Productivity

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 16th June 2015.

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Photo of Chris Matheson Chris Matheson Labour, City of Chester 11:30 am, 16th June 2015

What assessment he has made of the level of productivity in the economy.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

The UK’s productivity has been lower than the G7 average since OECD records began 45 years ago. In the previous Parliament, we took a number of steps to increase the UK’s productivity in the long run, including cutting the corporation tax rates to the lowest in the G20 and investing in skills, infrastructure and science. The Chancellor will set out what further action this Government will take to boost productivity in our productivity plan to be published before the Budget.

Photo of Chris Matheson Chris Matheson Labour, City of Chester

I thank the Minister for his reply. In Chester, the number of people on apprenticeships continues to decline, and I am talking about Conservative-style cheap and cheerful apprenticeships with little added value at the end. Was the creation of a low-skill, low-wage economy an intention of the Government, or was it an unintended by-product?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

On the subject of Chester, unemployment fell over the course of the last Parliament by 49%, which is something I would have expected the hon. Gentleman to welcome. The reality is that we are investing in apprenticeships; we saw 2.2 million people undertake apprenticeships in the previous Parliament, and we will increase that to 3 million in this Parliament.

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate

Following the crash, the remarkable record of the economy was that unemployment did not rocket up more post-2008 and 2009. Now, in my constituency, it is the labour market that is very tight. I ask the Front-Bench team to focus very hard on improving productivity because that is where the improvement in our economy must now come from.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

I entirely agree with my hon. Friend. Improving our infrastructure and skills and ensuring that we have a competitive tax system can all help to drive up productivity.

Photo of Jo Cox Jo Cox Labour, Batley and Spen

According to the Office for Budget Responsibility, if productivity growth per worker was closer to 4%, our national debt would be around £350 billion lower by the end of this

Parliament. The OECD confirmed that continued weak productivity could lead to a higher than expected budget deficit. Why does the Minister not realise that his failures on productivity explain why we are doing so badly on bringing down the deficit?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

I have said that productivity is important. One element of that is attracting more business investment into the UK. That requires a Government who are pro-business. I am not sure that the hon. Lady’s ambition to make Jeremy Corbyn Prime Minister will help.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

In 2010, according to the World Economic Forum, the UK had the second highest burden of red tape in the G7. By 2015, we have the lowest. Does the Minister agree that that alone will have a significant impact on productivity in the UK?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

Yes, my hon. Friend makes an important point. Regulations that are burdensome and do not achieve their objective do nothing to help productivity; they hold businesses back. That is why it is right that for every new regulation we bring in, two are taken out.