23 January 2004
Senior backbench MPs have called on the Treasury to reform the way it measures productivity in the public sector.
The Treasury select committee says the current methodology employs too narrow a definition of productivity, which does not take sufficient account of increases in the quality of services.
It also fails to identify clearly whether the extra money is leading to better services or merely inflating the costs of providing them, the MPs say.
The committee outlined its position in a report released on January 21 on Chancellor Gordon Brown's Pre-Budget Review. Members said they placed the 'highest possible emphasis' on ensuring that extra public investment led to better services rather than increased costs.
John McFall, chair of the Treasury select committee, told Public Finance that the current methodology was a 'significant problem'. He went on: 'It is if we are talking about reducing class sizes. Under the current system, that counts as increasing costs and reducing productivity, without taking into account improvements in education, which is absurd.'
Brown conceded in his evidence to the committee that the methodology needed improving.
The Office for National Statistics has commissioned Sir Tony Atkinson, an economics expert, to conduct a review of government productivity. He is due to publish his preliminary findings in July, just before the Spending Review.
PFjan2004
