Efficiency and value for money across the public sector fell relentlessly throughout most of Labour’s first ten years in power as government spending soared at near-record rates, official figures confirmed yesterday.
The “bang for the buck” delivered to taxpayers in the form of the quantity of extra public services for every additional pound spent fell steadily for most of the decade from 1998 to 2007 – even as public spending boomed, climbing by more than 75 per cent to £582 billion, the figures revealed.
The new official measures of “public sector productivity”, which gauges the additional services produced in return for extra resources and effort, showed that this tumbled by a total of 3.2 per cent over the ten years to 2007, falling by an average of 0.3 per cent a year.
The damning findings imply that, on average, for every £100 of extra resources and staff time lavished on the public sector over this period, only £96.80 of extra services and results was delivered for patients, pupils and other users.
The true picture of falling efficiency is likely to be even worse, as the figures, which are still labelled as experimental, specifically exclude changes in costs and prices. They are calculated before taking any account of rapidly rising inflation for pay and other costs in the public sector over the period, aiming only to measure the amount of services delivered for every unit of resources, whether staff time, equipment, energy or items such as medicines or school books, based on a constant price level.
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Between 1998 and 2007, the quantity of resources, including staff time used across the public sector, leapt by a total of 38 per cent, almost two fifths, as spending surged. Yet the results produced in return increased by only 33.6 per cent, a little over a third.
The conclusions, in a study by the Office for National Statistics, underlined the huge scale of the challenge confronting the public sector after next year’s general election, with government spending now set to fall in real terms for many key services as the Treasury’s plunge into the red forces it to enforce a period of austerity.
Alistair Darling, the Chancellor, admitted yesterday: “We are going to be moving into a difficult environment. We have choices to make and some of them will be difficult.”
George Osborne, the Shadow Chancellor, seized on the report. “These productivity figures tell the damning story of Labour’s wasted years of spending. Gordon Brown poured billions of pounds into public services but blocked any attempt to reform them,” he said. “The taxpayer has been left with massive debts and little to show for it at the end of this wasted decade.”
There was some consolation for ministers, as the figures did show that public productivity crept up in the final two years studied, 2006 and 2007, by 0.8 and 0.6 per cent respectively. This came as the health service was shown to have delivered a larger rise in results than in the extra resources it used during those two years, producing a rare rise in productivity. This reduced the overall 4.3 per cent productivity fall reported for the NHS from 1997 to 2007.
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Critics will point out, however, that the measurement of results in the public sector remains fraught with difficulties. The ONS findings are based on attempting a direct measurement of services delivered, such as operations in the NHS. The statisticians are also trying to factor in quality improvements so that, for example, if pupils achieve better exam grades this would count as improved results, boosting the measured growth of productivity. Many economists regard this approach as subjective and highly contentious, however.