YEARS of weak public investment represent an “institutional failure of the British state” which has undermined economic growth and key services, a leading think tank said today.

The Resolution Foundation demanded a change in fiscal rules determining government spending and tax decisions and also suggested that the Treasury be stripped of its powers to decide on public investment. 

In its latest report, Cutting the Cuts, the foundation revealed that low levels of public investment have consistently placed Britain among the weakest third of the 38 so-called “advanced economies” in the Organisation for Economic Co-operation and Development (OECD).  

The situation, which suggests a nation “living off its past, not prioritising its future,” has “clear day-to-day consequences,” such as the country having fewer hospital beds per person than all but one of its wealthy competitors, the report said. 

If public investment in transport, housing, healthcare and local services had been in line with the OECD average over the past two decades, it would have delivered a “truly transformational” extra £500 billion based on 2022 prices, the research found.

The report condemned the political short-termism that leads ministers to abandon future projects rather than take “unpopular decisions” to increase taxes or cut funding for core public services.

“Cancelling a bridge tomorrow is far easier than firing a nurse today,” the study warned. 

For example, Tory plans to raise public investment following the 2019 general election have largely been abandoned since then prime minister Liz Truss’s disastrous mini-Budget last autumn, it said. 

“This repeated public investment failure is so great that it represents an institutional failure of the British state — our approach requires policy and institutional change,” the report’s authors added. 

A Treasury spokesperson said: “Despite the tough decisions we’ve taken to stabilise public finances, we are maintaining record levels of capital investment.”