Bank of England and Big Business take over productivity drive from the amateurs – where does this leave our Local Enterprise Partnership?

Our LEP members are pretty much one-trick ponies representing primarily the interests of their companies or their councils. Are they now quietly being frozen out?

“British business leaders announce further plans to boost firm-level productivity at Bank of England

The governor of the Bank of England, Mark Carney, has chaired a meeting of UK business leaders who have announced a new set of commitments to help UK firms improve their productivity.

As the countdown to Brexit begins, Be the Business – the campaign organisation formed to tackle the UK’s longstanding productivity challenge – met with the governor to set out plans to make the UK more productive and competitive.

Attendees included the leaders of Amazon, BAE Systems, the British Museum, BT, CBI, Cisco, EY, KPMG, the John Lewis Partnership, McKinsey & Co, Rolls-Royce and Siemens UK.
UK productivity grew by 0.9 per cent in Q3 and 0.7 per cent in Q4 of 2017.

While positive, this follows a decade of under-performance and Britain remains 25 per cent less productive than Germany. In its latest inflation report, the Bank of England highlighted poor productivity growth as a key factor limiting the UK’s capacity to grow to around 1.5 per cent per year.

That’s why some of the UK’s leading businesses have committed to bringing world-class management and technology practices to thousands of British businesses in their communities and supply chains. This includes:

Support for a national digital platform, launched today, giving businesses best in class advice on how to improve.

A new mentoring programme, launching nationwide later this year, to help SMEs build essential management skills – supported by senior staff from companies including GSK, the John Lewis Partnership and Siemens

The national roll-out of Productivity through People – an executive education programme for SME leaders

A new business productivity index and a series of tailored programmes targeted specifically at SME productivity

The Bank of England has been at the forefront of highlighting the need for UK firms to improve their productivity. In March 2017, the organisation’s chief economist Andy Haldane warned that technological diffusion from business “leaders to laggards” has slowed. This message was echoed by chancellor Philip Hammond, who announced a call for evidence in the Spring Statement to understand how to best help the UK’s least productive businesses to learn from, and catch-up with, the most productive.

At the meeting, held on 9 April 2018, Carney said: “UK productivity has severely under-performed since the financial crisis, resulting in a lost decade for real incomes and a lower speed limit for the economy. Reviving productivity growth is critical for the UK’s long-term economic prosperity, and part of the answer lies in spreading best practice across a much wider range of firms. Be the Business are playing a key role in achieving that, helping businesses to identify and implement ways to improve their productivity.”

Also attending the meeting was Charlie Mayfield, chairman of the John Lewis Partnership and Be the Business, who commented: “Getting our businesses to improve their performance to the same level as our international competitors is the biggest economic challenge we face as a country. The UK’s businesses have the solution in their grasp. That’s why we’re building a movement that will recruit tens of thousands of companies across the UK to ensure we’re match fit to compete post-Brexit.”

Note:

Be the Business is a new business-led organisation created to close the UK’s productivity gap. Chaired by Charlie Mayfield, chairman of the John Lewis Partnership, Be the Business is spearheading a business-led drive to help companies across the UK improve their performance.

It is supported by some of the UK’s most senior business leaders including Tera Allas (McKinsey & Co), Olly Benzecry (Accenture), Sir Roger Carr (BAE Systems), Roger Connor (GSK), Ian Davis (Rolls-Royce), Carolyn Fairbairn (CBI), Doug Gurr (Amazon), Dame Fiona Kendrick (Nestle), Sir Richard Lambert (British Museum), Prof Juergen Maier (Siemens UK), Sir Charlie Mayfield (John Lewis Partnership), Gavin Patterson (BT Group), Phil Smith (Cisco), James Stewart (KPMG), Steve Varley (EY) and Nigel Whitehead (BAE Systems).

Be the Business’s advisory board members have committed the first 100 mentors to a leading nationwide mentoring programme. Be the Business will report on the programme roll-out at its next advisory board meeting, to be hosted by the chancellor, in September 2018.

Productivity through People is a 12-month regional productivity programme for SME leaders. Initially launched by BAE Systems and the University of Lancaster in January 2017, participants undertake a series of masterclasses, led by the leading business school faculty and industrial visits to some of the UK’s leading businesses, alongside tailored mentoring. Programmes are currently underway in Lancaster, Bath and Glasgow, and a national roll-out is in development for 2019.

