Opinion – The Productivity Puzzle – Under the bonnet | The Economist

This outstanding, must-read, article from the Economist looks at explaining Britain’s poor productivity record. Check it out!

Under the bonnet | The Economist.

Whilst I recommend the Economist article for some excellent insights into key sectors, it sadly misses the most obvious reason for poor productivity, compared to both other countries and Britain before the 2008 financial crash.

The Economist fails to identify just how bad Britain’s public sector productivity is compares poorly to international competitors. Despite George Osborne‘s bacon-slicer austerity program, UK public sector productivity is still the black sheep of UK productivity. Before I retired from mainstream activities, I was once very close to this sector. In my view, ministers and the Cabinet Office in the previous government seriously botched effective reform. But if you look at the professional background of the latest ministerial team at the Cabinet Office, the simple conclusion is more bacon-slicer austerity and little genuine reform.

Given the weakness in leadership in Britain’s public sector, the meddling of politicians and other powerful stakeholders, like unions, outsource and technology providers, plus the consulting sector, the best way to improve public sector productivity is:

  • Massive consolidation across both local and central government, eliminating vast layers of bureaucracy
  • Investment in national vanilla front and back-office service centers
  • Outsourcing  and possibly offshoring ALL non-strategic activities.

It makes sense to retain policy activities in the public sector, otherwise the case is overwhelming for transferring the rest of Britain’s public sector to the private sector.


Top Ten Risks – Ed Miliband Labour Party led UK Government

Here are my top-ten risks – they’re not in order of materiality nor likihood. So far, the mainstream media haven’t fully exploited the David Cameron (‘safe-pair-of hands’) Vs. the Ed Miliband (‘very high risk’)  – the liberal NYT described Miliband as ‘wonkish, indecisive and gawkish’.

  1. Expect the financial markets to take a dim view of a hung parliament or a left-wing coalition. Stock markets and Sterling are likely to show sharp falls.
  2. Watch for the reaction from big-business, especially financial services. A Labour led government will precipitate companies moving overseas or offshore. This will reduce investment, jobs and confidence in the UK.
  3. Many of the high-paid, highly-skilled expats will leave the UK, taking their expertise with them.
  4. Expect many UK high-earners and the wealthy to leave the UK too, taking their expertise and resources offshore. On the other hand, immigration is likely to climb under Labour, as in previous Labour governments.
  5. Watch for reversal of policies in the public sector. Starved of cash under austerity, there will be a marked reversal. Despite a Labour government, expect strikes as unions fight each other for the most-inflationary pay rises.
  6. Focus on public sector productivity, which is already weak compared to international benchmarks – expect public sector productivity to decline further under Labour. In other words, Labour will signal the return of ‘big government’ and paternalism – individualism, creativity and entrepreneurship will be starved.
  7. With a strongly left-wing Labour Government, expect the UK’s influence in the world to continue to decline.
  8. With Labour in power, expect the Scottish Nationalists to pull the strings, so there will be increased pressure for a breakup of the United Kingdom, with the associated consequences.
  9. In terms of foreign policy, expect the US to continue to play down the ‘special relationship’, unless the UK seriously ups military spending – and the UK would need to be ready to engage overseas, perhaps like in Iraq under the former Labour Prime Minister, Tony Blair.
  10. Most importantly, international terrorists would see a Labour government as weak and perhaps an opportunity?

Do you agree with my risks, want to restate them or perhaps add to my list? What about effective mitigation?



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