CBI: Chancellor must focus on productivity problem to raise living standards
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Chancellor Philip Hammond must tackle the UK's productivity problem if his budget is to improve people's lives across the country, writes Richard Tunnicliffe, the CBI's regional director for the East of England.
Talk of 'deadlock' in recent Brexit talks will have given many pause for thought.
While the EU negotiation is the most complex undertaking of the post-war period, we can't afford to neglect the other challenges facing the UK economy.
In a little over a year, our economy has gone from the fastest growing in the G7 to the slowest, and the IMF's recent downgrade has added to existing woes over poor productivity.
So, when the chancellor opens his red box in a few weeks' time, business leaders will be looking for measures to create a pro-enterprise environment – delivered through a new, bold Industrial Strategy – to help reinforce the UK economy against future challenges.
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Moreover, it's critical that growth reaches all parts of the UK.
Appointing an independent commissioner for Industrial Strategy will ensure all areas of the UK – even those without a devolution deal – don't miss out on government funding. And tackling poor teacher recruitment and retention by reviewing incentives, particularly in areas facing the greatest challenges, will also help level the playing field.
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For too long, the complexities of Brexit have crowded out domestic priorities, such as improving education, fuelling inward investment in energy and infrastructure, incentivising innovation and promoting competitiveness through the tax system.
Put simply, the only sure way to raise living standards and provide the sustainable public services we need is to solve the UK's productivity problem.
Let's start with skills. Preparing the UK's workforce for technological change is essential to bolster prosperity and improve people's life chances. By addressing underfunding in schools' education, incentivising high-quality teaching and delivering the long-overdue careers strategy, the government can help future-proof tomorrow's workforce.
Wherever possible, new measures should build on what has already been started, especially infrastructure. There is an urgent need to deliver projects, we need to see high-vis vests everywhere delivering existing projects in the current road and rail pipeline, from improvements to the A47 and making progress on connections from Norwich to Liverpool Street.
British businesses crave stability to help them invest and grow over the long-term.
The chancellor should set a high bar for tax changes, focusing on targeted measures to incentivise investment and productivity growth. For example, exempting new equipment from business rates and bringing forward the RPI to CPI switch to next April will deliver a fillip for factories and retailers struggling with higher inflation.
Britain's economy also needs to be match-fit for the future. Unlocking public and private investment in R&D to catch up with our international peers will be vital if the UK wants to be among the leaders of the technological revolution.
Only by setting out a vision for the economy that invites investment by shoring up business confidence, and addresses productivity problems, will the government achieve its aim of sharing prosperity and opportunity more equally around the UK.
• Richard Tunnicliffe is the East of England regional director for the Confederation of British Industry (CBI).