This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/uk-politics-32816451

The article has changed 3 times. There is an RSS feed of changes available.

Version 1 Version 2
Osborne says low productivity key economic challenge Osborne says low productivity key economic challenge
(35 minutes later)
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. George Osborne has signalled a major push to boost the UK's economic productivity as he vowed not to "take his foot off the pedal" in the wake of the Tories' election victory.
The chancellor told business leaders the UK could only find an "extra gear" if it tackled 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 deficiencies in transport, skills and broadband.
He promised 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 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. In his first major speech since his return to the Treasury, Mr Osborne told the CBI annual dinner that boosting productivity was vital to sustaining rises in living standards.
His comments come amid a warning from businesses about the risks of the UK leaving the European Union. Productivity is generally defined as the level of economic output per hour worked against the cost incurred.
'Smoother ride' 'Puzzle'
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. The BBC's economics editor Robert Peston said productivity in the UK was historically 30% lower than in Germany and America - a gap that previous governments had wrestled with but failed to do much about.
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. Insisting there would be no let-up in his efforts to embed the economic recovery, Mr Osborne identified increased productivity as one of the government's central economic challenges over the next five years.
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. 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.
"When it comes to saving money, we all know that the more you can do early, the smoother the ride," he said. Steps to upgrade transport links, reduce red tape, streamline planning and incentivise business ownership would be at the centre of a plan to "make Britain work better" and rebalance the economy, he said.
Analysis by BBC economics editor Robert PestonAnalysis 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.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.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.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 blogRead 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. Addressing what he called the "productivity puzzle", Mr Osborne said. "Frankly, nobody knows the whole answer. But what I do know is that I'd much rather have the productivity challenge than the challenge of mass unemployment.
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. "And what I also know is this: we have a once in a generation opportunity, right now, to find an extra gear for the British economy, and ensure higher living standards for the next generation to come.
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. "Confidence in the British economy is at its highest level in 12 years. If we don't, together, fix our country's long term weaknesses now - when will we?"
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. 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."
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".
"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."
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."
'Stagnation''Stagnation'
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". The CBI welcomed the focus on productivity, saying it was "the missing piece" from the UK's positive economic prospects 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." But Frances O'Grady, the general secretary of the TUC, said: "It's no good putting your foot on the pedal if you keep cutting the fuel in the tank. The extreme cuts the chancellor is planning will put growth at risk during a recovery that is already precarious."
Mr Osborne also 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.
"When it comes to saving money, we all know that the more you can do early, the smoother the ride," he said.
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.
Share sell-offs
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.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 said."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%.