Male life expectancy in London and the South East (at around 80 years) is 2 to 3 years longer than in these parts of the UK. 13  So this is a story of wide regional differences in incomes and well-being sourced, to a significant extent, in regional differences in firm-level productivity. Those differences are themselves rooted in differing levels of investment in machines and people, in technology and skills, in physical and human capital. We have red and blue firms hiring red and blue workers, resulting in red and blue car levels of income and productivity. Which is the North-East? Levels of GDP per head, wages and productivity in the North-East are, respectively 25%, 8% and 11% below the UK average. Levels of physical and human capital accumulation are also lower. Levels of unemployment are currently 1.3 percentage points higher and 4.4 percentage points higher for young people. North-Eastern households own half as many assets and fewer cars than South-Eastern households. Redcar is a Red Car region. The Role of Monetary Policy  These maps lay bare both some of the challenges, and the opportunities, facing the UK economy. 13  See ONS ‘Life Expectancy at Birth and at Age 65 by Local Areas in the United Kingdom’, available here. 7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  The challenges include the fact that growth in income and productivity at an aggregate level has recently been slower than in the past - the economic pie has not risen rapidly.
It is clear that, at the same time as the long tail of companies have been stagnating, they have been sky-rocketing. Or put differently, the distribution of UK firm-level performance has itself been widening or bifurcating over time. This pattern of productivities goes some way towards explaining, at least in an arithmetic sense, the large and widening divergence between regional levels of productivity. High-productivity regions have more of the frontier firms, and fewer of the long tail, than low-productivity regions. Or, put differently, high-productivity regions have greater numbers of companies from sectors with high productivity – for example, high-valued added chemicals companies, like those in Teesside. Charts 18 and 19 plot the estimated distributions of labour productivity, measured as output per employee, at the firm level across different regions and different sectors using the ONS ARDx dataset. What is striking is that differences in productivity within-region and within-sector are far larger than the differences across-region and across-sector. Every region and every sector has a range of both high and low productivity firms, with huge overlaps across regions and across sectors. There are, of course, some regions, such as London, and some industries, such as Information & Communication and Professional & Scientific services, which have a larger number of frontier firms in the far right-hand side of the distribution. But the North-East clearly also has its own set of productivity pioneers. This underscores the value of the Mayfield Commission’s benchmarking work.