Enterprise and productivity policy
The Government’s strategy for raising UK productivity growth and supporting entrepreneurship was set out in Productivity in the UK: the evidence and the Government’s approach, published alongside the November 2000 Pre-Budget Report. A progress report was given in Productivity in the UK: progress towards a productive economy (March 2001), and Enterprise and the productivity challenge (June 2001) set out further steps [that Government is taking] to improve the UK’s productivity performance. The Government's approach to raising levels of enterprise across the UK, and to unleashing entrepreneurial potential in the most disadvantaged communities, is described in Enterprise Britain: a modern approach to meeting the enterprise challenge. Further measures are set out in recent Pre-Budget Reports and Budgets, published annually by HM Treasury.
The Government’s approach to improving the UK’s long-term productivity performance has two broad strands: maintaining macroeconomic stability to enable firms and individuals to plan for the future, and implementing microeconomic reforms to remove the barriers which prevent markets from functioning efficiently. These microeconomic reforms address historic weaknesses in five areas that affect the rate of productivity growth:
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strengthening competition to encourage firms to innovate, reduce costs and provide better quality goods and services to the consumer;
- Promoting enterprise to maximise the contribution of businesses to employment, productivity, prosperity and social cohesion
- supporting science and innovation to harness the potential of new ideas, technologies and working practices;
- improving the skills base to maximise the contribution of human capital to growth;
- encouraging investment to improve the UK’s stock of physical capital in every sector and industry; and
- working directly to improve public services productivity.
Government has a key role to play in supporting productivity growth – creating the best possible environment for private enterprise and investment and working directly to increase the productivity of public services. However, the productivity gap cannot be closed without a wider effort across the economy. The Government is therefore working alongside business, trade unions and other stakeholders at the regional national and international levels to tackle the obstacles to greater productivity. At the time of the 2000 Pre-Budget Report, the Chancellor therefore asked the CBI and TUC to work together to identify key areas for action in meeting the productivity challenge. The Government welcomes progress made by the joint CBI-TUC productivity working groups and is taking further steps to implement their recommendations. The report of the CBI-TUC productivity working groups is available on the TUC and the CBI sites.
The Government is also committed to ensuring that the benefits of improved productivity are felt in all regions across the UK. The Government’s approach to tackling the productivity challenge at a regional level was set out in Productivity in the UK: 3 – the regional dimension (November 2001).
The new focus on improving the economic performance of every part of the UK opens a new strategic role for local government in economic policy making that is crucial to success. sets out the Government's approach to providing local authorities with the freedoms and flexibilities as well as the policy levers to carry out this role successfully. A new policy to allow local authorities to retain some of the additional business rates from growth in their area will also provide a direct financial incentive for authorities to encourage local economic growth. The Government is currently consulting on the details of this policy and the full text can be found on the ODPM website - Growth Incentives Consultation Document
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