Going up a gear: Raising productivity by powering up investment, work and institutions

The UK needs productivity growth to improve living standards. Without productivity growth, we will be economically vulnerable to recessions or stagnation, and we will likely see widening inequality, lower incomes, a smaller tax base, and, as a result, poorer health, lower educational attainment, and lower life satisfaction.

But it must be ‘good’ productivity growth, argues Luke Raikes, the Fabian Society’s deputy general secretary. We must avoid productivity gains that come at a high social cost: shedding jobs, reducing working conditions, or raising living costs. Poorly constructed cuts to taxes and regulation, supposedly to ‘unleash growth’, can in fact mean insecurity for businesses and workers, and a smaller tax base to fund public services. This can be self-defeating, ultimately undermining long-term productivity by eroding the foundations on which any modern economy rests.

This paper synthesises the research in this field as a basis for a set of practical recommendations to boost productivity while raising living standards, protecting the environment, and unlocking resources for public services and infrastructure.