U.K. productivity has been disappointing this century. The Chancellor and civil service call it a puzzle. The main reasons are obvious and need treating.
The public sector is the main cause. There has been no productivity gain all century so far. There has been huge spending on many more computers and digitalised services, and reductions in customer facing staff. At the same time there has been large scale recruitment, many promotions and much increase in the complexity of process and audit. There has been a proliferation of new public bodies and of EU and domestic regulation. Much of this has failed to make things safer and better.
The second cause is net zero high priced energy policies leading to accelerated run down or closure of highly productive sectors like oil and gas, steel, and other energy and capital intensive manufacture. There has been growth in labour intensive services instead. Even successful and internationally competitive sectors like banking  and business services have  had to recruit many more employees to implement waves of additional regulatory requirements.
The simplest way to lift overall U.K. Labour productivity is to reverse bans on energy using industry and go for lower energy prices.Essential to the task is also to effect a managerial revolution in public services. I will be writing more about this following yesterdayâs headline agenda for change.
December 11, 2024
Good morning – again.
There has simply been too much government and regulations. It is also no suprise that, since the introduction of IR35 which pretty much took effect at the start of this century that productivity has not increased as expected.
What was it a certain French dictator once said of us ? Oh yes; “A nation of shopkeepers.” SME’s in today’s parlance.
December 11, 2024
Productivity may not be a puzzle, but in the public sector it has no sanctions. We do not have a government, either capable or minded to place any restraints on public spending. In fact they believe that more public ownership and therefore spending is the solution.
Unfortunately, government also applies its yoke to the private sector, the only source of expandable wealth the country has. Industry in turn closes, moves its corporate base and production facilities offshore, while those of entrepreneurial talent fail to use it or move to a more welcoming location, again abroard.
Until the groundswell of recognition by the electorate of this stagnation becomes apparent, the only way is down. Reform are the only vehicle on track to reverse it. Many of the answers may need to be even more radical than even they realise or publicly admit.
December 11, 2024
Actually I think David Frost is our last hope.
December 11, 2024
We will see if DOGE under President Trump improves productivity. I hope so. There’s also President Milei in Argentina. They have slightly different challenges, but if they succeed (and Milei certainly has, in his first year) then it will demonstrate that we can do something similar here.
We’ll just need a breed of politician that believes in it and can take the country with them under a charismatic leader. The Tories don’t fall into this category, their MPs mostly aren’t conservatives. I hope Reform raise their game while Labour runs everything down, it seems our only chance currently.
December 11, 2024
I believe that you are partly correct.I have witnessed bad management overstaffing , people who were employed and are not appropriate for the job where others have to continually carry them whilst the tonto’s take the credit.
The other side of the coin is competition where private companies think they have the answer to problems and have little in depth experience and bring the house down.
In addition to this we have let millions of people into the country whose ethos is to do as little as possible and others will pay. Not withstanding this much cash is taken for inside unregistered business’s.Large wads of money changes hands and banked for the abroads.
December 11, 2024
What sort of private company has brought down what house or business? I don’t understand what that means. What industry is that in? Do you have an example?
December 11, 2024
Yes but cannot mention names on here.You shouldn’t be asking for examples to be published.Bringing the house down means that they have taken over and ruined a perfectly good service.
December 11, 2024
Mrs Gold and I recently took a short Autumn break in the East Riding of Yorkshire. The highlight of our week was a fascinating tour of the SSE Thermal/Equinor Saltend CCGT electricity plant on the N shore of the Humber estuary. There we learned that the 50% efficiency figure commonly quoted for CCGT only applies as a best-case scenario; constantly starting up and shutting down the plant can reduce this figure to ~45%. However, a portion of the “waste heat” is piped as steam to the adjacent Saltend Chemicals Park
To our surprise, the plant included a ginormous flare stack which was constantly, but intermittently, in operation. Apparently, this was burning off “condensate” which is found in the residual grades of gas that the UK extracts from the N Sea
The otherwise pro-fossil fuel right wing press has started to notice that the reason why electricity is so expensive in the UK is because about 40% of it is produced by burning extremely costly imported gas. The sooner the Labour government implements their net zero program, the quicker British industry will achieve the considerable savings which will accrue.
reply How will you keep the lights on when the wind drops?Have you accounted for the costs of storage and back up power?
