"The peer said public spending that did not enhance productivity would push up inflation"
Yo - spending has no relation to productivity. What matters is the structures and institutions this spending is channelled through AND their ability to change should the needs arise. Indeed sometimes we'd prefer them not to change.
Education - doesn't need more spending, just more sensibly so - community-based schools of smaller size, curricula that encourage blooming of individuals not being told repeatedly - the world's shit - this will help you cope (cf high school in Sunderland that set up a call centre training department with money from, er, a local call centre).
Health - wider view of what it is to be healthy. Again, megaoplis approach to hospitals does not work, just persuades people how much they really are sick.
Paper work - EVERYWHERE - needs to be slashed - people letting go to the extent that folk do things as they are supposed to rather than submitting to jingo as soon as anything goes wrong. Teachers, health professionals businessmen are choked beyond the point of creativity which is what propels productivity in the long run.
Innovation is the product of a solid bed (health, education) and enough fluidity. Regulation is too easy to throw in when things are going wrong. Let's try a harder way of regulation that allows things to flourish.
The more I read the above points the more I see the all-pervasive problem is a lack of spine. Principles are considered inconvenient, non-expedient. It's time we started standing up instead of submitting to lobbies and reacting to opposing dogma, which only serve to cloud our view.