How the UK can meet the productivity challenge and boost the economy - Atkins
7 min read
PoliticsHome interviews Philip Hoare, the UK & Europe CEO of SNC-Lavalin’s Atkins business, who leads a 9,000-strong team across sectors including transport, defence and security, to discuss increasing UK productivity levels and embracing new challenges.
It’s been one of the biggest challenges facing the UK economy for many years. Despite the strongest two quarters of productivity growth since the financial crisis in 2008, the UK lags well behind in global standings. Adding to the frustration, the Office for Budget Responsibility expects the recent uptick to be reversed.
For Philip Hoare, improving productivity is the “big single ticket item” on his agenda. Addressing the issue, Hoare explains, would improve efficiency and consequentially make Britain more competitive on the global stage.
So, how to go about this? Hoare believes that investment in digital and skills in the engineering industry can play a key role in helping get the UK back on track. This can include the use of artificial intelligence to create opportunities to consolidate the design, planning, construction and maintenance of physical assets.
“Digital is a core enabler to allow us to drive more efficient and effective services, but so is upskilling our workforce in general,” Hoare explains.
“The link between upskilling the workforce and improved productivity has been well established. So, making sure that we’re investing in skills, but also thinking about how digital will transform what we do, I think is really important.”
Hoare is aware however, that for some companies, investing in modern technologies can be precarious. The fluidity of developments means it can be difficult to know when to strike. But he believes that the first step lies in taking a considered leap.
“We all know technology is changing rapidly around us but that cannot be a blocker to progress. Sometimes you’ve got to be brave and make a decision based on the information at hand and then be as agile as you possibly can be, so that as and when circumstances change you can adapt what you’re doing to reflect those changes,” ” he says.
“If you’re always waiting for the next big thing, or the next evolution, you won’t make any progress.”
He adds: “We live in a VUCA environment, which is volatile, uncertain, complex and ambiguous. The more that we get people and our workforce to understand that we are living in a VUCA environment where change is the norm, then the more adaptable we’ll become as technology changes.”
Government has a key role to play in this too, Hoare continues, with ministers able to provide assurances to sectors over the strategic direction of the country. “I fully appreciate that government can’t underwrite investment. But what they can do is work with the various sectors to look at long-term vision and strategy for particular sectors and then use that to talk about long-term investment plans, even if ultimately the money gets cut in some way or another,” he says.
“The fact that there’s a vision and a longer-term strategy in some of our sectors is important. It’s why I’m such a fan of the sector deals that government is trying to negotiate with various different parts of industry, triggered by the launch of the government’s industrial strategy in late 2017.
“The overall principle of government wanting to enter into a deal with industry to create positive change through collaboration has to be a good thing.”
Hoare, is optimistic that the UK can reverse its trajectory on productivity. He is also sanguine about how SNC-Lavalin’s Atkins business has recognised the role that digital will continue to play in its future. “It’s fundamentally changing our business model as a company – we recognise that. I am optimistic about that and we will continue to adapt and change to meet those needs,” he says.
“I’m also optimistic about some of the things that government are doing. The evolution of the Department for International Trade and the way that that’s been set up importantly demonstrates a willingness to collaborate with our economic partners. The identity that we’re creating around exports will reinforce this sentiment and may help to steady the ship during uncertain times ahead. Industry and government partners need to be active participants to help promote and push that agenda forward.
“The industrial strategy is a clear intent to try and ensure that UK industries raise their game. There are many levers out there to make this happen but it’s about better understanding how we pull those levers quickly and firmly to make a difference.”
Hoare is not short of innovative ideas to drive productivity growth. He floats the idea of incentives and rewards for industry from bolstering productivity levels. These could include commitments to invest in public services. “If industry raises its game and UK PLC, the people in our country, get behind and strive to improve overall productivity, then why shouldn’t there be some return on that investment for those organisations and for those people?” he asks.
The difficulty is finding the airspace for these big conversations as the UK undertakes the not inconsiderable task of extracting itself from the European Union. It is a discussion that is taking place at SNC-Lavalin, Hoare adds.
“Automation is an important factor on our horizon. It’s fundamentally changing the way that we deliver our business and will continue to do so in the future. We’re already thinking about the skills mix that we need in our business because of it. How does it shift our emphasis in terms of the services that we provide to our customers? I think that is really quite an important point in terms of looking ahead,” he says.
“Certainly it will be about changing skillsets and creating new opportunities for people based on the fluctuating needs of services. We live in a world where population growth is increasing and so is the demand for goods and services; this only adds to the sense of urgency .”
“Automation is essential to keeping up with demands of the population and the economy.”
With SNC-Lavalin already taking steps to adjust its business model to new developments in technology, how can the UK best prepare for the fourth industrial revolution? “It’s about trying to be clearer about what the overall strategy is,” Hoare says.
“Once you’ve got some direction of travel, you can then start to look at your strategic resource planning over that period and how that changes. We all need to look ahead at longer term plans, coupled with a clear vision in each of our industrial sectors, how do we then manage our skills against that.”
Hoare is uncertain as to when the “scales will tip in the other direction” and the UK will embrace the fourth industrial revolution. “Brexit has definitely been a bit of a tipping point, although we still don’t really know what that means for our business in the UK & Europe,” he says.
“Technology is going to change the way that we work. Data, it’s accessibility and how we use it is going to change the way that we do things.”
One thing seems for certain, Hoare will be among those leading the charge for the UK to address its long-standing productivity conundrum.
“I’m pretty patriotic and I want the UK to be a top performing country in the world. We’ve got so much to talk about and so much to celebrate. I don’t want to see us positioned towards the bottom of league tables in terms of our overall performance, because I don’t think that really reflects the talent that we have in the country. I find that a little bit frustrating,” he says.
“I want people to choose the UK. For us to do that, we have to be at the forefront and we have to be able to demonstrate that we’re as productive and efficient as anywhere else in the world.”
