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  • Writer's pictureAndrew Black

Productivity and Planning

There is now no denying that the UK is in the grips of what can only be described as a ‘productivity crisis’ and has been for some time.

From the mid 1970s right up to the 2008 Global Financial Crisis, UK productivity grew at an average rate of 2.3% a year which was 2nd highest in the developed world. During the financial crisis it slowed to around 0.5% and has stayed low ever since. That lower growth was mirrored in other similar countries but UK productivity was, and has been, much worse than other comparable advance economies. What is even worse is that whilst most developed economies have recovered well post covid (particularly the US) productivity in the UK has remained on an only slightly better than flat trajectory since 2020.

That matters for a whole host of reasons but one of the consequences of flat productivity has been flat growth in average incomes which have grown only about 3% in the past decade for low to middle income households and actually when inflation is added to this, real wages are going backwards. Again, this matters because during that period of flat average wage growth the average house price in Britain has soared by 71%!

In the week of the autumn statement, the Tory Party continue to live up to their well-deserved description of putting the ‘n’ in ‘Cuts’. Cuts to personal tax rates in, but at the same time aware, but deliberately obtuse, of the real problems in the economy. It has been interesting to see Rishi Sunak replace his previous 5 pledges (halving inflation; growing the economy; reducing debt, cutting waiting lists and stopping the boats) with 5 new (well revised) ones this week of reducing debt, cutting taxes, improving energy security, backing british business and creating world class education.

Even Hunt has come up with his own pledges of employment, enterprise, education, everywhere. Are we all keeping up at the back? Anyone would think there was going to be an election next year! BTW the odds at the bookies for an election next spring massively shortened this week on the back of all this with some big money shifting on the betting exchanges towards that outcome.

Hunt said that he wants to create ‘a more productive state but not a bigger one’ and government spending on public services will take a “responsible approach” and focus on “tackling waste”. The OBR says the measures will result in a £19bn reduction in spending on public services, after accounting for inflation.

I’m convinced that this doom loop extends to the planning system. The short term and reactionary policy making that we have all experienced this year has led to a huge issue in the productivity of the entire system to make decisions, get local plans going and direct investment into building new houses. This isn’t an issue of productivity of planning officers or councils but instead the entire planning industry when looked at on a macro level. The promise in the autumn statement of £32m to tackle planning backlogs in local planning authorities will hardly touch the sides and makes little difference in light of the continued uncertainty over the future of national planning policy.

I’m reading an utterly fascinating book at the moment called ‘Late Soviet Britain: Why Materialist Utopias Fail’ by Abby Innes. In it she compares the political haitus of neo-liberalism economic policy in Britain that we are now seeing with the end of the soviet government. Obviously there are huge differences between us and a totalitarianism regime but there is some remarkable ‘isomorphism’ between the two that is scarily coming to pass.

Appreciate this is a thoroughly jolly way to end your week / begin your weekend but there you go. Doom Loops and Soviet Britain. That’s what we have to show for 13 years of Tory Government.

AB - My own thoughts


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