The UK productivity puzzle


Many analysts puzzle over why UK productivity has failed to grow in recent years. Part of the answer is the sharp fall in North Sea oil output, from 4.5 million barrels a day in 1999 to 1.5 million and falling. Producing oil yields very high incomes and profits which scores as high productivity. Part of the answer is the transfer of some of the highest paying financial activities out of London to the Far East and elsewhere, as tax, regulation and the crash take their toll on this activity which also scores as highly productive in the official figures.

Today I want to look at another part of the explanation. Around 30% of the UK’s output is now public sector activity. Total public spending  is considerably  higher, as it includes taking money from people who earn their own living to  give it to people who are unable to and need help  through tax and welfare payments. We exclude welfare or transfer payments from public sector output, as these become money for private spending and decision.  The largest parts of the public sector output are health and education services.

The main aim of these sectors is to provide better quality services. Many people think the way to do this is to make them more labour intensive. Governments want each teacher to teach fewer pupils – smaller class sizes. They want each Doctor or nurse to handle fewer patients – no waiting lists and manageable workloads. As a politician I agree with them. These are popular ideas.

However, there is a danger that the understandable view that I want my child to be taught in a smaller class becomes transmuted into a general view that all public services can only get better if their productivity falls. There are cases where productivity of the public sector can rise just as it does in manufacturing or private services, by getting smarter at how we do things and using more technology. Generally we can only pay ourselves as a nation more if we do work smarter with more machine power at our elbow.

Take the case of MP services. My productivity was slashed by almost a quarter  at the last boundary review, when my constituency was cut in size from over 86,000 electors to 66,000 electors. I was quite capable of handling the cases and opinions of the larger constituency.  I never had any complaints that I had failed to answer in a timely way or failed to pursue a case owing to overwork. It is dangerous to assume you can only have high quality MP services if we represent fewer and fewer people.

Labour and Lib Dems of course wish to prevent MP productivity rising again, by blocking reforms which would reduce the number of MPs by 10%. It is also probably the case that MP productivity has fallen over the last couple of decades through the recruitment of more staff to MP offices to help them with their workloads. I say probably, because you would also need to research workload as well. Whilst the workload of an MP has clearly reduced through the reduction in Parliament’s hours, in other ways it has gone up, especially with the arrival of email. There are many more organised lobby group email campaigns than there were letter campaigns, as they are easier and cheaper to do.

If we look at the delivery of other public services, there are many ways in which productivity can be boosted with no diminution in quality, or with an increase in quality at the same time. Adopting new digital ways of keeping patient and pupil records, using computer and phone systems for appointments, taking advantage of internet based recruiting, using smart technology in the classroom or surgery can all lower costs and improve performance. We need to make sure that our love of more teachers and doctors for the right reasons does not become an obstacle to raising productivity elsewhere in these services.

As I have written here before in more detail, I see the obvious scope for improving productivity and performance in a public owned  service like Network Rail. Part of the answer to our productivity problem lies with politicians and senior officials in public services developing a healthier interest in doing more, doing it  better and doing it at lower cost. Given the wonders of modern technology, all this is possible. It also means a better trained and better paid workforce to do it. Starting from the current base, achieving steady improvements of a few per cent each year in many parts of the public service is possible and would help to correct the poor performance of overall productivity in our economy.




  1. Mark B
    August 18, 2014

    Yet another ‘off the wall’ (good thing) article :o)

    I confess you do indeed have a good point about how technology can help in delivering better Public Services. My GP practice has now gone over to electronic prescriptions and I have just recently emailed them for a ‘repeat prescription’, saving me, and them both time and money. It also allows us to use our time more efficiently rather than spend ages waiting at the desk for a form, or having to travel to the GP Surgery. All very quick and convenient.

    One thing our kind host failed to mention, was the most obvious. And that is this here blog / diary. It allows both our kind host and ourselves, the opportunity to express our views and opinions. Yes, it must be seen and taken with more than a pinch of salt what is written here by all, but it is good to be part of a debate on a whole range of issues that are not always given the airing that they sometimes deserve.

