherwise, it’s just more homes that people can’t afford – widening the growth gap. Spell it out.
At the same time, be clear about the outcomes that will flow from these policies. This can be framed in terms of the cost-of-living crisis: e.g. the stabilising of bills and prices and the extra money in people’s pockets for luxuries will result in the opening up of public life, with pubs busy, independent shops opening and clean high streets.
Remember: growth is a means to achieving the tangible things that will make people’s lives feel better. It only matters for the things that it can deliver.
Apply a laser focus to the cost-of-living crisis
7.2
Right now, economic policy will only be considered a success by the public if it does one thing: alleviates the cost-of-living crisis. Growth that does not do this will simply not be noticed. Just look at the defeat of the Democrats in the 2024 US Presidential election, if you’re in any doubt.
The cost-of-living crisis can broadly be understood as the ratio between income and outgoings, in terms of how voters see it. They feel they’re limping through with little to show for their hard work. They want bills and prices to stabilise or want their incomes to go up drastically (although they’re more sceptical about the latter than the former). And they are doubtful about whether growth can fix the cost-of-living in the timescales needed.
Overcoming this is partly about messaging and partly about finding some quick wins. It also means growth policies must be evaluated – and amended where necessary – to ensure that action on the cost-of-living is the primary output that each one delivers.
Invest in people
7.3
Voters take a “people first” approach to growth. They believe it is ordinary people who drive the economy and they want a government that helps them do so. Messaging and policy must focus on creating a skilled and healthy workforce to boost productivity and individual purchasing power. When growth is framed in terms of sectors people do not work in, or infrastructure they do not understand, they assume it is other people who will benefit.
Consequently, the most popular measures to stimulate the economy have people – their skills, their health, their wellbeing – at the core. The public understands there is no productive economy when millions are out of work due to ill health. They see no point in creating jobs if the people in their community do not have the skills to fill them. They know that people cannot thrive if they’re stranded by hopeless transport links.
Growth policy should therefore focus on healthcare, skills and transport. Policy areas where the link is less tangible, such as clean power and housebuilding, need to be related back to what is actually delivered for people: lower bills and lower rent or mortgages, respectively.
Confront the age of insecurity first…
7.4
It is easy for those talking about the economy to fall back on nineties or noughties assumptions. But in the current context, appealing to people’s sense of aspiration gets you laughed out of the room. Economic security is all that people can dream of right now.
To halt the feeling of decline, government policy and messaging must address the age of insecurity by assuaging the public’s economic fears. This means making the cost-of-living bearable, repairing the safety net of public services and plugging the gaps in our industrial base before declaring success.
At times, this runs against economic logic. But the alternative is to foster decline narratives, breeding anti-growth cynicism towards an economic model that seems to reward winners before helping those struggling.
…But be clear about the opportunities that can come afterwards
7.5
Despite security trumping aspiration, messaging around opportunity was very popular in our polls and focus groups – as were policies about skills and life chances. Voters may want economic security right now, but they haven’t given up on the hope of something better in the future. They see ‘ordinary people’ as the drivers of our economy and are looking for investment in their potential.
How can the Government go beyond security and actively support people to have successful lives and careers? How does this translate into an economic and political strategy?
This is where the type of government people believe can deliver growth comes into play. Respondents were very negative about the chances of economic success with “a hard-headed government that takes tough choices and balances the books”. They were much more drawn to:
“An active government, willing to invest in places and people”, which came first.
And “a stable government, willing to keep things on an even keel and avoid turmoil”, which followed close behind.
A blend of these two aspects, investment and stability, captures well what voters across our focus groups and polling were looking for from the Government. This approach, voters hope, can create the conditions for growth and deliver new opportunities.
Appendix
Detailed methodology
Focus Groups
J.L. Partners recruited the following discussion groups as follows:
Group One, recorded 31 October 2024: Online Group with Male "hero voters" from a northern Red Wall seat (Wakefield and Rothwell). Hero voters are defined as voted Labour at least once previous to 2019, voted Conservative in 2019, and Labour in 2024. They stated they were also at least open to voting other parties (e.g. Conversative) prior to the 2024 election. All C1C2D SEG group.
Aged between 30-70 years old (median age, 51). 7 were White British, 1 Pakistani.
Group Two, recorded 31 October 2024: Online Group with Female "hero voters" from a midlands Red Wall Seat (Derby North). All C1C2D.
