We learnt of three priorities for government spending recently: roads, railways and flood defences.
As an economist, I take a slightly different view of what’s needed to drive the UK economy at this pivotal time. To quote a former politician, my three priorities for public infrastructure in today’s Autumn Statement would be “education, education, education.”
In early July, just before David Davis was appointed Brexit minister, he called upon the UK to develop into an export economy focusing on high value-added manufacturing goods.
Many British entrepreneurs have lamented the fact that this is not possible in the UK because of a skills gap – the domestic workforce is inadequately trained while immigration restrictions hamper overseas recruitment for the same personnel. With the latter unlikely to ease in the near future due to the post-Brexit political climate, the burden of adjustment will have to fall upon the former if Davis’s vision for post-Brexit UK is to be realised. This would require aggressive investment into education.
We can look across the Atlantic to see how such investment can have long-term benefits to a country’s global economic standing. The National Defense Education Act (NDEA) was signed into law by President Eisenhower in 1958 in response to a growing sense that the US had fallen behind the Soviets in technological advancements. Over the subsequent four years, $1bn was directed into improving science curricula at all levels of US educational institutions.
The outputs of NDEA were significant. The budget of NASA stood at 0.1 per cent of GDP in 1958, and by 1966 it had risen to an astonishing 4.4 per cent. But this massive fiscal stimulus was more about intellectual exploration than space exploration. Only half a million students attended US colleges in 1940; by 1970, this had risen to 7.5m.
As a result, NDEA not only put a man on the moon; it allowed the US to drive and dominate the digital revolution with profound economic implications over the decades to come.
One of the children of NDEA was a man called Bill Gates. Born in 1955, Gates’s formative years coincided with considerable improvements in science, computing and mathematics curricula. While it is true that Gates attended a private school, NDEA provided aid to such schools under certain provisos and elevated standards across the board. Colleges participating in NDEA included Harvard, where Gates studied computer science shortly before founding Microsoft.
In seeking to manage down its deficit, the UK’s record on education spending has sadly fallen far short of NDEA in recent times. Last year, public spending on education in England rose from £75.2bn to £75.8bn, the third lowest annualised increase in the EU after Austria and Slovenia and a reduction in real terms.
Of course, spending alone is not enough to drive standards and create the conditions for innovation. It is just as important to ensure that capital is deployed effectively, like recruiting and retaining talented teachers and making sure they teach the right things. This is where the educationist’s role begins and the economist’s ends.
But if NDEA teaches us anything, it is that a keen focus on improving curricula ought to be accompanied by substantial investment. This is the most challenging of infrastructure spending decisions as the effects will take decades to be fully felt. It is, however, a proven way of addressing the “skills challenge” that Philip Hammond has emphasised and it has the potential to drive the UK to the forefront of the world economy for years to come.