National Productivity

Debate between Stephanie Peacock and Dan Jarvis

Wednesday 22nd January 2020 Westminster Hall

[Dan Jarvis (Barnsley Central) (Lab)]

I beg to move,

That this House has considered national productivity.

It is a pleasure to serve under your chairmanship, Mr Paisley, and I declare an interest as a metropolitan mayor. I am pleased to see the Minister and the shadow Ministers here this morning. I know they all take this issue very seriously, and rightly so, because it affects all corners of our United Kingdom and all our communities.

I wanted to secure this debate because, for too long, the general debate about productivity has been too narrow—it has been too focused on the purely economic, on gross value added and on national statistics. That is the wrong approach. Growing productivity matters to people, matters to our businesses’ ability to raise wage levels and matters in terms of the types of job our economy makes available and the prospects we seek to create for our young people.

Being part of a productive economy also builds those intangible bonds between our people and our places, and between our role and our contribution. I hope that I speak for all Members when I say that we all want to live productive lives; we all want to leave the world in a better place than we found it; we all want our children to grow up full of ambition and aspiration and to be confident that we are building a world in which their hopes and dreams can be realised; and we all want an economy that creates wealth, enabling us to invest in our public services, in our people and in our communities.

Raising productivity, which is, in essence, about creating more value with the same or less input, is at the heart of all of those aims. Yet, despite the importance of raising productivity, the size of our economy has for too long been the overriding measure of success. That has led to an approach towards economic growth that has neglected the real long-term drivers of success: skills; investment in research and development; a balanced economy, with opportunities available right across the country; and the enabling infrastructure, the lack of which in many parts of the country means that we lag behind.

Perhaps conveniently, we have been able to ignore the growing weight of evidence that we are in the midst of a productivity crisis. The figures are stark. Since the financial crash, the UK’s average productivity growth has been a woeful 0.3% a year. For that reason, the Royal Statistical Society awarded it what in this instance is the unwelcome accolade of the “statistic of the decade”.

That is costing us billions in lost economic output, and the situation is even starker outside London and the south-east. Public policy has entrenched a productivity gap between the north and the rest of the UK of around 12%, which costs the economy about £40 billion. The OECD calculates that regional productivity gaps alone account for lost economic growth of around 10%. Looking across the whole UK, according to the Core Cities Group, which represents cities across the UK, if we brought all our regions up to the UK economic average, we would put around £80 billion into the economy every year. So the current situation is a huge missed opportunity for our people, our businesses and the Exchequer.

There is no silver-bullet solution to tackle the productivity challenge, but the levers to pull are all within our collective grasp, and there are things we can do urgently that will start the process of addressing the national and regional productivity challenges we face. First and foremost, we must win the argument for investing in an active place-based programme of investment that includes every region, city and town across the country. That programme must be focused on investment that is linked to the strengths and capabilities of each individual local area: its people, its businesses and its research institutions.

We must ensure that such investment is better balanced across the UK. Public R&D investment in Oxford, Cambridge and inner west London accounts for 41% of total public R&D spending in the UK. I do not begrudge any of those fine places any of that investment, but we must close the gap between academic research and the implementation of the ideas that we create. That means increasing investment in institutions such as the Advanced Manufacturing Research Centre, the Advanced Wellbeing Research Centre and the Olympic Legacy Park in the Sheffield city region. Such institutions connect ideas, innovation and research with real-life business challenges. They are ready-made vehicles through which we can supercharge regional economies, and they must be the focus of greater Government investment.

Around such institutions, we must build deep and pervasive programmes of support, to connect them more effectively with the productive potential of our existing businesses. We are already starting to do that in my own region of South Yorkshire; indeed, I believe we offer a national blueprint that shows how we can turn the productivity challenge around through the creation of innovation districts.

Many hon. Members will have heard of the University of Sheffield’s Advanced Manufacturing Research Centre. At the AMRC, the Government, the university and the public sector have invested alongside industry to build an institution that is focused on tackling real-life industrial problems, operating in that sweet spot between academic research and industry, and applying knowledge to problems.

Through the AMRC, we have been able to attract companies such as Boeing, McLaren, Rolls-Royce and many others to our region. We have built our inward investment offer around that approach. We have built the AMRC training centre, which helps to connect our young people to the opportunities that are being created. We have started to develop supply chain programmes that connect small businesses in the region to the opportunities being created by larger manufacturers. We are also looking to invest in the enabling infrastructure, to enable our workers to get to work by rail, tram and bike. That approach is building a true industrial commons, where academia, the public sector and businesses come together in a way that puts us in the vanguard of the reindustrialisation of the north.

However, there is so much more we can do. To create transformational productivity growth, we must embed this culture of innovation and ideas more broadly, across all our businesses, from sandwich-makers to steel manufacturers, and from education technology to energy production. If the Government are looking to establish a Massachusetts-style institute of technology for the north, they should look no further than South Yorkshire and the assets that we already have in place.

What we need right across the country is the ambition, matched with the investment, to scale up that approach and scale it out. Underpinning it all, the Government must take care of the fundamentals of any modern, regionally balanced and progressive economy. According to the Core Cities Group, deprivation is the cause of up to 40% of low regional productivity. Therefore, economic policy must sit right alongside our social regeneration and skills policies. We must tackle the issue of vocational and technical education head-on, and the Government must reverse a decade of under-investment in vocational education.

