For years business has moaned about our poor productivity figures in the North. So what are we actually going to do about it?
The North West Business Leadership Team(NWBLT) have come up with some practical suggestions but also some stark analysis of the scale of the problem. People in this country work some of the longest hours in Europe but our output is below the average of the G7. Although we have recovered from the 2008-12 recession with growth reasonably healthy and unemployment and inflation low; productivity has remained flat. The NWBLT warn that if this remains the case as the Living Wage comes in, unemployment will be on the way up again.
Manchester is seen as the heart of the Northern Powerhouse yet it still has big problems with its in-work productivity which is £8.2 bn below the UK national average, the greatest shortfall of any of the core cities. As NWBLT Chief Executive Geoffrey Piper recently pointed out only Cheshire and Warrington are above the national average in the North. Manchester’s problem is due to poor skills levels of course, but also shortcomings in transport. Manchester is getting a reputation for chronic congestion on the roads and trains. Recent announcements may address the latter but regarding the endless traffic jams, do you hear murmurings about another attempt to introduce congestion charging?
The NWBLT feel that the vision of a Northern Powerhouse as a truly competitive global economy will remain a distant dream until productivity is improved. So they have come up with some sensible, but quite tough policies. One is to link early introduction of the Living Wage directly to enhanced training for relevant qualifications. Another is to channel government research and development money into Performance Bonds and remove it from under=productive assets. The NWBLT want a Regional Productivity Index to measure performance every quarter by Local Enterprise Partnership area; and they want support for the national Productivity Leadership initiatives on process efficiency, digitalisation and working practices.
Juergen Maier, the Chief Executive of Siemens UK is chair of the NWBLT and wants urgent implementation of his report because he sees caution returning among business leaders. This is due to a number of factors including volatility in the Chinese economy, Middle East conflict and uncertainty over the E.U referendum. Maier believes there are other domestic factors that are unsettling business including the implementation of the apprenticeship levy on larger firms, cuts in industry support and the need for a stronger narrative about the aims of the northern Powerhouse beyond transport.
The Chancellor clearly shares Maier’s analysis of the economy. In November at the time of the Comprehensive Spending Review, George Osborne was bullishly confident that he’d repaired the roof while the sun was shining. Perhaps it was the floods or a fear that he had induced complacency, that has lead to his current reminders that the austerity programme is far from over.
Whatever the prospects for the Northern economy in 2016, they will be improved in the long term if everyone if everyone implements the NWBLT report” Unlocking our Potential: Solving the productivity puzzle.”