Government’s Productivity Plan lacks focus, says Business Committee

The BIS Committee calls on the Government to set out how it is going to implement the Productivity Plan and measure the success of each of the assortment of policies included in the plan. The Productivity Plan consists of 15 different policy areas, from transport, energy, and planning to science, finance, and infrastructure. The BIS Committee report focuses on the main areas in the Plan relating to skills, innovation, and investment, looking at areas such as investment in Research & Development (R&D), apprenticeships, and student visas.

Iain Wright MP, Chair of the BIS Committee said: “Productivity is the pressing economic challenge of this Parliament. Improving productivity is the key way in which our country stays competitive and raises living standards.  In recent years other countries have stormed ahead with productivity gains and we need to catch up. As a Committee we welcome the Government’s focus on tackling this crucial issue for the UK economy. However, rather than being a clear and distinctive roadmap as to how Britain will close our productivity gap, the Productivity Plan is a vague collection of existing policies. The analysis in the Government’s Plan is good, but the milestones for implementing improvements are virtually non-existent. If the Productivity Plan is going to avoid collecting dust on Whitehall bookshelves and having a legacy of being seen as worthy but useless, then the Government needs to back it up by setting out how these policies are going to be implemented and how their success will be measured”.

The Committee expresses concern about the potential damage to business R&D investment from the Chancellor’s decision to convert £165m in grants to loans. The Committee calls on the Government to explain how this will help boost R&D investment and provide specific evidence of the rationale behind this shift in policy.

The BIS Committee welcomes the desire to close the skills gap and encourage vocational training by setting an ambitious target of three million apprenticeship starts by 2020. However, the Committee notes the Government’s apparent lack of consultation with industry on this policy and raises concern that this decision has been made with no consideration for what type of training businesses actually require. The Committee calls on the Government to set out the rationale and evidence base for its three million target.

On the apprenticeship levy, given the Government has suggested the skills agenda should be employer-led, the Committee  does not believe the Chancellor has yet provided enough detail about how the levy will be implemented in a way that adequately protects sectors that—for legitimate reasons—do not use apprentices. The Committee recommends the Government now consults with industry to ensure the apprenticeship levy allows sectors to invest in skills through different qualifications and training methods specific to their needs.

“As a Committee we will keep a determined focus on scrutinising investment, regulation, innovation and skills policies designed to boost productivity. We hope this report and its recommendations will help to see the Productivity Plan succeed and ensure it delivers meaningful results for the UK economy."
Iain Wright MP, Chair of the BIS Committee

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