Later this month the Chancellor will announce the autumn budget. By all accounts, it appears there are going to be some severe cutbacks to government spending. But is this the right way to go about things? All commentators agree we have to improve productivity, but is this the way to do it?
Doing work like a hamster running on a tread wheel is not productivity. The UK needs to think smarter and we need to invent better products, systems and services. Just trying to repair an old, outdated engine is not going to help industries forge ahead in the future. Clearly, we have to cut out waste in government, but just cutting things back will not improve productivity; it simply creates a depressive atmosphere for workers, investors and innovators.
To get increased productivity, we need both people who want to go to work and innovators who know that there is a good chance their hard work will turn into well-financed projects.
We need increased productivity
I plead with the Chancellor to help innovators and investors to achieve sustainable businesses and solutions for a ‘Net Zero Carbon’ future, where we are not polluting the atmosphere but building new green industries and services that are the pathway to an exciting and ‘climate safe future’. The Chancellor can invoke all sorts of fiscal measures, but without much improved productivity the UK national debt will remain at record levels.
Set against the other major European countries like Germany, France and Ireland, the UK is way behind in productivity. According to the Office of National Statistics (ONS), the cumulative annual growth rate (CAGR) in Quarter 2 2024 was relatively low (0.5%). The ONS also says that preliminary estimates based on the Labour Force Survey indicate output per hour worked decreased by 0.1% in Quarter 2 2024 compared with the same quarter in 2023. Manufacturing industries made a substantial upward contribution to output per hour over the last year, but in the health and water sectors, it decreased markedly.
According to the business research Expert Market website, the UK currently ranks 14th in the world in terms of productivity. The Times records how thousands go straight from university to long-term unemployed. According to the Guardian, there are a record 2.8 million people off work due to long-term sickness, up 700,000 since Covid-19. The cost of sickness benefits is due to reach £64 billion by the end of the current parliament, up £30 billion on pre-Covid levels. A report by the NHS Confederation and the Boston Consulting Group found that reversing even some of this impact would save taxpayers £19.5 billion a year by the end of the decade, through lower benefit spending and higher tax receipts. The boost to the wider economy would be even bigger, at £62.6 billion!
We need a positive work environment
Creating a positive work environment is crucial for attracting and retaining workers, including the long-term unemployed. Of course, this must be accompanied by other strategies: financial incentives, flexible work arrangements, reskilling opportunities and addressing structural barriers are often just as important. A holistic approach, addressing both the work environment and broader socioeconomic concerns, is likely to be most effective in persuading the long-term unemployed to re-enter the workforce.
Above all, the working environment has to have a massive ‘feel good’ factor about it. The last fourteen years of chaotic Conservative government haven’t helped matters. While many may not wish to admit it, the act of taking the UK out of the European Union has had a major negative impact on many people’s lives, either directly or indirectly.
Introducing shocks to society doesn’t help people’s confidence. Sadly, the way this new Labour government has started to go about things hasn’t improved this, with an attack on the winter fuel payment. My wife said: “Why didn’t they just simply carry on paying it but claw the money back for higher rate taxpayers in the annual tax return.” Simple!
The government and industry have a lot to answer for when it comes to moving from school, college and university to the working world. Very little effort is put in to show students the many varied opportunities out there in the wider world. I don’t think things have changed since my son was finishing his GCSEs nearly 30 years ago, when all we were offered was an evening careers exhibition at the school. Recently, I asked my grandson, who is 17 and studying for his A-levels, what he wants to do, and he replied he wants to go to university. Sounds good doesn’t it, but when I asked him what he would like to do when he leaves university, he didn’t know.
We need a change in attitude
Industry and the government must participate fully in the education system to showcase the benefits and exciting opportunities that there are for people when they eventually leave full-time education. There has to be a greater integration between universities and industry. Every university should have a business innovation centre on site. If nothing else, this should make it easier for students to do some part-time work during their course, with businesses housed at the innovation centre.
Recently I was in Brighton enjoying a cup of coffee in one of the many coffee shops in our town centres these days. During a quiet moment, I asked the barista if they were working during their studies. The answer came back: “I have finished my degree.” It’s pointless investing billions of pounds into universities where a highly educated person ends up working in a coffee shop. Working in retail catering is a perfectly respectable career but you don’t need a university degree to do it. Universities shouldn’t be seen as the end-product – they are the ‘gateway’ to a future career. Universities need to wake up and partner with commerce and industry.
Across the board, there has got to be a change in attitude, whether it’s in the unemployment office, the recruitment department or in government and industry. Work has got to have that ‘good feel’ factor reintroduced to it.
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