The productivity crisis is getting worse because the public sector continues to experience failure

Monday 03 November 2025 12:49 WIB

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Public sector productivity has fallen at the fastest rate in almost three years, according to the latest official figures showing the government’s years-long struggle to revive the efficiency of the country’s dismal public services.

Data from the Office for National Statistics (ONS) shows total productivity of state-owned agencies fell by 0.7 per cent year on year in the three months to June, marking the sharpest fall since the final quarter of 2022 when the country was in the grip of a series of pandemic-related industrial actions and delays.

Health service productivity fell by around 1.5 per cent over the same period, pulling down the overall figure, although the Chancellor announced the biggest settlement for the beleaguered health service in more than a decade at the last Budget.

The health service figures put into stark relief the magnitude of the efficiency challenge facing Health Minister Wes Streeting, who has previously pledged to improve efficiency at hospitals and GPs with a multi-billion pound cash boost from Rachel Reeves.

Immediately after last year’s Budget, the Essex MP said ministers “owe it to patients” and taxpayers to provide value for money. And last week he claimed that middle management roles helped improve NHS performance.

Productivity languishes post-pandemic

The decline in public service efficiency will also raise concerns about the magnitude of the decline in productivity, which the Office for Budget Responsibility will hand over to the Treasury ahead of next month’s Budget. The fiscal watchdog is expected to reassess historically optimistic productivity forecasts, in a move that could increase the Treasury’s fiscal shortfall by as much as £20 billion ahead of the Chancellor’s highly anticipated speech.

But the Chancellor was also given a slight reprieve from upward revisions made by the ONS to previous figures. The official statistics agency said public sector productivity increased by 0.9 percent in 2023 and 0.3 percent last year.

The UK has been a different country in terms of its public services struggling to return to pre-pandemic levels of productivity. Despite the revisions, efficiency among tax-funded bodies is still three per cent lower than in 2019. The problem is particularly serious in the NHS, which produces 7.8 per cent less per pound spent than before the national lockdown.

Responding to the figures, Finance Minister Gareth Davies said: “Public sector productivity has fallen quarterly over the previous year compared to the Conservative Party government.

“Even after Wes Streeting paid the union a ransom, health care productivity fell 1.5 percent.

“Under Labor mismanagement, the country has become bigger and done less.”