Government seeks employer and union involvement in productivity initiative

In October 2000, the chancellor of the exchequer invited the Confederation of British Industry and the Trades Union Congress to engage in joint discussions on boosting the UK's productivity.

On 19 October 2000, the chancellor of the exchequer, Gordon Brown, initiated talks involving the Confederation of British Industry (CBI) and the Trades Union Congress (TUC) intended to address the "productivity gap" between the UK and countries such as the USA, Germany and France (UK9902182F). He wrote to the CBI and TUC asking them to set up joint working parties focusing on six particular issues which the Treasury sees as the key barriers to higher productivity growth:

  • restrictive practices;
  • low skills;
  • under-investment;
  • resistance to innovation;
  • under-use of technology; and
  • poor management.

Mr Brown has asked that each of the working parties should produce examples of strong and poor performance, seek proposals for improvement from employers and unions and identify issues for the government to address. Further details of the productivity talks are expected in the chancellor's pre-budget report due on 8 November.

In a speech to the CBI on the same day, the chancellor said he hoped that employers and unions would "work through an agenda for economic reform" to build upon the UK's "hard-won monetary and fiscal stability" and bridge a productivity gap with the UK's major competitors of as much as 35%. He said that "we cannot bridge the gaps without a broader drive from managers and workforces across the country to solve together productivity problems which each cannot solve on their own."

The TUC has welcomed the chancellor's initiative, seeing it as "a new partnership between government, business and unions to boost Britain's productivity". TUC general secretary John Monks said in a statement: "There can be no doubt that Britain needs to improve its productivity. The TUC has been calling for this kind of partnership approach for some time. I very much welcome the wide agenda the chancellor proposes, and look forward to working with ministers and the CBI."

The CBI's deputy director-general, John Cridland, was reported by the Financial Times to have welcomed the chancellor's decision to highlight productivity but to have "warned that the CBI would not take part in talks without approval from its member companies". The CBI is thought to be wary of involvement in tripartite arrangements for the discussion of economic policy. The institutional framework for tripartite discussion of economic issues provided by the National Economic Development Council was abolished by the previous Conservative government in 1992. However, in recent years there has been extensive CBI and TUC involvement in working parties and advisory bodies on related issues such as competitiveness and skills (UK0010196F).

Speaking on behalf of the opposition Conservative Party, Michael Portillo, the shadow chancellor, commented that the ruling Labour Party's policies were "part of the productivity problem, not the solution". He said: "Businesses and workers don't need pious instructions from the chancellor to raise their productivity. They need a low tax, lightly regulated economy where they can spend more time improving their performance and less time complying with red tape."

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