December 11, 2024
SG :
NESOâs advice was to achieve 95% rather than 100% decarbonisation of electricity because 35 GW of gas generation is required to keep the lights on when the wind doesnât blow. This means running 2 systems and consequently NESO estimate the wholesale price of electricity to be doubled by 2030. Probably an âHS2â estimate as they say it will cost âÂŁ40bn or more per yearâ with no upper limit given anywhere in their report. If green energy is cheaper why are subsidies still required and why is the government considering CBAM?
December 11, 2024
PS :
Did your CCGT host explain why the gas generator was constantly starting up and shutting down? Although demand varies the bigger reason is because renewables are chaotically intermittent and consequently to keep the lights on the gas generators have to work inefficiently. It is ironic that the more âcheapâgreen energy is supplied to the grid the more expensive our electricity becomes to handle the increased intermittency.
December 11, 2024
SG gas turbines generate some of the cheapest power available. Circa ÂŁ40 per mwh. It is only government taxes and carbon charges which rake it up to circa ÂŁ100 per mwh. In the USA prices are about ÂŁ20 per mwh. I’m surprised your guide didn’t point these things out for you.
You are aware the latest round for wind generation was between ÂŁ150 and ÂŁ270 per mwh
As for the condensate in the gas, this is a minute amount volumetrically but has a very high CV so it can give off an impressive flare. There’s not enough to bother processing it.
I worked for 40 years in the oil, gas, power industry and believe me Milibrains net zero will bankrupt us.
December 11, 2024
I wonder how much that solar farm on Anglesey will cost the insurers? Who were the insurers? During the storms most of the windmills had to be turned off because when the wind blows too strongly they aren’t safe to use, too cold ice may accumulate so they have to be shut down as it could cause overload and malfunctioning. Regulations also require systems to detect and monitor birds causing shut downs. Endesa
It’s currently taking three months to get British Gas to reconnect solar panels and pay credits towards their energy use while they are working; why? This doesn’t seem right and it wouldn’t encourage people to persuade others to use solar panels.
December 11, 2024
savings to British Industry? – on the back of dark and very cold homes across the country.
What is your answer to the day dark forces scupper our ability to import energy, or the willing to sell become unwilling?
December 11, 2024
Tories should be objective and pragmatic about fuel. Not ideological. The Western world is inevitably going green. And the fossil fuel companies know it and will have to invest their coppers accordingly. At same time we don’t want the greenies hijacking things either.
December 11, 2024
Well the western world is already âgreenâ as in wet behind the ears. But certainly deindustrialisation will turn the wealth creating areas green again as nature reasserts itself.
Eat grass do you? Well, you will do and be grateful.
December 11, 2024
Nothing green about reducing CO2 plant, tree and crop food. Quite the reverse in fact!
December 11, 2024
Ed M:
Dream on! May I suggest you read more widely on the subject of energy.
December 11, 2024
SG
We have to burn 40% imported gas because we now refuse North Sea licences and we refuse to exploit the gas below our feet. ie fracking.
The reason we have this ruinous policy is because of our legally enforced Net Zero.
This means the more we import the less our CO2 levels in the UK are.
Absurd.
December 11, 2024
UK has one of the highest proportion of offshore wind generation in the world and also has the highest electricity prices in the world. How can that possibly be the case if wind generation is so cheap ? Also, if wind generation is so cheap why does it have to be subsidised ?
December 11, 2024
SG :
This plant intends to use gas for a CCS (Carbon Capture & Storage) plant for industrial processes including generating electricity by 2030. This technology does not yet exist and even if is managed the efficiency will be less than half the 45% you quote for gas. Our electricity will become even more expensive than it is now.
