National Productivity

Alison McGovern Excerpts

Wednesday 22nd January 2020 Westminster Hall

[Alison McGovern (Wirral South) (Lab)]

It is a pleasure to serve under your chairship, Mr Paisley, and to speak in the debate introduced by my hon. Friend the Member for Barnsley Central (Dan Jarvis), who made a characteristically serious contribution.

Those of us who have participated in economic debates over the past decade, as I have had the great fortune to do in this House, have been talking about productivity for some time; yet the problem is not resolved. Today, we are talking about national productivity, and we have heard about regional disparity, which is certainly a problem for our economy. The divergence between some of the regions of the United Kingdom is greater than between some of the regions of the European Union as a whole, so if we think that Brexit will solve all our problems we are in for a bad surprise. However, that is not the reason I rise to speak.

It is true that investment in our economy, particularly from the private sector, is in a chronic and parlous state. We need a greater contribution to the future potential of our economy, and as an ex-employee of Network Rail nobody believes more than I do in the power of infrastructure, particularly trains, to do great good for our economy. Unfortunately for us all, infrastructure investment is necessary but not sufficient for the future good of our economy.

I want to make a different contribution on how we should look at productivity in the UK, because it is important to understand and get to the root of the issue. When we look at who does the jobs in the least productive firms—those jobs that add less to our national productivity—the answer is women. Women work in jobs that are, on average, 22% less productive than those that men do. Why? It is because they work in those areas of our economy that are the least productive, such as retail and hospitality, where productivity growth has been slow for many years.

As a result, women do the worst-paid work. We can ask ourselves whether women do those jobs because of gender stereotypes, whether those jobs are paid less because of gender stereotypes, or whether investment in those areas is so poor because of gender stereotypes, but the truth is that that is the situation we face. I simply ask the Minister to point to what the Government strategy will be to approach that, because if they do not approach the question of productivity with a focus on gender we will not solve the problem.

Women are also less likely to work in high-productive firms. We have heard a lot about advanced manufacturing. It is certainly the case that the most productive firms are those that invest heavily in technology. I do not think that it is fair that half the population has much less of a chance of working in the sectors of employment in our country that are likely to offer a higher pay packet.

In order to understand the question, we need to think about what productivity actually is. As has been said, it is a measure of how much value is added to the economy with the time that we have. That is why the question of time is so important. How we improve productivity depends on who decides what we do with our time. According to the data, women’s productivity really drops off around child-bearing age, because that is the point at which women have less of a choice about what they do with their time.

Childcare responsibilities still fall heavily on women, and the Institute for Fiscal Studies has found that access to childcare is a central problem for the productivity of our country. If we focus just on putting pounds in the ground—building new railways and road links, and investing in heavy infrastructure—we will fail to solve the productivity crisis in our country for yet another generation.

The other aspect is about power inside low-productivity firms. It is about time management, and the poor quality of management that we have had in the United Kingdom for many years in low-productivity firms, where people do not have the power to say, “Actually, I would like to manage my time so that I can be out of the business for one day a week, so that I can learn and upgrade my skills.” Again, women are most likely to be unable to do that, because of childcare responsibilities and, increasingly, responsibilities looking after older people in our society. Our social care system is collapsing before our eyes, and when that system collapses, it means that women cannot get to work because they are busy looking after older relatives as well as children.

In summary, if national productivity is to mean anything and if the Government are to have any kind of strategy to improve the productivity of this country, we must recognise that one half of our population are unable to take the steps they need to improve their working life and their ability to contribute to our economy. If we do not recognise that, we will fail yet again.

--- Later in debate ---

[Mr Clarke]

I am afraid the hon. Lady will have to wait for the publication of the consultation at the comprehensive spending review. The key point is that we want to make sure that this gives the Scottish Government meaningful control over key aspects of resources. She mentioned European funding in her remarks. The point I would submit is that that money was fundamentally UK money that was recycled back to this country, with conditions attached. We should be clear that we want to devolve control of that funding to the lowest possible level, and we will inevitably want to do so in a spirit of genuine concord with Holyrood.

