New productivity institute part of £37m investment to boost UK wage growth and living standards

@AllianceMBS at The@OfficialUoM to head up new productivity institute 

A new institute in Manchester will boost ground-breaking research to explore how to increase productivity, boost wages and support the economic recovery across the UK backed by a £37 million government investment, and is the largest economic and social research investment ever in the UK, as part of country’s continued economic recovery from the COVID-19 pandemic.

A new institute in Manchester will boost ground-breaking research to explore how to increase productivity, boost wages and support the economic recovery across the UK backed by a £37 million investment, the government announced today (21 August 2020).

This new state-of-the-art Productivity Institute based at the University of Manchester will be supported by £32 million of government and industry funding to identify barriers to increase productivity levels across the UK following the coronavirus crisis.

From September, over 40 researchers from leading UK institutions to work directly with policy makers and businesses to examine the UK’s productivity levels and the issues that impact productivity, such as working from home, workers’ well-being and lack of diversity in the workplace to identify key policies that could be implemented to unlock growth and deliver jobs.

Areas of research could involve understanding the supply and demand for labour and skills across regions and sectors, looking at how companies can implement new technologies and efficient processes to increase competition, improve working conditions, and accelerate the transition to a low carbon economy to future-proof industry and lower prices for consumers.

It comes alongside a new £5 million research programme at the London School of Economics (LSE) to accompany the Institute, which will identify ways that the UK’s most innovative products and services can be distributed more evenly across each sector of the economy to increase productivity.

Science Minister Amanda Solloway 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 earn more in every area of our economy.

Led by esteemed economist Professor Bart van Ark of the Alliance Manchester Business School, the Productivity Institute will seek to identify solutions that address imbalances in productivity between sectors and regions, as well as improving management practices. In doing so, they will also be working with eight partners including the Universities of Glasgow, Queen’s University Belfast and Cardiff.

Economic and Social Research Council (ESRC) Executive Chair, Professor Jennifer Rubin, said:

The Institute at Manchester and the LSE research programme address what is arguably the UK’s biggest economic challenge. This funding represents the largest economic and social research investment ever in the UK, befitting its enormous potential to improve lives for millions of people.

The aim is to ensure that advances in knowledge inform the significant decisions and interventions that policy makers, businesses and individuals must make to improve productivity, and to achieve the attendant improvements in wages and living conditions that doing so can drive.

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.

Professor van Ark of the Alliance Manchester Business School 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 new Programme on Innovation and Diffusion (POID) at the London School of Economics (LSE) will be led by world-leading economist Professor John Van Reenen. The Programme will work to identify ways in which the UK’s most innovative products, services and technologies can be distributed more evenly across the economy to industries that have been slower to adopt modern practices that will help increase productivity.

The Productivity Institute will be headquartered at the Alliance Manchester Business School.

Funding for the Productivity institute and the Programme on Innovation and Diffusion (POID) is being delivered through the Economic and Social Research Council (ESRC), part of UK Research and Innovation and through its Strategic Priorities Fund. It will run for 5 years, starting on 1 September 2020. ESRC will provide £4 million of the funding for the Programme on Innovation and Diffusion (POID), with an additional £1 million provided by the London School of Economics.

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 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.

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**. 

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.