December 11, 2024
To reply indeed. The gas plants run less efficiently due to them having to supply the intermittent wind and solar back up. Gas and Electricity in the US (where they sensibly frack and even burn coal) is about 1/3 the price of UK where government do not frack and even (insanely import young coal – wood) to burn at Drax. This make no sense what so ever in any way. It is surely a CO2 accounting fraud?
S. Gold you really do not seem to appreciate the huge problems of intermittency and the fact that storing electricity is usually not practical and too expensive. Also look at the destroyed solar farm in Anglesey Wales.
How cheap is Solar is you have to replace the panels every two years? Especially in Northern and rather cloudy Wales?
December 11, 2024
Another public sector adverse impact is caused by the FCA, which over the last forty years has introduced into the UK capital markets a culture of risk minimisation rather than risk management – this runs counter to capitalism which is an ongoing process of creative destruction harnessing innovation to deliver, inter alia, ongoing step change improvement in productivity. The following shows that Europe has produced very few significant companies compared with the US over the last 50 years:
https://www.linkedin.com/feed/update/urn:li:activity:7271798667370541056/
The UK develops an abundance of step change innovation but fails to commercialise it at scale for the benefit of the UK economy. The London Stock Exchange is withering because there is no inflow of potentially significant growth companies to replace the very large companies serving markets which are in decline.
A UK success story such as Octopus Energy (which is playing a key role in energy transition globally) has not used the UK’s public markets and has attracted most of its funding from overseas investors.
December 11, 2024
We all admire your optimism that government will listen to your sensible proposals. But the evidence points to the opposite, as shown for example by the impending football regulator. Yet another anti competitive and anti efficiency organisation placing costly administrative burdens on what will as a result become one of the most visible formerly profitable and admired sectors in decline. And yet another initiative instigated by the conservative government dutifully taken forward by Labour.
December 11, 2024
Indeed but also excessive red tape creates many, essentially parasitic (or wore net harm) jobs in the state sector and in the private sector in compliance. Excessive and over complex taxation does likewise. Then we have low skilled immigration lowering wages hugely and this discouraging mechanisation and other productivity increasing mechanisms plus a state sector that spends approaching 50% of GDP most of it either doing net harm or just wasted.
Then we have out no deterrent do nothing whenever possible two tier policing which encourages ever higher crime levels as does out open door immigration policy. Also out diversity over ability recruiting systems that ensures we do not get the right people in the right jobs.
We also lend people ÂŁ50k plus of soft âloansâ and not work for 3+ years to go to university and 75% of so study fairly worthless degrees in fairly worthless subjects. Many then even become MPs and Government ministers. Or get jobs distracting and regulating the productive, debasing the currency with QE, joining the ERM, planning the lunacy of HS2, deciding to make our Ambulance, Fire Engines, Refuse trucks electric⊠and other insanities.
About 50% of the population essentially live off the backs of other 50% this either on benefits or in parasitic & pointless jobs.
The absurdly high tax levels mean work so often does not pay so many work less, go black market, barter or leave the UK as so many good workers do. Also the rich invest elsewhere unless perhaps they are crony capitalists trying to farm green grants, house migrants in hotels, act as diversity, hr, health snd safety consultants or similar.
.
December 11, 2024
Harsh criticism but sadly true
December 11, 2024
In short low productivity is the direct result of idiotic government policies, far too much government and red tape and mad misdirected policies like Net Zero, rip off energy, duff degreesâŠmany universities have median intakes of about 2 Ds at A level – these people would prob. be better off and happier learning practical skills from 16.
December 11, 2024
and worse, the system, schools and teachers only aim is to equip students to pass A levels – where is the need for a rounded education, science inspiration, other entreprenural activity, why be an employee, instead aim to employ!
Creativity not box ticking.
December 11, 2024
Working from home and good customer service and not natural bedfellows.
Working form home can bring productivity gains in some areas where focus, not commuting and lack of collaboration abound but for most roles being together in one place improves productivity.
