Thursday, March 16, 2006

Thank God We're In Safe Hands

According to the Taxpayers Alliance, Gordon Brown will use next week's Budget to present himself as the experienced statesman whose steady hand will be needed to meet the competitiveness "Threat From The East" (see previous blog). Let's just remind ourselves of his form. Remember this?

"Over the next few years we must seize this opportunity to lift our productivity in each and every industry towards the levels of the world's best. Breaking free from old ideas of state control and crude laissez-faire, our new ambition for Britain must be to encourage enterprise and entrepreneurship, to boost education and skills... in other words to implement for our country a medium term strategy for growth".

That was what he told us nearly a decade ago when he originally became Chancellor: our productivity was way short of the best, undermining our international competitiveness; he would fix it through "investment" in education and training, industrial subsidies, "prudent" regulation, and all manner of hitherto undreamed of tinkering. As he put it, productivity was 'the fundamental yardstick of economic performance'

And the result? Crushed beneath an avalanche of tax and regulation, Britain's productivity growth has collapsed. In the eight years before he took over it was running at 2.1% pa; in the eight years since, it's averaged 1.6% pa, most of which took place in his early years. In the last five years it's slumped to a miserable 1.2% pa.

Internationally, our productivity shortfall is getting bigger: latest figures show us 11% behind the G7 average. And against the world productivity champs- the US- we are now 27% behind.

Of course, when it comes to productivity and competing with the new industrial powers of China and India, the US has one very big advantage over Britain. There the government takes just over 30% of national income in taxes, whereas under Mr Brown our government now takes around 40%.

PS One of the central planks in Gordo's National Plan was the huge funding for his pet education schemes. We've already blogged the hopeless £9bn pa Skills Industry. Now- irony of ironies- just at the time when all the "investment" should be starting to pay off in that titanic struggle against the new Eastern super-powers, we're having to import even more graduates from those very same super-powers. According to the Guardian, 'UK companies are starting to recruit science graduates from overseas rather than rely on the home market because they have a larger pool of high calibre students to choose from, the Confederation of British industry (CBI) warned today. The deputy director of the CBI, John Cridland, told "We are beginning to see UK companies saying it makes economic sense to source science graduates internationally, particularly from China and India." So much for the National Plan.

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