The Government’S Productivity Plan

Part of the debate – in the House of Commons at 3:59 pm on 28th February 2017.

Alert me about debates like this

Photo of Callum McCaig Callum McCaig Shadow SNP Westminster Group Leader (Energy and Climate Change) 3:59 pm, 28th February 2017

Let me begin by echoing what was said by Mr Wright. This estimates day debate is slightly archaic, in that, with the honourable exception of Richard Fuller, we are not actually discussing the estimates. Instead, we are discussing a report produced in February last year by the Business, Innovation and Skills Committee—a very valuable report—on a Government paper published in 2015. The hon. Member for Hartlepool said that that paper was rapidly becoming obsolete. That casts a favourable light on this process, which, I would say, became obsolete some time ago.

Rather than our discussing how the Government spend all their money, the Committee—and I mean no disrespect by this—has, essentially, presented its homework to the Chamber. That process has been entirely valid. It has been extremely instructive for someone who is not a member of the Committee to learn what it has done, and I commend it for its work. It would be interesting to know what a report from a Select Committee that did not contain a Government majority would say, because this report pulls no punches. I commend Conservative Members who engaged constructively with the process to ensure that the Select Committee did its job of holding the Government to account.

Let me now deal with the matter that should, or perhaps should not, be at hand: the report on productivity. I do not wish to repeat what has been said by many other Members at any great length, but there is clearly an issue. The general growth trend was 2% per annum before the financial crisis, and it is barely above that now, which the Office for National Statistics has described as unprecedented in the post-war period. As we have heard, ours is the second worst figure in the G7. It has been said that such comparisons may not give us all the detail, and that is certainly true, but there are some stark comparisons to be made in this context.

One of the most striking parts of the report, which was quoted by Michelle Thomson but which is worth repeating, concerns post-study work visas. It states:

“We recommend that the Government does not allow migration pressures to influence student or post-study visa decisions. Specifically, it should relax the post-study visa restrictions. It is illogical to educate foreign students to one of the highest standards in the world only for them to leave before they have had an opportunity to contribute to the UK economy.”

That, in a nutshell, is the critique of the Government’s immigration policy, and I do not think that it could be put any better. During a period of stagnating productivity growth, we have seen economic growth. Perhaps the two should not go together, but the reason we have no productivity growth but do have GDP growth is largely due to immigration. Following the ending of free movement of people and the pulling up of the drawbridge to immigration, we shall have to get serious about productivity, because if we are not going to secure growth from immigration, I shall be concerned about how we are going to secure it.

My hon. Friend Roger Mullin talked about tier 1 visas. I think that, in raising those two issues, my hon. Friends have nailed some of the imponderable follies surrounding an immigration system that does not work for our economy, and I fear that the situation will only get worse.

Of course, immigration is only part of the debate about our economy; productivity is also an important part of that debate. So how do we go about boosting productivity? I think there is a general consensus—although there are varying degrees of enthusiasm about the individual elements—that we need to invest in our infrastructure: our roads, railways, bridges and airports, and, crucially, our digital infrastructure. We need to invest in skills and training, we need pay growth, we need inclusivity in the workforce, and we need more internationalisation. The hon. Member for Bedford suggested that the SNP should get on with doing some of those things rather than criticising what others did. I can tell him that we have done them all, and that, as a result, Scottish productivity rose from 94.5% of the United Kingdom level at the time of the financial crisis in 2007 to 99.9% in 2015. In 2015, growth in Scotland was 3.5%, compared with 0.9% for the UK as a whole. The action we have taken has had a demonstrable benefit. I urge the Minister and his colleagues to look at what we have done in Scotland.

