Economic and Taxation Policies: Jobs, Growth and Prosperity

Lord Leigh of Hurley Excerpts

Thursday 13th November 2025 Lords Chamber

[Lord Leigh of Hurley (Con)]

It is a pleasure to follow my noble friend Lord Bridges, and I congratulate the noble Lord, Lord Elliott, on securing this important debate. I would like to start with a discussion about measuring productivity, which is, at the end of the day, crucial to growth, and which, despite the rose-tinted view of the country’s growth held by the noble Baroness, Lady O’Grady, is at a desperate level, mainly because of government decisions which have turned a fictitious £22 billion black hole into a hard £40 billion black hole.

However, I am going to be as helpful as I possibly can to the Government, which may come as a surprise to the Minister—we will see. Specifically, I have great concerns about the measurement of productivity used by the ONS. The ONS measures labour productivity primarily as output per unit of labour, which is usually measured by gross value added per hour worked. In this country, certainly in the private sector, we have a long-hours culture, unlike, say, France, so our output per hour is bound to be lower. Unusually, in the UK, we include public sector productivity in our calculations. This is extremely difficult to measure, and of course it is extremely hard to detect any improvement. Heroic assumptions have to be made about the output, which are probably wrong. In the private sector, the gross value added is the key determinator, and that, believe it or not, is determined by monthly or even annual business surveys. So let us bear in mind that the UK economy is now 80% services, not trade, and a large proportion of that is in digital and intangible services, which are one of the fastest-growing parts of the UK private sector and are extremely difficult to measure. Surveys are very unreliable. Hard stats, such as the data on unemployment—which, as the noble Lord, Lord Harper, has reminded us, is rocketing under Labour—are much more reliable but harder to find.

I will not say much more on this issue other than to remind the Minister that I have long argued that I do not think our productivity measures are reliable—I have argued it under the previous Governments—and we may be more productive than the ONS figures indicate. I hope he will confirm that the Cabinet Office is working to improve them.

I also want to comment on the terrible damage to the economy being inflicted by the current Government in a particular area. I have many concerns—national insurance and so on—but particularly the dire effect of the Employment Rights Bill, which is going to hinder both productivity and growth. The suggestion that the Government make that, as a result of the ERB, we will have happier workers who will be more productive is frankly worthy of derision, and the refusal to exempt SMEs is going to do great damage.

The Minister will assume my remarks are politically driven, so for the benefit of him and the noble Baroness, Lady O’Grady, I shall quote from an unsolicited letter I received from a Mr Jerry Dunham. He says:

“We are a third-generation, family-run manufacturer based in Norfolk since 1968. Our factory in Neatishead employs many local people, most of whom live within our community. The Bill in its current form would impose unsustainable costs and compliance measures that SMEs cannot absorb. It would reduce flexibility, make day-to-day operations harder, and force us to reconsider employment numbers and future job creation. For businesses like ours, which operate in the education sector, which is of course very seasonal, these proposals will make it harder to manage staffing and maintain employment during quieter periods … These changes will discourage hiring, particularly for young people and those without prior experience”.


That is from the coalface. I attended a GREAT GB seminar organised by the Cabinet Office this morning about inward investment into the UK. People representing American investors came to me and said that American investors are very nervous about investing in the UK because of the potential effects of the ERB, so I urge the Minister to assure Mr Dunham and all SME owners that this Bill will be put on hold.