The Mail on Sunday - 2021-10-10


We can ALL start to turn Britain into a land of high wages – by parking more carefully and complaining less often

How Energy Crisis Is Hitting The Whole World


BORIS Johnson’s vision of a high-wage, highoutput, better balanced society is fine – we all want that – but the rough reception the Prime Minister’ s speech to the party conference got from business should be a serious warning to him and his colleagues. It is no good banging on about wages needing to shoot up if the supermarket shelves are empty. This is going to be a rough winter for pretty much the entire developed world. And in particular it is going to be a rough one for Britain as we adjust to a new and different post-Covid economy. The world is short of energy, supply chains are clogged and there are shortages of labour everywhere. The Prime Minister is right to aim for a more stable, more productive economy. But we have to recognise how difficult this will be. There must be better co-operation between Government and the business community. There is clearly great scope for high-end manufacturing to grow, for example. But while manufacturing is vital, it is only about 12 per cent of GDP. We have to lift the other 88 per cent too. Government is a big chunk of that 88 per cent – and must ask itself some tough questions about its own performance. Take the ever-expanding army of Government workers. Today, it employs 5.68million people in total, of which central Government accounts for nearly 3.5million. Yet back in the summer of 2010, central Government had a mere 2.8million employees. The so-called decade of austerity has seen that head count increase by more than 600,000 people. Has its productivity increased? Anyone who has struggled to obtain a response from the tax authorities, or queued to get into the country at Heathrow, has good reason to doubt it. Next, Government should look at the efficiency of its spending. All governments make mistakes over big projects. So too do companies. But it is reasonable to ask whether the decision-making process in our Government works as well as it should. Is it capable of making sensible decisions about the country’s infrastructure, for example? Take HS2. Will it reduce regional disparities, one of the key goals? Or will it suck manpower and money from the hard-pressed regions into Central London? HS2 is being revised, although it should perhaps have been stopped years ago. Likewise, the Army’s expensive new Ajax armoured vehicle project has so many flaws that it might be abandoned altogether. Ministers should consider the weight of regulation, also. Of course there must be controls on how companies operate. But if a company needs extra staff to make sure it complies with some new regulation, then the cost of the salaries will be loaded on to the product or service it supplies. The same amount of output needs more labour. Productivity goes down. The whole idea behind Brexit was to simplify regulation, but so far leaving the EU has added to the complexity of exporting – which further adds costs. Taxes add costs too. We all, in some way or other, will have to pay for the damage caused by the pandemic. But the problem is not only about the level of taxation, it is about its complexity. The Government knows this and set up an Office of Tax Simplification in 2010. But we don’t need a department to make things simpler. We need to stop making them more complicated in the first place. Most of the transformation, however, must be done by the private sector. It is so diverse, so complex, so mobile, that it is only possible to sketch some ideas. First, companies – particularly in the service industries – need to look abroad to see how they use labour more efficiently. For example, in Scandinavia, hotel rooms have been made easier to clean by reducing clutter and creating elegance by simplicity. In French restaurants, menus are simplified to save kitchen time. The United States is the leader in developing automated checkouts – and so on. Next, companies can learn from nearer home. If our best firms are so much more productive than our worst, then the laggards have somewhere to look. How? They hire people from their competitors. That means some owners and managers accepting that they don’t always know best. Not easy – but common sense. Third, management matters. The UK has very good business schools, attracting the next generation of business leaders from all over the world. Some 92 per cent of students at Oxford’s Saïd Business School are international. Maybe more Brits should consider formal training to help them lift their game. Four, skills matter. And skills are not a one-shot thing that people learn early in their careers, for most of us have to reskill several times in our lives. People who for whatever reason miss out early on in their careers need to be helped into the new jobs that are being created. Employers are in the front line – because they know what they need to keep the show on the road. A high-skilled workforce is a better paid one than a low-skilled one. Crucially, though, we have to recognise that this is not only about government, or about business. It is about us as ordinary citizens – in our expectations and the way that we behave. We have enjoyed the many benefits of having foreign labour to fill gaps in our workforce – cheaper food, relative affordability of restaurant meals, fewer British workers needed to do jobs that by their nature will be unpleasant. So we all, in our different ways, have to think how to make our society work more efficiently. That means everything from respecting people who are doing tough jobs through to not blocking streets when we park the car. It means not wasting a business’s time by making unnecessary complaints. It means, in our work, figuring out how to do things more simply and swiftly. There may be less choice, but if we can’t get exactly what we want in a shop, we should put up with that graciously. That is how an entire society lifts its productivity. Overall, we are not terrible, but we are only in the middle of the G7 pack. According to a House of Commons briefing published on Thursday, we are worse than the US, France and Germany, but better than Canada, Italy and Japan. We are also extremely uneven. The best UK companies are wonderful. Foreign companies thrive here. Nissan’s Sunderland plant has long been one of the most productive in the world. Half of the top-ten fastest-growing companies in Europe are British, and the top ten per cent of UK firms are more efficient than the top ten per cent in Germany or France. But there is a long trail of underperformers that pull the country down. It is a huge challenge to improve the ways in which our economy works. It will take a decade, and we have a nasty winter to get through yet. We won’t change because the Prime Minister of the day tells us to. But the goal of making Britain a less uneven society – truly levelling up – must be the right one. It would make for a nicer country, too.


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