Office for National Statistics, Labour productivity, UK: October to December 2017:
https://bit.ly/2uRexXl

Productivity puzzles, speech given by Andrew Haldane, chief economist at the Bank of England, at the London School of Economics on 20 March 2017:
https://bit.ly/2EwlP2q

https://www.bethebusiness.com/2018/04/british-business-leaders-announce-further-plans-to-boost-firm-level-productivity-at-bank-of-england/

Productivity, high tech, software development? Look to Cornwall not Devon or Somerset

BBC Spotlight tonight: Cornwall – thanks to its attractive lifestyle and very fast broadband throughout the county from an EU project – is cornering the market in high-tech and software and gaming industries.

Devon – with its special, expensively – developed campuses and industrial areas and its “growth point” – is losing out.

Productivity match: Cornwall 1 – Devon 0

About that doubling of productivity in Devon …

“Ageing workforce a “ticking time bomb” as employers deal with mental and physical frailties”

Local authorities are sitting on a “ticking time bomb” due to the ageing workforce a Mid Devon officer has said.

In a statement regarding fitness for work issued by the authority, the Council said that they were aware that as the average age of the workforce increases the physical ability to perform manual tasks can become more challenging and ultimately can contribute to higher sickness absence rates attributable to muscular-skeletal conditions. …

… Discussions over the district’s handling of the ageing population were brought up by Councillor Jenny Roach who shared her concerns.

“When you read this report it talks about the individual being fit for work and the authority making sure that a person was fit for work,” she said. “When you get to be over 60, and you’re having to do a hard job you’re not going to be as fit for work as when you’re 28/29. I know you’re talking about people having other skills but in reality what can be done for those people?

“I would prefer it if the authority was saying that this was a major issue as people are having to work longer to keep the money flowing. We should make sure as an authority to make sure that jobs are mechanised as they have done in healthcare.”

Cllr Roach added that the word lifting is no longer used in healthcare, and has been replaced by the term moving and handling and that Mid Devon District Council should look into ways of mechanising jobs to avoid heavy lifting.

She added: “I can think of nothing worse than at 68, having to go out every day in all sorts of weathers when your arthritis is killing you and life heavy boxes. It’s a really big issue, and it’s not usually an issue people of qualifications or high positions will have to worry about. It’s the people who are refuse collectors who will have to continue to do that job.”

Catherine Yandle, Mid Devon’s group manager for performance, governance and data security replied: “Actually, that’s a fallacy. I totally agree that they’re the ones who you think would be impacted more, but in general, that’s not the case. We all lose the ability to think and to react in quite the same way when we get older.

“Unfortunately, because the default retirement age finished about five years ago, we are waiting and sitting on a ticking time bomb of issues with older staff and people whose retirement ages have been lengthened so they have to work longer to get their pensions, who feel the pressure to do so, so they will feel they need to work longer.

“We can’t just look at people’s functional health in respect of their physical wellbeing. We look at cognitive health and how they assimilate information. Because of age discrimination, you can’t say to people that they should retire; there isn’t a default retirement age. If they’re not performing in the way that we want them to be that physical or mental agility, then we will have to go down the capability route with them because there is no way of us dismissing those people unless they chose to go.

“We have a solicitor here who is also a qualified HR practitioner, so we’re very fortunate that we’re able to have somebody who has that understanding. This is very difficult for us as an employer.”

Cllr Roach said she was concerned how the Government was pushing people to work beyond their late 60s, yet being told they no longer are fit to carry out tasks they used to be able to.

“It’s fundamentally wrong, and that is not unfair. I think this Council should be doing something about it,” she added.

However, Ms Yandle added: “I agree with you, I don’t think it’s fair, I don’t think it’s right, it leaves a very nasty taste in the mouth of the employer for having to do that, but that’s where we are.

“We could accept a lesser performance, but I don’t think you as councillors would be happy with that, because you want value for money, you are representing the electorate who expect people to be performing at a certain level.”

https://www.devonlive.com/news/devon-news/ageing-workforce-ticking-time-bomb-1418980

The gender pay gap

Women earn 6% MORE than men at Exeter City Council
Women earn 3.2% less than men at East Devon District Council
Women earn 17% less than men at Devon County Council
NHS Northern, Eastern and Western Clinical Commissioning Group pays women 40.7% (yes 40.7%) less than men

Look for other major employers (local and national) here:

https://www.theguardian.com/news/ng-interactive/2018/apr/04/gender-pay-gap-when-does-your-company-stop-paying-women-in-2018

Council borrowing so high, government intervention may be needed

EDDC is borrowing to fund the building of its new HQ and to fund its “Growth Point” and is also considering going into the housing construction market.