John Redwood mentioned the oil and gas sector. Clearly, there are issues in the sector. The Scottish figures do not include figures for the offshore sector, but they do include many of the figures for the onshore activity in the oil and gas sector. That sector has a success story to tell. In the face of plummeting commodity prices, it has been able to bring down its costs dramatically. It has increased efficiency dramatically and put its business on a firm footing. It is ready for growth. My hon. Friend Kirsty Blackman asked the Chancellor about the Budget at Treasury questions earlier. The sector is ready for growth and, with support from the Government, who hold the key tools for boosting that sector, it will be able to grow further.

My hon. Friend Roger Mullin mentioned avoiding working in a silo. The oil and gas sector has learned to look at other industries to see how it can boost its productivity. About a fortnight ago, I was at the opening of the Oil and Gas Technology Centre in Aberdeen, a collaboration through the city deal for Aberdeen between the Scottish and UK Governments, both universities and both local authorities in the region. The guest speaker was the chief executive of the Advanced Propulsion Centre in Coventry. The oil and gas industry is looking to learn how others have boosted their productivity in the face of difficult economic pressure.

As I say, the Scottish Government have invested in these things. One of the key things that has led to the boost in productivity in Scotland has been the introduction of the Scottish business pledge by the Scottish Government —some 330 businesses across all sectors have signed up to that. Its key component is the agreement to pay the living wage—that is the real living wage, as opposed to the national living wage. It has also agreed to sign up to two of the other options, which include no zero hours contracts, improved workforce engagement, investment in youth, having a balanced workforce, investment in innovation, internationalisation, connecting with the community and prompt payment of suppliers. Those moves are making a manifest difference.

May I draw attention to the living wage aspect? Earlier, Sir Greg Knight, who is no longer in his place, asked the Chairman of the Select Committee about workers and caravan parks and talked about the economy perhaps requiring low-skilled workers on low pay. I disagree with that premise. The tourism sector is vital to the UK, and is of specific importance to Scotland. Having well trained people who can welcome folk and explain things and who have built up experience is a benefit. When companies have higher wages—when they pay the minimum wage—they experience lower worker turnover. Those companies then have to spend less on training and on recruitment and they get a better outcome, so let us not diminish jobs that may seem to be unskilled. If we can invest in those, treat those people properly, with the respect they are due, and pay people a decent wage, they will have greater pride in their job and produce more.

I mentioned in my intervention on the Chairman of the Select Committee that there have been damaging changes in policy. I, too, welcome the production of the Government’s industrial strategy. I hope that they will learn the lessons of previous mistakes. The constant moving of the goalposts was particularly acute in the energy sector, where expertise had been built up over a number of years, but the productivity increases were pulled away because of Government changes to the investment climate—onshore wind and solar PV have faced a headwind. The decision on carbon capture and storage was taken with zero consultation. That is not good for the economy or for productivity growth.

We also need to focus on Brexit. If we are serious about boosting productivity, let us ask ourselves how the productivity of our exporters is going to be increased by having to fill out forms because we have come out of the customs union? They will need to go through complex processes to export the same goods; more work for the same product. That will not boost productivity. How will the productivity of our university sector increase when students, academics and funding that had previously come from the European Union cease to arrive as a result of a hard Brexit? Our food and drink sector relies on the European Union for funding—through the common agricultural policy, for example. It exports a huge amount to the single market, and 8,000 nationals work in it. How is the productivity of that sector going to be boosted by Brexit? It is not, and we have to face that.

The Scottish Government, and my hon. Friends and I, have been clear about how we wish to proceed from a Scottish point of view. We have sought compromise over Brexit. We have sought to ensure that the UK as a whole stays in the single market and the customs union because we believe that that is the best thing for our economy and our productivity, for the reasons I have just outlined. Before we get too far down that road, however, I urge the Minister to look at the Scottish Government’s policy paper, if he has not already done so, and to react to it and respectfully agree that we will pursue that aim. To boost productivity, we need to invest in all the areas that I have outlined, but above all, we need to avoid the hard Brexit that is facing us. I plead with the Minister and his Government to listen carefully and to protect Scotland’s place in Europe.