    It is also good to challenge, and indeed, be challenged on views, ideas and opinions. The information we share (eg arcons maps, and Dennis’s links) can help forming a better understanding all round. Something that I am truly grateful for.

    1. oldtimer
      August 18, 2014


      No doubt it is possible for many parts of the public sector to improve productivity “by a few percent” each year. For businesses it is not just a possibility it is a necessity. Otherwise it runs the risk of being sunk by its competitors whether based here in the UK or overseas.

      1. Bob
        August 18, 2014


        “For businesses it is not just a possibility it is a necessity. Otherwise it runs the risk of being sunk by its competitors whether based here in the UK or overseas.”

        Correct, but what incentive is there for those in the public sector to work efficiently?

    2. Max Dunbar
      August 18, 2014

      Absolutely agree Mark B. Dr Redwood’s constituency may be 66,000 but his reach is the proportion of 66,000,000 who own a computer and can access the internet.

  2. Old Albion
    August 18, 2014

    The ‘productivity’ of Wetminsters Scottish, Welsh and N.Irish MP’s must have fallen through the floor. Devolution has left them little to do, except interfere in English issues.

    1. Denis Cooper
      August 18, 2014

      First have a look at Schedule 5 to the Scotland Act 1998:

      which lists the many matters which are NOT devolved to the Scottish Parliament but instead are still reserved to the UK Parliament.

      Then have a look at the 33 Acts passed by the UK Parliament in 2013:

      and count up how many of them have no provisions extending to Scotland.

      Well, I’ll save you the trouble of going through all 33 Acts and checking the extent of each by saying that I find only these 6 do not apply to Scotland in any way:

      Mobile Homes Act
      Presumption of Death Act
      Prisons (Property) Act
      Scrap Metal Dealers Act
      Prevention of Social Housing Fraud Act
      Trusts (Capital and Income) Act

      None of these 33 Acts ONLY applies to England, but there is one Act passed by the Parliament for the whole of the UK which ONLY applies to Scotland:

      Partnerships (Prosecution) (Scotland) Act

      Which incidentally was also the only Act which does not apply to Wales.

      So with 82% of the Acts passed by the UK Parliament last year applying wholly or in part to Scotland, and 3% applying only to Scotland, the same 3% not applying to Wales, it is patent nonsense to suppose that MPs elected outside England have nothing to except interfere in English affairs; and it could be seen a sign of the irresponsibility of MPs elected in England that they have allowed this dangerous misconception to spread among some of their own constituents even though they there dealing with all this legislation and must be aware of the truth.

  3. Gary
    August 18, 2014

    (Too) cheap money.

    Companies just cut prices to compete as their cost of capital falls. Instead of competing by improving productivity and new innovations to increase margins,they just cut prices as rates fall. This is a cancer.

    This monetary policy will kill our economy and not one politician has a clue.

    1. Leslie Singleton
      August 18, 2014

      Gary–Be fair, our host at least tries to have a clue, and very hard at that

  4. Lifelogic
    August 18, 2014

    You say: “Part of the answer to our productivity problem lies with politicians and senior officials in public services developing a healthier interest in doing more, doing it better and doing it at lower cost.”

    Indeed but much of the output of the state sector is actually totally negative in its real useful output anyway. If you encourage production “renewable” energy at 6 times its true value with daft grants for example, if you augment and encourage fecklessness with benefits, if your job is motorist milking with strategically places cameras at box junctions or clear sections of dual carriageway with 30 MPH limits, if you job is harassing companies with endless daft employment regulations or enforced pensions rules. If you encourage the building of pointless white elephants like Concorde, HS2, the Olympic stadiums, idiotic wind farms, PV of roofs, the green deal, the green investment bank, the hugely over priced and usually pointless government buildings, even grants for £60,000+ electric cars.