The Government will set out further information about our plans here in an English devolution White Paper this year, which will outline our strategy to unleash the potential of our regions, level up powers and investment and give power to people and places across the country. Alongside that, we will publish a refreshed northern powerhouse strategy, building on the successes of the existing strategy in bringing together local leaders to address key barriers to productivity in the regions.

As the hon. Member for Islwyn (Chris Evans) said, productivity is not a concept that always commands headlines, but it goes to the heart of national prosperity. It is the best way to boost wages, improve living standards and enhance economic growth across the country, regionally as well as nationally. We are working hard to build a stronger and fairer economy—dealing with the deficit, helping people into work and cutting taxes for businesses and families. There are 3.7 million more people in work, and the hon. Member for Wirral South alluded to the record rate of women in employment, which is worth highlighting. More than 60% of the increase is in regions outside London and the south-east, but we need to go further and we need to be candid about the extent of the productivity challenge we face. Productivity growth slowed globally in the aftermath of 2008, but the slowdown has been particularly acute here. The Government are committed to tackling that challenge as we enter a new decade in which we are less under the shadow of the financial crisis and the impact on our public finances.

The key will be an ambitious programme of investment. Infrastructure is a key driver of productivity—it is not sufficient in itself, but it is an absolute good. It links people to jobs and products to markets and supports supply chains, encouraging domestic and international trade. It affects daily life: speeding up internet connectivity means less time staring at blank screens; improving roads and trains, which the hon. Member for Stalybridge and Hyde rightly mentioned, means less time stuck waiting to get to work and more time to play; decarbonisation means cleaner air for us all to breathe and more efficient energy. When the national infrastructure strategy is published alongside the Budget on 11 March, that will be a core moment in this piece. We will set out further details of our plan to invest £100 billion to transform our infrastructure and achieve a real step change. The strategy will set out our long-term ambitions across all areas of economic infrastructure, including transport, local growth, decarbonisation, digital infra-structure, and infrastructure finance and delivery.

Alongside that investment in our physical capital, it is essential to focus on and improve our human capital, as the hon. Member for Wirral South, whom I had the pleasure of serving alongside on the Treasury Committee, rightly said. I know that from my constituency. The hon. Member for Barnsley East (Stephanie Peacock) is right to say that talent is evenly spread across this country, but opportunity is not. We know that, which is why our recent manifesto pledged a national skills fund—I was briefed on it yesterday, and it is exciting, bold and visionary. We all know that it needs to happen, because there has been profound personal, human dislocation as part of our transition from one era of industrialisation to a new one. That has had uneven consequences across England, let alone across the UK. We will seek to give a leg up to people looking to get onto the career ladder, support those wanting to switch careers, and support growth by ensuring firms can get access to the skills they need.

The hon. Member for Stalybridge and Hyde referred to Be the Business. I had the pleasure of meeting it last week, and it is hugely impressive. I heard first-hand from several of the entrepreneurs it has helped about how targeted interventions and upskilling have helped them to be better business leaders. We need more of that to create a culture of entrepreneurship, which, as the hon. Member for Islwyn said, is not always common in all parts of the United Kingdom.

Increasing our productivity also means innovating. The hon. Member for Barnsley Central referred to the AMRC in Sheffield. That is precisely the kind of thing that we want to see more of. That is why we are committed to meeting our target of raising investment in research and development to 2.4% of GDP by 2027, ensuring that the UK remains at the cutting edge of science and technology. One of the great frustrations of recent decades is that the UK has so often come up with brilliant ideas but has not had the opportunity to build them out at scale. That needs to change. If we do that correctly, there is so much good that we can unlock and economic potential that we can unleash. We are increasing public spending on science and innovation by an additional £7 billion by 2021-22, which marks the biggest increase in 40 years.

The point that the hon. Member for Wirral South made about human capital, and in particular women, was well made, and I take it to heart. It is something I have been talking to my officials about. The Government are seized of the cost of childcare and the need to resolve fundamentally the problem we face with social care, which has so many spillover consequences for our health service and our economy, and we will be coming forward with proposals. Particularly on the social care piece, we genuinely welcome constructive engagement with the Opposition as we try to build a settlement that has lasting legitimacy. We want to do it right for successive generations, which will doubtless encompass Governments of both colours.

