Opinion

Tomorrow's economy: The great productivity debate gets its time in the spotlight

4 min read

09 July 2015

Former editor

On the eve of chancellor George Osborne unveiling the government’s approach to improving the UK’s dire productivity level, Real Business is launching our new focus, which will examine what business leaders themselves can do to make their operations more streamlined and efficient.

It’s no big secret that Britain doesn’t compete on the productivity front as well as it does on others. We’re the second worse in the G7, ahead of serial offender Japan, and have failed to improve output at all since the global financial crisis.

However, today’s business generation has at their disposal the most useful set of tools anyone has ever had – so why can’t we seem to execute?

Productivity has to be a sort of joint venture between government and the business community. As such, it is reassuring to see Osborne and the Conservative government decide to tackle it head on with a raft of new measures. It remains to be seen how successful they’ll be, but you can’t fault them for trying.

On 10 July the government will unveil its productivity plan – a set of policies it hopes will provide companies with the framework necessary to do more with the same, or probably less. As a prelude to the published plan, Osborne aligned a number of announcements made in the summer Budget 2015 to productivity. As examined by Real Business in our comprehensive coverage, he: stated corporation tax would be cut further to 19 per cent in 2017 and 18 per cent by 2020; set the Annual Investment Allowance permanently at £200,000; raised the Employment Allowance by £1,000 to £3,000; introduced an apprenticeships levy; and diverted vehicle excise duty proceeds to fund road improvements.

This is all well and good, but what can be done at a more macro level by the people at the helm of the government’s “engine room of growth” – SMEs.

Already, we’ve heard from three leading businesses on the kind of strategies each have employed to ramp up productivity. In the feature linked to below, Real Business discovered how EAT integrated new software to help management make quicker, more informed decisions, how StuRents allowed its CTO to work remotely and why Motorclean is now able to handle more sales dockets. Describing the changes made, EAT’s FD, Strahan Wilson, said: “Improvements are like standing on the shoulder of giants.”

How three UK firms upped productivity with simple investments

To find out how others are “standing on the shoulders of giants”, our new focus will speak to even more of these companies. We expect to unveil what new technologies are being employed (from software to hardware), how new methods of working are contributing and what kind of major investments are being made in an era of increased positivity.

During his speech in the Houses of Parliament, marking the first Budget from a majority conservative government in nearly 19 years, Osborne said productivity will “ensure Britain becomes what we want it to be – the most prosperous major economy in the world by the 2030s”.

Without giving him too much credit, this one line sums up the productivity debate very well. It is not a quick win, but a battle requiring progressive, long-term thinking initiatives. By the time 2030 rolls around Messrs Cameron and Osborne will probably be collecting a nice pension and sitting in the House of Lords, but the changes they make now may prove key.

There are quick wins on a business-by-business level to be had, as the three companies in our feature explained, but it is the long-term effect which will have a more resounding impact.

So, if you have made some changes in recent years to improve productivity, however big or small, we’d like to hear from you. You can get in touch through hunter.ruthven@realbusiness.co.uk.