IoD responds to Government’s plan to improve UK’s productivity

The Institute of Directors has welcomed the Government’s publication of ‘Fixing the foundations: creating a more prosperous nation,’ [1] which sets out measures to improve the UK’s productivity.

James Sproule, Chief Economist at the Institute of Directors, said:

Productivity is the key determinant of long-term economic growth, and it is right that the Government is committed to boosting the UK economy through measures which address this. While in some areas the UK has performed well, we cannot deny that there are still significant challenges to overcome.

It encouraging to see the Government set out proposals which are long-term in nature and will help businesses well beyond the life of this Parliament. Companies’ investment horizons span decades not months and years, and it is vital that government policy recognises this. A flexible labour market and simple tax code are crucial components of a competitive economy, as they encourage people to move jobs or start businesses in new and exciting industries, and make sure labour is allocated as efficiently as possible across the economy.

Jimmy McLoughlin, Head of Innovation Policy at Institute of Directors, said:

Technology and financial services are two of the UK’s most dynamic industries. The development of the ‘New Bank Unit’ is a vital step to bring these two industries closer together and help Britain cement its place as the global hub for fintech.

Work 2 (PD)IoD members consistently rank broadband as their top infrastructure priority. The commitment to ensure superfast broadband reaches 95 per cent of businesses by 2017 will be cheered by firms up and down the country. Almost no plan on digital infrastructure would be too ambitious, and is vital if the UK is to maintain its position as the number one digital economy.

The creation of departmental innovation plans is an interesting idea which could support the growth of disruptive technologies. It is important that new regulation does not stifle fledgling industries before they have properly emerged.”

Seamus Nevin, Head of Employment and Skills Policy at the Institute of Directors, said:

The government has correctly identified apprenticeships as a key factor in boosting Britain’s productivity. While IoD members welcome this focus on skills and training, the emphasis must be on quality. The coalition government did an excellent job of increasing the number of apprenticeships, but many of these were not of the required standard, with one in four apprentices failing to complete their placement. Steps must be taken to ensure that future apprenticeships are of the quality and standard that employers need.

The education system must also take account of the shift in the nature of work, and growing need for people to be aware of the importance of dynamism and life-long learning. Many of today’s school leavers and graduates will be working in jobs that don’t yet exist, in industries that haven’t yet been created. The days of people finishing education at school and having a clearly-defined career path are over. We must enable and encourage people to continually develop new skills and be open to new opportunities.”

[1] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443897/Productivity_Plan_print.pdf

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