Government publishes productivity plan

Nick Elvin

The Government has launched new plans to improve productivity in the UK.

The document, entitled “Fixing the Foundations: Creating a more prosperous nation” sets out how the whole of government aims to “reverse the UK’s long-term productivity problem and secure rising living standards”.

The Government says that while raising productivity is a global challenge, a large and widening productivity gap exists between the UK and leading advanced economies. Its framework for raising productivity includes 15 key areas, built around the two central themes of encouraging long-term investment and promoting a dynamic economy.

The plans include tax measures such as cutting corporation tax to 18% in 2020, a move aimed at saving businesses £6.6 billion. There are also a number of education-related measures, including introducing a new compulsory apprenticeship levy requiring large businesses to invest in their own future.

The Government also wants to improve infrastructure, for example by creating a new Roads Fund from 2020-21, financed from Vehicle Excise Duty. Another measure is ensuring that superfast broadband is available to 95% of UK households and businesses by 2017.

The plans also include a rebalanced economy and a Northern Powerhouse – this would see the devolution of further powers and responsibilities to the elected mayors of London and Manchester, and possible devolution deals with areas including Sheffield, Liverpool and Leeds.

HR industry body, CIPD, has warned that the Government’s plans risk being undermined unless more is done to address the country’s skills challenges.

Ben Willmott, CIPD Head of Public Policy, said: “Proposals to increase the number and quality of apprenticeships, and simplify and streamline the professional and technical education system are of course welcome, but only scratch the surface on solving the skills part of the UK’s productivity problem.

“We have a high proportion of people in low-skilled and low-paid jobs by international standards, and an equally high degree of over-qualification with too many employees unable to use the skills they have because of poor leadership and people management, inadequate work organisation and poor job design.

“We also have a perfect storm of falling public and employer investment in further education and training. A simplistic focus on increasing employer investment in apprenticeships through a levy risks taking money away from broader investment in workforce development.”

The CIPD believes that solving these problems requires a team effort involving government working closely with businesses, particularly SMEs, which are responsible for 60% of private sector employment in the UK.

Willmott added: “There needs to be much greater emphasis on the provision of high-quality low or no cost support, advice and guidance to help small businesses improve their people management and skills development capability, and recognise the value of workforce investment. They also need help to access available public skills funding and high-quality training to get the most from their people and grow.

“It is also crucial that the Government protects the adult skills budget from any further cuts as the UK’s ageing working population and rapid changes to working practices created by technology will increasingly require people in the labour market to train to keep their skills up-to-date and relevant to the changing requirements of employers.”