The productivity puzzle

As Government seeks to increase productivity levels in the UK, ICE has called for a strategic and evidence-based approach to deliver investments worth £100bn over the next Parliament.

ICE’s response to the Business, Innovation and Skills committee aims to improve construction’s contribution to UK productivity
ICE’s response to the Business, Innovation and Skills committee aims to improve construction’s contribution to UK productivity
  • Updated: 11 September, 2015
  • Author: Ben Goodwin, ICE Policy Manager

The UK has a long-standing productivity problem. Since the early 1990s productivity in the UK has lagged behind other major economies such as France, Germany and the US.

In the construction industry productivity growth has been even weaker; from 1997 to 2008 it grew by just 0.8%.

The economic and social benefits of high productivity are substantial and while overdue, policy geared at its growth is welcome.

The Government’s Productivity Plan

In July the Chancellor published his plan for tackling the UK’s long-term productivity problem ‘Fixing the foundations: Creating a more prosperous nation’. Infrastructure – a catalyst for boosting growth, skills and innovation – was rightly placed at its heart.

Subsequently the Business, Innovation and Skills (BIS) Select Committee set up an inquiry to explore the extent to which the plan is fit for purpose.

What should the way forward look like?

In its response to the inquiry, ICE set out a number of ways in which both government and industry can help ensure that infrastructure contributes to productivity growth. Both have a vital role to play.

Productivity plan for civil engineers
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Policy should be geared at delivering high performing infrastructure networks and a framework that incentivises long-term institutional investment, while Government’s commitment to infrastructure investment – totalling £100bn over the next Parliament – should be tied into a thorough, evidence-base assessment of future infrastructure requirements. Put simply, long-term investment choices must be strategic.

A world class engineering workforce that is flexible and can easily be redeployed across a range of infrastructure projects is also a key to driving productivity.

This must start in the classroom so we have a pipeline of engineering talent for the future. More physics teachers are needed to inspire children into STEM subjects, better careers guidance is needed so all modern STEM paths are communicated to students, and the focus for apprenticeships must be on high quality schemes that result in real jobs on successful completion.

But we also need to upskill the existing workforce. Industry must step up to the challenge here and ICE will support that through its forthcoming Academy. The ICE Academy aims to be a focal point for providing ‘whole life’ learning, upskilling the existing workforce and those who have taken career breaks by providing topical learning content in key knowledge areas.

There is also more that the industry can do to improve its own productivity, ranging from developing new business models, to supporting greater investment in research and development, and developing the capacity to make cultural changes necessary to adopt new technologies and ways of working.

This too is something that ICE has started working on through its Industry Transformation programme – geared at advancing innovation across industry and ensuring we are agile in developing solutions to the major global challenges we face.

Read ICE’s full submission to the BIS Select Committee