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Productivity plan doesn't go far enough, say business groups

The Government's much-anticipated productivity plan was published last week. But business groups are calling for more to be done on exports and skills.

The report, Fixing the Foundations, has been billed as a "comprehensive plan that sets the agenda for the whole of Government over the Parliament to reverse the UK's long-term productivity problem."

Secretary of State for Business, Sajid Javid, said: 

"A large and widening productivity gap exists between the UK and leading advanced economies. Narrowing this gap is a prize worth striving for. For instance, matching the productivity of the US would raise GDP by 31%."

The plan includes many of the Government's budget promises, including reducing corporation tax and raising the Annual Investment Allowance. There are also pledges to improve support for exporters, cut red tape, invest in transport and infrastructure and encourage more apprenticeships.

However, business groups say more needs to do be done to improve the UK's productivity.

John Longworth, Director General of the British Chambers of Commerce (BCC), said that the UK needed a "radically new approach" on exports. 

"We are consistently punching below our weight when it comes to international trade," he said. "We currently export less than the Netherlands, a country a third our size. And the OBR predicts that the UK will miss the Government's target of having exports worth £1 trillion by 2020 by more than a third, coming up short by £370bn."
He added: "We have to tackle deep-rooted, structural problems if we are to have a great economy. We need world-class infrastructure, a streamlined planning process … and, crucially, we must kick-start our export performance. We must also see better access to finance for businesses. These are the fundamentals where the UK has consistently failed to punch its weight and which act as a drag on growth and productivity."

And the CIPD, the professional body for people development, said the UK's productivity will not improve unless more is done to address the country's skills challenges.

Ben Willmott, CIPD Head of Public Policy, said: 

"Proposals in today's productivity plan 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."

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