December 11, 2024
Net Zero is the only game in town. Lead by a zealots who has no knowledge of physics or the damage being done.
No one other than Trump and Reform are willing to confront this massive scam perpetrated on the taxpayers of the western world.
Even in the EU countries such as Poland are shunnin these policies and AfD are threatening the German establishment. So much so that the government are trying to ban them.
Europe is turning into a tinder box and just one spark……
Politicians of all stripes has better have their tickets booked.
December 11, 2024
Yes to the tickets, but where will they go?
December 11, 2024
To put it in simple terms, we have more people doing unproductive “make-work” (enforcing non-essential regulations and monitoring compliance, particularly but not exclusively in the public sector) and fewer people who are doing genuinely productive work in the private sector because they have been priced out by deliberately inflated energy prices.
It’s all going just as the UN intends with Agenda 2021 and Agenda 2030, both of which are supported by the British Establishment. This is “levelling down” in action.
Meanwhile, the Establishment is well on the way to bankrupting the country with its Open Borders immigration policy as this article explains. They are proving that you can either have a Welfare State, OR you can have mass immigration. You can’t have both. Boosting public sector productivity is a secondary problem.
https://conservativepost.co.uk/story-of-the-century-flawed-migration-policies-to-cost-the-uk-government-a-trillion-pounds-a-year/
December 11, 2024
Leaving aside that doubtless most of life is a puzzle to the Chancellor and civil service, the low productivity we witness is strongly suggestive of poor management, not least from government that as you note has piled on regulation but has failed to make things safer and better”.
December 11, 2024
where are objectives setting, facilitation, recognition, rewards, satisfaction?
December 11, 2024
Any political Party that places the repeal of the 2008 Climate Change Act will have nation wide support and will be in position to form the next government in 2029, if not sooner due to ‘events dear boy events’.
There is no greater piece of self harm legislation ever placed onto the statute book than the CC Act 2008, by Labour. It was further enhanced and endorsed by the Tories via the Net Zero legislation introduced through a statutory instrument by Theresa May the Tory PM. She appended Net Zero to the Act without debate or vote in the HoC and without putting it on her manifesto.
Net Zero will, as it is designed to do, destroy UK manufacturing and ban our indigenous energy resources from being accessed or sold. The result will be an impoverished Nation then prepared to consider re-adoption of EU membership as an option, other than grinding poverty in an energy restricted and rationed island nation. Theresa May wearing her EU champion badge knew exactly what she was doing when she introduced Net Zero.
December 11, 2024
RE :
Yes, I think that the Uniparty has dug itself into such a large hole with its support for Net Zero and open borders that they cannot climb out and as a result I think we will see a really major shift in politics between now and the next GE if not sooner.
December 11, 2024
I have seen some productivity improvements in the public sector, for example HMRC’s move to on-line tax returns has made the process easier and quicker while on the few occasions I have needed to contact them they have been very responsive and helpful. Similarly there have been improvements on health services though inevitably there have been some delays for restricted resources such as staff. My local GP has adopted Anima to handle the initial access phase and I have generally found it reasonably quick though getting subsequent appointments has been somewhat protracted. Online health services such as prescription ordering have also introduced welcome efficiencies for the customer.
This highlights another major cause – inadequate automation – but this pervades the private sector as well. Why the employer demand for increasing numbers of cheap labour instead of investing in systems and automation – because that entails business cost and profit whereas cheap imported labour puts the cost onto the public purse and maintains business profit.
December 11, 2024
We had an attachment of earnings order warning letter because it wasn’t in operation. We tried to call because we hadn’t received the letter and details, 35 minutes holding on the phone trying to get through, gave up. No e-mail to get hold of someone. So we sent a first class letter. It took two months to get the attachment, it arrived a day after the payroll had been finalised so another months wait for them.
December 11, 2024
Excellent summary. But if itâs possible to discern any core beliefs and policies of this Labour govt itâs 1) increase the size, scope and cost of the public sector and 2) net zero driven by climate hysteria.