    The incompetent NHS often doing minor ops to meet silly targets when they know, full well, the full (say Knee Replacement) is actually needed or rationing treatment through inconvenience, absurdly lengthened processes to see consultants and organised delaying tactics.

    Also with uncontrolled immigration they have reduced & suppressed wages making mechanisation and capital investment even less attractive relative to more staff. This made even worse with the lack of sensible bank lending, over charging and banks, snatching money back off businesses.

    The state sector should concentrate of simple tax, employment and other systems, efficient services and a sensible balance of risk reward in the legal system. This would have the huge benefit of reducing the numbers of tax specialist, advisers and lawyers. With luck we could get down to about 1/10 of the current numbers, we have far too many doing this pointless work with negative net output. Look toward Japanese levels of lawyers.

    We want more business people, builders, engineers, sales people, entertainers, miners & frackers and fewer lawyers, tax experts, parasitic bureaucrats, HR law experts, motorist muggers and other parasitic rent seekers.

    The government should be giving voucher for education and should not really be running schools at all. They are not very good at it. The NHS clearly need to charge at the point of use, as structured it is hugely inefficient and expensive but still fails to deliver.

    1. Lifelogic
      August 18, 2014

      Another reason for lack of productivity is the proliferation of more and more government in Wales, Scotland and at EU level and the extension of multilevel court systems.

      Also the subsidies for low paid workers through in work benefits.

    2. Lifelogic
      August 18, 2014

      Mr Cameron just now, at a photo OP in some school said “No one wants to be accused of being judgemental”. Why on earth not?

      Surely good judgement & indeed being intelligently discriminating in how you act, drive government, go to way or invest tax payers money is an entirely positive thing. Anyone who says some thing so daft as “No one want to be accused of being judgemental” is perhaps not really someone who should be in any real Tory Party.

      judgmental adj. – involving the exercise of judgment.

      Does Cameron want to be a leader who does not exercise any judgement? True his judgements so far have nearly always been about 180 degrees out.

      I would love to see a leader who was (intelligently) judgemental on HS2, fracking, electric car grants, the augmentation of the feckless, the dysfunctional NHS, wind farms, green crap, tax levels, pointless military actions, tax levels …..

      1. Lifelogic
        August 18, 2014

        sorry “go to war” (not way).

      2. Iain Gill
        August 18, 2014

        Re Schools.

        Any sensible politician should be reading mumsnet discussions. Look at the massive, wide, and various wheezes people are dreaming up to manipulate the schools admissions system, faking religion, renting small flats near the best schools, and so much more. This is now routine in this country. Parents have no buying power in the relationship with schools so we now have widespread string pulling in the only ways parents have open to them.

        I’m judgemental, my judgement is that all of this is crazy. We really do have an old communist block approach to service in the public sector, and the sooner consumers get some real buying power the better.

        1. Lifelogic
          August 19, 2014

          Indeed of course it is crazy, but inevitable given the way schools (and the NHS) are free at the point of rationing and incompetence.

          Education Vouchers, that can be topped, up are the solution.

      3. Denis Cooper
        August 18, 2014

        Correct, judgement and discrimination are virtues not vices.

      4. JoeSoap
        August 18, 2014

        It sums him up.
        This is a politically-correct fad – “you’re being judgemental” meaning “you’re offending me, by contradicting my views”. Most commonly used by those without the intelligence those too mentally lazy to argue a particular case. Of course, thinks Cameron, we all have to pander to those folk now.

      5. Martyn G
        August 18, 2014

        Absolutely right LL. I have been involved for past 12 years as Chair of governors and other leading governor positions of a primary school and at one point a person from the LEA said to me “you are being judgmental”. “Indeed” said I, “for how else am I to judge the facts, the evidence and the problem itself in order to arrive at a sensible conclusion and set in train the appropriate action to produce the desired outcome for our children”?
        I am quite sure that my response was not at all what the LEA person had expected and he said no more, other than to bring up a quite different and much safer (so far as he was concerned I think) issue. One has always to defend oneself against the PC brigade, who seem so often to inhabit a world rather different from the one that ordinary folk live in…

        1. Lifelogic
          August 19, 2014

          Good, well done. Lefty loon language need addressing, not adopting by right on Conservative party leaders.

