Economy: Productivity

Lord Bilimoria Excerpts

Wednesday 8th February 2017 Lords Chamber

[Lord Prior of Brampton]

The noble Lord raises an interesting point. Since, I think, 2010, our economy has grown by 12%, which is the highest in the G7, yet our productivity growth over that period has been low, as the noble Lord said. The reasons for that are broad and manifold, but he puts his finger on it when he says that, in part, it is to do with a lack of investment in key infrastructure and technical skills. Both those things are absolutely centre stage in our new industrial strategy.

[Lord Bilimoria (CB)]

My Lords, will the Minister acknowledge that one of the best ways of increasing productivity is to invest in higher education and research and development innovation? Would he also agree that we underinvest as a percentage of GDP in our higher education, compared with the OECD EU average, and way under America, and yet have the best universities in the world? When it comes to R&D innovation, we invest 1.7% of GDP compared with 2.8% in the United States and Germany. We would have to invest an extra £20 billion a year just to catch up with them.

[Lord Prior of Brampton]

The noble Lord makes a good point. The fact is that the productivity of our investment in research in British universities is incredibly high and the output of our top universities is fantastically high by any world standards. He will know as well as I do that we are now committed to raising an extra £2 billion a year in research by 2021, which is a very significant increase. He is also right that even after that increase we are still not investing as much on a per capita basis or on a percentage of GDP basis as some of our biggest competitors—Germany and the US, for example. So we are making good progress but the job is not yet done.