Saturday 21 March 2015


By Andy White
Head of Innovation
Budget week has passed and George Osborne went on an epic strut with the swagger of a man who has delivered the goods.
Mr Osborne’s boasts about growth, deficit reduction, and lower taxes will be repeated throughout the election campaign, as the Conservatives aim to convince voters that they have rescued the country from a Labour-shaped hole. The key message being “stick with us, we’re on the right path, you can’t trust the other lot”.
Labour on the other hand stuck to their own familiar refrain on the NHS: “colossal cuts”, low pay and rising inequality.
Meanwhile, a new ComRes poll of over 150 MPs for Nesta uncovered some fascinating differences between the two parties vying for government on the perceived importance of economic issues facing the UK. The results of this poll, as with so much of our polling of legislators, puts paid to all those who say that the major parties are all the same.
Unsurprisingly, the government deficit is seen as an important priority by 87% of Conservative MPs, compared with only 43% of Labour MPs. Conversely, low pay is prioritised by 92% of Labour MPs versus only a quarter (25%) of Conservative MPs.
But are both parties at risk of ignoring the big economic problem of the day?
‘Output per worker’ – or productivity – is a key economic indicator. The UK has seen a prolonged decline in productivity since 2008, and nobody is sure precisely why it has happened (see ‘The UK productivity puzzle’ by the Bank of England, for example).
Our research for Nesta suggests that MPs recognise that low productivity is a problem – and that it is the one economic issue on which both the Conservatives and Labour appear to agree.
But because it is a “second order” issue for each party, behind fiscal discipline for the Tories and low pay and inequality for Labour, it keeps falling down the to-do list. Indeed, in a climate where the major parties are in almost perpetual campaign mode and productivity is not seen as an obvious vote winner it appears to be skipping the attention of our parliamentarians.
The research findings show that there is worryingly little consensus across the parties about what is causing low productivity (and, by extension, how best to address it).
Given that most models project a messy parliament and some form of multi-party government, it may be worth paying more attention to “under the radar” issues like low productivity which might command more cross-party support than the shrill pre-election battle cries.

Ultimately, increasing productivity will be key as a long-term solution to both the fiscal deficit and wage stagnation. At some point politicians will have to start talking about it.
Until the election, though, expect to keep hearing more of the same.

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