  5. John E
    August 18, 2014

    There is a feedback loop at work here. More money spent on public services requires more and higher taxes which drive economic activity elsewhere.
    Dublin and Amsterdam airports are picking up UK long haul traffic as passengers go there to avoid Air Passenger Duties. In other areas Ireland, Switzerland, and Luxembourg collect the Corporation taxes and VAT, etc. I am sure there are many other examples.

  6. Turbo Terrier
    August 18, 2014

    Excellent entry.

    All areas of the public sector have got to be taken albeit kicking and screaming down the customer service excellence and smarter route. The public sector has to be operated as a business and every employee set goals and incentives to deliver excellent service.

    In conversation with HMRC I tried to tell a call centre operator that being self employed help pay her wages, back came the reply ” The government pay my wages” Who pays the government?!!

    All these hand outs, tax credits etc all place a bigger burden on the self employed in trying to get reliable personnel who want to do a real weeks work. Told time and time again “can’t do that I will lose my credits, not worth my while”

    Today the PM announces more help for families. What about those of us struggling to make ends meet with no children at home but still supporting our families and their family. Who is going to be paying for all of this I ask myself?

    The biggest problem with new technology especially in the public service is the Little Britain scenario ” The computer says no mentality” If there is not an order or job payment on the end of it it is easy to duck the flak. Many of our public services are not really fit for purpose primarily for the reason it is not their money they are spending. How accountable are they in the real world?

    Lets get rid of the do gooders who have never had a real job in their life who are running this country and make it a requirement that when being considered by your party your CV really highlights your experience with industry, business or professional bodies. Not a lot to ask.

    1. david
      August 18, 2014

      Surely not every part of the public sector should operate as a business. What are termed “community services” for the elderly, the vulnerable and children must have the care element prioritised. I have seen first hand how the need for profit has adversely affected the lives and choices available to these people, and find it rather sad that society as a whole cannot find it possible to provide assistance to them and their families without financial benefits to the provider. Of course, those with wealthy , influential and assertive carers can often circumvent any restrictions put on to “save taxpayers money”.

  7. alan jutson,
    August 18, 2014

    As government and the EU produce more and more regulations each year, is it any wonder that productivity is slowing down as more and more organisations have to engage in cover your arse type records, which are very rarely read, other than when inspection takes place.

    We need a bonfire of regulations, funny I seem to have heard this before ?

    1. Lifelogic
      August 18, 2014

      Indeed but as we know Cameron’s promises cast iron or not (IHT, cutting taxes, putting UKIP supporters and fair representation in the house of lords, the EU renegotiation) are just for elections and expire after the echo has faded out.

      Nearly every new regulation, forced pension, complex tax law, green crap laws, employment laws …. decreases productivity, makes us less competitive and exports jobs.

      1. JoeSoap
        August 18, 2014

        Now having enforced pension saving they are planning to tax pension contributions on the way in and on the way out, so a higher rate taxpayer will need to find £10 to contribute £8 to a scheme where he/she will receive £4.80 on the way out, a total tax of 52% tax on a pension income in the 40% band!

        1. Lifelogic
          August 19, 2014

          That is not quite right if you contribute while in 20% tax you get £10 into the pension for £8 cont. but draw at 40% (you get 25% tax free of the £10) and then pay 40% (or 20%) on the £7.50 so £3 at 40%. You put £7 in and get £7 out.

          True it does not really make much sense for most unless you are in 40% tax now or will stay in 20% later. Some NI saving too if done efficiently. But they there are investment restrictions and admin costs and crooks around too.

          1. stred
            August 20, 2014

            Have you taken inflation into account? If you put in £7 and get the same out 20 years on average later, it will be worth about £3.50. Bargain.

