Economy: Productivity Measurement

Lord Stevenson of Balmacara Excerpts

Thursday 28th March 2019 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is always a pleasure to see the noble Lord in his place, particularly when he is straying off-piste. He mentioned some of the issues raised in Professor Haskel’s book but he did not touch on the key point raised by my noble friend Lord Haskel, which is that the new technologies do not rely on physical goods but on a different type of trading, which involves platforms, brands and algorithms. What work is being done to try to make sure that that aspect of the new technologies is being caught? The second point made in that excellent book is that people measuring productivity seem to ignore the productivity of which we in this country are very proud of, in making real progress in education and health. Those things are not even counted in GDP.

[Lord Young of Cookham]

The noble Lord is quite right to say that productivity in education and health has gone up. Over the past few years, productivity growth in the public sector, which had been 0.2% for the past 19 years, grew to 1.4% in 2016. We have had six successive years of improving productivity in the public sector, and health and education lead the field. The noble Lord is quite right in his other point about intangible assets. We are putting a lot of work into measuring intangible assets. This has a key impact on productivity, for example, in the information and communications sector and in the science sector. Along with investment in software and R&D, intellectual capital training is also an important intangible. It is one of the most important ones, followed by organisational capital.