Economy: Productivity

Debate between Lord Davies of Oldham and Lord O'Neill of Gatley

Monday 5th September 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, most of the independent measures of competitiveness would actually rank the UK among the highest in the world. On the first part of the noble Lord’s question, there has not been any official devaluation of our currency. It was a consequence of what happened, and in the context of what I said earlier, it is interesting to note that in recent days the pound has recovered somewhat.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister is an honest man and he will recognise that we have had a chronic position with regards to balance of payments throughout the whole time that we have had a Conservative-led Government since 2010. He will also know that in this country the average Briton still takes five days to produce what the average Frenchman can produce in four days. In a period of increasing competition—as we are bound to find as we leave the European Community—how can we possibly make progress or expect to meet this competition with such appallingly low levels of productivity?

[Lord O'Neill of Gatley]

My Lords, I think I heard two questions from the noble Lord. I cannot resist saying that I seem to remember that the era of chronic balance of payments problems as described goes back to the 1960s, which precedes not only Conservative Governments; those of different colours were in town over that time. On the latter question, an important part of understanding the productivity issue in greater detail is that there is some evidence, which I have mentioned in the House before, that you have to be careful about bemoaning everything about our apparently low productivity performance because some of it is almost definitely the flip side of a very strong rate of employment. That is particularly the case in the context of making direct comparisons with France. It is an important point.

Wales: Economic Investment Projects

Debate between Lord Davies of Oldham and Lord O'Neill of Gatley

Tuesday 12th July 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, I thank the noble Lord for pointing out the specific legal status of the EIB for those unfamiliar with it. It is the case that any change to the EIB’s shareholder structure or lending activity is a decision for member states. It is important that we pursue discussions because, as I am sure the noble Lord is aware, lending in the UK right now is at record levels, covering more than 30 different projects.

[Lord Davies of Oldham (Lab)]

My Lords, leading Brexiteers such as Michael Gove and Chris Grayling made it quite clear that Wales, as others, would benefit from the decision to leave the European Community. Can the Minister assure us that, given that Wales benefited from a surplus of £245 million a year from Europe, the Welsh will not be sold short by future decisions of the Government?

[Lord O'Neill of Gatley]

My Lords, the third repetition of the day. That specific issue will be a choice for the new Prime Minister. Many other parts of the United Kingdom are facing a similar challenge.

Economy: Overseas Trade Deficit

Debate between Lord Davies of Oldham and Lord O'Neill of Gatley

Wednesday 25th May 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, the numbers that the noble Lord referred to in the Pink Book are broadly accurate but I do not share his interpretation of them. As shown in the timely piece from EY yesterday, the number of jobs being created by foreign direct investment in the UK is substantial.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister is extraordinarily complacent. Does he not recognise that the deficit on goods and services is the largest since the post-war recession of 2008, which affected the country so adversely? He is indicating that the Government have got matters in hand, but in fact we are approaching catastrophe as far as these figures are concerned.

[Lord O'Neill of Gatley]

My Lords, I hate to be a statistical nerd about these things, but I am staring at the data. Last year, our overall trade balance as a share of GDP was minus 0.20%. In 2010, it was minus 2.8%. As I said a few minutes ago, the trade deficit today is smaller than it has been for 10 years.

Economy: Productivity

Debate between Lord Davies of Oldham and Lord O'Neill of Gatley

Wednesday 16th March 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, as a novice and relative newcomer, I sometimes quite like long questions as it gives me less time to answer them. However, as a general intention, it would be welcomed.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister is a specialist on productivity and therefore obviously agrees with the American economist who said that productivity, in the long run, is the only thing that matters. Of course, it certainly was the basis of the success of the British economy during the Industrial Revolution. How is it, therefore, that the UK is still sixth out of the G7 countries and this Government are making no progress, apart from vague announcements about infrastructure which rarely come to fruition? We are making no progress on improvements in productivity per worker at all. Until we do so, we will not be able to clear our debts and have a position in the world that others respect.