  8. ian wragg
    August 18, 2014

    Low productivity nothing to do with importing half a million low skilled workers and exporting half as many skilled workers and rich pensioners.
    Soon you will have presided over the birth of a third world economy but who cares.
    Tomorrow I go for a hospital operation paying privately after being told that it will be 12 – 18 months wait on the NHS. Is this what I pay my taxes for (still working at 69).
    I had my pre-op at the weekend, never happen on the NHS. only a 9 – 5 Monday to Friday organisation.

    1. Brian Tomkinson
      August 18, 2014

      Hope all goes well, Ian.

    2. Mactheknife
      August 18, 2014

      You do realise of course that it will be NHS surgeons doing your operation even though you have gone private ? Thats why your pre-op was done at the weekend.

      1. lifelogic
        August 19, 2014

        Well the NHS has virtually a monopoly in the UK, so it is not surprising nearly all surgeons are NHS. It is also much of the problem. The free at the point of rationing in the NHS prevent competition in the industry, just as it also does in education. People do not want to pay twice for something unless they really have to.

        1. ian wragg
          August 19, 2014

          Op went well. In at 0700 home by 1500 hrs. Fed and watered. Many patients had been referred by NHS for knee ops etc to reduce waiting time.
          My Professor tells me he typically does 0n average 15 procedures
          a day similar to mine which is just not possible in an NHS hospital.

          1. Lifelogic
            August 19, 2014

            Glad to hear that.

          2. stred
            August 20, 2014

            We have a friend in Essex who has had severe pain in her arm, to the point where she was becoming suicidal. Previously she had been mis-diagnosed until a scan revealed she had needed a hip operation, which was done very well on the NHS. She had to pay for a private scan to reveal that she needs urgent treatment for a much more serious condition and she is, at last, being treated by the same consultant on the NHS. We had to persuade a locum GP to prescribe the more expensive pain treatment after the partner GP had prescribed Paracetamol, presumably in order to save money.

            We pay up front, then have to go with a begging bowl.

  9. Richard1
    August 18, 2014

    We need to move away from the prevailing public sector culture that only more ‘resources’ can deliver better services. From the child’s point of view its far better to be with a good teacher in a class of 25 than a bad one with 10. Some employees work harder / are more able than others. Pay promotion and continued employment needs to reflect this. Such concepts are bitterly resisted by the unions and the Labour party. But taxpayers must insist on getting better value for our money.

    1. Anonymous
      August 18, 2014

      Richard1 – Sadly, in Britain these days, the more children in a class the more likcly there are to be disruptive ones or those who don’t speak English.

  10. JoolsB
    August 18, 2014

    What about the productivity of 117 MPs with Scottish, Welsh & NI constituencies whose main role nowadays post devolution is to meddle in matters which only affect those who have never voted for them and to whom they are unaccountable. Full time salaries, expenses and pensions for part-time MPs.

    When it comes to the Westminster gravy train, it seems productivity and taxpayers’ money not to mention democracy count for nothing!

    1. Denis Cooper
      August 18, 2014

      See above for an updated version of the factual information which I previously gave you on this matter, but which of course did not shift you one inch from your prejudice or in any way inhibit you from repeating your nonsense.

      1. JoolsB
        August 18, 2014

        Education and training, health and social services, agriculture, forestry, fisheries, environment, housing, law and order, local government, sport and the arts, tourism and economic development, most transport – ALL matters which 59 MPs with Scottish seats have absolutely no say on whatsoever for those who voted for them making making them part-time MPs. Thank goodness they can meddle in ALL these matters for the people of England where nobody voted for them, otherwise they would be twiddling their thumbs with nothing to do whilst their colleagues with English seats are busy being responsible all these matters for their constituents.

