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IoD urges Government to introduce 'productivity allowance' as South West business confidence grows

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Written by: Hannah Baker | Posted 22 October 2018 16:08

IoD urges Government to introduce 'productivity allowance' as South West business confidence grows

Business leaders in the South West are more upbeat about the economy than the UK average, according to data collected by the Institute of Directors.

Despite uncertainties around Brexit, the region is confident that wages, employment, and revenues will rise and that investment will continue to be resilient.

But the South West’s productivity – measured by the value of goods and services produced per hour - continues to lag behind London, the South East, Scotland, the East of England and the North West.

The IoD is now urging the Government to introduce a new Productivity Allowance to help 'drag the UK out of a lost decade' of economic performance.

The suggestion takes the form of a new tax allowance for productivity-raising technologies and support, features in the IoD's Lifting the Long Tail: The productivity challenge through the eyes of small businesses report.

The IoD puts forward a range of other measures aimed at SMEs, including developing a more formalised national business support framework, expanding the Apprenticeship Levy into a wider training levy, and improving the transfer of knowledge between academia and businesses.

Read more:  South West businesswomen urged to join 'work sisterhood' to boost career

Tej Parikh, Senior Economist at the IoD, said: “Solving the productivity puzzle has been a defining challenge for the UK over the past decade.

"The success of our post-Brexit economy hinges on our ability to unlock the vast untapped potential among UK small businesses.

“For too long, the debate has revolved around broad prescriptions and sweeping trends, but there is no silver bullet. We must now move the discussion out of the ivory tower and onto the office floor if we are to solve the productivity puzzle.

“To lift itself, the long tail will first need to twitch into action. This means shifting mind-sets and a series of small steps."

Tej believes that directors of small firms need support and encouragement to spend more time working on their organisation - and to confidently adopt new management techniques and technology.

He added: “As our leading innovators push the economic frontier, we must ensure new ideas, practices and technologies are diffused throughout the business community.

"The Government is right to make closing the gap between our high performers and lagging firms a focal point of its Industrial Strategy.

"But delivery could not come sooner, otherwise anaemic wages and subdued economic growth will continue to anchor an economy that should have the wind in its sails.”

 

 

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