Economy: Productivity

Lord Hamilton of Epsom Excerpts

Monday 5th September 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, private business needs to feel confident about many things in order to undertake further investment decisions, of which the latter part of what the noble Baroness asked may be one. However, a number of other factors are important. In that regard, it is interesting that the latest evidence on investment is not only slightly more encouraging than was the case last year but perhaps ahead of some expectations.

[Lord Hamilton of Epsom (Con)]

My Lords, can my noble friend confirm that one of the reasons for low productivity in the United Kingdom is the seemingly unlimited supply of immigrant labour which is keeping down wage rates? Does he agree that if we manage to limit immigration as a result of Brexit, our productivity might go up?

[Lord O'Neill of Gatley]

My Lords, I am not sure that I would agree with my noble friend’s assertion. However, I agree with the inference that many things lie behind our apparently low and disappointing productivity performance, which I spend far too many hours trying to wade into. If you look at this in the kind of detail that I do, it is interesting to note that, if you take away the negative contributions made in those areas such as finance about which people are usually the most critical, our productivity performance since the recession of nine years ago is not any worse than that of any other member of the G7. There are many reasons behind our apparent—and probably realistic—disappointing productivity performance.