        1. Denis Cooper
          August 19, 2014

          See my comment above. When 82% of the Acts passed by the UK Parliament during 2013 extended to Scotland wholly or in part no reasonable person can claim that MPs in Scotland had nothing to do other than interfere in English affairs. Coincidentally, 82% is also the proportion of the MPs who are elected in England by the English, so no reasonable person can claim that the English are being dominated the Scots. If the English are fed up with the laws passed by the UK Parliament then the solution lies in their hands without any need to blame people elsewhere in the UK.

          1. JoolsB
            August 19, 2014


            You really should read other peoples’ comments before going off on one. Whatever the percentage of acts passed in 2013 affecting Scotland by the UK Parliament it does not affect the fact that Scots (& Welsh) MPs have more say in English matters than they they do in Scots matters. I don’t blame Scotland. I blame Blair’s Government for deliberately giving us a lopsided devolution deal which gave England a rotten undemocratic deal so they could carry on using their Scots (& Welsh) MPs as voting fodder to help them govern England and I also blame Cameron and the present Tory led coalition for doing bugger all about it.

            59 Scots MPs should not be allowed to vote on matters which do no affect their constituents when they cannot vote on those same matters for their constituents and I cannot understand why you find that suggestion unreasonable. If it were the reverse no doubt the canny Scots would be rioting in the streets at this blatant discrimination by a Westminster based UK Government. You are right, it is in England’s hands and so far England has been very tolerant, partly due to ignorance and the fact that all 650 UK MPs are complicit in deliberately conflating England and the UK. They deliberately refuse to say the word England when they know most of the legislation they speak of only applies to England. But times are changing and all three parties, especially the Tories, who owe their very existence to England, are making a huge mistake if they think they can carry on ignoring the rotten constitutional (and financial) deal England gets from this so called union, especially when all three parties are promising even more powers to Scotland and Wales post September.

            Whatever you say, the fact Scotland has it’s own parliament legislating on all devolved matters which I list above, makes the MPs with Scottish seats sitting in the UK Parliament part-time compared to their colleagues with English seats who do not have an English Parliament to deal with a large chunk of their work load.

          2. JoolsB
            August 20, 2014


            why have you chosen not to show my reply to Denis Cooper?

          3. Denis Cooper
            August 22, 2014

            I did read your comment, which started:

            “What about the productivity of 117 MPs with Scottish, Welsh & NI constituencies whose main role nowadays post devolution is to meddle in matters which only affect those who have never voted for them and to whom they are unaccountable.”

            Then I pointed out that your claim about their “main role” is not borne out by an examination of the 33 Acts passed by the UK Parliament in 2013, just as it was not borne out by an examination of the 23 Acts passed in 2012.

  11. Iain Moore
    August 18, 2014

    The BBC , in its pro mass immigration propaganda, cited some Bulgarians doing prepared salad packing jobs , jobs they created by being cheap hard working immigrants . These are low added value, low wage, low productivity jobs that the state has to subsidise with in work welfare payments.

    I would suggest that is where your productivity problem lies, whenever we hear the propaganda for mass immigration , it usually comes with the cry of needing cheap hard working immigrants who will do the jobs British people won’t ( because of the rotten wages) , which is seeking to make jobs that were previously uneconomic a viable proposition.

    1. Lifelogic
      August 18, 2014

      Indeed people, on average, are probably still a net financial liability to the state even when earning an average wage.

      Admittedly that is largely because the state is so inefficient and does so much that is pointless or actually damaging.

      1. Denis Cooper
        August 19, 2014

        It seems highly likely that on average the people who are only on average wages will be net financial liabilities to the state when the government is still having to borrow a significant chunk of all the money it is spending. Of course it will vary, for example people on average wages might be net contributors while they are childless but no longer when the government is having to pay for education and healthcare for their children.

        1. Lifelogic
          August 19, 2014

          Childless health hard working, high earning, law abiding couples, who come to the country already trained in their mid twenties and work until 65 then die not long after, are a great boon to government tax receipts.