Aged between 30-57 (median age, 38), 5 White British, 2 British Caribbean and 1 British Mixed Race.
Group Three, recorded 7 November 2024: In-Person group with "Hero voters" from traditional southern swing seats (Swindon). Mix of Genders. All C1C2D.
Aged between 33-62 (median age, 40), all White British.
Group Four, recorded 7 November 2024: In-Person group with Reform voters from traditional southern swing seats (Swindon). All had voted Labour at a previous election, voted Conservatives in 2019, and Reform in 2024. Mix of Genders. All C1C2.
Aged between 25-52 (median age, 40), 7 White British, 1 Indian.
Group Five and Six, recorded 5 December 2024: Two further In-person "hero voters" groups from a traditional southern swing seat closer to an urban area (Bexleyheath). Mix of Genders. All C1C2D.
First group aged between 30-82 (median age, 39), 7 White British and 1 Black British.
Second group aged between 35-67 (median age, 48), 5 White British, 1 Black British, 1 Black African British, and 1 Turkish.
Polling
J.L. Partners polled a nationally representative sample of GB adults.
Fieldwork dates of 27th to 29th November 2024
Sample of 2,004 GB adults
Data was quota-ed and weighted to be representative of Great Britain on age, gender, region, education, 2024 general election vote, ethnicity and political attention
Sample collected using online panel
Survey length: 20 minutes
Margin of error: 2.2%
We use ‘Hero switcher’, ‘swing voter’, and ‘Tory-Labour switcher’ as a key audience throughout. These are synonymous and defined as:
Voted Conservative in 2019
Voted Labour in 2024
Supplementary charts from quantitative research
Below are a series of charts and commentary, detailing additional materials from the survey element of our report. This is intended to be a helpful aid and provide a more comprehensive understanding of the results from our research.
Chart A. Indicators for a strong local economy, showing crossbreaks on vote at 2024 election by political party, and education
Chart B. Whether economic growth would increase, decrease, or make no difference to the following options
Chart C. Results with respondents selecting the two most convincing statements to ‘Labour should push for growth’, showing crossbreaks on vote at 2024 election by political party, and education
Chart D. Results on the attack message testing, showing which arguments were most and least convincing
Chart E. Results on whether the following measures would grow the economy, showing crossbreaks on vote at 2024 election by political party, and education
Chart F. Results on change in net support for Labour’s plans for the economy, results showing levels of support depending on which attack line was shown
Chart G. Word cloud on the responses to the question ‘If the UK economy was a car, what car would it be?
Bibliography
After Biden’s first year, the US economy is surprisingly healthy. His prospects are not, The Guardian, Adam Tooze, 20 January 2022
Clean Power 2030: Advice on achieving clean power for Great Britain by 2030, National Energy System Operator, 4 November 2024
Child poverty: trends and policy options, Institute for Fiscal Studies, Anna Henry & Tom Wernham, 3 October 2024
Counting the cost of NHS strikes, The King’s Fund, Siva Anandaciva, 23 February 2024
Ed Miliband election speech: neither Labour nor the Tories can play away, Prospect, Jonathan Todd, 5 January 2015
Great Britain? How We Get Our Future Back, Torsten Bell, The Bodley Head, London, 2024
Knife-edge in north-east referendum, The Guardian, Peter Hetherington, 15 October 2004
Larger than local decision-making: putting housing at the heart of growth ambitions, Savills, 22 May 2024
Manufacturing Booms Thanks to Biden-Harris Administration Investments, U.S. Department of Commerce, 30 October 2024
Map of healthy life expectancy at birth, The Health Foundation, 6 January 2022
Six Reasons Behind the Decline Of The UK High Street, Myers Clark, 14 December
The new divide: Hard or soft Brexit?, BBC News, Mark Mardell, 7 July 2016
Wage Controversies: Real Wage Stagnation, Inequality and Labour Market Institutions, LSE Public Policy Review, Stephen Machin, 1 March 2024
What is a 'working person', according to Labour, BBC News, Faarea Masud, 28 October
Download the PDF version of our report ‘Mind The Growth Gap’.
With special thanks to…
Billie Coulson
Louisa Dollimore
Arthur Fyfe-Stoica
Theresa Bischof
Chris Clarke
Robbie Smith