Productivity

Sammy Wilson Excerpts

Wednesday 17th June 2015 Commons Chamber

[Chris Leslie]

Normally, I have a lot of respect for the right hon. Gentleman, but I am afraid his facts on that are wrong. Under the previous Labour Government, we had a period of sustained productivity growth. [Hon. Members: “Public sector!”] Did I hear something, Madam Deputy Speaker? When it comes to private sector productivity, we had a sustained period of growth. We can talk about public sector productivity, but I am focusing on the wider economic, private sector productivity, which is ultimately the way in which we create wealth and prosperity in this country.

I am very proud of what the previous Labour Government did. Between 1997 and the period just before the global financial crisis, productivity grew by an average of 2.2%. In fact, it reached 4.2% in 2003. At the time, the UK’s productivity was second only to that of the United States. The CBI has emphasised that improvements in labour productivity accounted for almost three quarters of UK economic growth during that decade. Over that period, real wages rose faster in the UK than in other advanced economies, and rising productivity and GDP growth meant that the previous Labour Government were able to take significant steps in tackling poverty and improving public services. That was not by accident, but by design.

We achieved sustainable growth in productivity because of relentless efforts to focus on competition, innovation, investment, skills and enterprise, including a 10-year framework for science and innovation, incentives for investment in business research and development, the expansion of higher education and adult and vocational training. That was the record of the previous Labour Government.

[Sammy Wilson (East Antrim) (DUP)]

Does the hon. Gentleman accept that employers also have a big role to play? The appetite for low-paid, unskilled employees has added to the problem. Employers must value workers much more, invest in them and be prepared to pay them wages that mean it is worth while investing in them.

[Chris Leslie]

There is indeed a problem in the shift away from the added-value, higher-skilled economy that we must have to maintain our place in, and indeed win, that famous global race. If we think that we can do it simply by chasing lower-wage, lower-skilled markets, we will never ultimately succeed relative to other countries.

--- Later in debate ---

[Michelle Thomson]

I am inclined to agree with my hon. Friend, and I shall address that point further in a moment.

[Sammy Wilson]

I know that it is in vogue for the Scottish nationalists to blame everything on the Westminster Parliament, but does the hon. Lady accept that most of the supply-side measures that could be introduced to improve productivity are already in the hands of the Government in Scotland?

[Michelle Thomson]

I thank the hon. Gentleman for his intervention, but he is, quite frankly, wrong. I shall also cover that point later in my speech.

The sad fact is that the recent growth in UK GDP has been driven not by increased productivity and not by a focus on increased investment levels or high-value sectors. Instead, it has been delivered with zero-hours contracts, often paying the minimum wage and with low employee engagement. That is not the way to power a modern 21st-century advanced economy. We see the results of this poor performance in our manufacturing sector. Previously, manufacturing accounted for some 30% of total GDP—a position shared with many of our European neighbours. However, a lack of investment and a focus on the City of London have resulted in a manufacturing percentage of GDP that is now barely into double figures.

With only a limited set of powers, the Scottish Government have set out an ambitious strategy to increase Scotland’s productivity and, as a result, Scotland’s economy has seen sustained growth over recent years, with record numbers of people in employment. Female participation in the labour market has increased, and Scotland’s female employment has reached a record high. Including more women in the workforce is a powerful driver to increased productivity and encourages a balanced and inclusive economy. The Scottish Government’s plans to expand the provision of free childcare will encourage more parents into work, too. It is worthy of note that between 2007—the year of the SNP’s election to Holyrood—and 2013, the largest relative rise in productivity of any region or nation in the UK was in Scotland.

This debate must fundamentally be about ambition, which is something that the SNP has for Scotland in droves, but our ambition is for much more than simply a return to pre-recession levels of economic performance. Allow me to highlight some key areas that the Scottish Government’s economic strategy—a real long-term economic plan—promotes.