“Stop worrying about hairdressers”: The UK government has misdiagnosed its productivity problem

We’re going as fast as we can, here. Image: Getty.

Gonna level with you here, I have mixed feelings about this one. On the one hand, I’m a huge fan of schadenfreude, so learning that it the government has messed up in a previously unsuspected way gives me this sort of warm glow inside. On the other hand, the way it’s been screwing up is probably making the country poorer, and exacerbating the north south divide. So, mixed reviews really.

Here’s the story. This week the Centre for Cities (CfC) published a major report on Britain’s productivity problem. For the last 200 years, ever since the industrial revolution, this country has got steadily richer. Since the financial crash, though, that seems to have stopped.

The standard narrative on this has it that the problem lies in the ‘long tail’ of unproductive businesses – that is, those that produce less value per hour. Get those guys humming, the thinking goes, and the productivity problem is sorted.

But the CfC’s new report says that this is exactly wrong. The wrong tail: Why Britain’s ‘long tail’ is not the cause of its productivity problems (excellent pun, there) delves into the data on productivity in different types of businesses and different cities, to demonstrate two big points.

The first is that the long tail is the wrong place to look for productivity gains. Many low productivity businesses are low productivity for a reason:

The ability of manufacturing to automate certain processes, or the development of ever more sophisticated computer software in information and communications have greatly increased the output that a worker produces in these industries. But while a fitness instructor may use a smartphone today in place of a ghetto blaster in 1990, he or she can still only instruct one class at a time. And a waiter or waitress can only serve so many tables. Of course, improvements such as the introduction of handheld electronic devices allow orders to be sent to the kitchen more efficiently, will bring benefits, but this improvements won’t radically increase the output of the waiter.

I’d add to that: there is only so fast that people want to eat. There’s a physical limit on the number of diners any restaurant can actually feed.

At any rate, the result of this is that it’s stupid to expect local service businesses to make step changes in productivity. If we actually want to improve productivity we should focus on those which are exporting services to a bigger market.  There are fewer of these, but the potential gains are much bigger. Here’s a chart:

The y-axis reflects number of businesses at different productivities, shown on the x-axis. So bigger numbers on the left are bad; bigger numbers on the right are good. 

The question of which exporting businesses are struggling to expand productivity is what leads to the report’s second insight:

Specifically it is the underperformance of exporting businesses in cities outside of the Greater South East that causes not only divergences across the country in wages and standards of living, but also hampers national productivity. These cities in particular should be of greatest concern to policy makers attempting to improve UK productivity overall.

In other words, it turned out, again, to the north-south divide that did it. I’m shocked. Are you shocked? This is my shocked face.

The best way to demonstrate this shocking insight is with some more graphs. This first one shows the distribution of productivity in local services business in four different types of place: cities in the south east (GSE) in light green, cities in the rest of the country (RoGB) in dark green, non-urban areas in the south east in purple, non-urban areas everywhere else in turquoise.

The four lines are fairly consistent. The light green, representing south eastern cities has a lower peak on the left, meaning slightly fewer low productivity businesses, but is slightly higher on the right, meaning slightly more high productivity businesses. In other words, local services businesses in the south eastern cities are more productive than those elsewhere – but the gap is pretty narrow. 

Now check out the same graph for exporting businesses:

The differences are much more pronounced. Areas outside those south eastern cities have many more lower productivity businesses (the peaks on the left) and significantly fewer high productivity ones (the lower numbers on the right).

In fact, outside the south east, cities are actually less productive than non-urban areas. This is really not what you’d expect to see, and no a good sign for the health of the economy:

The report also uses a few specific examples to illustrate this point. Compare Reading, one of Britain’s richest medium sized cities, with Hull, one of its poorest:

Or, looking to bigger cities, here’s Bristol and Sheffield:

In both cases, the poorer northern cities are clearly lacking in high-value exporting businesses. This is a problem because these don’t just provide well-paying jobs now: they’re also the ones that have the potential to make productivity gains that can lead to even better jobs. The report concludes:

This is a major cause for concern for the national economy – the underperformance of these cities goes a long way to explain both why the rest of Britain lags behind the Greater South East and why it performs poorly on a

European level. To illustrate the impact, if all cities were as productive as those in the Greater South East, the British economy would be 15 per cent more productive and £225bn larger. This is equivalent to Britain being home to four extra city economies the size of Birmingham.

In other words, the lesson here is: stop worrying about the productivity of hairdressers. Start worrying about the productivity of Hull.


