21 April 2023

Operation Innovation – how to make society richer, healthier and happier


By far the most important issue facing modern societies is the ability to achieve and sustain economic growth. 

This doesn’t simply mean the level of Gross Domestic Product – the total value of goods and services exchanged within an economy in a given year – but rather the annual improvement in the living standards we experience. The taste and smell of our food. The look, hygiene, and comfort of our homes. The ease with which we communicate, travel, relax, and work. Our ability to prevent and cure disease. The quality of our air, and the health of our countryside.

Improvement in all of these – in affordability, safety, health, quality, efficiency – is what lies behind modern, sustained economic growth. And it is innovators who drive those improvements, finding ways to do more with less, making things easier, safer, more sustainable, and effective. Increasing GDP is just the measurable tip of the iceberg.

The effect of accumulated innovations has transformed the world at a pace that would have been unimaginable to our not-so-distant ancestors. Even a rate of 2% growth per year – what is now considered slow – if sustained year after year, results in a doubling of measured living standards in just 35 years. The gap in living standards between 1423 and 1723 may have been noticeable to a typical fifteenth-century person, but the gap between 1723 and 2023 would have been beyond even an eighteenth-century person’s wildest imaginings. 

In 1723, the typical Brit would have spent a substantial portion of their wage on lighting and heating their home with sputtering candles and smoky coal. They would almost certainly have had no access to running water, been unable to afford to travel abroad, and only just about been able to fund some pastimes – some limited reading, if literate, and perhaps the occasional and expensive sip of a newly-imported luxury like coffee. Their work would have involved back-breakingly long hours, with little recourse for that broken back. They faced the constant threat of an early death from disease.

Thanks to the incremental and accumulated work of just a few thousand innovators in the intervening three centuries, we now enjoy the widespread availability of electricity, central heating, running water, toilets, cars, rail travel, literacy, television, restaurants, office jobs, and instantly effective treatments for many previously debilitating or life-threatening diseases – not to mention commonly available inventions that to the 1723 Brit would seem tantamount to magic, like human flight, impressively accurate weather forecasting, instantaneous communication with anyone in the world, and now machines that can reason and talk.

The UK, as the home of so many of those innovators, was often among the earliest beneficiaries of their improvements. It continues to be among the best places in the world to innovate, recently giving us the Oxford/AstraZeneca Covid vaccine, Babylon Health, and DeepMind. But its seventeenth-, eighteenth-, and nineteenth-century pole position, in almost all industries, from agriculture to textiles to machine-making to watchmaking, and everything in-between, has largely been ceded to others. 

Countries that once looked to the UK for inspiration on how to innovate and grow, like France, Germany and the United States, now enjoy a comfortable lead in productivity – the living standards their populations on average enjoy for the work they do. They may not always be the first to produce certain inventions or scientific breakthroughs, but increasingly their populations have been faster to enjoy their benefits. The comparison with the United States is especially stark, with the average Brit having lower living standards than those of even Mississippi, the poorest US state. The general manager of a Buc-ee’s car wash in Texas earns a higher wage than the UK Prime Minister. The average starting salary for a newly-qualified nurse in the US is just over £42,000, compared to just £27,000 in most of England, and the discrepancy only widens after that. The range and quality of goods, services and housing that they can buy for that higher wage is also typically higher.

The consequences of the UK’s lacklustre growth are already severe, with low growth making it harder and more individually costly to support our various public services, especially those most affected by our ageing population, like healthcare, social care, and pensions. And this, in turn, puts pressure on the availability of other vital public services, from education to dealing with crime.

Next week, The Entrepreneurs Network will launch Operation Innovation – a series of short essays which seek to remedy this situation. We are delighted that CapX will be running a selection of them – and look forward to the responses readers may have. 

Each essay addresses a key way in which the UK can improve its growth prospects, and all of them focus on how to do this by supporting and harnessing innovation. Some discuss the barriers that prevent people from innovating in the UK, looking at housing, transport, and childcare costs, as well as immigration and taxation policy. Others examine the way we support and fund science and innovation, how we regulate them, how we build a culture that supports them, and how we integrate them into both private and public services. A few deep-dive into specific sectors, such as artificial intelligence, food production, and energy systems. But in all cases we asked authors to push the envelope and point readers towards important ideas that have been overlooked.

This collection is not intended as a final answer to the UK’s productivity woes. It is, instead, the beginning of a work in progress. It sketches out the policies and areas that desperately need further work – work that we at The Entrepreneurs Network will be undertaking in the months and years to come.

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