National Productivity Week 27th January 2025 | Visit Website

A diverse community of
leading experts, policymakers
and practitioners

The Institute’s key research themes
are led by ten academic partners
spread across the UK.

We’re a UK-wide research
organisation exploring what
productivity means for business

Businesses are crucial to solving
the UK’s productivity problems.

Independent growth and productivity institution needed to address UK’s economic challenges

The UK must establish a dedicated, independent growth and productivity institution similar in scope and influence to the Office for Budget Responsibility to overcome its deep-rooted economic challenges, two leading research institutes have recommended.

The Productivity Institute, a public-funded research body headquartered at the University of Manchester, and the Programme on Innovation and Diffusion at the London School of Economics’ Centre for Economic Performance, have called for the establishment of a statutory institution that puts productivity at the heart of the UK’s growth agenda. This proposal is made as part of this week’s National Productivity Week – an awareness campaign on the importance of raising productivity across the nation.

Britain has now experienced about 15 years of poor productivity when compared to its past performance and that of similar sized economies. Average annual growth in labour productivity, measured by gross value added per hour, was around 2% in the decade before the financial crisis but has averaged less than 0.5% since.

In a joint note the two research organisations argue that productivity has deteriorated due to a long-term lack of investment, poor knowledge- and best practice-sharing among firms, and the lack of joined up government policies and institutions. The note states that addressing the UK’s productivity crisis is urgent if the country is to see sustainable increases in living standards once more.

The recommendation, which resulted from consultation with experts from academia, policy organisations and industry, makes the case for an independent statutory institution similar in scope and influence to the Office for Budget Responsibility and the Climate Change Committee.

The two organisations argue that the new body should be independent and operate autonomously from government, focused on long-term, strategic solutions to addressing growth challenges, flexible to changes in government or new developments, and given the ability to influence policy making.

Bart van Ark, Managing Director of The Productivity Institute and a professor of productivity studies at The University of Manchester, said:

“Without productivity gains, economic growth and improvements in living standards are incredibly hard to achieve. What brings together political parties of all stripes is a consensus that productivity will be the lifeblood of a more stable, prosperous future.

However, the political environment is, and has been for some years, too uncertain, turbulent and febrile to deliver on a long-term, focused approach to pro-productivity policies which connects different policy domains across government. An independent productivity institution with influence across Whitehall and the devolved nations – and which is immune to changes in the political weather – is key.

The last 15 years have illustrated the scale of the challenge. Brexit, technology advances and the transition to net zero are all additional pieces that need to be fitted into the productivity puzzle. Now’s the time to solve the challenge by establishing an outfit and giving it the power to inform policy making that will benefit us all.”

Anna Valero, Deputy Director of the Programme on Innovation and Diffusion (POID), Director of the Growth Programme at the Centre for Economic Performance added:

“We can’t shy away from the scale of the challenge of addressing nearly 15 years’ worth of productivity stagnation. Now is the time for an institution with the focus and drive needed to advise on and monitor lasting policies for long-term, sustainable investment and growth. This institution will need resources, expertise and a long-term vision behind it to be a success. At the core is should focus on productivity and growth, but job creation, living standards and the journey to net zero are also critical areas for this institution, as they all depend on and interact with productivity gains being made across every part of society.”

The note which proposes the new institution, is part of a larger Productivity Agenda published by The Productivity Institute. The Productivity Agenda highlights key areas of policy for leaders to focus on to better equip the public, private and civic sectors to be able to translate productivity gains into improved living standards and wellbeing across the UK. The full report will be available on Wednesday, 29 November.

The Productivity Agenda is part of National Productivity Week – a week-long campaign running from 27 November to 1 December to raise awareness of the importance of productivity and its impact on the UK economy, society and the environment.