Lessons from the past: how might productivity policy learn from the policy changes of the past 20 years

There have been a significant number of changes to policies and programmes over the last 20+ years. But how far have these changes been material and what might we learn for the future of productivity policy, including in the context of the coronavirus pandemic?

Our chapter in the recently-published book, Productivity Perspectives, reviewed the changes in aspects of productivity policy from 1997 to 2018, a period which included the global financial crisis. This traced the overarching narrative associated with productivity policy, and focussed in on policies relating to innovation, business support, skills and regional development.

Our review identified significant change in programmes and policies, which often related to nomenclature or changes in targeting. We found that, whilst programmes and policies may seem to be new, they have historically not been much more than repackaging of old initiatives with some changes in the emphasis of branding.

Another aspect that we identified was the institutional churn over the period, and this coincided with changes in programmes. For example, consecutive waves of institutional reforms brought about regionalisation of programmes in the 2000s, a subsequent centralisation after 2010, and then (as we have recently experienced) a shift towards localism. As well as changes in the regional and local institutions, including the coming and going of Regional Development Agencies, we have seen significant adjustments to the skills landscape with a plethora of new and then disbanded or rebadged agencies.

But isn’t change good? Shouldn’t policy experiment and adapt? Yes, but experimenting and adapting are different from much of the change that we have witnessed. They are, or should be, about trying things, learning from them, keeping what works and amending things that don’t work. It does not necessarily require constant reinvention and institutional reform, and arguably such change works against the principles that are required for testing and learning. Churn is not good for maintaining institutional memory, nor for having a long-term perspective, which is important for many of the challenges we face such as productivity, and, in the coming months and years, supporting an economic recovery due to the coronavirus pandemic.

Our chapter did, nevertheless, identify some positive examples where there has been developmental change. One of these areas is the role of innovation programmes in stimulating solutions to market or societal challenges. Indeed, the current Industrial Strategy Challenge Fund programmes in part reflect the way in which innovation support has evolved since the 2008 Innovation Nation White Paper.

Productivity cuts across many issues and requires a policy approach that works across silos, and flexibility to take advantage of the intersections. In this way, it is a complex issue. Productivity Perspectives includes a chapter by Tim Vorley and Jen Nelles that discusses the role of a systems approach to conceptualising, designing and implementing productivity policy. As they argue, productivity policy has too often been developed as a collection of policies intended to stimulate productivity improvements: some policies on skills, others on innovation and technology development, yet others on infrastructure etc. However, these are all interdependent, and so the intersections need to be considered, understood (as far as possible) and policy developed in a way that can maximise potential synergies.

Therefore, in the coming months as the UK hopefully starts to turn its attention to industrial policy to support economic recovery, it needs to create the right environment for an adaptive policy response. This requires consistency, which means avoiding the constant churn and chopping and changing of programmes and institutions. It also needs to encourage comprehensiveness to integrate thinking across policy domains. Four key features to this are as follows:

  • Patience and flexibility: policy makers and funders should manage their expectations in relation to short-term results. Addressing complex challenges often requires time to understand the issues, develop appropriate initial actions, and then test, learn and amend them. A failure of policy is to abolish something just as we have learned from its initial mistakes and developed it into a working solution.
  • Longer-term funding: commitments of funding for longer periods of time give opportunities to consider actions with longer-term benefits (as opposed to looking just for the quick wins), and to adapt actions in response to early learning. Funding should also be sufficiently flexible to be used in ways that can cut across traditional policy domains.
  • Appraisal and evaluation that is appropriate for systems change: by the very nature of complex challenges and systems approaches, complete and very clear assessments of the benefits are more challenging than for simple interventions. Therefore, it is important that appraisal and evaluation approaches, and the demands placed upon them, are appropriate.
  • Appropriate decision-making and governance: structures should be in place that can help mitigate against the risk of the short-term decisions that can occur, for instance due to the length of policy and political cycles. Balanced representation of different stakeholder interests, and the role of independent bodies, can assist with this.

Originally published as part of the Productivity Insights Network.