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Three easy tests that all the British parties flunk

The fate of the next British government will be determined by productivity. As the Bank of England said on Wednesday, current rates of activity growth cannot be maintained for long "in the absence of some material improvement in labour productivity". If Britain's productivity crisis persists, the result will be weak growth and more austerity. Imagine Italy without the food or sun.

We now know quite a bit about the sources of weak productivity growth. It stems from a failure to improve the efficiency with which land, labour and capital are used, especially in four sectors: professional services, manufacturing, information technology and banking. The best bet is that we will not recover the ground lost, but will return soon to something approaching previous productivity growth rates.

In these circumstances, you might expect serious political parties to put restoring productivity growth at the centre of their election campaigns. Have they? Consider three tests.

Britain has huge demand for decent housing and a huge supply of unused land where people want to live. The productive use of this land is prevented by planning constraints in much of Britain, raising the price of housing far above that in other, more enlightened, countries. Test one is therefore whether political parties have the courage to suggest borrowing money, using compulsory purchase orders to buy developable land and ensure the growth in the supply of housing rises to levels last seen in the 1970s.

Although rightwing think-tanks and homeless charities have suggested such policies, none of the parties comes anywhere close. The Conservatives deserve a particular place in the hall of shame for their proposal to have a special additional inheritance tax allowance for the family home. This would complicate the tax system further and provide a strong incentive for older people with inadequate income to tie up cash in large cold houses.

The second test is whether the next government will allow a new runway at Heathrow Airport. Runway capacity in southeast England is constrained, and properly regulated airport expansion is an easy way to guarantee growth. Again, none of the parties have such a commitment in their manifestos.

The Conservatives have committed merely to "respond" to the independent Airports Commission, which will report soon after the election. Here, Labour deserves a special booby prize. It promises to set up an independent National Infrastructure Commission, similar to the Airports Commission but more wide-ranging, to take the politics out of big projects. Then, two paragraphs later, it refuses to be bound by the Airports Commission's proposals. The Liberal Democrats, who have adopted a holier-than-thou attitude to the economy, are even worse. They pledge at once to "consider" the Commission's proposals and to ignore them, being opposed in principle to new runways.

A third test is whether politicians propose to simplify taxation. Regardless of the level of taxes, clearer and simpler structures encourage people to get on with productive work rather than wasting time trying to arrange their affairs in a way that minimises the tax they pay.

But none of the parties are in any mood to seek fiscal simplicity. Money is so tight that small tax lollipops are the order of the day, financed by wheezes to collect more money from rich and poor people in complicated ways.

These three tests on productivity should be difficult for any prospective government to flunk. They are Britain's really low-hanging fruit. But the manifestos fail badly.

Although our political leaders talk a lot about improving the economy, when you scratch the surface, it becomes clear that they prefer to pander to vested interests.

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