The UK has a productivity problem. The productivity record in the UK has been consistently among the worst in the OECD with output per hour worked growing at a snail pace of 0.5% per year on average between 2008 and 2019. And this productivity problem becomes more challenging when you consider the huge variation within the UK, across devolved nations, regions and cities. That slow nationwide 0.5% productivity growth is double the growth seen in the north-east, while growth stalled entirely in the north-west and declined in Yorkshire and the Humber over the past decade.
“The promise to level up the UK was one of the flagship pledges made in the 2019 Conservative manifesto,” says Gemma Tetlow, Chief Economist at the Institute for Government, in the foreword of On Productivity – a new report from academics at The University of Manchester.
“This pledge tapped into a longstanding sore in British society – the stubborn gap in economic performance and many other measures of prosperity between different parts of the UK. As the chapters in this report demonstrate, addressing gaps in productivity across the country is likely to entail a wide variety of policy levers – from policies to boost skills and health to changes to governance structures. It will also require central government working constructively with subnational governments and the private sector. “
The government’s 2022 Levelling Up White Paper is the most recent and most concrete attempt to begin to address this regional inequality.
“If the current government is to make meaningful progress where its predecessors have failed, it is vital that it learns from the evidence on what has and has not worked before and how local circumstances affect what policies are required and whether or not they will be successful,” writes Gemma Tetlow.
In the report, Dr Luke Munford and Professor Clare Bambra emphasise the need to ‘Level Up’ England, so as to address the health inequalities that are rife throughout the UK. They write, “Large economic benefits will follow from the improvement of the health of those living in the north of England. This entails the improvement of employment rates, wages, and in turn, productivity. Potential channels through which health can improve productivity and economic performance include a healthier workforce, who are more likely to be employed and stay employed.”
Other articles in the report detail issues and solutions related to devolution, public procurement, green recovery, skills and gender equality. Upon reading the report, Mary Glindon, Labour MP for North Tyneside, commented, “Our region needlessly loses talents that can better sustain our communities. We need a smart state that invests in infrastructure, mobilises private enterprise and boosts social justice in all parts of the UK.” Andrew Lewer, Conservative MP for Northampton South noted, “On Productivity contains some essays that try to look beyond ‘tax and spend’ banalities (almost always expressed in the 21st century as ‘tax and invest’) to deeper and longer term analysis. Policy recommendations on skills are especially key and feature prominently in the report. This is a worthwhile read, both in terms of policy ideas, but also as an insight into the mindset of academics researching these issues.”
On Productivity was produced with support from the CAPE project alongside Policy@Manchester, The University of Manchester’s policy engagement unit.