The Productivity Institute, a public-funded research body headquartered at The University of Manchester, has launched a policy unit dedicated to informing thinking about the productivity growth needed to support the new government’s economic ambitions.
It will be located at The Productivity Institute’s London hub at King’s Business School, King’s College London.
The Productivity Policy Unit has been established in response to the new UK government making economic growth, net zero and future-proofing the NHS three of its five missions key to raising living standards and wellbeing.
The Unit has been launched with three core purposes: developing research outcomes from The Productivity Institute into concrete policy ideas for key government decisionmakers; knowledge sharing among thought leaders from different policy fields to inform guidance; and serving as a response board for policymakers when productivity-related questions emerge.
It comes as chancellor Rachel Reeves and business secretary Jonathan Reynolds prepare their Industrial Strategy. In her speech at Labour Conference, Reeves said the Industrial Strategy will be at the heart of the government’s mission to grow the economy, unlock investment and make every part of the country better off. A green paper is set to be released in October before the final Industrial Strategy is published in April 2025.
The Productivity Policy Unit has identified three areas the government should focus on as part of its Strategy. The first is net zero and the energy transition, which the prime minister has already indicated is a key focus in its mission. The Unit notes the vast role state support will play in establishing the UK’s place as a clean energy superpower.
Second is a solid analysis of the sectors where the UK’s productivity is lagging its potential. The Unit advises the Department for Business and Trade to use its analytical resources to evaluate where growth potential, UK comparative advantage and sensitivity all come together to provide the foundations for future productivity gains in specific sectors with state support.
Finally, the Unit has identified underperforming regional growth as a key area of focus. A first priority within this is ramping up the capacity of Mayoral Combined Authorities to run programmes and deliver key projects vital to their respective region’s growth, the Policy Unit said.
The Productivity Policy Unit’s other areas of focus will include recommendations for local growth plans, the skills agenda and public sector productivity.
It will be led by professor Andy Westwood, The Productivity Institute’s policy director. Work by professors Dame Diane Coyle, Stephen Roper, Nigel Driffield, Jagjit Chadha and Bart van Ark and other researchers at The Productivity Institute will also form the basis of the Unit’s recommendations.
It will also be home to newly appointed Productivity Fellows and advisors including Dr Tim Leunig, professor Anna Vignoles, professor Dame Athene Donald, professor Graeme Roy, Nyasha Weinberg, Jack Shaw, professor Richard Jones and Huw Spencer. More policy fellows and researchers will be added as the Unit grows in the future.
Professor Andy Westwood, policy director at The Productivity Institute and lead of the Unit, said: “The new government has rightly identified economic growth, net zero and the NHS as core tenets of our future prosperity. But we won’t markedly improve on any of those areas without addressing our deep-rooted productivity challenges.
“Productivity needs to be at the heart of all decision making on the economy in Whitehall. Our Unit is designed to ensure policymakers have the information needed at their disposal to make long-term decisions that improve our productivity and lay the foundations to achieve economic growth.
“What’s needed now is action from the government that is rigorous, united, focussed on delivery and ruthless about what isn’t working. We stand ready to provide the support it needs to do that.”
Stian Westlake, executive chair of the Economic and Social Research Council (ESRC), said: “If we want Britain to prosper and thrive, we need to tackle our dismal productivity problem. By turning research on productivity into actionable advice, the TPI Policy Unit offers an opportunity to turn the UK’s economic fortunes around and get Britain’s economy growing strongly again.”