[Stephanie Peacock (Barnsley East) (Lab)]

I congratulate my hon. Friend on securing this important debate and on all the work he has done on this issue. He is absolutely right to highlight the lack of funding, because it has had a huge impact on areas such as ours, in Barnsley. Does he agree that skills are the missing link in South Yorkshire? We need more investment in vocational education, so that all kids can access courses.

[Dan Jarvis]

I am grateful to my hon. Friend and parliamentary neighbour for that intervention. She is precisely right about all of that. We are seeking to do a huge amount of work across South Yorkshire, working with our further education colleges, our universities, our training providers and our businesses. I am incredibly concerned to ensure that, within our local enterprise partnership, we have the requisite knowledge, skills and experience to develop our skills sector. It is a fundamental and crucial pillar of our strategic economic plan, but it requires more thought and certainly more investment, as my hon. Friend rightly suggests. I give her an assurance that it is right at the top of my list of priorities, and I look forward to working with her and with colleagues right across South Yorkshire to ensure we have the investment in our skills system that we so need and deserve.

I was just making the point about the importance of investment in vocational and technical education. We need to ensure that we create parity of esteem across academic and vocational education routes so that we give businesses, our young people and their parents confidence in the skills system. We must better connect our businesses to the skills system. Notwithstanding the excellence of our civil servants and the capabilities and competences of Ministers of this Government, there is no way that skills, innovation, enterprise and transport systems can best be brought together at the national level. I know the Minister understands that.

To make all that happen, our places have to be given the right tools, so we must empower our places up and down the country to build their own industrial commons. Following years of austerity and systemic neglect, the manifesto on which the Government were elected contained a raft of ambitious infrastructure projects and a promise to level up investment across Britain, much of which was aimed at voters in the north of England.

If the Government are serious about building a collaborative, sustainable and inclusive economy where everyone shares the benefits, reversing the prolonged stagnation in productivity should feature at the very top of their agenda. The way to do that is by redistributing power to our nation’s regions through a programme of meaningful devolution. Westminster needs to give us the tools to do the job. I say this with the greatest respect to colleagues in the Government, but it is time to let go, because it is no coincidence that a country that has this level of political and economic centralisation also has some of the lowest levels of productivity growth and some of the highest regional inequalities. That is not good for the state of our nation. Nor is it good for the state of our public finances or the health, happiness and wellbeing of our communities. Let us make a change.

Local Authority Budget Reductions

Debate between Stephanie Peacock and Dan Jarvis

Tuesday 30th October 2018 Commons Chamber

[Dan Jarvis]

I absolutely agree. My hon. Friend makes an important point about a common experience right around the country. The reality is that councils are facing a funding crisis. In my area, since 2010, Doncaster and Barnsley councils have both had to make £100 million of cuts; Rotherham has had to make £177 million of cuts; and Sheffield City Council has had to make £390 million of cuts.

[Stephanie Peacock (Barnsley East) (Lab)]

I congratulate my hon. Friend and parliamentary neighbour on securing this important debate. On his point about funding cuts, he will know that our local council is doing a fantastic job, despite difficult times, but has he, like me, noticed the number of charities—often small, volunteer-led charities offering bereavement services, youth services or support for victims of domestic violence—that just cannot rely on the previous level of funding so have had to cut back the support that they offer to our local community?

[Dan Jarvis]

My hon. Friend and parliamentary neighbour is absolutely right that the cuts to council funding have a much wider impact on our society. They simply mean that councils do not have the vital match funding that keeps so many worthwhile local organisations going. The reality is that austerity has caused huge damage to communities up and down the UK. It has undermined the way we protect children at risk, disabled adults and vulnerable older people. It has reduced the quantity and the quality of community services, such as street cleaning, libraries and rubbish collection. Reduced funding also means reduced capacity to invest in prevention and, as such, these cuts represent no more than a false economy. If councils are unable to fund sufficient support for older people—

Yorkshire Devolution

Debate between Stephanie Peacock and Dan Jarvis

Tuesday 9th January 2018 Westminster Hall

[Dan Jarvis]

My hon. Friend makes an important point: the Humber is absolutely vital to this devolved settlement. Whenever I discuss this, I always have her in mind and am always careful to make sure that I speak the words “Yorkshire and the Humber,” but I am grateful to her for reminding us.

I was in the process of reflecting on how we got to where we are. All hon. Members will know that last year, as other parts of the country moved ahead with their devolution deals, we reached an impasse in Yorkshire. In response, the councils of Barnsley and Doncaster held a community poll on devolution.

[Stephanie Peacock (Barnsley East) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he agree that the very clear result of the community poll sends a strong message to the Government that the people of Barnsley would like a wider devolution deal? With that result in mind, the Government should work with Sir Steve Houghton and Barnsley Council to produce a deal that reflects the overwhelming will of the people of Barnsley. A fresh approach could end the inequality between north and south that has existed for too long.

[Dan Jarvis]

I am grateful to my hon. Friend and neighbour, with whom I agree. The people of Barnsley and Doncaster were given a very clear choice of whether they wanted their local authority to pursue a Sheffield city region deal or a wider Yorkshire deal. I am very pleased that the people of Barnsley and Doncaster made their voices heard. Some 85% voted in favour of a wider Yorkshire deal, and in doing so endorsed the approach that their council leaders had taken. They showed those of us who proudly represent the people of Yorkshire and the Humber the scale of their ambition for devolution. For those of us who represent Barnsley and Doncaster, our marching orders are clear.