Manchester-based body calls for national productivity version of OBR

University of Manchester

A call to create a productivity version of the Office for Budget Responsibility (OBR) has been issued.

It comes from the Productivity Institute, a public-funded research body, based in the University of Manchester.

The new body would help the UK to overcome its deep-rooted economic challenges, it has been claimed.

The Productivity Institute, together with the London-based Programme on Innovation and Diffusion, issued their plea for the establishment of a statutory institution that puts productivity at the heart of the UK’s growth agenda as part of this week’s National Productivity Week – an awareness campaign on the importance of raising productivity across the nation.

A survey of business leaders, conducted on behalf of The Productivity Institute, shows that less than a quarter (24%) are aware that the UK’s record on productivity is among the worst of developed economies. Bosses also say the best way of boosting productivity would be to improve workforce skills, with 47% choosing this as their number one priority when offered a range of options.

Britain has now experienced about 15 years of poor productivity when compared with its past performance and that of similar sized economies. Average annual growth in labour productivity, measured by gross value added per hour, was around two per cent 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 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.”

He added: “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.”