Productivity

Andrew Gwynne Excerpts

Wednesday 17th June 2015 Commons Chamber

[Chris Leslie]

I will give way in a moment to the hon. Gentleman, who will, I know, have plenty to contribute on the subject.

Our economic prosperity depends on maximising the output from the efforts of working people and the resources available to business. The amount of output per hour worked is a useful way for us to measure whether our economy is advancing and adding value, or whether we are just treading water. Creating a more productive economy means creating a virtuous circle of higher growth, higher living standards and, as a consequence, more effective deficit reduction. When working people can produce more and they have the tools and the skills to create output more efficiently, employers can afford to pay them more, tax revenues become more buoyant and our GDP can grow in a more sustainable way.

[Andrew Gwynne (Denton and Reddish) (Lab)]

rose—

[Chris Leslie]

I will give way to my hon. Friend after I have given way to the hon. Member for Wyre Forest (Mark Garnier).

--- Later in debate ---

[Chris Leslie]

I will send the hon. Gentleman the anthology of Chris Leslie’s speeches, because I am sure that he will be keen to find out every occasion—in 2013, 2014 and 2015—on which I have talked about productivity. I have been talking about it for a very long time. We must not think of it as simply a parliamentary issue. The CBI has emphasised the importance of higher productivity as the only way to secure long-term and sustainable wage growth. In the words of the Governor of the Bank of England,

“productivity growth—doing more with less—is the key determinant of income growth. Our shared prosperity depends on it.”

As Paul Krugman famously put it:

“Productivity isn’t everything, but in the long run it is almost everything.”

We need a cross-party approach to the challenge.

[Andrew Gwynne]

The Chancellor is always very keen to make economic comparisons between the United Kingdom economy and G7 counterparts, but UK output per hour is 17% below the G7 average and a huge 31% below the USA average. Is not that the root cause of this problem?

[Chris Leslie]

We can see that the problem is particularly stark when we make those international comparisons. Our productivity growth rate has plummeted to the second worst in the G7. The UK was ranked 29th out of 36 OECD countries for GDP growth between 2010 and 2014. My hon. Friend makes an important point.

--- Later in debate ---

[Greg Hands]

Surely the most important thing is the delivery of the Budget, not just the speech. The delivery of the Budget was all about things such as digital communications infrastructure, housing, science, innovation, freezing fuel duty, doing something for the oil and gas regime, the sharing economy and backing business by launching a comprehensive review of business rates. The most important thing in government is what is delivered.

The Chancellor announced four weeks ago—way before the hon. Gentleman tabled a motion or wrote an article—that we will publish a productivity plan: a plan to make Britain work better. I will remind the hon. Gentleman of that speech, because he was there with various Labour leadership contenders, minus the hon. Member for Islington North (Jeremy Corbyn). Curiously, he seemed to have been missed off the CBI invitation list, but he may be up for an invitation in the future. The Chancellor said:

“Let me be clear”—

perhaps he was not clear enough for the hon. Member for Nottingham East—

“improving the productivity of our country is the route to raising standards of living for everyone in this country.”

I am sure the shadow Chancellor will recall that, because he was there.

It speaks volumes that the Treasury ministerial team announced in May by the Prime Minister includes Jim O’Neill, one of the most respected economists in the country and an authority on productivity. His input is more about deeds than words and it will be vital as we put in place the policies that will turbo-charge our economy.

Our productivity plan will build on the significant supply-side reforms we have put in place over the past five years. It will be wide-ranging and ambitious. It will look to the long term. It will help rebalance the economy and build the northern powerhouse. It will improve our infrastructure and reduce burdens on businesses; increase our support for childcare; ensure that many more affordable homes are built; expand apprenticeships and equip us with the skills we need for the 21st century; and make a bold next step in this country’s remarkable economic recovery.

[Andrew Gwynne]

Can the Chief Secretary confirm whether the success or otherwise of his productivity plan will be assessed by the Office for Budget Responsibility? Will it cut across all Government Departments to ensure that some of the regional imbalances that he has mentioned will be tackled across Government?

[Greg Hands]

The hon. Gentleman makes an important point. Of course the OBR looks at all Government proposals at the appropriate time, and I do not think that there will be any exception for this.