Public service productiveness tumbles at quickest charge in almost three years after Labour’s pay and spending splurges – in additional woe for Rachel Reeves forward of Budget
Rachel Reeves suffered more woe today as official figures showed productivity has tumbled since Labour came to power.
The Chancellor is preparing to blame Brexit and Tory austerity for another grim package of tax hikes in the Budget on November 26.
She has argued that the government needs to raise more money to fix the NHS and other struggling parts of the public sector.
However, Office for National Statistics estimates released this morning suggest that Labour has overseen a deterioration in productivity.
Across public services as a whole, productivity – the relation between resources and and output – was down 0.7 per cent in the quarter to June compared to the same period last year.
The picture in healthcare was even worse, showing a 1.5 per cent fall.
Office for National Statistics estimates released this morning suggest that Labour has overseen a deterioration in productivity
The picture in healthcare was even worse, showing a 1.5 per cent fall
The ONS said that public service ‘inputs’ – primarily funding – grew by 2.5 per cent year-on-year. Labour settled a series of pay disputes with unions after coming to power in July, and upped spending.
However, outputs only rose by 1.8 per cent.
The ONS said that meant overall there was the largest fall in total public service productivity since the last quarter of 2022 – which saw a 2 per cent drop year on year amid surging inflation.
‘Total output growth continues to slow down, however inputs have risen sharply,’ the statistics body said.
Annual figures – regarded as more reliable by the ONS – indicated that total public service productivity was still 3 per cent lower than 2019 in 2024.
For health it is estimated as 7.8 per cent below the pre-pandemic level.
Labour sources dismissed the ONS productivity figures as ‘experimental’.
They instead highlighted separate NHS England figures suggesting productivity has grown by 2.4 per cent in the first four months of this financial year. Those statistics classify spending in a different way.
Health and Social Care Secretary Wes Streeting said: ‘This data shows our reforms are bearing fruit as the NHS continues to outperform its productivity target.
Annual figures – regarded as more reliable by the ONS – indicated that total public service productivity was still 3 per cent lower than 2019 in 2024
Rachel Reeves is preparing to blame Brexit and Tory austerity for another grim package of tax hikes in the Budget on November 26
‘We’ve sent in crack teams of top clinicians across the country, opened up more services at evenings and weekends, and slashed agency spending by almost a third.
‘It’s leading to more patients treated and less taxpayer money wasted.
‘We know there’s more to do, but these numbers show the NHS is turning a corner.’
The Treasury’s Office for Budget Responsibility (OBR) watchdog is widely expected to downgrade its productivity forecasts for the UK at the end of the month.
That could add as much as £21billion to the black hole in the finances that the Chancellor needs to fill to meet her fiscal rules.
Defence Secretary John Healey admitted in interviews yesterday that the OBR now saw much worse ‘scarring’ on the economy than previously thought and Ms Reeves would make ‘announcements to deal with those challenges’.
