Posted by

Susan Acland-Hood

16 Dec 2015

As Paul Krugman said, ‘Productivity isn’t everything – but in the long run, it is almost everything.’ Economies can grow for a while just by increasing capital investment, or jobs – but ultimately unless productivity improves there’ll be a limit to growth – and without productivity, growth doesn’t translate into higher wages and living standards. So this Government has focused its attention on doing all it can to raise productivity (having presided over very strongly rising employment in the last Parliament). We set out some of the steps we will take in our Productivity Plan, Fixing the Foundations, in July. The Plan was always meant to be a beginning – not an end – and so we continue to seek ways to improve UK productivity. A big part of this is working with, and listening to, businesses from across the country.

In September, I spoke about the Productivity Plan to a breakfast meeting of the East Lancashire Chamber of Commerce’s International Trade Club. I learnt a lot about the support the BCC, with UKTI, were giving to local businesses to start exporting, or to scale up their export ambitions; including a particularly interesting discussion about breaking into the US market, with its hugely variable rules and processes state-by-state, which led to a good conversation with UKTI back in London about how they could reflect this better. Later in the month, I had the opportunity to visit Dorset, taking in the Sunseeker production line (I suspect, on a civil service salary, my only chance to lounge on a Sunseeker), lunch with BCC members and a visit to Bournemouth University, where we talked a lot about University-business collaboration, and I hugely enjoyed the products of the University’s excellent animation work. Question and answer sessions at both events allowed me to gather many views from businesses and covered a wide range of topics including skills, innovation, management practices and devolution.

As well as spending time talking to businesses and others about productivity, we’re making sure we put our money where our mouth is. The Spending Review has focussed on investing in the drivers of growth and productivity – infrastructure, science, innovation and skills investment, and support for a more dynamic economy. I would particularly note: the protection of the £4.7 billion science resource funding in real terms for the rest of this parliament; over £120 billion of infrastructure spending, including £61 billion on transport; and our tackling of the UK’s long running skills gap that holds back our productive potential so much. Both our investment in schools, and more directly in Higher Education, Further Education and Apprenticeships will benefit businesses by helping them to get the highly trained staff they need to compete.

You probably think there’s more we could be doing - and Treasury is always interested in hearing views on what else should be done to drive economic growth. You can have your say by making a Budget representation – find all the details here.

Finally, I’d like to thank everyone involved with the visits I made. I found them very useful and hope to be on the road again in 2016.

All views expressed in guest blogs are that of the authors, and not of the British Chambers of Commerce