National Productivity Week 27th January 2025 | Visit Website

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How to reshape the UK’s political institutions to boost productivity

Four research papers from The Productivity Institute were cited in a report, A good life in all regions: uniting our country to end poverty, produced by the think tank The Fabian Society.

The Productivity Institute’s Professors Andy Westwood and Philip McCann were also thanked in the report, the final one of the Commission on Poverty and Regional Inequality.

Coverage of the report was featured in The Financial Times and the Yorkshire Post. The papers cited were research focusing on:

How political institutions, system of governance and policies have shaped poor productivity

The UK has one of the poorest productivity performances and highest spatial inequalities among the OECD’s 38 advanced economies. It also has one of the most centralised political and financial systems. The set-up and the functioning of UK institutions contributes to policy design and decision-making that are too centralised in spatial, geographic terms and simultaneously too fragmented in functional, sectoral terms.

This research paper offers the structural factors contributing to this problem – over-centralisation; weak, ineffective institutions and policy churn; institution and policy silos; short-termism and poor-quality policy co-ordination.

What needs to change to make Levelling Up work

The UK’s endemic regional-national productivity problems cannot be addressed by the UK’s current institutional and governance set-up. The economic development aims of the Levelling Up White Paper need to be matched by an institutional model that allows for proper analysis, consideration and engagement of multiple perspectives and stakeholders to be fed directly into the design of the policy making and policy-delivery process.

This paper argues that the establishment of such an institution, body or forum is essential in order to fill the current governance vacuum.

How are governance structures tackling spatial inequality in England

This paper reviews the overarching policy frameworks that oversee local and regional institutions that can tackle regional inequality and low productivity. Specifically, it looks at the frequent changes to institutional arrangements supporting economic development and the process of allocating competitive funds to local and regional bodies, with case studies on skills policy and Local Enterprise Partnerships.

It offers three policy recommendations – a stable institutional landscape; a clear devolution and decentralisation strategy; and coordination between institutions at all levels.

Find out more about the research by reading Levelling Up, Local Growth and Productivity in England by Andy Westwood, Marianne Sensier and Nicola Pike on our website.

Failure to learn from the past

The UK’s industrial policy since the 1970s has been characterised by frequent policy reversals and announcements, driven by political cycles, while multiple uncoordinated public bodies, departments and levels of government are responsible for delivery. This paper explores the impacts of these deficiencies of the industrial policymaking landscape in the UK and contrasts them with the experiences of other advanced economies.

Find out more about this research by reading UK’s Industrial Policy: Learning From the Past? By Diane Coyle and Adam Muhtar on our website.