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Written on 21 Aug 2020

Cambridge takes major role in initiative to help solve UK ‘productivity puzzle’

The University is to be a key partner in a new national effort to boost British productivity, bringing together expertise to tackle questions of job creation, sustainability and wellbeing, as the UK looks to its post-pandemic future.

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The University of Cambridge is one of the partners in a major new £32.4m Productivity Institute, announced today by the Department of Business, Energy and Industrial Strategy. It is the largest single funding award for social sciences in the UK.

Productivity – the way ideas and labour are transformed into products and services that benefit society – has been lacklustre in the UK over recent decades, with limited growth stalled further by the global financial crisis of 2008-9 and the impact of the coronavirus pandemic.

To address the urgent challenge, the new Institute will bring together institutions and researchers from across the country to tackle questions of job creation, sustainability and wellbeing, as the UK looks to a post-pandemic future full of technological and environmental upheaval.

Professor Diane Coyle, co-director of the University’s Bennett Institute for Public Policy will be one of the new Institute’s Directors and leading one of its eight major research themes. She will be heading up the strand on Knowledge Capital: the ideas that drive productivity and progress.

Professor Anna Vignoles from Cambridge’s Faculty of Education will helm another of the main research strands, on Human Capital: the cultivation of people’s skills and abilities. Both lead academics will be supported by a host of other Cambridge researchers from a variety of departments, including POLIS, Psychology, Economics, and the Institute for Manufacturing.

The Productivity Institute will be headquartered at the University of Manchester, and, along with Cambridge, other members of the leading consortium include the National Institute of Economic and Social Research and the universities of Glasgow, Sheffield, Cardiff and Warwick. The new Institute is funded by the Economic and Social Research Council (part of UK Research and Innovation). 

“Productivity is economic jargon for something fundamentally important,” said Professor Coyle. “This is the question of what will enable people’s lives everywhere to improve sustainably over time, ensuring new technologies, along with business and policy choices, bring widespread benefits.”

“Productivity is key to the creation of decent work and the provision of high quality education and healthcare. Its growth offers people sustainable improvements in their standard of living,” she said. 

The Knowledge Capital theme, led by Coyle, will investigate the way that ideas and know-how – “intangible assets” not easily defined or measured – permeate our society and the economy. 

“We want to understand better the links between productivity and things that are important but hard to pin down, whether that’s how businesses adopt new technologies and ideas or the role of social networks in determining how well different areas perform,” said Coyle.

Professor Vignoles will lead a team, including Dr Simone Schnall, considering the importance of individuals’ wellbeing and productivity. It remains an open question as to whether greater wellbeing can increase the productivity of individuals and what the implications of this might be for both national policy and firms’ strategies.

“Increasing productivity is a pressing priority for the UK and understanding whether policies to improve individuals’ wellbeing are also likely to improve their productivity is crucial,” Professor Vignoles said.

The fulcrum for Cambridge’s involvement in the new Productivity Institute will be the University’s recently established Bennett Institute for Public Policy, where Professor Coyle is based. 

Since its launch in 2018, the Bennett Institute has been concentrating on the “challenges posed by the productivity puzzle” in the UK, says the Institute’s Director Professor Michael Kenny, with a focus on ensuring notions of “place” are brought to the fore.

“We are delighted to be contributing to this major new initiative,” said Kenny. “Under the leadership of Professor Coyle, we have been working to understand the many different factors and dynamics which explain the well-springs of, and obstacles to, productivity growth.”

Professor Stephen Toope, Vice-Chancellor of the University of Cambridge, said: “I am thrilled that the University will be playing a pivotal role in the new Productivity Institute.”

“The knowledge generated by universities such as ours is a fuel for productivity, and will be fundamental to the resilience of the United Kingdom, and the opportunities afforded its citizens, in a post-pandemic world.”

Science Minister Amanda Solloway said: 

“Improving productivity is central to driving forward our long-term economic recovery and ensuring that we level up wages and living standards across every part of the UK.

“The new Productivity Institute will bring together the very best of our researchers, boosting our understanding of the different drivers of productivity and helping people and businesses earn more in every area of our economy."