Secretary of State for Business, Innovation and Skills Sajid Javid launched the report Fixing the Foundations at Longbridge. The document sets out a 15-point plan that the government will put into action to boost the UK's productivity growth, centred around two key pillars: encouraging long-term investment, and promoting a dynamic economy. It sets out the government's long-term strategy for tackling ?the issues that matter most for productivity growth.
Javid described the back drop against the report as the worst recession in almost a century, the biggest budget deficit since the Second World War, the world's largest bank bailout and a nation saddled with debt and an economy struggling to grow.
"Five years on, the picture is very different," he said. "Our long-term economic plan is working, and Britain is working. Or economy is growing faster than that of any other G7 nation, and we've gone from a record-breaking recession to record employment. Last year, Birmingham alone created more new jobs than the whole of France.
"But we're not about to stop now. I want to take British business to the next level. And the best way to do that is to boost our productivity. Productivity is something we've been hearing a lot about recently, and that's because it's one of the few areas of the economy where Britain is struggling.
"Britain is home to some of the world's most innovative and dynamic businesses, staffed by incredibly talented, hardworking individuals. Yet our productivity – the rate of output per hour worked – is well below its potential. In stark terms, it now takes a worker in the UK five days to produce what his or her counterparts in Germany can deliver in four.
"The picture's not entirely bleak. Standing here in Longbridge a decade ago you could have been forgiven for thinking that Britain's car industry was in terminal decline. Yet today, the UK is home to the world's most productive automotive sector. And if one sector can solve the productivity puzzle in such spectacular fashion, there's no reason why others can't too. It's crucial that they do, because productivity isn't just some obscure measure, of interest only to economists. It matters to each and every one of us. If we could match USA for productivity, it would boost our GDP by 31% – that's equivalent to £21,000 a year for every household in the UK.
"And higher productivity means higher incomes. When productivity rises, standards of living rise too. So today I'm proud to publish 'Fixing the foundations'. It's our plan for productivity, and our blueprint for creating a more prosperous nation.!
The Engineering Employers Federation (EEF) were quick to comment on the report with Terry Scuoler, its chief executuive calling for solid policy foumdations to enable the UK's productivity performance to go from stumbling to soaring during this parliament. "The new administration's promise of a whole government focus on productivity and boosting the levers of growth is an encouraging step," he said. "Launching this plan in the Midlands, the business secretary was right to draw attention to how government and industry working together with an industrial strategy can, in part, help our key sectors like automotive become global productivity leaders.
"Measures already announced by ministers on tax reform, infrastructure investment and devolution are today being supplemented with action on innovation, housing and export support. Together these make a down payment on what will be needed to ensure the pay rise the government has ambitions for by the end of this parliament is affordable, while at the same time we start closing the productivity gap with competitors. The next instalment will be the Spending Review later this year, when the government's plans will need to ensure that their framework for long-term growth and prosperity – investment, skills, infrastructure and innovation– remains a priority in the face of tough decisions.
"It's particularly reassuring to hear the business secretary single out a commitment to the development of high-level skills and plans to increase the level of employer input into this critical agenda – business will want to work closely with government to ensure we get this right for the future."