The research, entitled ‘Addressing the regional and sector productivity gap’ looked at the productivity of SMEs across all industries to identify potential changes that firms can make to close the productivity gap. It found that manufacturing SMEs are uncertain of the actions they can take to improve productivity. Over three quarters (85%) believe that improving productivity is important, 30% don’t know what productivity means in practice, making it difficult for them to identify the steps to improve.

The research also showed that the uncertainty surrounding Brexit has meant that only 35% see tackling productivity as a key business priority, with under half (48%) of manufacturing SMEs that see productivity as important have targets in place to improve it.

To help SMEs understand how to boost productivity, NatWest and Cebr have identified the following measures that can have the biggest impact:

UK potential productivity impact: Potential increase in output, per worker, per year

Average percentage of UK manufacturing businesses that have implemented

Investing in workplace culture.

For example: team building exercises, mentorship or buddy schemes.



Benefits packages above statutory minimum.

For example: offer of paid days leave above the legal minimum, subsidies for meals eaten at work.



Rewards for good performance (financial and non-financial).

For example: commissions, bonuses, non-financial performance incentives for employees.



UK industry is facing a productivity crisis. According to the latest ONS figures, published earlier this year, national productivity fell by 0.5% in the first quarter of the year.

Manufacturing topped the list of industries that stand to gain the most from improved productivity. The sector’s figure of £3.9bn compares to a £2.56bn boost for construction, and £820m for agriculture. The legal sector has the least to gain, at £580m.

NatWest have teamed up with cycling manufacturer Temple Cycles and business mogul Sharmadean Reid to develop a Productivity Blueprint, which outlines the measures that have the biggest impact on productivity with tips and advice from other successful small business leaders in the UK. The bank have also made available £1bn in additional lending aimed specifically at SMEs looking to boost performance through investment in productivity improvements.

“It’s crucial that banks, government, and business leaders tackle the productivity gap head-on,” said Richard Hill, head of automotive and manufacturing at NatWest (pictured). “However, from talking to thousands of our business customers every year, we know that many small to mid-size businesses struggle to understand how to take steps that will make a real difference to their productivity levels. That’s why we commissioned research to enable us to take a closer look at the productivity landscape and identify best practice advice in this area to share with our customers. This correlates with our Future Fit programme that aims to further our insight and capability, recognising the transformational disruptive change UK manufacturing will undergo in the next 5-10 years.”

“Discussing ideas and sharing knowledge is one of the most important things you can do when you run a business, especially when you’re starting out,” added Matt Mears of Temple Cycles. “It’s hard to get the headspace to consider what you can do to improve business performance, so talking to others is invaluable. That’s why I’ve partnered with NatWest to create this Productivity Blueprint to outline a series of simple steps that any small business owner can consider taking to help their business be the best that it can be.”