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With Theresa May set to double the number of Tier 1 visas in the search for technology talent, as part of the government’s Industrial Strategy, will this solve the productivity puzzle across the UK? David Sapsted finds out if this plan will work or end up being a 21st century high-tech version of Winston Churchill’s “riddle, wrapped in a mystery inside an enigma”.
S
omething surprising happened in November: Prime Minister Theresa May, whose government is committed to slashing annual net migration to the UK from hundreds of thousands
to the tens of thousands, announced that she was doubling the number of Tier 1 (Exceptional Talent) visas available each year. The hearts of authors and artists around the world might
have soared at the news that, suddenly, two thousand of these visas would be up for grabs in 2018. However, these are not the exceptional talents Mrs May is suddenly anxious to attract – she is after the techies. “Technology is at the heart of our modern
Industrial Strategy, and we will continue to invest in the best new innovations and ideas, in the brightest and best talent, and in revolutionary digital infrastructure,” she says. Leaders of industrialised nations around the
globe might echo such sentiments, but there is a reason why it is particularly pertinent to the UK in the 21st century – it is the productivity puzzle. Britain’s productivity rate – what each
worker produces per hour – tumbled during the financial crisis. After 2010, it was expected to pick up, but it has not, leaving the country trailing behind most of the other G7 nations, and this is at a time when the number of people in work soared to record highs while the unemployment rate tumbled to a 42-year low. As he presented his Budget in November,
Chancellor of the Exchequer Philip Hammond admitted: “Regrettably, our productivity performance continues to disappoint.” As a result of this disappointment, the
Office for Budget Responsibility (OBR) reduced the UK’s GDP growth by a quarter for 2017 and suggested it would not recover to 1.6 per cent growth until 2022. On productivity, the OBR revised down its forecast and said it would grow by an average of only 0.7 per cent a year up to 2023. It is a problem the government has become determined to resolve,
and measures in the Budget and this winter’s Industrial Strategy white paper are aimed directly at boosting skills and innovation in areas such as artificial intelligence (AI), infrastructure, life sciences and Research & Development (R&D). Ministers are focusing their efforts on spreading improvements, not just in London and South East England, but in much poorer-performing regions throughout the UK. As the announcement on Tier 1 visas showed, and an upcoming,
more wide-ranging review of immigration rules is likely to reveal, ministers are having second thoughts about a further clampdown on migration criteria despite the commitment to cut net migration. The Industrial Strategy white paper insisted that Britain will remain
an attractive destination for “the world’s most talented and innovative people” owing to the nation’s thriving and flexible labour market.
national average, while towns such as Stoke, Blackburn, Mansfield and Doncaster had productivity levels of around 25 per cent below it. In Bristol, Tim Lincoln, practice leader for the South West at
Grant Thornton, says, “The West of England Combined Authority region is showing itself to be one of the country’s most successful for productivity and prosperity. We have a huge amount to be proud of, with burgeoning technology and financial services sectors, and some ambitious growing businesses that are attracting and retaining the top talent.” Under the Transforming Cities Fund, the West Midlands will
receive £250 million for better transport links, including a £200 million expansion of the Midland Metro from Wednesbury to the new high-tech DY5 Enterprise Zone at Brierley Hill. Andy Street, mayor of the West Midlands, adds: “The importance
of this extension is difficult to understate. It will open up sites for housing and regeneration and reconnect Dudley and Brierley Hill to the rail network for the first time in decades. ➲
Mr Hammond voiced a similar message in his autumn Budget
speech, as he set out other measures designed – directly or otherwise – to jump-start productivity. These measures include £500 million support for 5G mobile networks, full-fibre broadband and AI; investment in electric car infrastructure and research; £30 million to develop digital skills with distance learning courses; the recruitment of 8,000 computer science teachers and the establishment of a new National Computing Centre; and a £1.7 billion Transforming Cities Fund to boost transport links outside London. The fund will be shared between six regions with elected mayors and other areas. Boosting growth in the UK regions is key to the government’s
industrial strategy, primarily because the productivity puzzle is also a geographical one. A recent report by the Centre for Cities think-tank revealed that output per worker in South East England, including places such as London, Slough, Reading, Milton Keynes and Aldershot in Hampshire, was 44 per cent higher than in other parts of the country and, indeed, 7 per cent higher than the national average in Germany. Outside of the South East, Aberdeen, Bristol, Edinburgh and Swindon were the only towns or cities to record productivity levels above the
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