    2. bigneil
      August 18, 2014

      Agreed. The BBC ( along with the govt) think mass immigration is wonderful, citing low wages etc. Why doesn’t the BBC then employ some on low wages, enabling them to be more efficient -or -lower the license fee? Of course that won’t happen, wouldn’t be enough to send god knows how many to the World Cup on a jolly.
      Or should we vote for any East European who stands for election -so long as they promise to be an MP for a quarter of the money an English MP takes?
      Or why bother working when you can walk in and get £4.5k+ a month handed to you. The govt keeps saying how much the immigrants are contributing to this country – -why won’t they say how much is being paid to them in benefits and how much is being sent straight out of England? -or is it a case of “that figure not being available?

    3. outsider
      August 18, 2014

      Eaxctly Ian. Both our public and private sectors are addicted to cheap labour, which is so often the lazy, low-risk alternative to raising productivity. Until 2008, the rest of the economy was flattered by the golden eggs laid in the City, even if many of these eggs turned out to be plated with fool’s gold.

      1. outsider
        August 18, 2014

        Sorry Iain.

  12. margaret
    August 18, 2014

    Cyber communication is still in its infancy. To many it must seem as though it has always been there. We would find it difficult cope without it now. My computer ,which I purchased last December has broken 4 times now and every time it goes back to the manufacturer I am lost. I cannot quickly look up the emergency pharmacist , I cannot look at my ‘e’ mails at weekend and much more.

    When the computers are down at work it takes time and man power to correct the problem , going through breakdown numbers and a long line of IT referrals. When faster communication works, it is good, but the failures and breakdowns cause far too much time and money.

    As far as Wokingham is concerned do you not feel it is true that a dozen or more people can cause more work than thousands and if you lived in another ? problem area, those dozen cases would increase dramatically ?

  13. DBC Reed
    August 18, 2014

    Unfortunately in a competitive economy, private sector schools are going to compete by offering smaller classes and the most capital intensive facilities. Eton’s rowing set-up was used for the London Olympics; it has several full size theatres for drama.
    When the big public schools have classes of 36 (which I used to teach in a grammar school) then the public sector might be able to follow suit.
    (No doubt you will moderate this comment off the face of the Earth as you normally do)

  14. Kenneth R Moore
    August 18, 2014

    Uncle Redwood,

    JR Total public spending is considerably higher, as it includes taking money from people who earn their own living to give it to people who are unable to and need help through tax and welfare payments.

    I think there is a distinction to be made between those that can’t find a job and need help..and those that refuse a job because it’s easier and more lucrative to exploit the benefits system. I guess I can say that more easily than JR as I don’t expect any of this group to vote for me…although I suspect that 99.9% of them would just vote Labour anyway… and more Conservative minded voters would prefer a harder line to be taken.

    As a member of the public I want my politicians to make this distinction clear – not repeat the Labour fantasy line that all benefits claimants are needy and worthy of our help. It is the lack of ‘productivity’ of the latter group that needs to be tackled.
    Similarly I don’t want politicians to assume that all nurses are angels and that they are therefore excempt from critisism.

    Raising productivity of teachers in my view should be looked at in the widest sense. Many children now have behavioural issues caused by family breakdown and need more one to one style help. This benefit to the kids that want to learn in terms of well being and happyness is very hard to quantify but it should not be overlooked.

    On the productivity ‘puzzle’ doesn’t surprise me that having vastly expanded the Labour market hastily creating 1,800,000 ‘new jobs’, productivity is stagnating. What is the incentive for employers to automate and use more machinery when it is getting easier and cheaper to use more labour?.

    Overmanning and inefficiency in the public sector is embedded by the Lib/Lab/Con as the college boys and girls in charge see it as a ‘stimulus’ to the ponzi scheme Uk economy. I think it will take a bigger more damaging crash than the one we have just seen to change minds.

