Fixing The UK's Productivity Requires Fixing Broken Government

Perhaps we should use our votes more wisely.

A recurring refrain from Westminster is the need for the UK to increase its productivity. This message has come from Chancellors of all persuasions, most economics commentators and some quangos throughout my adult life (and quite possibly before then). If the UK’s productivity hasn’t been fixed in half a century or so of effort either something fundamental is wrong or it’s impossible. If, after 50 years of failure, the UK’s economic resurrection depends upon increasing productivity we’re in trouble. If increasing national productivity is a Quixotic quest, why are we still chasing it?

[Note that being impossible or pointless doesn’t prevent something being a political priority. For example the World Trade Organisation is still seeking global free trade, the rest of the United Nations is failing to deliver world peace and here in the UK Ed Miliband thinks he can deliver Net Zero.]

According to Investopedia “Productivity is a measure of performance that compares the output of a product with the input, or resources, required to produce it. The input may be labour, equipment, or money.” Clearly measuring productivity requires measuring all inputs and outputs regularly, doing some maths and comparing results over time.

For a small business such measures are relatively straightforward as their accounts track everything. Any decent commercial manager has measures such as the energy cost per widget or person-hours per job at the front of their mind. They also intimately understand the step costs of expansion and the trade-offs between offering overtime and hiring more staff.

For larger, multi-site businesses it’s more complicated; different sites have different fixed costs (like rent and rates) and probably different specialities. Pulling data together is more complex, but not impossibly so. There is scope to misinterpret generalised data; for example, if Site A makes bricks and Site B makes more fragile tiles the sites’ breakage rates are not comparable and aggregating them is nonsensical. Within the company management accountants develop suites of measures called KPIs (key performance indicators) to measure these and have the expertise to understand and improve them.

For macro-economists measuring productivity at national scale is rather more challenging. For a start, direct measurement of anything is impossible. There’s an awful lot to measure too – understanding the economics of the UK requires aggregating the daily commercial decisions of some 50 million adults and 5 million companies. That’s only possible though modelling which brings in simplifications (a polite term for errors). Accessing sound data for the model it in time to generate useful advice isn’t straight forward either.

One measure of national productivity is calculated by dividing the country’s GDP by the number of hours worked. This enables comparisons between countries as well as between time periods. On this basis, according to Trading Economics the UK’s productivity is amongst the worst in the world (only Germany, Luxembourg and Russia are worse) and has pretty much stagnated since 2008. Why? Is there a British disease again, as there was thought to be in the 1970s. (There was, it was called socialism).

That’s where a macroeconomist struggles. While there are plenty of inputs to the models that can be tweaked to investigate the UK’s perceived productivity weakness, many of those inputs are themselves complex, using aggregated variables. The models are likely to be designed and operated by economists, most of whom – with a few noble exceptions - believe in managed economies (a disingenuous term for socialism).

I’m a truck driver, not an economist; I see things that reduce my productivity every single day, all of which are relatively simple to fix. (Note that in commerce, as in war, even the simplest thing can be incredibly difficult.) The first is traffic jams, generally caused by crashes, roadworks or undercapacity. The former are inevitable, but would be reduced by better driving and less congestion.

Roadworks are an inevitable part of maintenance. The maintenance demand is driven by the number and weight of vehicles increasing more quickly than the motorway network can handle. In the past 20 years the length of major roads has grown by just 2.5% while traffic has increased by over 10%

In Kent there are two main sources of capacity constraint. The first is the Dartford Crossing, which routinely carries 30% more traffic than it was designed for. Delays of an hour, that is some 11% of my maximum daily driving time, are not uncommon. The other is the M20 when Operation Brock, which converts part of the motorway into a parking lot when weather in the Channel, French Customs strikes or other problems with the ferries trigger it. The resulting contraflow creates tailbacks at peak times and increases the frequency of crashes.

Delays complicate my life. Like all HGV drivers, I’m required to take regular breaks, which means finding somewhere to park. There are also limits on how long I may drive in a day. Delays hit my employer’s revenue as he may be penalised for late deliveries. Delays can also knock on into the next shift, delaying its start or even cancelling it if I don’t have the hours to get back to the yard at the end of the day. All of this hits productivity where it hurts, delivering stuff is taking longer and costing more.

The bottleneck of Dartford is too small. There is a plan to build an additional crossing but inexplicably Louise Haigh (then the Secretary of State for Transport) delayed it. https://nationalhighways.co.uk/our-roads/lower-thames-crossing/whats-next/ How can anyone in the Westminster bubble thinks that £80 billion https://www.theguardian.com/uk-news/2024/dec/17/cost-of-hs2-estimate-euston spent on HS2 will deliver more productivity gain than the £9 billion https://news.sky.com/story/thames-tunnel-project-delayed-after-planning-it-cost-more-than-worlds-longest-road-tunnel-13230526 Lower Thames Crossing? There is something rotten in the Department of Transport.

