Source · Select Committees · Treasury Committee
Fourth Report - Jobs, growth and productivity after coronavirus
Treasury Committee
HC 139
Published 13 July 2022
Recommendations
5
Accepted
Para 44
In its response to this Report, the Treasury should set out how it is making...
Recommendation
In its response to this Report, the Treasury should set out how it is making the Plan for Growth an effective successor to the Industrial Strategy, given that it is not taking on additional resources for this purpose, and in …
Read more
Government Response Summary
The government states that the Plan for Growth is an overarching framework which helps to support a whole-Government approach to delivering long-term growth, and outlines processes already in place.
HM Treasury
View Details →
8
Para 65
There are productivity-enhancing opportunities arising from the pandemic, in an increased take up of digital...
Recommendation
There are productivity-enhancing opportunities arising from the pandemic, in an increased take up of digital technologies and in remote working in certain circumstances. The Government should be looking at how it can facilitate these positive developments, while also being mindful …
Read more
HM Treasury
View Details →
9
Acknowledged
Para 72
Brexit has not been a major focus of this particular inquiry.
Recommendation
Brexit has not been a major focus of this particular inquiry. Nonetheless, it will clearly have a profound impact on the economy’s future direction and growth prospects, potentially greater than the long-term effect of the pandemic. In its response to …
Read more
Government Response Summary
The government acknowledged the need to explain how growth policy is identifying and helping sectors most adversely affected by changes in trade between the UK and EU. The Autumn Statement announced that the government will move rapidly to review retained EU law in key growth industries.
HM Treasury
View Details →
11
Acknowledged
Para 92
Help to Grow: Management and Help to Grow: Digital are promising responses to the problems...
Recommendation
Help to Grow: Management and Help to Grow: Digital are promising responses to the problems of relatively poor digital technology adoption and management skills among businesses, but there have been some difficulties in the early days of the schemes. Considering …
Read more
Government Response Summary
The government acknowledged the importance of long-term stability in growth policy. They stated they are committed to helping small businesses and are rebalancing the rates of the reliefs to ensure cutting-edge, innovative firms have access to finance to invest.
HM Treasury
View Details →
14
Deferred
Para 121
The Treasury has allocated significant and welcome resources to initiatives to help people who are...
Recommendation
The Treasury has allocated significant and welcome resources to initiatives to help people who are seeking work gain employment. However, a more urgent problem now seems to be becoming clear in the sharp fall in the number of people looking …
Read more
Government Response Summary
To understand what action should be taken as a result of the rise in economic inactivity, the Department for Work and Pensions will thoroughly review workforce participation concluding in early 2023.
HM Treasury
View Details →
15
Acknowledged
Para 131
The Prime Minister has suggested that labour shortages should not be resolved through immigration, as...
Recommendation
The Prime Minister has suggested that labour shortages should not be resolved through immigration, as part of a drive for a high-wage economy. At most, some witnesses to our inquiry thought this could have a small effect on wages. Moreover, …
Read more
Government Response Summary
The government acknowledges the need to address gaps in the UK's skills and ease labor shortages, but emphasizes that immigration will not be the long-term solution and reform within industry is vital. They are taking steps to ensure the education system provides the skills current and future employers need, for example through T-Levels, Higher Technical Qualifications and Skills Bootcamps.
HM Treasury
View Details →
16
Rejected
We have received a large number of proposals for reform of the Apprentice Levy in...
Recommendation
We have received a large number of proposals for reform of the Apprentice Levy in England. A full review is needed, and the Treasury should confirm that it is going ahead with such a review. (Paragraph 132) Macroeconomic policy
Government Response Summary
The government stated there will not be a formal review of the Apprenticeship Levy or system at this time.
HM Treasury
View Details →
Conclusions (10)
1
Conclusion
Acknowledged
Para 18
Witnesses were mostly unpersuaded by the Government’s arguments for the abolition of the Industrial Strategy and its replacement with the Plan for Growth. More importantly, we are particularly concerned at the ‘chop and change’ and lack of long-termism in growth strategy and policy, without which businesses themselves are unable to …
Government Response Summary
The government states that the Plan for Growth is an overarching framework supporting a whole-Government approach to delivering long-term growth, with departments reporting progress quarterly.
