King’s Speech (4th Day)

Lord Londesborough Excerpts

Monday 22nd July 2024 Lords Chamber

[Lord Londesborough (CB)]

My Lords, this may be my last opportunity to speak in a debate on the King’s Speech, given one Bill coming our way on which I will refrain from comment tonight. I will focus on Labour’s key mission of generating the highest sustained economic growth in the G7, with

“productivity growth in every part of the country”.

I am eagerly awaiting a strategy for productivity that matches that ambitious statement. If you try googling the term “UK productivity”, the next suggested word that pops up is “problem”, followed by “puzzle”. That sums it up rather well. Put bluntly, we have developed some bad habits. We produce too little, consume too much and borrow heavily to finance our deficits, with our national debt fast approaching £3 trillion. That is very bad news for an ageing population with a shrinking workforce. The critical measure, GDP per capita, has barely moved since the financial crisis, while our labour productivity, as we have heard, remains below that of the US, France and Germany and, importantly, has been so for decades.

Stagnant productivity does not just take growth; it blunts our competitive edge overseas—witness the last five years of declining exports. In business, it generally leads to zombie companies, distress takeovers or, worse, bankruptcy. My own experience of productivity stems from 30 years as an entrepreneur in the information space and 10 years advising and investing in start-ups and scale-ups. Indeed, my livelihood depended on the productivity of my staff, both here in the UK and overseas. Over those years I discovered that productivity is not just structural; it is cultural. It is crucial that in the UK we create a performance culture that runs across both public and private sector workforces. This requires leadership, smart management, astute recruitment, and relevant skills and training. Above all, it requires proper incentivisation of our workforce, rewarding performance and developing a stakeholder culture.

The UK has much to learn in this regard from the US and many countries across to Asia-Pacific, all of which are growing considerably faster than we are. I suggest that boosting productivity requires explicit targets rather than lofty mission statements. Why not be bold and set a GDP growth target of 3% per annum for the next five years? To achieve that, we would probably need to improve our worker productivity by 2% every year—not impossible if we set our minds to it and hold ourselves accountable.

I have yet to mention the classic drivers of productivity: higher levels of public and private investment, upgrading infrastructure, education, innovation and technology. All are highly relevant but mainly long-term projects, with a five to 25-year payback that requires huge levels of funding. The problem is that we have an immediate need to mind the productivity gap, and time is not on our side.

Time is not on my side either, so I will conclude by welcoming both Ministers to their new roles and asking them, as I did their predecessors, whether the Government will consider setting up a productivity council on a statutory footing that is permanent and not subject to political churn. This body would inform, co-ordinate, measure and evaluate policies that impact on private and public sector productivity across all departments. Its members, critically, would have had first-hand experience not only of what drives productivity but of what it takes to stick to targeted long-term measures.