Productivity

Debate between Chris Philp and Chris Leslie

Wednesday 17th June 2015 Commons Chamber

[Chris Leslie]

I will make a little progress, if I may, and then give way.

The Office for Budget Responsibility’s recent forecasts have lamented the persistent weakness of our recent productivity. According to the OBR, if our productivity per worker was closer to 4%, our national debt would be £350 billion lower by the end of this Parliament. Those are big numbers, but that is £5,000 less debt for each person in this country. The productivity issue is therefore absolutely crucial, and it is linked to the health of our public finances. Translated into potential GDP, it would mean growth of 3.7% by 2019-20, which is the sort of growth that we need in this country. The OBR is right to warn that improvements in growth and living standards very much depend on our productivity performance and to say that it is the most important and uncertain part of its economic forecasts.

Quite simply, if sustainable productivity growth fails to materialise, the Chancellor will just continue to miss his deficit reduction targets, however hard he may try to distract us with his dreams about permanent surpluses. Although productivity traditionally drops off during a recession, seven years after the global banking crisis our productivity is still 1.7% below the pre-crisis peak, and a whopping 16% below the level implied by the pre-crisis trend. Last year, productivity growth was just 0.2%; in 2013, it was negative, at minus 0.3%; and in 2012, minus 1.2%. That is just not good enough.

[Chris Philp (Croydon South) (Con)]

The figure that the hon. Gentleman has not mentioned is, of course, the productivity figure for 2009—the last year in which Labour was in government—and in that year it dropped by a staggering 2.6%, the highest for the last 25 years.

[Chris Leslie]

This might be a shock to the hon. Gentleman, and I am not sure where he was at the time, but there was a global banking crisis—[Interruption.] I know it is a shock to Conservative Members, because in their script it has been expunged from the record, as if it never happened.