Ahead of tomorrow’s Spring Statement (Tuesday, March 13), KPMG’s David Elliott speaks exclusively to The Northern Echo about how the Chancellor must map out a route to productivity and growth

MR Hammond is set to deliver the shortest fiscal statement in history, which is expected to last just 15 minutes.

While the whistle-stop announcement will leave much off the agenda, it will be hard for him to avoid referring to Britain’s productivity challenge in his response to the OBR’s forecasts.

That challenge is more relevant than ever for the North-East.

According to the latest ONS figures, the region is performing 11.1 per cent below the UK average for gross value added (GVA) generated per hour.

The North-East achieved productivity 12.4 per cent below the UK average.

For context, Cardiff, Greater Manchester, Liverpool, Glasgow, Edinburgh and London all outperform our region.

KPMG’s own report, Improving UK Regional Productivity Performance, ranked the North-East eighth out of the UK’s 12 major regions.

It highlighted concerns over transport and digital infrastructure, the need to develop skills, and the relatively lower levels of research and development expenditure, exporting and foreign investment in the region compared to national figures.

This is clearly a real challenge.

Of course, productivity levels will reflect differences in industry and business size composition and will be affected by other factors that determine living standards and economic growth.

But the measure still affords a useful look at economic health.

Crucially, it can help steer policy in the right direction to help the region achieve its potential.

There are three key areas that regional leaders should start to address if they are to tackle this productivity challenge.

The immediate priority is transport infrastructure.

Enhanced transport links also enable companies to source the best inputs for their production, increase their target market and benefit from knowledge and best practice sharing.

The focus should be on improving connectivity, particularly with the Northern Powerhouse, to which the North-East is critical, but often poorly connected.

This should be done through the timely delivery of rail electrification plans and, more broadly, through support and investment in the Northern Powerhouse Rail initiative, including incentivising private investment.

Connectivity also means helping smaller towns in the region secure better links to larger urban areas, such as Newcastle and Durham.

This would not only increase the pool of available labour but provide better employment opportunities.

Secondly, we need to improve literacy and numeracy before we can overcome the mismatch between the skills possessed by school leavers and the jobs available in the region, especially bearing in mind the unstoppable rise of digital technology.

We need to invest in our young people and motivate them from an early age, encouraging work experience programmes as the building blocks of a stronger workforce.

Finally, we need to think about what our economy will look like tomorrow, not just today.

Ever increasing use of and dependence on technology in the workplace, and its integration with our daily lives, is a great opportunity.

But it is also a threat if we don’t prepare properly.

We need to better encourage investment in technology so that the North-East keeps up with a rapidly evolving economy.

That starts with improving the region’s digital infrastructure to boost internet speed and reach.

Sluggish productivity risks holding the North-East back, which is a similar conundrum facing many other cities and regions across the country.

But, I know that our region has the passion, ingenuity and willpower to continue its incredible growth story.

By focusing on improving transport, skills and technology infrastructure, we can start to address the productivity challenge head on and sustain our economic growth well into the future.

David Elliott is office senior partner at KPMG, in Newcastle