“This country doesn’t invest in its own future”: Torsten Bell on why the UK is being hit hardest

The Resolution Foundation head explains why the average British household is forecast to be worse off than its Slovenian counterpart by 2024.

By George Eaton

In 2023 living standards in the UK are forecast to fall by the largest amount since records began in 1956-57. A baleful combination of higher inflation, tax rises and interest rate rises threatens a second lost decade.

There are few who have analysed Britain’s plight in greater detail than Torsten Bell, the chief executive of the Resolution Foundation, a think tank devoted to “improving living standards for those on low-to-middle incomes”. The former Treasury aide and Labour Party policy director (under the leadership of Ed Miliband) has become a ubiquitous media presence. For government ministers, the Resolution Foundation’s grim but impeccably researched publications are a regular source of woe.

“Everywhere in Europe is having a tough time but it is particularly bad in Britain,” Bell, a youthful 40, said when we met in the foundation’s Westminster office (which faces the Two Chairmen, the pub where Kwasi Kwarteng toasted his mini-Budget). “Britain has entered this crisis with a toxic combination of the high inequality of the 1980s, which has basically never come down, and the low growth of the last 15 years. The two together are disastrous for low- and middle-income earners. It means that poorer households in Britain are far poorer than poor households in northern Europe, and middle-income households are also far poorer than their equivalents in France, Germany, Canada and Australia. That’s why the crisis is so painful, because the energy prices we’re paying are globally set but we’re paying for them out of lower UK incomes.”

Indeed, if current trends continue, the average Slovenian household will be better off than its British counterpart by 2024. To reduce inequality, the Resolution Foundation advocates a more generous welfare state and higher wealth taxes. But Bell, who became chief executive in 2015, is as preoccupied with raising economic growth (Russia is the only G20 economy forecast by the OECD to perform worse than the UK in 2023).

“Britain doesn’t invest in its own future,” he told me. “That’s true in the public sector, though less true than it used to be, and it’s even more true in the business sector. We’ve seen no business investment growth since Brexit. Firms always say to me, ‘We can’t get the skills we need,’ and I always reply, ‘Have you looked at your investment in staff training?’ Over the last 20 years, British business has been year-on-year reducing the amount it spends on training.”

Another example is the UK’s paltry investment in automation: it has just 101 installed robots per 10,000 employees, putting it behind countries including the Czech Republic and Slovenia.

“If I go back to all the time that was wasted in public policy circles discussing how dangerous it was that robots were taking all our jobs, people could have spent a lot more time focusing on why there was no investment in any robots, why British productivity was disastrous,” he said. Productivity grew by just 0.4 per cent from 2008 to 2020, less than half the rate of the richest 25 OECD countries.

The UK’s political instability and economic sclerosis has also prompted comparisons with Italy, a case study that Bell regards as illuminating.

“Italy is worth focusing on: if you go back to the 1980s there were lots of articles in the American academic and popular press panicking that the new Italian form of capitalism was going to overtake the US because they had these small, nimble family firms rather than big American juggernauts. And now Italy has barely grown for the last 25 years.

“The lessons are that there’s nothing automatic about escaping a period of relative decline, and that you can suffer a toxic feedback loop between bad economic outcomes and bad political outcomes.”

Torsten Bell was born in Greenwich, south-east London, and hails from a civic-minded family. His Swedish mother, Clem Henricson, is an author and policy analyst who specialises in family policy, while his British father, Bill, is head of child protection at Save the Children. Bell’s identical twin, Olaf, is EU director at the Foreign Office having worked in the civil service since 2008, most notably as press secretary to the chancellor from 2019-21. No pair of brothers enjoys greater influence in Whitehall.

The former Conservative Europe minister David Lidington, whom Olaf served as private secretary from 2012-14, recalled: “I once joked with Ed Miliband about if [Torsten and Olaf] swapped jobs for the day how long it would take us to notice. We both thought it would take quite a bit of time.”

“Having an identical twin brother is a defining feature of life,” Torsten Bell said, when asked about the experience. “Apart from one brief overlapping phase [when Olaf worked in the Treasury], we work on very different things. My brother is a diplomat and I’m definitely not – in any sense of the word. My wife is also a civil servant, so having Chinese walls within families is perfectly normal, we just do that.”

After graduating from Oxford University and entering the Treasury, Bell went on to become a special adviser to chancellor Alistair Darling during the financial crisis. He was still in his mid-twenties.

“And that is luck,” Bell reflected. “That’s a good lesson about careers, I’ve had lots of really interesting jobs, all of which have been challenging in different ways, and luck is a large part of how I’ve got them. I think people who have been successful should be honest about how things could have gone differently.”

As Labour’s director of policy during the Miliband era, Bell was admired for his intellect while also earning a reputation as a tough taskmaster (and being blamed by colleagues for the disastrous “EdStone” gimmick, an 8ft 6in limestone tablet on which Labour’s pledges were engraved). Does Bell see continuity between Miliband’s programme and that of Keir Starmer?

“That’s a good question, one thing that is common across European and Anglosphere democracies right now is that social democrats are increasingly green social democrats… If you look at where Labour has moved since 2015, green investment is doing a lot of work, it’s not just driving the save-the-planet agenda, it’s also driving the bulk of the economic agenda, probably more weight than it can bear for a governing agenda. But you see this happening in Germany, and in the US: Joe Biden’s growth strategy, his anti-inflation strategy and his climate strategy are all wrapped together in a nexus of green investment and green jobs.”

Asked if he has any advice for Starmer, Bell returned to his theme. “My overall judgement would be, for anybody running for election, is that we’ve got to get growth up and we’ve got to get inequality down. And we need to do both; there is not some trade-off between them as people on the left and the right occasionally say. To do that is going to require rebooting the UK’s economic strategy because we do not have one and countries without economic strategies are unlikely to succeed.”

Since Bell’s time at the Treasury, there have been rumours that he is interested in becoming an MP. As Labour draws closer to power, has his ambition grown?

“I am not running for a seat, I suspect you would be the first people who would know if I was! Who knows what the future holds,” he replied in a carefully caveated answer. “But I said to myself ten years ago that I would never work at a think tank and having now spent seven years at one, I was wrong. The thing you underestimate in day-to-day politics is the lack of time to think and rethink where you were wrong about something or to understand how the world has changed… Thinking is underrated, so I intend to keep doing it.”