WHAT'S THE PLAN?

John Boydell - Friday, 31 March 2023

As always, I’m not on anybody’s “side” politically, just trying to champion common sense.

In our day to day work, we’re always helping businesses plan but also, crucially, implement. A plan without implementation is a collection of pieces of paper. It’s commonly accepted that the #UK has a longstanding problem with productivity compared to our friends in Europe and many of those elsewhere in the world. We produce less per worker than most do and we need to do something about it as there’s a deficit of wealth production and so availability of money to provide support services for citizens. In 2017, under Teresa May the Government published its Industrial Strategy. That, regrettably, made little progress before it was replaced by the Plan for Growth under the supervision of Boris Johnson as PM and Rishi Sunak as Chancellor. This was clearly in the new post-Brexit and emerging from Covid landscape so that was able to be factored in. What did it propose? It set out three priorities: levelling up; net zero; and “Global Britain”. To achieve these things, three “pillars of investment” were put forward: infrastructure; skills and innovation. That however was subsequently deemed not ambitious enough by Liz Truss and Kwasi Kwarteng, who in September 2022 had their Growth Plan, involving tax cuts and an energy support package, while still referencing: investment; skills and infrastructure. The markets, domestically and internationally, reacted very badly and much of this plan was then reversed by Rishi Sunak, now PM and Jeremy Hunt as Chancellor. It’s a sorry trail over a number of years.

So there’s been a fair bit of planning, some of it contradictory, and not much in the way of implementation. Covid and the war in Ukraine are trotted out regularly as excuses for the lack of progress in boosting the UK’s #productivity and #wealth. The problem with this, of course is that every other competitor country has had to deal with those issues too but has managed to advance, while the UK has fallen further behind. So what is it about the UK that has seen it falling behind for years? A starting point is to look at the fundamentals of productivity: skills; technology and investment. If workers know how to do stuff well, they will do it efficiently. If they have the kit to do it with, they will do it effectively. To give workers skills and to give them kit requires investment. If a team is fixing potholes and only had a pickaxe and shovels, they’re going to take a lot longer to fix it than if they had the latest piece of automated kit that digs and shares the repair. Their output per hour will be a lot lower with the pickaxe and shovels. However, to improve they’d need the new kit and the training to use it, both of which would require funds and time to be invested. How do we look, compared to others? Frankly, not well.

We’ve had years of stagnant and now falling standards of living and the level of productivity is the most fundamental of all factors. Increases in productivity feed through into decreasing real prices and increasing real wages, while falls in productivity do the reverse. Investment in the productive has been woeful. Politics has dictated that there are more votes in pouring money into the ever hungry NHS than, for example, funding further education, where weak funding has little short term pain for votes to be attracted but weakens our medium and long-term productivity as there’s a shortfall in (otherwise achievable) skills.

Let’s cut to it. There needs to be a credible, sustainable plan, supported by the markets and explained and accepted by the citizens of this country. Rhetoric can win votes but it won’t increase productivity. There’s been too much rhetoric and not enough planning/delivery for years on end. This has been exacerbated in recent years by the?trend to deny facts. For example, #Brexit has hit our economy and has made us poorer, as a fact. It is what it is and we need to make the best of it and that starts with acknowledging facts, but instead we have denial. How can you plan effectively without recognising the facts of where you are as you begin a journey to a better destination. Filling the vacuum in productivity with rhetoric (even lofty rhetoric) will not wash any more; the public is wising up to it. They are poorer, they feel poorer and they are demanding to be and feel wealthier. Words have run out for politicians and actions that work will be the new game in town if they want votes. It’s last chance saloon for the Tories and an early yellow card for Labour if it comes to power and fails to take action that works. Here’s the running order: facts; reality check; feasibility; plan; and implement. Now get on with it!