Labour has promised to revive the UK’s stagnant economy and knows it must solve the productivity puzzle that has eluded its predecessors. These entrenched challenges won’t be solved overnight; it took decades for the UK to create its current problems, and it will take time to solve them. But tight budgets and voter impatience means Labour will need to also focus on initiatives that can show results sooner rather than later. One area where Labour can make a more timely impact is by ensuring innovation spreads and takes root across all sectors—filling the gaps left by the piecemeal efforts of previous governments.
There are at least three challenges to UK productivity: chronic underinvestment, institutional fragmentation, and poor diffusion of productivity-enhancing technologies. While entrenched underinvestment and fragmented governance will take time to address, Labour can deliver faster, more visible results by concentrating on the third challenge: accelerating the spread of innovation. This approach builds on the Conservatives’ groundwork and offers the promise of quicker gains.
The previous government understood that low productivity in certain regions isn’t just a local issue; it’s a national vulnerability. When parts of the country lag, the entire economy suffers, leaving it more vulnerable to shocks. But their response was incomplete, focusing on seeding R&D hubs in lagging regions with less focus on ensuring these areas could effectively utilize new technologies. For cities like Glasgow, Manchester, and the West Midlands—regions facing some of the widest productivity gaps—developing new technologies alone won’t be enough. They need to absorb and implement them.
Take the Health Innovation Accelerator in Manchester, born of the previous government’s Levelling Up agenda, which aims to improve disease diagnosis and treatment. With Manchester’s NHS Trust being the largest in the UK, tackling inefficiencies and cutting costs is vital. But the initiative’s potential to increase productivity in Manchester’s hospitals is hamstrung by obstacles familiar to all NHS Trusts: tangled procurement processes, inadequate funding, and a lack of clear accountability. Stakeholders in the UK’s HealthTech sector argue that the central government should do more than just spark innovation—it should empower regions to adopt and implement it, while holding them accountable to a national strategy. For Labour, the task is clear: streamline bureaucracy, secure sufficient funding and tie it to results, and ensure regions are accountable for driving these innovations forward, paving the way for a more balanced and resilient national economy.
Granted, tackling the NHS’s high-tech diffusion might not seem like an obvious quick win for boosting productivity—these innovations require substantial investment, careful integration, and time to show their full impact. But Labour shouldn’t be too quick to discard what the previous government set in motion. Across Glasgow, Manchester, and the West Midlands, numerous promising projects are already underway, from advancing clean energy technologies and digital innovation to pioneering breakthroughs in health and manufacturing. Labour has the opportunity to do what its predecessors couldn’t: ensure these initiatives deliver tangible benefits. By fully implementing these innovations and expanding their impact, Labour can demonstrate its ability to turn potential into progress, showing that they can succeed where others fell short.
However, high-tech isn’t the only area where Labour can make a difference. Much of the UK’s economy lies in lower-tech sectors—restaurants, retail, non-tradeable services—where R&D isn’t the main driver of innovation. These sectors don’t need cutting-edge research; they need stronger adoption of existing technologies and practices, including new business models that can transform industries. Simple improvements like more efficient booking systems or smarter management practices can drive significant productivity gains. Meanwhile, new business models, such as AI-enabled legal services, offer the potential for even greater boosts in efficiency—though they may ruffle feathers in the legal profession. For Labour, boosting these low-tech sectors could be the key to achieving meaningful, widespread growth—proving that innovation isn’t just about creating the next big thing, but about making sure everyone benefits from the best ideas already out there.
Labour’s path to reviving the UK’s economy lies not in grand gestures, but in the practical work of providing incentives and cutting unnecessary red tape to enable innovation to spread where it’s needed most. By turning potential into progress—whether in high-tech hubs or everyday businesses—Labour has the chance to bridge the gap between promise and delivery, ensuring that innovation isn’t just an abstract goal, but a tangible force that drives growth across the entire country. In doing so, Labour can better fulfil its promise to revive the UK’s economy.
* Ayesha Bhatti is a policy analyst at the Center for Data Innovation. Prior to joining, she worked as a data scientist at a technology consulting firm in London. She has an LLB from the University of Nottingham, and an MSc in Computer Science from Birkbeck, University of London. She is also a licensed attorney in the state of New York.
* Hodan Omaar is a senior policy manager at the Center for Data Innovation focusing on AI policy. Previously, she worked as a senior consultant on technology and risk management in London and as a crypto-economist in Berlin. She has an MA in Economics and Mathematics from the University of Edinburgh.
Source: Center for Data Innovation
