Professor Leaza McSorley, University of Sunderland and Co-Investigator of the Productivity Insights Network writes about her experience of working on the Rebuilding a Resilient Britain programme organised by the Government Office for Science.
The Rebuilding a Resilient Britain programme was established during the Covid-19 pandemic to address aspects of Britain’s recovery from the pandemic over the medium to long term. The project convened groups of academics, policy makers and funders to focus on Areas of Research Interest to support Britain’s evidence-based recovery from the social and economic challenges facing the country. Areas of Research Interest are the research priorities of government departments which inform their research strategies, wider strategy and policy development.
The Covid-19 pandemic resulted in a mobilisation of academic research and engagement with government. Most of this activity needed to focus on the urgent matters at hand. Relying on academic research, data and analysis to protect lives (and livelihoods).
However, the Rebuilding a Resilient Britain project had the challenge of attempting to develop research priorities for government, funders and academics looking to the (very different and uncertain) medium and long term. The challenge was: what will we need to know in 3-5 years time, and what research do we need to do now to find that out?
As many of the research priorities identified are cross-departmental plenary meetings were chaired the Government Chief Scientific Adviser Sir Patrick Vallance and Professor Jennifer Ruben, Executive Chair of the Economic and Social Research Council.
The process was expertly led by ESRC/GO-Science ARI Policy Fellows, Professors Annette Boaz and Kathryn Oliver who have written about the project here, and facilitated by The Universities Policy Engagement Network (UPEN). An objective of UPEN is to ensure diverse contributions in academic-policy engagement. This approach to supporting diverse voices at the table is particularly required when it comes to the topic of productivity. Given the Government’s commitment to ‘Levelling up’ and addressing regional inequalities it is important to listen to a more diverse range of expertise and experience. I was asked to Chair the subgroup on “Productivity, Business and National Economy” and was pleased to represent the University of Sunderland and the Productivity Insights Network. The final report is available here: “Rebuilding a Resilient Britain: Local and National Growth”
The project ran from July to October, with the final reports being produced in January. The groups produced 9 reports, totalling 528 pages and over 200,000 words. The scale and scope of the outputs give an indication of the volume of the inputs and resultant intensive process over the 6 month period. All nine reports can be read here at https://www.upen.ac.uk/go_science/
The objectives of each sub-group were to i) collate existing evidence, ii) synthesise existing evidence and identify key messages for policy and practice and iii) identify evidence gaps and future priority areas of research interest and investment.
Productivity: key messages for research, policy and practice
The majority of academic research on productivity is in the domains of – competition, enterprise, skills, investment and innovation. These five drivers remain an important part of the productivity puzzle. However, this is the paradoxical challenge of evidence-based policy making. The weight of evidence does not necessarily reflect the weight of need. The fact that most evidence relating to productivity is within these five (mainly microeconomic) domains may be one reason why the UK has failed to tackle its relatively poor productivity performance. Productivity research has suffered from the street light effect, looking to find solutions in areas that are most illuminated through prior research.
The most recent data (January 2021) from the ONS show we are now witnessing the paradoxical situation where the technical/statistical measures of productivity outputs are actually improving due to a significant contraction in the hours worked in the economy and the closure of less productive (and high employment) sectors of our economy such as hospitality, leisure and retail.
The pressure to boost productivity can lead to improving productivity in the wrong way – a technical statistical fix, which shows up in the official statistic as increased productivity, and simultaneously reduces the productive capacity and total output of our economy through underutilisation of labour and capital (and reduced innovation and investment). This risks taking us back to regressive discussions of supposed trade-offs between employment and productivity and investment in ‘low productivity’ sector versus the frontier high GVA sectors. The productivity debate has moved on from viewing productivity as a technical measure of output (Labour productivity and Total Factor Productivity) to its role in driving growth, wages and wider economic and societal benefits.
Since the financial crisis in 2008 to date the OBR has revised its productivity forecast 40 times. This downward revision in its productivity forecasts reflects the main conclusion from the report: there is a widening gap between the theory, data, policy and practice when it comes to UK productivity.
From the report key evidence gaps and future areas of research interest related to productivity are identified as:
- Micro: Research evidence at a micro (firm/industry level) on policy and practice that prioritises/delivers both productivity and employment improvements
- Meso: Regional and structural inequalities and policy. Research that further develops regional-macro-economic linkages. Structural issues focused on labour markets and institutions
- Macro: Structural causes and drivers of low productivity and economic growth.
- Environmental sustainability and productivity and growth
- International best practice/comparative research
- Theoretical underpinnings of productivity
To support the objectives of the Rebuilding a Resilient Britain programme, the report recommends the following areas of research interest be prioritised now to support evidence-based policy making and delivery of plans for productivity growth in the medium to longer term:
a) Regional policy and regional inequalities: further research on how to solve the regional productivity puzzle and delivering ‘levelling up’. To simultaneously increase UK aggregate productivity and growth and deliver balanced and sustainable regional growth. i) Regional economic to macroeconomic transitions. Better understanding (theoretical) of how regional economies contribute to macroeconomic outcomes, and how macroeconomic policy can more effectively address/benefit from regional economic issues.
b) Structural causes and drivers of low productivity and economic growth: this should include: i) Labour market: creating the demand for skills and education; quality of work, pay and productivity; demographic change; inequality and inclusivity, particularly gender equality: ii) Institutions: what role do institutions national, regional and local play in supporting productivity and growth? Role of public sector (including education and health), NGOs, civic, voluntary, community.
Begin with the end in mind – why do we want to improve productivity? Mirroring the debates we have had over GDP growth now is the time to re-focus on the potential benefits of productivity growth. As with GDP too much attention – policy and research – has focused on the growth of productivity (the percentage change) and insufficient attention given to the i) the level of productivity ii) the distribution of productivity. If we consider productivity as the given level of output to a given level of inputs it is then possible to reconcile both lowering inputs in a positive (socially and economically desirable) manner (such as the 4 day working week or reduced/balanced working hours, reducing the level of unstainable inputs – such as energy, materials) and achieving higher levels of outputs through improving innovation processes (improved management practices, good work, investment and diffusion of R&D, balanced regional growth) to deliver higher levels of output (sustainable GVA, foundational and tradeable goods and services). To Rebuild a Resilient Britain productivity research must now provide new solutions to new and different productivity challenges.