Director Weekly Holding government to account

Running a major economy is a complex business. How does one measure success?

This week, we’ve launched the new IoD Balanced Scorecard for Government to help do just that. We’ve identified 10 key performance indicators (KPIs) spanning the policy areas that matter most to UK business growth.

They include metrics such as the cost of business regulation, as measured by the government; electricity prices; investment levels, including both public and private investment; the UK’s tax competitiveness; its appeal as a destination for inward investment, as assessed by EY’s attractiveness survey; the extent of skills and labour shortages, as measured by our own surveys; and our measure of business sentiment, the IoD Directors’ Economic Confidence Index.

We’ve applied a traffic light system for each metric and taken data from last year as our baseline, aligned – as closely as possible – to the election of Keir Starmer’s government in July 2024.

Critically, we’re basing our assessment on measurable outcomes, rather than on a subjective assessment of policy decisions. And almost a year into the government’s tenure, a quick glance at our Scorecard shows a wash of red.

On the price of electricity, for example, UK businesses were paying 235% of the G7 average in 2023. We’ve set a target of reaching the G7 average – and while it’s good to see the Modern Industrial Strategy now focusing on this problem, the bottom line is that for now, the prices paid by business remain sky high. On the regulatory burden, we’re using the government’s target of cutting business’s administrative costs by 25% – but we’re yet to see any progress.

For many of our KPIs, updated data is not yet available. We’ll adjust the Scorecard as the data is refreshed by the relevant agencies – yet the reality is that many measures will remain red for years to come, because the KPIs on our dashboard generally reflect long-term, complex issues.

We recognise that solutions will take time – and it’s vital that policy is shaped by long-term thinking. We won’t be updating the Balanced Scorecard on a monthly basis: that would only reinforce the behaviours we want to push against, encouraging government to chase marginal short-term wins at the expense of the policies needed to deliver better outcomes in the long run.

After all, a government could opt to boost economic growth by simply turning on the spending taps. But if that meant a bigger deficit, higher borrowing costs and growing national debt, it would ultimately undermine growth. The long-term hangover of a spending spree would far outweigh any short-term boost.

The recently published 10 Year Infrastructure Strategy a case in point. Clearly, national infrastructure projects cannot be delivered in a matter of months: the Chancellor has made much of her plans to drive infrastructure investment, but our investment metric will not be turning green any time soon.

Yet taking a genuine long-term view is the only sensible approach. The government’s ambition to “do things differently and fix the failures of the past” – such as those around HS2 – is to be applauded. Private sector investment has a huge role to play in delivering on the government’s ambitions, so clarity and stability in the policy environment will be key for giving businesses the confidence to invest.

Ultimately, our interest is in improving the quality of the UK economy, with higher levels of investment, a better tax and regulatory framework, and sustained higher growth levels. The KPIs on the IoD Balanced Scorecard for Government reflect the elements of policy needed to shape such an economy – and we will hold the government to account on the progress achieved over the years ahead.