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George Osborne: No let-up in growth plans Osborne says low productivity key economic challenge
(34 minutes later)
George Osborne will set himself the twin goals of boosting productivity and reducing the UK's debts as he vows not to "take his foot off the pedal" in the wake of the Tories' election victory. George Osborne has set himself the twin goals of boosting productivity and reducing the UK's debts as he vows not to "take his foot off the pedal" in the wake of the Tories' election victory.
The chancellor will tell business leaders the UK can only find an "extra gear" if it tackles long-term problems with transport, skills and broadband. The chancellor told business leaders the UK could only find an "extra gear" if it tackled long-term problems with transport, skills and broadband.
He will promise a "productivity plan" in the run-up to the Budget in July. He promised a "productivity plan" in the run-up to the Budget in July.
Departments are also being asked to find savings as soon as possible.Departments are also being asked to find savings as soon as possible.
In his first major speech since his return to the Treasury, Mr Osborne will tell the CBI annual dinner that securing the public finances and boosting living standards through higher growth will be at the heart of the Budget in six weeks' time. In his first major speech since his return to the Treasury, Mr Osborne told the CBI annual dinner that securing the public finances and boosting living standards through higher growth would be at the heart of the Budget in six weeks' time.
His comments come amid a warning from businesses about the risks of the UK leaving the European Union.His comments come amid a warning from businesses about the risks of the UK leaving the European Union.
Before the election, the Conservatives said £30bn would need to be found in the early years of the Parliament to achieve their target of balancing the books by 2017-18, £13bn of which is earmarked from departmental spending cuts. 'Smoother ride'
Economic challenges Before the election, the Conservatives said £30bn would need to be found in the early years of the Parliament to achieve their target of balancing the books by 2017-18 - £13bn of which is earmarked from departmental spending cuts.
Speaking on Wednesday evening, Mr Osborne will say the Treasury is asking ministers to identify areas where money could be saved this year and to report back within weeks, although no target for the level of savings will be set. Speaking on Wednesday evening, Mr Osborne said the Treasury was asking ministers to identify areas where money could be saved this year and to report back within weeks, although no target for the level of savings will be set.
All departments excluding health, education and international aid, whose budgets are being protected to some degree, will be expected to spend less money than they have been allocated in the coming year as part of the process.All departments excluding health, education and international aid, whose budgets are being protected to some degree, will be expected to spend less money than they have been allocated in the coming year as part of the process.
"When it comes to saving money, we all know that the more you can do early, the smoother the ride," he will say. "When it comes to saving money, we all know that the more you can do early, the smoother the ride," he said.
Mr Osborne will say there will be no let-up in his efforts to embed the economic recovery, as he identifies increased productivity as one of the government's central economic challenges over the next five years. Analysis by BBC economics editor Robert Peston
If I were cynical I would say that it is a shame that the so-called productivity challenge hardly featured in the general election battle.
Or I might point out that successive governments and chancellors have vowed to improve the UK's internationally substandard productivity, to very little effect.
But I am minded to say that George Osborne's focus on productivity at the CBI dinner matters, not least because it represents an important shift of emphasis at the Treasury - towards an agenda for economic growth, rather than the almost exclusive focus of the previous coalition government on reducing the large deficit between public sector revenues and outgoings.
Read Robert's blog
Mr Osborne said there would be no let-up in his efforts to embed the economic recovery, as he identified increased productivity as one of the government's central economic challenges over the next five years.
Levels of productivity have traditionally lagged behind other leading European economies and continue to do so, even as the UK outperforms other countries in terms of economic output.Levels of productivity have traditionally lagged behind other leading European economies and continue to do so, even as the UK outperforms other countries in terms of economic output.
The UK, he will suggest, can become the "most prosperous country in the world" but only if historic weaknesses in the UK's infrastructure and skills base are remedied. The UK, he suggested, could become the "most prosperous country in the world" but only if historic weaknesses in the UK's infrastructure and skills base were remedied.
Steps to upgrade transport links, reduce red tape, streamline planning and incentivise business ownership will be at the centre of a plan to "make Britain work better" and rebalance the economy, he will say. Steps to upgrade transport links, reduce red tape, streamline planning and incentivise business ownership will be at the centre of a plan to "make Britain work better" and rebalance the economy, he said.
Government assets This work, he said, will complement the government's plans to give extra financial powers to the north-west of England and invest in science and innovation with the aim of creating a "northern powerhouse".
This work, he will say, will complement the government's plans to give extra financial powers to the north-west of England and invest in science and innovation with the aim of creating a "northern powerhouse". "Improving the productivity of our country is the route to raising standards of living for everyone in this country," he said. "Our future prosperity depends on it."
"Improving the productivity of our country is the route to raising standards of living for everyone in this country," he will say. "Our future prosperity depends on it." Addressing the task facing the new government, he added: "It would be very easy at the beginning of a second term to take our foot off the pedal. That's not what we are going to do. I want Britain to find that extra gear so we will deliver for working people."
Addressing the task facing the new government, he will add: "It would be very easy at the beginning of a second term to take our foot off the pedal. That's not what we are going to do. I want Britain to find that extra gear so we will deliver for working people." 'Stagnation'
Mr Osborne will also pave the way for a quicker sell-off of government-owned assets by announcing the consolidation of two bodies which manage taxpayer stakes in UK banks and other businesses. The CBI welcomed the focus on productivity, saying it was "the missing piece of the growth puzzle", but unions said output per worker had "stagnated" since 2010 and was symbolic of the "weak recovery".
"It's no good putting your foot on the pedal if you keep cutting the fuel in the tank," said Frances O'Grady, the general secretary of the TUC. "The extreme cuts the chancellor is planning will put growth at risk during a recovery that is already precarious."
Mr Osborne has also paved the way for a quicker sell-off of government-owned assets by announcing the consolidation of two bodies which manage taxpayer stakes in UK banks and other businesses.
The Shareholder Executive and UK Financial Investments - which oversee government shareholdings in Lloyds Banking Group, RBS, Bradford & Bingley and Eurostar - are to be brought together under a single holding company, UK Government Investments.The Shareholder Executive and UK Financial Investments - which oversee government shareholdings in Lloyds Banking Group, RBS, Bradford & Bingley and Eurostar - are to be brought together under a single holding company, UK Government Investments.
The move is designed to ensure value for money from the sale of assets, set to total £23bn this year, and to improve the performance of assets that remain in public hands.The move is designed to ensure value for money from the sale of assets, set to total £23bn this year, and to improve the performance of assets that remain in public hands.
"If we want a more productive economy, let's get the government out of the business of owning great chunks of our banking system," Mr Osborne will say. "If we want a more productive economy, let's get the government out of the business of owning great chunks of our banking system," Mr Osborne said.
The Conservatives have pledged to make £4bn worth of Lloyds shares available to small investors - at a discount to the market price - as part of a £9bn share sell-off.The Conservatives have pledged to make £4bn worth of Lloyds shares available to small investors - at a discount to the market price - as part of a £9bn share sell-off.
The government has already raised £9bn from the sale of Lloyds shares, and the state's stake in the bank - which was 43% at the time of its 2008 bailout - is now down to 22%.The government has already raised £9bn from the sale of Lloyds shares, and the state's stake in the bank - which was 43% at the time of its 2008 bailout - is now down to 22%.