Public sector productivity fell by 3.2% as investment rose

15 Jun 09
A decade of rising investment in public services has led to an overall drop in productivity, according to data released by the Office for National Statistics.

By David Williams

12th June 2009

A decade of rising investment in public services has led to an overall drop in productivity, according to data released by the Office for National Statistics.

The survey, which spans the public sector, aimed to measure productivity by comparing public sector ‘outputs’ and ‘inputs’ from 1997 to 2007. Although productivity fell by 3.2% in Labour’s first decade in power, the figures showed a modest upturn in 2006 and 2007.

The ONS described its study, Total public service output and productivity, as experimental and internationally ‘pioneering’. The office has been producing productivity reports on individual departments since 2005, but this is the first attempt to assess the performance of the entire public sector.

The figures showed that the largest falls in productivity in the decade were in 2002 and 2003, and coincided with the highest levels of public spending growth.

Between 1997 and 2007, public sector outputs grew by an average of 2.9% a year – exactly in line with gross domestic product.

Martin Weale, director of the National Institute of Economic and Social Research, told Public Finance: ‘On the face of it, the Labour government hasn’t been successful in delivering good productivity performance in the public sector. The public finance difficulties might well be an impetus for improvement.’

However, some have questioned whether the ONS is measuring outputs accurately. Although some activities, including health and education, are measured for quality of services, as well as the amount of work done, others such as defence are not. One source told PF that a Jobcentre Plus office with large numbers of customers claiming Jobseekers’ Allowance would be judged as more productive than another that was less busy because it was finding work for people.

Mike Phelps, the report’s author, acknowledged that the raw figures would not take into account investments that would provide only long-term benefits.

A Treasury spokesman said: ‘The ONS measure of productivity cannot be the complete picture because productivity measures are partial and cannot include greater economy or improved efficiency and effectiveness of public services.

‘As a result, improved outcomes – such as reducing the number of children in care institutions – may not be reflected as improved productivity.’

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