REACTION: Was the Autumn Budget a missed opportunity?

23 November 2017 -

Chancellor Philip Hammond spoke a lot about productivity, but he has ignored one of the biggest pieces of the puzzle

Matt Scott

“I report today on an economy that continues to grow, continues to create more jobs than ever before and continues to confound those who seek to talk it down.” Those were the opening words of Philip Hammond as he stood up in Parliament to announce his second budget as Chancellor.

But beneath this seemingly rosy outlook lay a more worrying trend, that of stalling productivity and economic growth.

Hammond admitted that “productivity performance continues to disappoint” and revealed that the forecasts for productivity growth, business investment and GDP growth had all been revised down.

To help combat this, Hammond announced additional funding is to be made available for the National Productivity Investment Fund, taking such investment in the country’s infrastructure past the £31bn mark.

What about management?

CMI chief executive Ann Francke, however, said that, while this further investment is welcome, it will be wasted if more is not done to improve the country’s management skills.

“It’s great that the Chancellor is to extend the National Productivity Investment Fund to £31bn, including significant spend on research and development, technology and artificial intelligence, but investment will be wasted unless we also invest in managers to lead,” she said.

“Already the new Apprenticeship Levy shows how employers are investing in those skills that they most need, with management, digital and engineering leading the way. Yet, the new National Retraining Scheme with £30m to support digital and construction skills, is missing out on the management skills so sorely needed.”

Read More: Three case studies of how the Apprenticeship Levey will help employers

“The Chancellor opened by recognising that productivity remains stubbornly flat. Yet the government still stubbornly ignores the impact of management skills, when both the OECD and the Bank of England show that quality management and leadership is the number-one driver of productivity,” she added.

Investment in Skills

Hammond also announced a further £20m to support further education colleges introducing the new T-level qualifications, as well as financial incentives for schools to encourage more students to take maths at A-level.

CMI strategy director Petra Wilton welcomed the move, but said it would not be enough to close the productivity gap between the UK and other leading nations unless there was further support for improving the management skills of UK Plc.

“This is a clearly a Budget for maths not management,” she said. “Yet without the leadership skills needed to create business strategies for growth and the ability to engage employees, our stubborn productivity puzzle will never add up. 

“While there is very welcome new investment in initiatives targeting young people, with £20m pledged to support FE Colleges with the new T-levels, and further new funds for those studying maths, it is disappointing that there're no explicit recognition and further support for employers now using the Apprenticeship Levy to start their overdue investment in the management skills needed to lead our economic turnaround.”

CMI companion and EY Foundation chair Patrick Dunne said he too would have liked to have seen a greater focus on investing in the UK’s management skills.

“The lack of support for further investment in training is disappointing,” he said. “Particularly given the low levels of cost, and that support and investment would have been helpful [in boosting productivity].”

“This is a Budget that is clearly constrained by the anxiety over Brexit,” he added. “And if the £3bn set aside to prepare the UK for Brexit had been free to apply to other things, that would have been helpful.

“This is a demanding time for managers across society, and the reduction in the growth forecast will lead to more challenging times ahead.”

Further details of the government’s Industrial Strategy, aimed at helping young people develop the skills they need to do the high-paid, high-skilled jobs of the future, will be revealed on Monday, and all management eyes will be on this important piece of strategy to see how far it goes towards supporting the Budget’s measures.

Do you think the Autumn Budget represents a missed opportunity to solve the productivity puzzle? Tweet us @cmi_managers and have your say