Productivity and skills continue to concern

Jason Ford, news editor

Most people agree that increased productivity is a good thing and last week the chancellor Philip Hammond underlined the Tories’ commitment to boosting output in his Autumn Statement.

The announcement of a £23bn National Productivity Investment Fund - to be spent on innovation and infrastructure over the next five years - was generally well received and by the following day Hammond and his boss Theresa May were in Gloucestershire for a tour of Renishaw’s main research and development facilities.

Commenting on the visit, Sir David McMurtry, Renishaw’s chairman and chief executive, said: “In his Autumn Statement the chancellor spoke of his ambition to achieve a high wage, high skills economy, and we fundamentally believe that to create wealth for our company and the nation requires innovation in the generation of new technologies, and as importantly, innovative manufacturing that enables those technologies to be produced profitably in the UK.”


In last year’s Autumn Statement Hammond’s predecessor George Osborne reiterated the economic benefits that can be brought about by backing science. He set out ambitions for the UK to be the wealthiest major economy by 2030, supported by a 15 point productivity plan that included long-term investments in business by cutting corporation tax and fixing the Annual Investment Allowance at £200,000; investing in skills by introducing an apprenticeship levy; and investing in the Northern Powerhouse and supporting infrastructure.

However, whilst many manufacturers recognise the importance of improving productivity (59 per cent according to a recent report from Lloyds Banking Group and the Manufacturing Technologies Association), only 28 per cent believe it is a problem for their own businesses.

Over 1,500 companies took part in the survey, which found investment in production machinery (44 per cent), skills and training (37 per cent), automation (30 per cent) and robotics (12 per cent) as drivers for productivity.

Of those cutting back investment, 15 per cent feel there is a lack of available skilled labour, an issue reflected in two of the largely positive comments received by The Engineer immediately after the Autumn Statement.

“Government wants home-grown talent to deliver Research & Development, driverless cars and new energy infrastructure, but we just don’t have the sufficient engineers to deliver this,” Dr Colin Brown, engineering director, IMechE. “Government must face facts and outline a clear strategy to ensure the UK has the skills it needs for the economy to thrive.”

Kit Cox, CEO of Enate, said: “Hearing the government’s desire to foster, develop and keep innovation here is welcome, but the government will only be considered visionary when it instigates a radical education overhaul as, right now, we don’t have enough people with the skills to deliver.”

A new report published today by Albion Ventures has found that 50 per cent of small businesses with over five employees are planning to grow their headcount over the next two years, but finding skilled staff remains challenging.

Per sector, manufacturing SMEs reported the highest level of concern about finding skilled staff, followed by the technology and telecoms sector and construction businesses.

According to Albion Ventures, this is the first time that SMEs have identified a shortage of skilled staff as the biggest obstacle to growth, ahead of red tape and regulation ranked in second and third places in 2016.

Political uncertainty and leaving the EU were ranked in fourth and sixth place respectively.

Patrick Reeve, managing partner at Albion Ventures said: “Policymakers charged with deciding our post-Brexit future must recognise that many of the skills that enable us to compete in a fast-changing and increasingly competitive world are in short supply and our best chance of overcoming this challenge is by building on the UK’s first class reputation as a home for global talent.”

The fourth Albion Growth Report is based on interviews with 1,000 SMEs and highlights factors that create and impede growth in post-Brexit Britain.