On female entrepreneurship, my predecessor—the current Secretary of State for Housing, Communities and Local Government—and I are working with Alison Rose to develop the Investing in Women code, which will help to pioneer work. We are looking to increase lending to female entrepreneurs to increase the possibilities. Clearly, if someone cannot even make the time to work because of competing priorities, that constrains them. I genuinely take the hon. Lady’s point to heart, and I will continue to work on it with officials.

[Alison McGovern]

Will the Minister make a commitment that the Treasury’s next productivity strategy, connected to the Budget or otherwise, will have a gender analysis of who does what work and for what remuneration?

--- Later in debate ---

[Mr Clarke]

It is best that we wait for a fiscal event to set out our targets in this area. The Government are clear that we need to increase trend growth. There is no doubt that we accept that challenge, which is thrown down quite legitimately. As we have now cleared the rubble from the 2008 crisis, we need to aspire to do more. I accept that in the spirit in which it is offered. It is right to challenge the Government and hold us to account on whether we can now put that vision into practice. There is always a lag when it comes to investment on the scale and of the nature that we are talking about, but we are doing things that I hope by the end of the Parliament will have made a demonstrable impact, in terms of changing our economic structure.

[Alison McGovern]

I apologise for testing your patience, Mr Paisley. Doubling the trend rate of growth would really return it only to pre-crash levels of growth. To repeat the questions that my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) just asked, what measure for the Government to be held to, specifically on productivity, will the Minister commit to?

[Mr Clarke]

That is simply not something that I am in a position to commit to on behalf of the Government today. As I said to the hon. Member for Stalybridge and Hyde, we are resolved to do more to increase growth in a way that will mean that, the next time we come to review these statistics at the start of a new Parliament, there is a new tone and a new level of ambition realised in the results. That is genuinely the Government’s commitment. We are particularly interested in ensuring that areas such as Merseyside, Teesside, Greater Manchester and South Yorkshire lead the charge and are not left behind.

[Dan Jarvis]

I want very briefly to reflect on two points that the Minister referred to. First, the transforming cities fund is absolutely vital for us, in terms of productivity and economic growth. We have worked incredibly hard with the Department for Transport to put forward an outstanding bid into the transforming cities fund. I am the only metro mayor who has been required to bid for that money. My parliamentary colleagues in South Yorkshire, who now include three Conservative Members for the first time, and I will be looking very closely at what the Chancellor announces in his Budget in March.

I want to reiterate the points that the hon. Member for Glasgow Central (Alison Thewliss) rightly made about the shared prosperity fund. It is a critical amount of money for our regional economies. I am pleased that the Minister said that the consultation will be launched later this year. It is vital that both regional and national leaders can contribute to the important process of determining how the shared prosperity fund will be allocated in our regional economies—that is incredibly important. We urgently require clarity so that we can make long-term investment decisions.

The debate has been really useful; we have had a series of very constructive contributions from Members representing every corner of the country—Northern Ireland, Wales, Scotland, the north-west and north-east of England, and Yorkshire. We have established a consensus that productivity is a key driver of economic growth in the UK, and that regional imbalances are huge challenges that will require investment in skills, R&D and infrastructure, of which public transport is key. Devolution is a significant way to address some of those challenges, but democratically elected leaders need investment and resources to make regional and local decisions.

My hon. Friend the Member for Wirral South (Alison McGovern) rightly placed the focus on women and challenged the Minister and the Government on what they will do about gender disparities. To be fair, that important challenge also needs to be levelled at our metro mayors, all of whom are men, as she will know.

[Alison McGovern]

Oh yes, I know!

[Dan Jarvis]

I had no doubt about it. My hon. Friend has put that important challenge to the Government and we will look and listen very carefully at how they respond to it. That challenge should also be put to our metro mayors, and I assure her that in South Yorkshire we take that very seriously and have a programme of work, through our skills and employment board, that looks specifically at the points she raised. I would be grateful for the opportunity to discuss that further with her at some point.

Question put and agreed to.

Resolved,

That this House has considered national productivity.