Stalled productivity poses threats to public services

THE GOVERNMENT’S performance in the last year has lacked focus on productivity, one of the major challenges to the economy, according to a report published yesterday.
Deloitte and think tank Reform’s analysis indicates that the government is also still losing out through fraud and struggling to tackle its long-term liabilities.
The report warns stalled productivity can pose a risk to the quality of services when budgets are tight, and notes that public sector workers lose 2.6 per cent of their working hours to sick leave, while only 1.6 per cent is lost in the private sector. Overall, the UK’s productivity is second lowest across the G7 nations.
Deloitte’s chairman, David Cruickshank, commented: “Getting the public sector to produce more with less money is a central challenge for the public services – and that means a productivity increase.”
The estimated £20.6bn that chancellor George Osborne has been defrauded out of in the last year was also highlighted, signalling the figure is rising and the government has made little progress in reducing it.
Over £1 trillion in pension liabilities was drawn on as another concern for the government, as the UK’s long-term demographic challenges loom on the horizon. The total net liability of the country is cited as £1.3 trillion, spiralling upward by £161bn since the last financial year.
To tackle the issues, the report calls for a “more profound change” to the UK’s public sector, but credits many of the coalition government’s reform as “crucial first steps”.
The report also points to massive differences in public sector spending per head across different regions.
While spending on public order, health, education and social protection has been relatively high in London, the capital’s residents took the biggest cut per head between 2010-11 and 2011-12. Spending on these four areas fell by £237 per person, in comparison to a £21 reduction across the UK on average.