You can read the Centre for Cities’ full report here.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

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Green roofs improve cities – so why don’t all buildings have them?

The green roof at the Kennedy Centre, Washington DC. Image: Getty.

Rooftops covered with grass, vegetable gardens and lush foliage are now a common sight in many cities around the world. More and more private companies and city authorities are investing in green roofs, drawn to their wide-ranging benefits which include savings on energy costs, mitigating the risk from floods, creating habitats for urban wildlife, tackling air pollution and urban heat and even producing food.

A recent report in the UK suggested that the green roof market there is expanding at a rate of 17 per cent each year. The world’s largest rooftop farm will open in Paris in 2020, superseding similar schemes in New York City and Chicago. Stuttgart, in Germany, is thought of as “the green roof capital of Europe”, while Singapore is even installing green roofs on buses.

These increasingly radical urban designs can help cities adapt to the monumental challenges they face, such as access to resources and a lack of green space due to development. But buy-in from city authorities, businesses and other institutions is crucial to ensuring their success – as is research investigating different options to suit the variety of rooftop spaces found in cities.

A growing trend

The UK is relatively new to developing green roofs, and governments and institutions are playing a major role in spreading the practice. London is home to much of the UK’s green roof market, mainly due to forward-thinking policies such as the 2008 London Plan, which paved the way to more than double the area of green roofs in the capital.

Although London has led the way, there are now “living labs” at the Universities of Sheffield and Salford which are helping to establish the precedent elsewhere. The IGNITION project – led by the Greater Manchester Combined Authority – involves the development of a living lab at the University of Salford, with the aim of uncovering ways to convince developers and investors to adopt green roofs.

Ongoing research is showcasing how green roofs can integrate with living walls and sustainable drainage systems on the ground, such as street trees, to better manage water and make the built environment more sustainable.

Research is also demonstrating the social value of green roofs. Doctors are increasingly prescribing time spent gardening outdoors for patients dealiong with anxiety and depression. And research has found that access to even the most basic green spaces can provide a better quality of life for dementia sufferers and help prevent obesity.

An edible roof at Fenway Park, stadium of the Boston Red Sox. Image: Michael Hardman/author provided.

In North America, green roofs have become mainstream, with a wide array of expansive, accessible and food-producing roofs installed in buildings. Again, city leaders and authorities have helped push the movement forward – only recently, San Francisco created a policy requiring new buildings to have green roofs. Toronto has policies dating from the 1990s, encouraging the development of urban farms on rooftops.

These countries also benefit from having newer buildings, which make it easier to install green roofs. Being able to store and distribute water right across the rooftop is crucial to maintaining the plants on any green roof – especially on “edible roofs” which farm fruit and vegetables. And it’s much easier to create this capacity in newer buildings, which can typically hold greater weight, than retro-fit old ones. Having a stronger roof also makes it easier to grow a greater variety of plants, since the soil can be deeper.


The new normal?

For green roofs to become the norm for new developments, there needs to be buy-in from public authorities and private actors. Those responsible for maintaining buildings may have to acquire new skills, such as landscaping, and in some cases volunteers may be needed to help out. Other considerations include installing drainage paths, meeting health and safety requirements and perhaps allowing access for the public, as well as planning restrictions and disruption from regular ativities in and around the buildings during installation.

To convince investors and developers that installing green roofs is worthwhile, economic arguments are still the most important. The term “natural capital” has been developed to explain the economic value of nature; for example, measuring the money saved by installing natural solutions to protect against flood damage, adapt to climate change or help people lead healthier and happier lives.

As the expertise about green roofs grows, official standards have been developed to ensure that they are designed, built and maintained properly, and function well. Improvements in the science and technology underpinning green roof development have also led to new variations on the concept.

For example, “blue roofs” increase the capacity of buildings to hold water over longer periods of time, rather than drain away quickly – crucial in times of heavier rainfall. There are also combinations of green roofs with solar panels, and “brown roofs” which are wilder in nature and maximise biodiversity.

If the trend continues, it could create new jobs and a more vibrant and sustainable local food economy – alongside many other benefits. There are still barriers to overcome, but the evidence so far indicates that green roofs have the potential to transform cities and help them function sustainably long into the future. The success stories need to be studied and replicated elsewhere, to make green, blue, brown and food-producing roofs the norm in cities around the world.

Michael Hardman, Senior Lecturer in Urban Geography, University of Salford and Nick Davies, Research Fellow, University of Salford.

This article is republished from The Conversation under a Creative Commons license. Read the original article.