Solving the UK’s productivity puzzle


The Chartered Association of Business Schools and Chartered Management Institute hosted a fringe meeting at the Conservative conference which discussed how employers and higher education can work together to boost the UK’s productivity.

Suella Fernandes MP said she understood the ‘productivity puzzle’, a measurement on which the UK currently lagged behind its international competitors, but she was less clear of the causes.

She cited that UK productivity was 27% below that of France and 31% below that of the United States.

This Government had given “a clear priority” to increase productivity by galvanising the British entrepreneurial spirit, said the MP.

Professor Angus Laing, from the Chartered Association of Business Schools said that universities themselves had a responsibility as “civic bodies” embedded within a community and should become “agents of business and economic development”.

He explained that many UK students were not equipped to enrol on some postgraduate Business courses because they are too heavily Maths focussed. In this light he was critical of Theresa May’s intention to clamp down on foreign student numbers:

“I will clash with Theresa May on any occasion on student numbers” and he added that the UK was running a risk of damaging its economy over this issue. He argued that many international students returned home and became “ambassadors for the UK” which should not be under-valued.

Professor Laing explained that many business school postgraduates end up in the financial sector because of the “high rewards” on offer, but the UK needed to ensure business school graduates were encouraged into the science and engineering sectors or to start up new enterprises.

He also commended the previous coalition government for supporting small and medium enterprises, not least in the creation of the Small Business Charter.

Petra Wilton of the CMI explained that poor productivity in Britain indicated a need for “better led organisations” and added that Britain was “a nation of accidental managers”.

Stating that only one in five managers were trained before taking up a management role, Ms Wilton said higher education and business schools can play a key role in this area.

Patrick Dunne from EY Foundation argued that the political process was “worth looking at” particularly in terms of the friction cost of individual policies to business and society. Government cuts to science funding and to doctoral student funding were “an incredibly short-sighted investment decision,” he warned.

Calling for more to be done to support school leavers and students, Ms Fernandes said: “I meet a lot of young people who feel they don’t get enough training and careers advice”.

Mr Dunne added that it was “blindingly obvious” that the UK would never have a fully productive society with one million people not in education, employment or training.

The UK needs to acknowledge that “we are a good service economy,” said Professor Laing, and the ground-breaking catalyst schemes encouraging start-ups in the advanced manufacturing sector should be extended to include the service sector.

Ms Fernandes cited a recent Government report ‘Fixing the foundations: Creating a more prosperous nation’ which argued that putting employers at the heart of funding apprenticeships would boost skills and productivity. This would fall in line with the Government’s commitment for 3 million extra apprenticeships over this Parliament, she said.

Ms Wilton indicated that businesses did not currently measure the true value of their staff beyond the “very crude metric” of the salary cost of employing them. She called for proper human capital management to measure the level of skills amongst the workforce.

This piece was originally posted at on 8th October 2015