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House of Commons Hansard
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17 April 2018
Volume 639
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3. What fiscal steps his Department is taking to increase productivity. [904776]

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My hon. Friend is asking the right question. The only way to deliver a high-wage, high-skill economy of the future and to sustainably raise living standards is to raise our productivity growth rate. This requires investment by the Government in infrastructure, skills, and research and development. Since 2010, this Government have provided over half a trillion pounds in capital investment, increased investment in skills and reduced taxes for business. But raising the productivity growth rate also requires action at the level of the firm. Lower taxes provide a strong incentive for businesses to invest in raising their productivity. These tax reductions include the £9 billion package to reduce business rates that the Financial Secretary has just mentioned.

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Productivity is a key element in determining our future standard of living. The current productivity gap in Yorkshire and the Humber provides great opportunities for growth. However, significant and sustained investment is required to achieve this. Will my right hon. Friend commit to the excellent northern powerhouse project and ensure that the region gets the vital investment in infrastructure that it needs to improve productivity?

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My hon. Friend is right again. We will only build an economy that works for everyone and every region if we succeed in narrowing the regional productivity gap. For that reason, the Government are fully committed to the northern powerhouse. We have announced a funding boost of £436 million to improve transport connections within the northern city regions through the transforming cities fund, with a further £840 million to be competitively allocated to the largest cities in England. This builds on the record amounts of more than £13 billion over this Parliament that we are already investing in northern transport, which is more than any previous Government.

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One of the ways in which the Chancellor could improve productivity across south Wales and beyond is to invest in the tidal lagoon project, which will bring skills and investment to the area, in line with what he said in answer to the hon. Member for Morley and Outwood (Andrea Jenkyns). So may I encourage him please to bring this investment forward and start delivering for the people of south Wales?

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As the hon. Gentleman knows, the tidal lagoon project is under careful consideration by the Government, and a decision will be made and announced in due course.

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One of the consequences of increasing productivity is of course higher wage growth, which I think would make everyone feel much better. The Chancellor may be aware of the Treasury Committee’s recent report on childcare, which called for more childcare support for those undergoing retraining—another way of increasing productivity. What were his thoughts on that, and what is his progress on talks with the national retraining scheme?

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I am happy to tell my right hon. Friend that we have had a very productive first meeting with the CBI and the Trades Union Congress to flesh out the shape of the national retraining partnership, which is clearly going to be a crucial part of our investment in skills in future. I do take her point on childcare. We have of course seen the Select Committee’s report and will respond to it in due course.

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On 6 April, the Treasury bizarrely used a “thumbs up” emoji in a tweet celebrating the worst decade of productivity figures since 1817. I will help the Chancellor with the arithmetic—that is 201 years ago. I know that he has a new-found Tiggerish optimism, but is not his Department’s tweet, even with his misplaced exuberance, more like self-delusion for which local government, the police, the NHS, the fire service and public services more generally are paying the price?

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We have a challenge in this country around productivity, and it is not a new challenge, as the hon. Gentleman well knows. For eight years, the OBR has estimated UK productivity growth, and on eight occasions it has had to revise down the estimates that it had made. This is a long-term challenge facing this country. Rather than trading insults about what has happened in the past, I suggest that the most constructive approach would be for us to work on improving the UK’s productivity performance. That means investing in infrastructure—this Government have committed half a trillion pounds of capital investment since 2010—addressing the skills gap, ensuring that capital is available to businesses, and addressing management challenges at the level of the firm. All those strands need to be taken forward together if we are going to create the high-tech, high-wage economy that we all want to see in this country.