It is a pleasure to follow so many excellent maiden speeches, and such a passionate speech from the hon. Member for Bristol West (Thangam Debbonaire). It is a particular pleasure for me to speak in this debate. Over the past 15 years, I have set up and run businesses of my own, one of which I managed to float on the stock market.
It is interesting that Labour Members chose this topic. It is rather like the dog that did not bark. Let us think about all the topics that they might have chosen, but did not. They did not choose employment; that is no surprise, because it is at record levels. They did not choose unemployment; that is no surprise, because it is at its lowest levels since 1975. They did not choose the deficit; that is no surprise, because it has halved. They did not choose inflation; that is no surprise, because it is zero. They did not choose wage growth; again, that is no surprise, because it is now running at 2%. Instead, they chose to focus on this one economic indicator. What the shadow Chancellor forgot to mention when he reeled off the recent figures was the level of productivity during the last year of the Labour Government. In 2009, productivity fell by 2.6%, which was a far bigger drop than we saw in any year during the last Parliament.
It is fair to say, however, that international comparisons suggest that there are opportunities for improvement. It is also instructive to compare different sectors. As we heard earlier from my right hon. Friend the Member for Wokingham (John Redwood), both the oil and gas and the finance sectors have declined somewhat in the last few years—for reasons that he explained— and they were among the most productive sectors. Nevertheless, there are a number of industries from which we can learn, most conspicuously the automotive and aeronautical manufacturing industry, whose productivity has grown by a staggering 56% in the last six years. A British worker now manufactures, on average, 11.5 cars per year, up from just 9.3 five years ago. That is an impressive improvement.
Both the Institute for Fiscal Studies and the Bank of England have published interesting reports on this subject, which I sincerely commend to fellow Members. They cite as a general cause of declining productivity—not specific to the United Kingdom—a lack of accessibility to capital that could be invested in better plant and machinery, combined with cheap labour. Firms are tempted to be lazy and hire such labour, rather than investing in machinery or technology.
I am pleased that, in the last five years, the Government have taken action to deal with both those issues, most recently by raising the minimum wage by 3%—the largest increase since 2008—and by encouraging banks to lend more. I hope that in the next five years they will continue to increase the minimum wage and encourage banks to lend more to operating businesses, because I believe that both those measures will help to address the productivity issues that have been raised today.
The Government have taken extremely compelling action in a number of other areas, not least in reducing energy costs, in rolling out broadband in reducing regulations—£10 billion in the last Parliament and the same again this year—and in reducing corporation tax to just 20%, the lowest level in the G7. In the light of all that, it is no wonder that we are growing so strongly and that wages are now growing by 2% a year. In my view, that is a leading indicator of productivity increases. I am delighted to be supporting the Government’s record and I look forward to it continuing for the next five years.
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