2
Conclusion
Accepted
Para 24
Although witnesses were generally in agreement with the broad aims and priorities in the Plan for Growth, there was some dissatisfaction in both written and oral evidence with other aspects. It was suggested that there was a lack of detail and a lack of collaboration with businesses and regional bodies, …
Government Response Summary
The government states that the Plan for Growth is an overarching framework which helps to support a whole-Government approach to delivering long-term growth, and outlines processes already in place.
3
Conclusion
Para 32
We are concerned at the abolition of, and the lack of a replacement for, the Industrial Strategy Council, which provided oversight and evaluation of the Government’s growth strategy, and a suite of detailed metrics against which to judge the success of growth policies. The Council was a force for consistency …
4
Conclusion
Accepted
Para 43
The Government as a whole is spending a large amount of money and time on devising growth strategies and policies. It is important to have a robust, overarching strategy for this that drives co-ordination across departments. This function may well sit best in the Treasury. However, it is unclear to …
Government Response Summary
The government states that the Plan for Growth is an overarching framework which helps to support a whole-Government approach to delivering long-term growth, and outlines processes already in place.
6
Conclusion
We do not believe that the Plan for Growth should necessarily be discontinued, let alone the Industrial Strategy revived, as another wholesale change in policy would exacerbate the lack of long termism and consistency in policymaking. Nonetheless, there needs to be a renewed effort at a co-ordinated growth strategy across …
7
Conclusion
Acknowledged
Para 59
Post-pandemic scarring seems likely to be much less of a problem than first feared. But there are still risks, especially outside the labour market, that need Government attention. Notably, these include the long-term legacy of interruptions to education. Business indebtedness might also be a factor restraining investment and should be …
Government Response Summary
The government acknowledges that productivity growth has slowed and is monitoring issues exacerbated by the pandemic, such as business indebtedness and individuals withdrawing from the labour market, and states that it has announced a package to reform and invest in the key supply side drivers of productivity gains.
10
Conclusion
Acknowledged
Para 85
A consistent theme in this inquiry was that a significant part of the UK’s productivity shortfall compared to other countries is due to a ‘long tail’ of low-productivity firms, usually small ones. Relatively poor digital technology adoption and management skills were seen as key interlocking causes.
Government Response Summary
The government acknowledges the importance of productivity and has announced a package to reform and invest in the key supply side drivers of productivity gains, including infrastructure and investment.
12
Conclusion
Acknowledged
Para 100
The Chancellor is correct to pinpoint business investment as a component of the UK’s shortfall in productivity compared to other major advanced economies. The UK’s record in this area has worsened since 2016. In addressing this investment shortfall the Chancellor’s focus on reforms to tax incentives is a good start, …
Government Response Summary
The government acknowledged the importance of addressing the investment shortfall through tax incentives and policy certainty and stated they are committed to helping small businesses and are rebalancing the rates of the reliefs to ensure cutting-edge, innovative firms have access to finance to invest.
13
Conclusion
Accepted
The target to spend 2.4 per cent of GDP on research and development (R&D) is an important aspect of growth policy. We re-iterate our disappointment over the pushing-back of the target to spend £22 billion of public money on R&D and continue to warn against any further slippage. (Paragraph 105) …
Government Response Summary
Government spending on R&D will increase to £20 billion a year by 2024–25, a cash increase of around a third compared to 2021–22.
17
Conclusion
Not Addressed
The key points made by witnesses on macroeconomic policy issues were: • Global energy prices and supply chain disruptions arising from the pandemic are the main factors behind the outbreak of inflation. But second-round effects, in the form of inflation expectations among the public, and domestic factors in the UK, …
Government Response Summary
The government provides context on the economic situation since the report was published including the impact of global challenges, Putin's invasion of Ukraine, and high energy prices. It notes the high rate of inflation and deteriorating economic outlook.