The North West of England’s Productivity Challenge
Business leaders in the North West are championing plans from productivity experts to accelerate the levelling up agenda in the region.
Bruntwood, the North West Business Leadership Team and former Siemens UK chief executive Juergen Maier are among those calling for a re-think when it comes to addressing the North West’s productivity challenges.
The call comes on the back of the newly released Productivity Insight Paper for the North West of England, created by The Productivity Institute and its North West Regional Productivity Forum, both based at Alliance Manchester Business School. The paper highlights the strengths of the region, including its large and very productive manufacturing sector – which sits head and shoulders above its UK regional counterparts – as well as its leading R&D assets, life sciences, energy and digital industries. But it also outlines productivity gaps in the region, identifying the obstacles preventing the North West and its sub regions from gaining ground on UK average productivity levels.
The report’s authors have called on the government to prioritise policy areas that focus on the region’s strengths, factoring in improving within region connectivity through local transport connections; strengthening coordination and collaboration between businesses, government and universities; unlocking demand for skills and strengthening basic conditions for creating a productive workforce; and digitalisation.
The paper comes on the eve of the publication of the long-anticipated Levelling Up White Paper, which also seeks to address the widening gap and “dismal” productivity growth rate in the North West of England.
Outlining some of the findings in the report, Dr Marianne Sensier, Research Fellow at Alliance Manchester Business School and co-author of the report, said:
“We need to recognise the true scale of the productivity problem here in the North West. What is clear is that addressing the North West’s productivity challenges cannot be delivered with the same historical approach. It will require a sophisticated mix of coordinated policies – incorporating education and skills, R&D, innovation, health, planning, and transport investment – and long-term commitment that respond to the specific local circumstances. But not acting now, and failing to better leverage our strengths as a region, means we risk remaining trapped in a low investment, low skill and low productivity equilibrium.”
Data from the Office for National Statistics indicates that productivity in the North West has fallen by 0.3% (between 2008 and 2019), whereas the national average has increased by just 4%, highlighting the sheer scale of the issue.
Jennifer Halliday, North West Forum Chair, said: “The time has come for business leaders and boards to really engage on the topic of productivity, to set targets and to initiate projects that will really move the dial, and drive the inefficiencies out. These are often embedded deep within an organisation’s processes, and may not be easily visible to boards or to senior management. We need to take a cold hard look at the facts around productivity and really understand the factors preventing businesses from reaching their full potential. Let’s focus on the key drivers. In many cases, there are common themes, particularly around skills and digitalisation. Businesses should learn from others and reach out for support. One of the keys to solving the productivity puzzle is in engaging people at all levels in the organisation, and laying out a clear vision of the target they should be reaching for.”
Juergen Maier, former Siemens UK chief executive and current Northern Powerhouse Partnership vice-chair, said: “It is disappointing that the North West continues to fall behind other UK regions on productivity, but the green industrial revolution holds the key to reversing this. By investing at scale in the future industries, like hydrogen and those based on new materials like graphene, we can create many new companies that are at the cutting edge of technology and invest in skills that create the high productivity sectors of the future. We now have the chance to do this with programmes like HyNet, an innovation programme for hydrogen and low carbon energy across the North West, and they need investment at scale from both the public and private sector.”
Emma Degg, Chief Executive of the North West Business Leadership Team, and member of the North West Forum, said: ‘Tackling poor productivity matters to the country, and it matters here in the North West. We have one of the UK’s largest regional economies, and can claim the greatest manufacturing output of all UK regions. Our £180bn economy includes £27bn of exports across the globe and ambitions for Global Britain depend, in part, upon us. We are not lacking in ambition and see exciting new opportunities emerging across the North West, from the Liverpool City Region’s Freeport to Net Zero North West, and we are at the forefront of positioning the UK as a leader in clean energy and sustainable manufacturing. However, productivity remains a significant challenge and continues to hinder growth. If we are to ensure all our communities benefit from the opportunities before us, we must take action. This excellent report could help to drive significant improvements in productivity across the North West, raising the overall competitiveness and prosperity of the entire country. The time for action is now.”
Jessica Bowles, Director of Strategy at Bruntwood, and member of the North West Forum, said: “We do have a problem in our hands, but crucially, what this paper highlights is that by businesses working together and with academic institutions and government both local and national, we do have the tools to fix it.
“The region has many assets, but it’s about leveraging those strengths in the right way – be it our manufacturing skills, expertise in health planning or knowledge in life sciences. Only then can we start to reduce the gap and shift the dial on productivity in a meaningful way.”
Professor Barry Leahey MBE, CEO at Cumbria-based Playdale Playgrounds, Be the Business Fellow, and member of the North West Forum said: “Business, government and universities must work together if we want to level up the North West. We simply can’t afford to wait around. Lacklustre business investment during the pandemic is a concern and progress on productivity has gone backwards – compared to not only our global competitors but other UK regions – as a result. We need to leverage the expertise of our region’s most productive businesses and find mechanisms to share their tactics for success with businesses that want to improve.”