The UK needs greater collaboration between national and regional authorities, more empowerment of local mayors and policies tailored to specific regions to significantly improve its productivity performance in the long-term, according to the Regional Productivity Agenda published today by The Productivity Institute. It states that, despite its commitment in the Industrial Strategy and the Devolution Agenda, the government is not sufficiently focused on joining up and scaling up pro-productivity policies across regions.
Developed by the Institute's eight Productivity Forums across England, Northern Ireland, Scotland, and Wales, the regional agenda builds on its 2023 National Productivity Agenda. It calls for better alignment of national pro-productivity policies, including investment, innovation, skills, trade, and foreign direct investment, with those of regional bodies and local authorities. Additionally, it emphasizes the need for coordination and selectiveness on the implementation of the industrial strategy and devolution deals.
The report emphasises the importance of scaling up powers for local authorities, particularly (Mayoral) Combined Authorities, to enact pro-productivity policies and align their growth strategy with the national Industrial Strategy and other initiatives to strengthen productivity and growth in the UK.
The Productivity Institute researchers find that while there has been some narrowing of productivity gaps between regions in recent years, this is partly due to improved performance in regions like the South East, North West, North East, and Northern Ireland, and partly due to a decline in productivity in London, a trend worsened by the pandemic.
Andy Westwood, policy director of The Productivity Institute said: "'The national industrial strategy involves choices between places as well as sectors and that might involve scaling up in some rather than others depending on the clusters and their growth potential. Co-ordination might also seek to align planning and housing, including the location of new towns, with places that are most in need of human capital, for example in second tier cities."
The launch of the Regional Productivity Agenda, which is built on eight reports offering a detailed overview of productivity developments and policy recommendations for each region and devolved nation, coincides with this year's National Productivity Week from January 27 to January 31. It will run a series of regional events held to discuss the productivity challenges holding back the UK's regions and how to address them
The week's events will see high profile policymakers, academics, business leaders and local politicians debate regional productivity disparities, the role of the public and private sectors in driving productivity growth, best-practice management skills and working practices, and technology.
National Productivity Week has been organised by The Productivity Institute, a public-funded research body headquartered at the University of Manchester. It was established in 2020 to address the UK's long-held productivity challenges that have been prevalent for almost two decades. Between 2009 and 2019, Britain's productivity growth rate was the second slowest in the G7. In 2024 output per hour worked was about 10 percent below the average for France and Germany and almost 20 percent below the level in the United States.