So not much chance of action on these I fear.
Yet another example today of a quango which should face immediate abolition should a Conservative or other right-of-centre govt ever be elected again: IPSO. It has just made an absurd ruling against the Spectator following some spurious complaint by a trans person. We would be much better off without it, saving the money and allowing its employees to do productive work elsewhere, supplying goods or services which people want.
December 11, 2024
In the civil service productive where is the incentive to be more productive? All parliament does is create more regulations and quangos to administer them. In the private sector taxes go up and up. Taxes, if they do not render businesses totally uneconomic, consume the cash needed for investment for growth and improved productivity. The UK’s downward slide will accelerate under this Labour government.
December 11, 2024
Amusing how Starmer briefed some very slightly disobliging (true) comments about the Civil Service and was immediately forced by the unions to put out a public statement recanting and saying how they were all doing a great job and everything was fine. If an individual minister had done it the accusations of bullying would have been wheeled out immediately. There will be NO productivity improvements in the public sector until we have a government which isn’t scared of offending the public sector unions – It’s clear neither Labour or Conservatives fit the bill – has Kemi actually started the party leader job yet ? If so I haven’t noticed.
December 11, 2024
Civil Service productivity will not improve until there is a ruthless reduction in the numbers. As for Reeves, there will be a 5% reduction in waste by 2029, the lady is talking utter nonsense.
In my career, 50% of our cost base walked in every morning. I suspect in the Civil Service; it is closer to 75%!
It would be interesting to compare our Civil Service headcount with those of other countries which are prospering.
Your suggestions are all good, but until you reduce the numbers from 530,000, nothing will change.
December 11, 2024
Maybe Labour are saying that its puzzling that the numbers employed in the civil service, quango and local government grew so vast during the tory governance
December 11, 2024
Public Sector the cause and then a list of symptoms.
Time to be honest. Utter failure at a political level, with inadequate weak politicians on both sides so poor leadership, tortoise pace decision taking and therefore a failure to hold the Civil Service to account.
Poorly devised and managed projects, support schemes etc resulting in egregious waste. Overall zero idea about or efforts to implement change/performance improvement.
The three rules of successful business. Management. Management. Management. At a political and operational level the public sector fails continuously.
You can come up with all the sensible suggestions in the world but until you address the culture of leadership and management failure nothing will change,
The Tories had been in power for 13 years and it is obvious they all continue to be in denial.
December 11, 2024
According to the home office we have âapproxâ 10,000 people working in the UK Border Force âŠ.but the donât deter anyone, so why is the number so high, in comparison we only have 5,500 Royal Marines
….and Labour have just established a new Border Security Command (numbers unknown)
December 11, 2024
Over 20,000 illegal immigrants have entered Britain since Keir Starmer became Prime Minister âŠ.thats 2 for every UK Border Force employee âŠtheyâre obviously not any good at there job
December 11, 2024
Anyone capable of maintaining simple efficiency could improve productivity. Does any such person with authority exist in Government?
So much of what the Government sees as a puzzle includes pieces muddled and duplicated in a pile from others that do not even belong in the UKâs picture.
Cut out the irrelevant chunks with Occamâs razor. Then the task is quicker and easier to solve.
December 11, 2024
The civ service is certainly ineffective, and do not give a good return for their salaries.
That will not change while governments pander to them.
A tool exists to remedy this, widely used in the private sector. It is called an appraisal, where individuals are assessed on how well they achieved personal goals set by their immediate managers. Pay rises would depend on a good mark. In the private sector this meant getting the highest possible grade. Below was considered normal, or ‘just doing the job’.
Too often we hear of public sector workers being given bonuses when they clearly had not earned them.
This approach should apply to all quango personnel, then perhaps we wouldn’t be seeing so many golden hellos and goodbyes.
December 11, 2024
Sadly “appraisals” are done but just going through the motions & “tick box” /
December 11, 2024
The first thing you may need to do is explain to people how to calculate productivity accurately.
