Keep calm, produce more – but don’t lose sight of the social impact. Our director, Campbell McDonald, shares his thoughts on Budget Day.
The country has a clear and simple target. And it’s much bigger than getting through Brexit in one piece. Keep calm and produce more – and we’ll get through this national crisis together. That seems to be the Budget headline from ‘fiscal Phil’ today.
In the face of reduced GDP forecasts, billions lost to Brexit preparations, rising inflation, stagnant wages and big business threatening to leave the country – increased productivity will see us through.
From stronger skills to billions in business investment, from more houses to better functioning hospitals, from revolutionary tech to devolutionary powerhouses – increased productivity will save the day.
The simple fact of it is that we produce less per working person in the UK than we did pre-crisis, and less than our G7 peers. Which tells us Brexit is a symptom rather than a cause. People are unhappy with the underlying fundamentals in a society where many feel they are working harder than ever before but with little recognition of effort. Employment is up, but what’s the good of that when wages are less than they were a decade ago and inflation is on the rise.
There is plenty that is helpful in today’s Budget announcement list. Who could argue with a much-needed programme of mass house-building, £44 billion of overdue capital investment in NHS infrastructure or vital changes to the implementation of Universal Credit to protect the most vulnerable.
Our simple plea is that productivity ultimately is not a spreadsheet exercise. Capturing and measuring it certainly is, but reversing its direction of travel requires human beings to change behaviours – a far harder task.
In every market we work in, across private and public sectors, we find workforces in crisis. People’s good will has worn as thin as it gets, and yet it here that we must see evidence of the one u-turn the Government is in favour of – reversing falling productivity.
The critical challenge is to ensure we have a clear view of the social impact, the impact on individuals and our communities, as we implement our national productivity drive.
Technological innovation is not a by-word for a better world for everyone. Automation and AI will take out layers of existing workforce before it creates vast cohorts of new roles we’ve not even thought of yet. It’s not that this kind of progress is not positive, only that we need to account for the impact it will have as we unleash it.
And we’ve been here before. It was similarly couched promises made a generation ago about the one-way impact of globalisation that has left us in the Brexit and Trump-shaped rut we now find ourselves.
Investment in R&D, in emerging UK businesses, in digitalisation is a great thing. We just need to make sure we are alive to the social impact of the changes we bring.
If we want people engaged and passionate at work, they need organisations with clear strategic purpose, where they are managed in a way that respects the effort they bring and seeks to align reward with those who actually generate value, and where leaders hold themselves to account for the impact of everything they do – not just on their numbers, but on the people who work for them, the communities they affect, the planet they inhabit.
It’s hard to reconcile that with no meaningful movement on public sector pay in the Budget. Or with an Industrial Strategy that at its last draft barely featured the role of individuals at all. Skills yes, but nothing explicit on responsible management practices or clear accountability for wider organisational impact.
If the country is going to have the resources to tackle the upcoming societal challenges we face (ageing population, unsustainable healthcare system, levels of unhappiness at work), we need this national productivity drive to work.
At Baxendale we will certainly continue to do our own bit to help organisations address these critical issues – and we look forward to next week’s Second Act as the Prime Minister unveils her new, improved Industrial Strategy.
Don’t be surprised if the message is precisely the same though – keep calm, and produce more!