- “Landmark investment” to address the UK’s ‘productivity puzzle’
- New Productivity Institute will be based at Alliance Manchester Business School at The University of Manchester, in partnership with eight other institutions
- Goal of improving UK’s productivity – currently among the lowest of developed economies and with large regional dispersion across the UK
Alliance Manchester Business School will host a new institute funded by the Economic and Social Research Council (ESRC) to make the UK economy more productive.
The new £32m Productivity Institute is being funded by £26m from ESRC and £6m from Alliance Manchester Business School and its partner institutions for five years, from 1st September 2020.
The creation of the new institute was announced today by Science Minister Amanda Solloway. She said: “Improving productivity is central to driving forward our long-term economic recovery and ensuring that we level up wages and living standards across every part of the UK. The new Productivity Institute and LSE’s innovative research will bring together the very best of our researchers, boosting our understanding of the different drivers of productivity and helping people and businesses produce and earn more in every area of our economy.”
The business school, part of The University of Manchester, will partner with eight other institutions across the country in a bid to help policy and business leaders across the UK understand how to improve productivity and living standards as the economy begins to recover from the impact of COVID-19.
While UK productivity (the amount of production per worker) has historically risen over time, It is lower now than it was at the onset of the financial crisis in 2008, even though the economy grew until COVID-19 reached the UK – something dubbed Britain’s ‘productivity puzzle’*. Addressing this puzzle could mean better jobs, higher living standards and the country becoming richer on a per-person basis.
The Productivity Institute is being funded by the Economic and Social Research Council (ESRC) as part of its largest single investment into social sciences research. ESRC is part of UK Research and Innovation, which is principally funded by the Department for Business, Energy & Industrial Strategy (BEIS). Alliance Manchester Business School has been chosen as the lead institution because of its extensive background in business engagement and developing world-class economic research that informs public policy.
Professor Dame Nancy Rothwell, President and Vice-chancellor of The University of Manchester, said: “This is a landmark investment by the government. It demonstrates how serious the government is about solving the UK’s productivity puzzle and importantly, it signals a commitment to help create an economy that works for everyone, with growth that is sustainable, inclusive and regionally distributed. We are proud to lead a group of some of the UK’s most prestigious institutions to tackle what is perhaps the greatest economic challenge of our times and to do so from our region, with its rich heritage in productive growth.”
The Institute will be led by Professor Bart van Ark as Managing Director who has been appointed to a Chair in Productivity Studies at Alliance Manchester Business School and was previously Chief Economist at The Conference Board in the US. Professor van Ark will be supported by over 40 co-investigators who are world-renowned experts in their fields, including Professor Anthony Venables of the University of Oxford, who will be appointed as the Institute’s Research Director; Professor Diane Coyle of the University of Cambridge; and Professor Jagjit Chadha at the National Institute of Economic and Social Research.
The Institute will develop its research agenda and practical business interventions through a programme of regional engagement with policymakers and business leaders from firms of all sizes as well as bodies like HM Treasury, BEIS and the CBI.
It will create eight Regional Productivity Forums across the country to work with these businesses and policy makers on critical productivity issues in the regional context; and it will form a national Policy Reform Group to work with policy makers on productivity aspects of nation-wide policies.
The Institute’s goal is to make long-term policy recommendations that help to improve the UK’s productivity, which is lower than in the US, Ireland, France, Germany and Spain, according to the Organisation for Economic Co-operation and Development**.
Professor van Ark said: “For many years the UK has grappled with how to create better jobs and boost productivity, thereby increasing people’s prosperity around the country. The COVID-19 recession makes it time for a fresh look at these challenges. If we are to reboot the economy we need jobs that create high value, use economic and natural resources efficiently, and drive sustained growth through technological change and innovation. Productive jobs will pay more and improve people’s well-being.
“Working closely with businesses, policymakers and other stakeholders across the nation and sharing insights with other countries, we aim through our research and engagement to develop practices and policies to encourage more productive and inclusive growth across the UK.”
Professor Fiona Devine CBE, Head of Alliance Manchester Business School, added: “This landmark project shows how business schools act as a force for good for the whole of society. By taking our original thinking and research and applying them to a huge economic challenge, we can play our part in building a stronger working UK economy with all the benefits that brings to people and businesses right across the country.”
The partner institutions supporting Alliance Manchester Business School are: University of Cambridge, the National Institute of Economic and Social Research, University of Glasgow, University of Sheffield, King’s College London, Queen’s University Belfast, Cardiff University, University of Warwick.
The Productivity Institute will also collaborate with the Economic Statistics Centre of Excellence (ESCoE) and with organisations outside of the UK, including the Organisation for Economic Co-operation and Development (OECD) in Paris.
For more information about the Productivity Institute please go to: