Autumn Statement: Economy

Baroness Vere of Norbiton Excerpts

Tuesday 29th November 2016 Lords Chamber

[Baroness Vere of Norbiton (Con)]

My Lords, last week I ventured to the other place, which I found to be a somewhat noisy experience, to watch the Chancellor of the Exchequer give his Autumn Statement. He gave a measured and, I thought, very sobering account of the economic state of the nation, and without wishing to fall into the trap of “talking our country down”, I am sure that very few of us would conclude that we are in the strongest of places. I am now going to mention Brexit, and I fear I am going to be a bit political.

I am disappointed by the comments of noble Lords on the Labour Benches that suggest that Brexit was somehow nothing to do with them. I remind your Lordships’ House that the majority of Conservative MPs actually supported remain. The majority of Conservative Peers actually supported remain. I know this. I compiled the list and I published it in the Daily Telegraph. I worked at the heart of the campaign and I am afraid that my report card for Labour during the campaign would have been, “Should have tried harder—much harder”.

However, we are where we are. Even without the uncertainty and the forecast cost of Brexit, our deficit remains significant and our debt, to coin a phrase, is eye-watering. Progress has been made over the past six years, I think we can all agree. The deficit is down, there are more people in work than ever before, the lowest paid have been taken out of income tax and 3 million people are in apprenticeships. There is more to be done. We must redouble our efforts now to build a strong foundation for the future. By “we”, I mean all of us— in the private sector, the public sector and charities—supported and encouraged by government. We must adjust the course of our great nation along a different and more prosperous trajectory to yield greater economic benefits for all over the decades to come, but we have to start this today.

I am not going to reiterate grim forecasts from the Autumn Statement or go into great detail about it, but there is one area that I believe offers great benefit—I am a very positive person so I like to look for opportunities —and that has to be the opportunity to improve our nation’s less than stellar productivity, particularly of the labour market. We know that we lag behind many countries: France, the United States and Germany. That has been said many times in today’s debate. If we want to improve our living standards and achieve real wages growth, we have to be more productive. As the economist Paul Krugman said:

“Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker”.

We should and we must catch up.

The Government can go ahead and pull all the levers they have—they can spend the money, as they do, in research, which is a wonderful thing, given that we have the Higher Education and Research Bill coming up—but it is not enough. The private sector, the public sector and charities must also step up. There are changes that we can make—to the ways that we do things and the way that we think. In essence, we need a change in culture.

Three factors affect the productivity of labour: time, effort and skill. It is very simple. Looking first at time, we know that British workers work far longer than their counterparts in other nations and yet we are less productive. Is it always the case that when someone is at work, they are actually always working? There is an argument that, for some, a kind of presenteeism, of being at work but not always working, has set in. In some cases, I am sure that employees do not even realise that they are doing it. It is a cultural thing. It must be up to the leaders of all organisations to understand the culture in their workplace. Individuals must never be incentivised to eke out the work they have to do across the hours in which they have to do it. Change will require a fundamental shift in attitudes and must be supported by employers. They must look for incentives to encourage change; for example, they might offer “quick finish” bonuses—paid time off when a job has been done well in less time. We also need to build a more robust culture of team working. When workers have finished their work, they should look around to help others, to share the burden, recognising that if one person does well, everybody does well. Organisations must support this and change their reward structures.

Somewhat linked to time is the second factor: effort. All of us in your Lordships’ House will, I am sure, have had good days and bad days. The bad days are when you know that you could have done a little bit more and a slightly better job, but it did not get done. I think we can change the culture a little bit to make a marginal but significant difference. If all organisations recognise and reward the effort—as distinct from time at work—of those who go above and beyond, it would yield results. It is worth noting, and I think this is quite important, that our predilection for crafting ever more tightly drafted and overly bureaucratic job descriptions is probably hindering, not helping, in this regard.

The third factor is skills. Of course, the Government can make great changes to the skills of our nation but our organisations also need to take part. There has to be a greater focus on formal and on-the-job training, more time spent on ensuring that people’s skills match the role that they have, and more opportunities for people to progress in a more flexible labour market. This means regular and formal appraisal structures—activities which are sometimes deemed less than important and, indeed, sometimes overlooked completely, yet which provide a vital forum for both the employer and the employee. Some people are overskilled; that is, underutilised. It may not be possible to progress because it is a small organisation; there is no space. So what should we do? Is it really beyond the pale for organisations to help people find more suitable roles in other organisations, to be at the heart of an orderly, sensible and positive transition, not because they are not good at the job that they are doing but because there is no room for them to progress? It is far better for the individual and, often, the organisation that they are given leave to fly.

The Autumn Statement gave a very clear signal that productivity is top of mind. It must be up to all employers—private, public and charitable—to step up, to create a culture where employees feel that their employers care about them and motivate them to be the very best they can. All government can do is not stand in the way. All the things I have outlined are not new. They are absolutely standard fare for any management training course. But sometimes, in tough times or in busy times, employers can forget what it means to be a responsible employer, to be a good or outstanding people manager. The right reverend Prelate the Bishop of Portsmouth, who is not in his place, calls it just treatment. It is time to remember what we already know and put it into practice.

The political class—the establishment, the elite—has been shaken by recent events in politics at home and abroad. Employers should not regard themselves as being immune to the mood of the country and these shifts in public opinion. Indeed, they might learn some important lessons from the political sphere and proactively improve relationships by fostering positive and frequent engagement with those in their fold. If not, we may find that the chill winds of change course through workplaces, too, and have a very cooling effect on our productivity and our economy.