[Lord O'Neill of Gatley]

My Lords, there are many complex aspects to the ongoing productivity puzzle around the world, and I do not have time to speak to many of the issues that the noble Lord implied in his question. I remind the House that next week we will have a debate on the Budget, when I will have the chance to go into some of the issues in more detail. However, in a recent discussion with independent directors at the Treasury, I was particularly pleased to hear them commend the Government’s efforts to boost productivity through their policies and to address some of the long-term, powerful weaknesses of the UK.

Income Inequality

Debate between Lord Davies of Oldham and Lord O'Neill of Gatley

Thursday 21st January 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, the Government are focused primarily on pursuing the appropriate economic policies to promote sustained economic expansion and higher productivity, including better opportunities for those who have been most disadvantaged, whether it be commitment to the northern powerhouse or the Midlands engine, and the devolution of policies that go with that, particularly skills and education. Those are the policies that are attracting more and more of our policy attention.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister says he has data that show inequality reducing. I would very much welcome any submission he intends to make. I can only assume that he is measuring the past few months and that some of the inequality that has been reduced is because assets have dropped in value for the very rich because of the collapse of prices on the FTSE. Let us be absolutely clear: from 2010 onwards, wages were effectively frozen in this country as there were no pay rises at all for workers. I cannot understand how the Minister can suggest that the Government have been pursuing policies of reducing inequality.

[Lord O'Neill of Gatley]

My Lords, it is very dangerous to goad someone with my background about data, but there are considerable and widespread data on these matters published completely independently of the Government. In fact, the data show that the so-called Gini coefficient, which is one of the widely accepted global measures of inequality, has been showing a slow decline in British inequality since the mid-1980s, as I said earlier, both at the disposable income level and before disposable income.

Economy: Balance of Payments and Industrial Productivity

Debate between Lord Davies of Oldham and Lord O'Neill of Gatley

Thursday 10th December 2015 Lords Chamber

[Lord O’Neill of Gatley]

My Lords, there were at least three questions there but I shall try to be brief. I speak frequently to the EEF and its survey unfortunately reflects similar and growing evidence from surveys all over the world of weakness in manufacturing. The UK’s most regular monthly survey of the degree of optimism, or otherwise, in business shows that it remains one of the strongest in the G7 countries.

[Lord Davies of Oldham (Lab)]

My Lords, as the Minister has indicated that he is prepared to comment on statistics, I shall ask two straightforward questions. Is it the case that manufacturing output is now down the levels of 2009—just after the financial crash? The march of the makers is therefore becoming the slow movement of the disappointed. Is it not also the case that, with productivity set to fall over the next two years, the gap between the UK and the G7 countries is now down to 1991 levels? If these figures are correct, what on earth have been the so-called successes of the long-term economic plan?

[Lord O’Neill of Gatley]

My Lords, again there are many questions about the arcane world of economic statistics with which I am very familiar. I suggest that there is no clear correlation between the level of manufacturing and the overall level of productivity. I spent considerable time yesterday discussing this with my many friends in the north of England.

Income Per Capita

Debate between Lord Davies of Oldham and Lord O'Neill of Gatley

Tuesday 14th July 2015 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, I take it that the Minister accepted the post because he intends to do good rather than harm to our productivity figures, in which we compare so badly to our leading competitors. However, how are the Government doing good when they dither over airport expansion, postpone rail electrification, have slippage on road programmes and generally fail to give the necessary government investment that would help on productivity? Even the construction industry is anticipating a drop in productivity this coming quarter. How on earth are we going to solve our chronic balance of payments problem while our productivity levels remain so low?

[Lord O'Neill of Gatley]

My Lords, I am still learning the practices here, and I am extremely tempted to give a very long answer to that very detailed question. I shall find the appropriate moment do so. Suffice it to say, at the risk of repeating myself, that I think I am right in saying that the very specific attention this document gives to all the factors that are important for productivity has never before been given, including virtually every single topic that the noble Lord mentioned.