King’s Speech

Lord Londesborough Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I will focus on the economy, in light of the Prime Minister’s rather baffling introduction to the King's Speech where he states that “Our vibrant economy”, which has “turned the corner”, makes investors

“excited about what the UK has to offer”.

As an entrepreneur and investor in SMEs—I declare my interests as set out in the register—I must beg to differ. Our economy is flatlining. GDP is stuck at around £2.3 trillion and has barely moved in the last three years, whatever ONS revisions the Government cling to, and the outlook is for minimal growth.

Our GDP generates some £900 billion in tax receipts for the Government, which, for an ageing nation of 67 million people and a finite workforce, is simply not enough to run public services and invest in infrastructure—HS2 being a case in point—let alone meet the unknown costs of achieving net zero. Our tax burden is now at the highest level since the Second World War, but tax receipts remain arguably some £100 billion per annum short of the nation’s needs. There is no scope for increasing taxes, and the costs of servicing our national debt are spiralling.

The only way out of this is to generate real economic growth—to be specific, 2% to 3% annual GDP growth over a period of five years. Overall, that would add about £250 billion to economic output and, crucially, generate an additional £100 billion per annum in tax receipts. That is the big picture, so let us have an honest appraisal of our economy—or, as the noble Lord, Lord Bridges, put it, full disclosure—identify the opportunities, set out ambitious targets and be fully accountable for them; in other words, take an enterprising approach. That requires a laser-like focus on boosting labour productivity—output per hour—which is fundamental to achieving sustainable growth.

We keep referring to the productivity puzzle but do little to solve it. When the Prime Minister claims that our economy is recovering at a faster rate than France and Germany, he misses the point entirely. Our productivity lags significantly behind those two countries and has done so for decades. I suggest that we cut the hubris and perhaps learn from our neighbours—and learn also from leaders in the private sector who champion the productivity of their workforces. They talk a language we rarely hear in Parliament: that of performance culture. They focus on the critical areas that turn the productivity dial: recruitment, training, incentivisation on performance, management and leadership. We are deep in the fourth hour of this debate and I am the 37th to speak, but no one has mentioned even one of those items.

I have time to touch on only one of those areas: management. We have 8 million managers in the UK workforce, yet 70% of them are deemed accidental managers, having received no proper training to develop the skills required to lead their teams effectively and productively. That begs the uncomfortable question: are we a nation of poor managers?

Take football’s Premier League, which has become very big business. How many of the clubs finishing in the top three places over each of the last 20 years have been led by an English manager? The answer is zero—not one. In the other major leagues of France, Italy, Germany and Spain, those nations’ managers have accounted for more than 30 of the top three places over those 20 years. In that time, not a single British manager has led a top-three club in any one of those countries. Is that a trivial, anecdotal example? No, it is symptomatic of a country that invests too little in its human capital—in education, training, skills and management in both public and private sectors. This is hugely important for productivity but gets far too little attention. Can the Minister say what plans the Government have to develop a coherent plan and strategy for workforce productivity, and when will we see it?