More trouble for George Osborne as MPs attack ‘useless’ productivity plan

The Chancellor has been heavily criticised for his controversial £130m tax settlement with internet giant Google

George Osborne has come under yet more fire today after his plans for improving the UK’s lagging productivity were attacked by MPs in a damning report.

Mr Osborne – enduring his worst political spell since the “omnishambles” 2012 Budget – has also been attacked by Andrew Tyrie, chairman of the Treasury Select Committee, for an “unacceptable” failure to make the economic case for airport expansion.

The Chancellor, who has been heavily criticised for his controversial £130m tax settlement with internet giant Google, took more flak today from the Business, Innovation and Skills (BIS) Committee over his “Productivity Plan” for the UK economy, which was published alongside last July’s Budget.

The UK’s shortfall in productivity – the output produced by individual workers – compared with rival economies has been put down to factors such as lower investment in equipment by businesses and low public infrastructure spending. Improving productivity is crucial as greater efficiency can be passed on to consumers in cheaper prices – fuelling demand  and improving international competitiveness.

Mr Osborne said in July that he was “determined to change” the UK’s productivity performance. But the committee  said his plan – covering 15 areas including transport, energy and infrastructure – was far too “vague”, lacked ministerial engagement, and was barely worthy of being called a “plan” at all.

Committee chairman Iain Wright said: “Rather than being a clear and distinctive roadmap as to how Britain will close our productivity gap, [the plan] is a vague collection of existing policies. The analysis...  is good, but the milestones for implementing improvements are virtually non-existent.

“If the productivity plan is going to avoid collecting dust on Whitehall bookshelves and having a legacy of being seen as worthy but useless, then the Government needs to back it up by setting out how these policies are going to be implemented and how their success will be measured.”

A government spokesman said it would “carefully consider” the committee’s report and respond in due course.

Mr Tyrie, meanwhile, lambasted the Chancellor over  an “unacceptable” failure to clarify the Airports Commission’s “opaque” economic case for airport expansion through answers to a series of questions from the MP two months ago. 

The commission’s final report said its preferred third Heathrow runway could deliver £69.1bn in economic benefit, but Mr Tyrie has called for the Government to provide “a good deal more” information, including the impact of different economic scenarios on the case for all three proposals under consideration. “Parliament and the public cannot reasonably be expected to judge the merits of any decision the Government takes... on the basis of the commission’s published analysis alone,” he said.

The Government has delayed a final decision until the environmental impact has been reassessed. A Department for Transport spokesman said: “It has not so far been possible to respond to Mr Tyrie’s long list of questions on related and different issues. 

“However, we are considering his questions in the light of progress and will respond to his letter as soon as possible,” he added.

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