That’s not all. I frequently find myself driving my 42 ton truck to collect produce from farm cold stores. All too often this involves driving down a very narrow country lane, the dimensions and alignment of which were probably determined by an ox-cart long before William The Bastard landed near Hastings. Such obsolete infrastructure often slows me to walking pace; time taken to deliver goes up, as does my fuel consumption and blood pressure – it’s scary.

It's not just the UK’s poor infrastructure that holds me up. One particularly invidious encroachment into my productivity is the increasingly common habit of supermarkets requiring me to unload my truck. Hitherto, when one parks on an unloading bay the warehouse staff unload it with either a forklift or pallet trolley. I can count that process as break time, which means when they’re done I’m fully rested (in the legal sense) and immediately ready to drive for another four and a half hours.

At Lidl’s huge new depot I must unload myself, which in turn means ticking a lot of boxes and figuring out how to work an electric pallet truck. You may think that easy, but there’s a knack to it. While one acquires it bad stuff happens, most commonly breaking the pallet which is then rejected and I end up restacking the goods onto another pallet. All in all its slower and, far worse, I haven’t had my break so I may get back into the cab with under 30 minutes’ drive time remaining. I then must find somewhere to park and rest for 45 minutes. Delivering the same amount of goods has taken over an hour longer.

There is strong, unspoken pressure form transport managers to claim the time unloading as rest. Although it is refreshing and includes exercise, the law says unloading counts as “other work”. Lidl has saved itself the employment cost of a forklift driver and my working day got at least one hour longer (for no more pay). I no longer shop at Lidl.

Weak company management also wastes my time. At one port that I drive up to the gate and hand over a piece of paper to the receptionist, who’s window is conveniently at cab height. The paper has just four pieces of information on it, which the reception dude enters into the system. I ‘m then given direction and drive in. In the unlocking bay I get out, unlock the four studs that keep the container on my trailer, get back in and drive on to the loading bay. There I have the container plucked from my truck and another one loaded on. A quick stop in the locking bay, hand the paperwork to the goods out person and I in my way. In and out in 15 minutes is the norm.

At another port I must stop at the gate and wait for the security person to emerge (at ground level on the wrong side. I recite a number, the gate eventually opens and I drive to the (well hidden) next gate. There I get out and walk into their office to have my driving license photocopied. I get back in the cab, start up and drive 100 metres, then park , get out and walk to another office. There I queue to fill in paper forms and wait while the clerk comes to photograph the trailer. I then drive 500m to another park. There I reverse my trailer in a random space, find the trailer I’m to collect in another random space, hitch and exit. It the load stimulates an anti-terrorism sensor, which it often does, I then get searched by customs, which can take 30 minutes or more. In and out time is 30 minutes to an hour and a half, almost all of which counts as working. Some days I’m in that wretched port three times for a total of perhaps three hours, none of which adds one drop of value to my output.

The first port is all run and staffed by one company, whose staff are exceptionally helpful and a well-motivated team. The second has layer upon layer of sub-contractors, plus Border Force and Customs, who are often playing blame games. This allows the port owner to focus on property development, it being more lucrative to turn space at a docks into flats than to invest in sensible infrastructure. Those choices were made by businesspeople, not politicians.

All too often one company’s productivity comes at the cost of another’s. Such inefficiencies do not show up in any calculation of productivity based on GDP because the detail is lost in aggregation. That means that central government doesn’t understand the impact of its regulations, which might go a long way to explain how it us that the UK’s productivity is persistently low.

The UK desperately needs to generate more wealth to balance its budget, address the deficit and start dealing with the time bomb of the pensions Ponzi scheme. That means increasing productivity. For sure Chancellors of the Exchequer should be concerned about productivity and growth. However they must realise what central government can and can’t do and concentrate on the relatively few things they can improve.

The government could also put its own house in order. According to ONS data, public sector productivity grew by just an average of just 0.2% per year from 1998 to 2019, when it fell of the covid cliff and has yet to recover. It’s unlikely that the Chancellor’s recent generous pay awards will deliver improvement. Certainly it hasn’t from the train drivers, who are striking again. Surely the time has come for the widespread roll out of automated trains? (I’m a truck driver and am green with envy of train drivers.)

The UK’s long and peaceful existence has left it with quaint infrastructure which other, less fortunate countries, have had ravaged by war, most recently in 1945. That (and the Marshall Plan) enabled Europe to rebuild more efficiently – with the much of the preliminary demolition and landscaping done free of charge by the RAF, USAF and Red Army. Yet the UK received over 25% of the Marshall Plan aid by 1951, of which some £2.4 trillion was a gift from the US. Our government frittered it away then and we’re paying the productivity price of that now.

We’re also suffering from vainglorious dolts at the levers of power. We can’t change history. We can, if we choose, change the future by using our votes more wisely.

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