Oral Answers to Questions

Debate between Lord Hammond of Runnymede and Lord Soames of Fletching

Tuesday 17th April 2018 Commons Chamber

[The Chancellor of the Exchequer (Mr Philip Hammond)]

Productivity, as I have already said, is at the very forefront of the Government’s agenda. That is why we established the national productivity investment fund, a £31 billion package of investment in infrastructure and research and development, and committed to introducing a national retraining scheme, which we are developing in partnership with the CBI and the TUC to ensure that British workers have the skills they need to benefit from technology change. The focus now has to be on moving forward with firm-level initiatives, such as Be the Business led by Charlie Mayfield and Made Smarter led by Juergen Maier, that start to look at the challenges we face at the level of the firm in this country to make sure that we are doing what we need to do not only in infrastructure and skills but in investment in management at the level of the firm.

[Sir Nicholas Soames]

May I congratulate my right hon. Friend on all the steps he is taking, with the Government, to improve productivity, which is very badly needed indeed in our economy? Does he agree that it is becoming increasingly difficult, with a very modern, interconnected, internet-driven economy, to successfully garner the information needed to truly assess how well we are doing on productivity and across the whole scale of Government statistics on the economy? Does he agree that this is first-order business and that we need to get this matter resolved so we may have a better picture overall?

[Mr Hammond]

My right hon. Friend is right that there is some evidence of a measurement challenge around the productivity figures. My right hon. Friend the Member for New Forest West (Sir Desmond Swayne) asked a few moments ago about the relationship between rising wage costs and continued economic and employment growth. The question is why the tightening labour market is not driving a higher productivity performance and whether an element of that is in fact a management challenge. A great deal of time and energy is being spent on this issue. Indeed, the figures on productivity for the last two quarters do, on the face of it, show some improvement. Now, one swallow does not make a spring and we should be very cautious about interpreting—even a summer, Mr Speaker. I am even less ambitious! We should be very cautious about interpreting those figures, but, as we see record high levels of employment in the economy, we should expect them to help to drive the UK economy’s productivity performance.