What should an expected successful and productive turnover level be? How do you consider the full payroll cost (holidays, sickness insurance or sick set-aside, employers NI) to the business or service?
December 11, 2024
The BoE is in the news again – it has said that it will not reveal the names of financial institutions that fail and it helps to bail out.
So, what’s behind this – are they expecting so many institutions to fail – by keeping them secret we wouldn’t get to know the extent of the financial woes!
December 11, 2024
It looks like 2025 is going to be an horrendous financial mess – and they seem to be in a hurry now, perhaps because they fear Trump could ruin their plans.
December 11, 2024
Presidents Putin and Xi have already ruined their plans!
The new world order can only be built on the ruins of the old.
December 11, 2024
Correct. It is not a puzzle. It is because there is absolutely no intention to increase productivity. In fact quite the reverse. The false CAGW story and its Net Zero âsolutionâ is designed to de-industrialise, impoverish and lead to the rationing of food, energy and travel. Itâs obvious to any economist that the more âgreenâ jobs there are providing a very basic essential such as energy the poorer we all become. Or making our food production less efficient with fertiliser bans. Or reducing efficiency in all sectors of the economy through electrification. All designed to reduce productivity and thus wealth.
December 11, 2024
Correct. It’s deliberate.
December 11, 2024
Do a good job in the civil service, achieving a high work rate, and you will be despised by your fellows for showing them up.
Anyone in the public sector soon learns its best just to plod along and be unremarkable in output.
The public sector isn’t an environment where achievement gets a reward. You need to go to the private sector for that. Do a good job in the private sector and maybe your business will survive and you keep your job. Better still, perhaps your business becomes successful and you do well financially.
December 11, 2024
Mickey
Fortunately after working in the Private Sector with both UK & American blue chip companies one still has to be razor sharp to deliver productivity improvements, especially best doing work for the Public Sector.
What we regard as “Best Practices” are alien to the Public Sector, in fact likely to be regarded as downright dangerous, an existential threat to the grey sky non thinking inside the block Luddites who have historically clad their fiefdoms legally bullet proof, thinking they are the ultimate protectors of England and the UK from itself.
Computers shook out staff from the Private Sector.
Computers doubled staff in the Public Sector. Crazy but true.
Non jobs employment was embraced on a grand scale as it allows unemployment and under-employment to go undetected.
The latest digital revolution will be hard to resist, like a higher intelligence
bringing Best Practices to backwater bureaucracies and will just bypass these Dinosaur Dynasties. AI
December 11, 2024
“Productivity is not a puzzle”. LOL.
Well, SJ, I suppose you might be wrong, as this socialist government has demonstrated, it is a puzzle – to them! Their solution to falling productivity in the Public Sector is to pay them more. And if that doesn’t work, increase their pay!! There is no problem with funding- the Private Sector workers will always pay for it.
December 11, 2024
Don’t idealise the private sector!
I worked for a large IT company where there was a lot of self-inflicted bureaucracy which people used to hide behind in order to do less work!
So really there’s a kind of hierarchy of hard workers in this country. From top down:
1) Entrepreneurs (for small companies) to entrepreneurial-minded CEOs (of large companies).
2) Fairly hard working CEOs / mid management
3) Lazy CEOs / mid management (but clever at hiding their laziness)
And then you move into the public sector where some people do work hard (and sure, lots don’t).
So it’s a false dichotomy to over-focus on private versus public.
The real focus should be WORK ETHIC. This is what really drives people to work hard whether in the private or public sector (and with more work ethic, we’d have more people in the private sector and less people on the dole etc).
Also, we need the public sector, to a degree, for people who want to to work and not be on the dole but not fully committed to working either (i.e a lot of women / mothers and / or just men who aren’t as capable as other men) but who should not be nearly as well remunerated as the private sector which is generally more stressful / more demanding.
December 11, 2024
Also, don’t forget the lazy, fat cats in the ‘private sector’ utilities – like water and which is owned by largely by foreigners.