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To ask Her Majesty’s Government what action they will take to increase productivity as compared to that forecast in Table 5b of the Bank of England May inflation report.
My Lords, productivity is a key challenge for this Parliament and a key focus. That is why, before the Budget, the Chancellor will publish a productivity plan, which will be a plan to make Britain work better.
My Lords, I welcome the Minister to his first Oral Questions. I also welcome his words, but I think that many noble Lords will agree with me that we have heard these promises before. However, manifestly, they have not worked. Why not? Will the Minister agree with me that they have not worked because they do not understand that productivity involves every aspect of our economic life and beyond—a life which is presently dominated by austerity? So, once again, I ask the Minister whether the Government will demonstrate their commitment to productivity by moving on from a life of austerity to a life of productivity.
My Lords, as your Lordships can tell, I am not yet very familiar with the exact procedural formalities. I apologise, as I should be. I have been immersed in studying issues to do with productivity for a large part of my adult life. It is dangerous to associate productivity improvements with a so-called focus either on austerity or on some other particularly cyclical fiscal policy stance.
We are living through a moment in time when a very large number of diverse developed countries are all apparently showing a dramatic slowing in measured productivity, whether it be Germany, which is generally regarded as successful and whose measured productivity has been even weaker than ours in the past few years, or the United States, which is frequently regarded as a beacon. In my maiden speech last week, as those of your Lordships who were here would have heard, I highlighted a number of factors that will be focused on. When the Chancellor makes his presentation, I think your Lordships will see that those feature highly in the appropriate steps we plan to implement.
The ideas that are being thought about include appropriate incentives to boost long-term investments and greater incentives for both the owners and participants in any company, whether privately owned or otherwise. The role of tax incentives is very important and they will be looked at further.
The Minister is correct to say of course that productivity has slowed throughout the OECD countries. However, as he acknowledged in his maiden speech last week, our record is palpably worse than so many other OECD countries. Does he accept that increasing productivity needs extra investment, better skills and decent pay? Will he therefore encourage the Government to reverse the 50% cut in net public investment since 2010, the ongoing 40% cut in further education for the over-19s since 2010 and the 6% loss in average earnings in this country? Is it not clear that unless those reversals are made, there is no hope of our country resuming the 15% increase necessary to return to our historic trend, let alone securing the 30% increase necessary to catch up with our comparable competitors?
My Lords, it is important to remind noble Lords that I referred to “measured productivity”. There are considerable issues to be focused on about aspects of how productivity is measured. Again as I highlighted in my maiden speech, the UK in the past few years has had the best employment increase record throughout the G7 countries. One does not need to look at a choice between employment and productivity, but if one were forced to do so, I think that most people in this country would want jobs and not to get so lost in the productivity issues. However, I also add that—as is well known—over the long term, countries that have the better true productivity performance are those with generally a higher standard of living and wealth, including in shared wealth. In that regard, let me repeat some of the policies that I suggested will be focused on. They will include rebuilding the northern powerhouse, improving our infrastructure, undertaking policies to improve the supply of new homes, further reforms of education and apprenticeships and—this is linked to my previous comment—boosting incentives for long-term investment.
My Lords, the Minister referred to the importance of employment. Would he care to comment on the fact that the personal income of people in employment ought to be sufficient for them to be self-sufficient—that is, a living wage? Would he care to endorse the—apparently—lately formed views of the Mayor of London that the Government ought to stop subsidies to companies which make huge profits while paying pittances to the people the Minister referred to, who want not only employment but a living wage and dignity?
The policies we will focus on will be those to boost the long-term performance of the economy from a productivity perspective, which will help enhance the job satisfaction of many people in our country.