Productivity

Damian Hinds Excerpts

Wednesday 17th June 2015 Commons Chamber

[The Exchequer Secretary to the Treasury (Damian Hinds)]

Solving the productivity puzzle is a vital component of the journey we have been on since 2010—the journey to long-term prosperity through a comprehensive long-term economic plan. In 2010 this country urgently needed financial stability. We provided it. We needed to get public spending under control. We did so. We needed job creation, because that is the best way to help people support their families, and 2 million jobs were created—1,000 a day.

Rebuilding an economy takes time. It is a long journey, and we have always known that improving productivity is a key part of that journey. Our productivity plan, which the Chancellor announced last month, will set out how we develop that further. Forty-five years ago, when I was born, UK output per hour was 37% below that of the United States, a significantly bigger gap than there is today. What happened 45 years ago is of limited significance and, I suspect, interest to anybody sitting here right now, but it highlights the partial picture presented by the words of the motion, that UK productivity has been an issue “for several years”. It has been an issue for several decades.

Ever since we returned to government in 2010, productivity growth has been central to our mission of sustainably rebuilding the economy. In 2010 our overarching priority had to be keeping people in jobs while we set about the task of returning to fiscal balance. I make no apology for that. At the same time as pulling us back from the financial brink, we were also bringing in key supply-side reforms to boost efficiency and productivity. We created a national infrastructure plan and, as a result, infrastructure investment was 15% higher in the previous Parliament than in the preceding one. On road, on rail and online, thousands of infrastructure projects are connecting people and communities.

Our support for science and innovation has increased our competitive advantage by focusing on the UK’s great areas of strength. Even as we had to trim departmental budgets across the board, we protected science. We helped our universities to get on a firm financial footing to maintain their world-class position as centres of excellence. To rebalance the economy we put together a radical programme for growth outside London and the south-east, combining investment and devolution.

All this has helped to deliver jobs and growth. Last year we saw productivity begin to rise. The Office for Budget Responsibility expects productivity growth of 0.9% this year, and after that it grows at 2% or above in every year of the forecast period. We are now ready for the next step. Our productivity plan, as the Chancellor announced on 20 May, will explain how we shift our economy up a gear. It will be ambitious, long term and wide-ranging. Our manifesto is a programme for long-term sustainable growth: £100 billion of infrastructure this Parliament, as well as the big infrastructure questions for the decades ahead; skills for the long term, at every stage of people’s education and career; a better balanced Britain, and not just a northern powerhouse because, as I am sure Members will agree, there should be no monopoly on powerhouses.

We will deliver the affordable homes that people need. We will cut red tape, help businesses to access finance, and maximise workforce participation, including giving parents who want to return to work the support to do so—this, and much, much more, is a blueprint for a more productive Britain.

Today we have had interesting and powerful speeches from a number of right hon. and hon. Members, many drawing on their own business experience. Two speeches that we heard, which were maiden speeches, were particularly outstanding. The first was that of my hon. Friend the Member for Hertsmere (Oliver Dowden)—as expected, a highly erudite maiden speech from the former deputy chief of staff to the Prime Minister. He reminded us of the rich lineage he has in his constituency predecessors. I am sure he will make an extremely admirable addition to that line. The second was that of the hon. Member for Sheffield, Brightside and Hillsborough (Harry Harpham). He, too, knows what it is to have big shoes to step into—those of David Blunkett, who is so respected right across the House. The hon. Gentleman follows in his footsteps from local government into this place. He put EU renegotiation in a very interesting, long historical context. As for the topic of today’s debate, he rightly put productivity in its proper context—that of raising living standards and spreading prosperity.

There were a number of other interesting speeches. My right hon. Friend the Member for Wokingham (John Redwood) reminded us of the sectoral shift that has been going on. He spoke about the maturity of the UK continental shelf and the fall of the oil price, and what that has done to the North sea oil sector, as well as the shift away from financial services. My hon. Friend the Member for Bexhill and Battle (Huw Merriman) reminded us of his own lack of productivity when he challenged Madam Deputy Speaker electorally in North East Derbyshire. He also described the contrast between this country and France, and how we should be careful who we follow.

My hon. Friend the Member for Yeovil (Marcus Fysh) talked about the importance of services as well as manufacturing in productivity growth. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) spoke of the importance of cutting red tape. My hon. Friend the Member for Solihull (Julian Knight) welcomed employer involvement with schools in building skills, and my hon. Friend the Member for Croydon South (Chris Philp) talked about all the things that Labour did not choose to debate today, which are just as instructive as the things that they chose. There were excellent speeches from my near neighbours, my hon. Friends the Members for Havant (Alan Mak) and for Fareham (Suella Fernandes), and from my hon. Friend the Member for Newark (Robert Jenrick).

I want to mention the contributions of two Opposition Members in particular. The hon. Member for Hartlepool (Mr Wright) talked about the success stories of the automotive and aerospace sectors, and the importance of research and development spending. He asked about the Government’s industrial strategy. Our entire programme of government is an industrial strategy. It is integrated with what we do, not something that we add on. Of course, we stay in constant contact with industry.

The hon. Member for Sefton Central (Bill Esterson) spoke of his own experience in training and development, and the key role that management quality plays in productivity. He is quite right, and I remind him that our postgraduate loans will be available to MBA students as well. More broadly in terms of skills-building, we have an ambitious programme to deliver 3 million quality apprenticeships. To date, there are 50 higher apprenticeships available up to degree and masters level. Last year, there was a 40% increase in the number of people participating in higher apprenticeships.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Will the Minister confirm how many of those 3 million quality apprenticeships will be conversions from other programmes?

[Damian Hinds]

We have a track record in the previous Parliament of delivering 2.2 million quality apprenticeships. We will carry on delivering that important investment in the young people of this country and in our industrial future.

The reforms of the past five years have delivered jobs, growth and security for the people of our country. We now have a chance to take things to the next level through our bold and ambitious productivity plan. We have a track record of making the right economic decisions—a record that, I am glad to say, the British people strongly endorsed five weeks ago. There is a real ambition to achieve the step change in productivity that our country needs. Our cities want it, our businesses want it and the people of this country want it. With them, we will make it happen.

Question put.