“Local authorities could face further intervention by central government if new changes to investment and treasury codes fail to dampen council borrowing levels, according to a senior Whitehall official. …

[A conference speaker said] … “said: “When last year local authorities borrowed an additional £3.8bn, that was a £3.8bn increase in net debt. “That was £3.8bn less that the chancellor had available to distribute as funding across the board at the last budget. “So, local authority borrowing does have a real world impact in the overall quantum of funding that is available to government.”

In addition, he said that concerns have been raised that councils investing in particular asset classes can drive prices up, creating a bubble.

New principles on proportionality included in the code were triggered by some smaller authorities taking on huge sums of debt relative to their size, Caller [the speaker] added.

“We had concerns that those authorities who were doing that were effectively assuming that government stood behind their risk. “That is not the statutory position, and it is not a position we want to encourage. “What the legislation says is that effectively it is council tax payers that have to make good any deficit in those assumptions, not central government. We want people to remember that.” …

http://www.room151.co.uk/treasury/councils-could-face-additional-intervention-if-borrowing-rates-continue/

Committee promises to double the number of unicorns in Devon and Somerset

How will we know that this committee can or will double productivity in 20 years? They will tell us in 20 years time! How will we know if they are correct? Answers on a postcard …

From the press release:

“Representatives from 23 organisations across Devon and Somerset today agreed steps to drive up productivity at the first meeting of the Heart of the South West (HotSW) Joint Committee.

The inaugural meeting of the Joint Committee unanimously endorsed the Productivity Strategy that has been taking shape over the last two years and aims to double productivity over 20 years.

At the meeting in Plymouth City Council offices, the committee also voted unanimously to appoint Councillor David Fothergill, Leader of Somerset County Council, as the first Chair of the new committee and Councillor Paul Diviani, Leader of East Devon District Council, as the Vice Chair. …

… The Productivity Strategy aims to double productivity in the area over 20 years, focussing on themes including promoting business leadership, housing, connectivity, infrastructure, skills and training. It looks at growth, capitalising on the area’s distinctive assets and maximising the potential of digital technology. … [just as a large part of digital technology has gone into freefall!]

Somerset County Council is acting as the host of the HotSW Joint Committee and meeting agendas and further information including the full Productivity Strategy can be found here:

http://democracy.somerset.gov.uk/mgCommitteeDetails.aspx?ID=357

District councils say they are being starved of most government funding

“The fair funding review will fail unless any reforms come with more money for local government, an umbrella-group has warned.

The Local Government Association said funding cuts had forced councils to divert ever-dwindling resources from other services to prop up adult social care and children’s services.

“Ultimately, the review will not be successful and lead to a sustainable outcome if it is not introduced alongside additional resources,” the LGA wrote in their response to the fair funding consultation, which ended on Monday.

“We estimate that councils face a funding gap of over £5bn by the end of the decade, on top of a £1.3bn pressure to stabilise the adult social care provider market.”

It called for 100% retention of business rates to try to plug the gap. The government confirmed in the draft local government settlement in December last year it is reducing the amount of grant it gives to councils and will allow them to keep 75% of business rates by 2020-21.

But the LGA said business rates retention and the calculation methodology for the four-year settlement had introduced “further layers of opacity” to a system already complicated by the use of 15 formulae and 120 indicators.

“It is positive that the government is attempting to reduce the number of cost drivers and formulae used in the relative needs assessment,” the LGA said. “It is important that complexity is only added where it is unavoidable and where it has a material positive impact on fairness.

“However, the right number of formulae and cost drivers must ultimately be driven by evidence or the outcome will not be seen as ‘fair’.”

The County Councils Network said any new formula arising from the review “must be capable of addressing spikes in demand for social care services”.

Its finance spokesperson Nick Rushton, leader of Leicestershire County Council, said: “This is a once in a generation opportunity to reform the system for the better.

“If we focus on the evidence and avoid introducing unnecessary complexity we may actually make something that stands the test of time. If not we will be back here sooner than we think.”

The District Councils Network said most districts would stop receiving revenue support grant by 2019-20 and were “continuing to see reductions in their core spending power for the whole period, compared to other councils who are all seeing an increase”. …”

http://www.publicfinance.co.uk/news/2018/03/local-government-funding-changes-will-fail-without-extra-resources