A new proposal by former Bank of England Chief Economist Andy Haldane and David Bharier of the British Chambers of Commerce could revolutionise the way UK Budget policies are crafted. The 'Growth Delivery Test' (GDT), a rigorous seven-point framework, aims to ensure that government initiatives genuinely drive business growth rather than merely announcing ambitious plans.
The GDT asks ministers to provide concrete answers to critical questions about their policies: Which specific business behaviour will be altered? What types of firms are targeted? How will businesses learn about and utilise the policy? Does it reduce or increase complexity, cost, or uncertainty for firms? Is it fiscally realistic? What evidence supports its potential for growth? And finally, how will its impact on firm behaviour be measured?
The report, 'Delivering Growth: From Ambition to Action', recommends that a policy must pass all seven parts of the test before implementation. Failure to do so could necessitate redesign, while failing two or more would indicate a low likelihood of positive influence on business behaviour.
Applying the GDT retrospectively, the authors analyse the employer National Insurance (NICs) rise introduced in October 2024. While intended as a revenue-raising measure, this policy reportedly led to a significant drop in business confidence, with taxation concern jumping from 48 per cent to 63 per cent in just one quarter by early 2025, according to the BCC's Quarterly Economic Survey. Investment intentions also weakened, with only 17 per cent of firms planning to increase investment – its lowest level since the pandemic.
Conversely, the 'full expensing' tax relief, made permanent in 2023, is seen as a policy that aligns well with the GDT principles. By allowing firms to deduct the entire cost of new plant and machinery from their corporation tax bill, this measure targeted increased capital investment directly. Its impact could be tracked through business investment data, with 18 per cent of all firms and 24 per cent of manufacturers planning to increase investment due to this allowance, according to a 2024 BCC survey.
The introduction of the GDT is expected to shift policy discussions from political ambitions towards tangible economic outcomes. By ensuring that growth-affecting measures meet rigorous criteria, policymakers can create an environment conducive to business expansion and job creation.