Health service continues to be 18 PER CENT much less productive than earlier than Covid – as wider public sector efficiency retains sliding and is worse than 1997
Productivity in the health service is still nearly a fifth worse than before Covid, damning figures showed today.
Official statistics have painted a bleak picture of progress in making the public sector more efficient, with surging funding not matched by improvements.
They raise questions for Rachel Reeves after she hiked taxes in the Budget for a big spending splurge on the NHS and other parts of the public sector – including bumper pay settlements.
The Bank of England warned last week that the growing proportion of employment accounted for by the state looked to be holding the economy back because of the productivity gap.
Public services were 1.4 per cent less productive across the board in the third quarter of 2024 compared to a year earlier.
The full-year measurement of productivity remains lower than 1997 – and by July-September last year it was 8.4 per cent worse than immediately before the pandemic.
Official statistics have painted a bleak picture of progress in making the public sector more efficient, with surging funding not matched by improvements
Productivity was down 2.4 per cent year-on-year in health, according to the Office for National Statistics (ONS)
The ONS figures compare resourcing levels in public services with outputs to estimate productivity
However, the performance of the health service has been even poorer. Since late 2019 funding has gone up by 30.3 per cent, but output has only risen 6.2 per cent.
As a result productivity is rated as 18.5 per cent short of 2019.
Productivity was down 2.4 per cent year-on-year in health, according to the Office for National Statistics (ONS).
That was despite a slight 0.2 per cent uptick in the most recent three months – following a 0.9 per cent fall the previous quarter.
The ONS figures compare resourcing levels in public services with outputs to estimate productivity.
Healthcare accounts for around 39 per cent of total public expenditure. It includes elective and non-elective services, GPs, prescription drugs, outpatient, mental health, community health, and A&E.
Experts have pointed out that the figures contrast with NHS England’s estimates published last week. They suggested productivity had improved 2.4 per cent year-on-year between April and September last year – although the longer-term position remains bad.
IFS economist Max Warner said the differences might be down to measurements of non-acute services and the way funding is counted.
In the Monetary Policy Committee report accompanying the decision to cut interest rates last week the Bank of England said it could not fully explain why productivity was so poor.
‘One contributing factor to weakness in measured productivity may be the increasing share of employment accounted for by areas where the public sector is the predominant employer such as education, health and public administration,’ the report said.
‘Employment in these sectors has risen significantly since 2019, particularly in health-related activities, but these sectors have also seen significant declines in their measured productivity per hour.
‘This means that the shift in the composition of total employment towards these areas will have weighed on total productivity.’
The MPC said although it judged that productivity improvements would return to the long-term trend there was ‘considerable uncertainty around this, reflecting data uncertainty and the extent of unexplained past weakness’.
An NHS spokeswoman said: ‘The NHS recognises that there are different methods for working out public sector productivity and we will continue to work with the ONS to ensure all figures used are as accurate as possible.
‘While our latest estimates show acute productivity has reached 2.4 per cent in the first seven months of 2024/25 compared to the same period last year, there is a lot more work to do to make further improvements – we will be ruthlessly focused on this over the next year, including by having a sharp focus on slashing agency spend, improving retention of staff and using the latest technology to be more efficient.’
The annual fall in health service productivity came despite a slight 0.2 per cent uptick in the most recent three months – which followed a 0.9 per cent fall the previous quarter
