Growth in regional productivity to add more than £200bn in next decade

Plans to power regional productivity has the potential to inject £208bn into the UK economy over the next ten years, according to a new CBI report.

This will represent an economy that has increased by 10%.

The CBI’s new report, ‘Unlocking Regional Growth’ launched (Thursday 1 December) at the Manufacturing Technology Centre in Coventry, looks at ONS data to identify the four main drivers of regional productivity differences across the UK.

These four areas are educational attainment of young people at 16 and skills; transport links that widen access to labour; improved management practices and higher proportion of firms that innovate and export.

In the Autumn Statement, delivered on November 23rd, the Chancellor set out to tackle regional imbalances by pursuing an industrial strategy led by infrastructure and innovation spending.

The CBI has now calculated the potential gain to the UK economy if each regional area can increase its productivity at the same rate as the top performer in their respective region or nation.

In the North East, CBI’s research shows it is 31.8% less productive than London, with Hartlepool & Stockton-on-Tees the most productive area and Durham the least.

Sarah Glendinning, CBI North East director, said: “Raising productivity across all parts of the UK should be the single most important domestic goal over the next 5 years. Powering productivity in the North East could help lead to a UK economy that is 10% bigger in a decade than it would have been otherwise.

“We can achieve this by pursuing investment in education, infrastructure and innovation in an industrial strategy delivered in true partnership between the Government and business.

“So let’s all unite behind this common agenda and usher in a new era of opportunity – and prosperity – for all.”

The Rt. Hon. Greg Clark MP, Secretary of State for Business, Energy and Industrial Strategy, added: “Our upcoming industrial strategy will have a particular focus on improving productivity and just last week we announced the £23bn National Productivity Investment Fund.

“This new investment will help us unlock the full potential of regional economies and support businesses of all sizes to grow and prosper.”

According to CBI, the full potential of regional economies will add £208bn to the UK’s nominal gross value over the next decade. This would lead to more jobs and higher standards of living across the UK.

To achieve this goal, CBI urges business and policymakers to work together to place increasing productivity and economic growth at the centre of further devolution efforts, and take action to address the drivers specified above.

Examples CBI identified, include:

• Focus on building the right skills across the UK and producing the best opportunities for our young people. Reduce the numbers of poorly performing schools by enhancing the role of regional schools commissioners (RSCs), who are charged with their improvement.
• Improve transport links between cities in the North of England could provide access to a population of 16m – the same number within one hour of London. Specifically, lowering transport times between Manchester and Sheffield to 30 minutes could provide a 10% lift in productivity.
• Reduce urban congestion and speed up travel times in our cities. This could boost productivity in Leicester by 8% and Nottingham by 6%.
• Improve management practices and simplify the number of business support initiatives, building on the work of the Productivity Leadership Group
• More targeting of Government assistance for firms with the potential to export at a regional level. Exposure to foreign markets facilitates competition and promotes innovation.

National law firm Irwin Mitchell is a sponsor of the report. Vicky Brackett, CEO of Irwin Mitchell’s business legal services division, said: “Increasing productivity across the UK’s economy is a subject Irwin Mitchell is passionate about, particularly as it can drive greater prosperity and ensure all businesses are able to reach their full potential.

“We are fully supportive of this CBI campaign and welcome their evidence based approach which looks at each region closely and identifies tailored solutions to boosting productivity.

“There are some significant challenges ahead but if businesses and government can make it a priority and work closely together, then I genuinely believe that economic growth within our regions can be unlocked.”

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