  15. Kenneth R Moore
    August 18, 2014

    Mp productivity should also be measured on the yardstick of quality of governance and independence of thought. It is what they are elected to do – to make the right decisions in our long term interests.
    In this respect they have been failing spectacularly offering us very poor value for money.
    How many think through the implications of policy change , study the text of important policy documents ?. How many came to the knee /group-think reaction that we should invade Iraq or arm the Syrian rebels ?
    On that measure it is very low – how manyMp’s simply vote whichever way is most likely to secure a placement on a comittee or appease the whips office.
    Too many put career before country.

  16. Ex-expat Colin
    August 18, 2014

    If history of government computer (distributed) systems procurement is anything to go by then appeal to that is not going to improve much at all. Cloud computing is of interest but security limits if for government I think.

    Gov services to the public generally loose on quality grounds. And if you increase customer load almost limitlessly it diminishes further. Add in inadequacy of staff and overall its a wonder anything much is achieved. Quality Systems are largely a realisation of a minimal standards. Quality is within the people….somewhere?

    The two areas of public service (Education and NHS) should be exceptions to the rule of rough cattle herding. It is essential to provide the very people who are expected to produce the right skills and care to accomplish such production.

    Don’t think new Universities add much at all.

    Commercially there are examples that achieve better but are not of large scale. Banks for instance have taken far too long to provide adequate software functionality. Some I know around London leave me wondering how on earth their businesses exist. IT standards are not good and internationally its truly appalling. The BBC is an example of poor IT systems (not quite government) and in the past it was a world technical leader. It mimics government waste and has difficulty with its brainware.

  17. Worried of Wilmslow
    August 18, 2014

    A few years ago the Chief Fire Officer of Merseyside made very significant reductions in the number of staff employed and, I think, the number of fire stations. At the same time, performance improved. So, productivity and performance gain is possible.

    If there were regularly published tables showing for each fire service the population served, the cost, the headcount and the key performance measures we’d be able to see the size of the opportunity to apply informed pressure to those in control of the budgets.

    The same must be true for many other elements of public service. It might be made to resemble private sector competition.

  18. Iain Gill
    August 18, 2014

    Come on John, again you are sliding into the politically correct, social democratic view of the world.

    One of the biggest reasons productivity per person is falling, is that highly productive Brits are leaving the country, and large numbers of low quality not so productive foreign nationals are coming in as immigrants.

    That’s the major dynamic.

    It would be nice if you admitted it, and pushed back on the lazier views of the world.

    1. Kenneth R Moore
      August 18, 2014

      Ah but that would require being ‘judgemental’ which is officially not allowed by David Cameron’s Conservatives. It’s a pity Mr Redwood who speaks a great deal of common sense isn’t a little more bold in confronting the nonsense of PC.
      The wood does seem to have been lost for the trees but our kind host makes some excellent points. .

      1. Lifelogic
        August 19, 2014

        He is a politician, and thus cannot really say what he actually thinks too clearly, he does very well given these constraints.

  19. English Pensioner
    August 18, 2014

    Looking at the past, increased productivity and innovation tend to happen when there is a labour shortage and wages start to rise. Once all agricultural land in this country employed purely manual labour, (Just look at, say, the 1851 census where the majority of occupations was recorded as “Ag Lab”), but as demand from factories produced a labour shortage, there was innovation in the form of things like the steam plough to enable the same work to be done by far less men. Wars produced innovation and improved productivity; with large numbers of men at war, ways had to be found to make things with fewer and less skilled workers.
    This situation doesn’t apply at this time; there is plenty of cheap immigrant labour, why spend money on new machinery or computers?

  20. Graham
    August 18, 2014

    Unfortunately we leave the decision making to politicians who for the large part are neither interested, nor qualified, to handle the problem.

    The first consideration of the politician, like most species, is survival and to retain their position – hence self (and party ) will always prevail over national well being,

    John should it not be a requirement that all MP’s should be at least numerate and financially aware – a requirement for all management in commerce these days?

    Can’t believe that there will be a breakthrough in what’s left of my time!!

  21. Denis Cooper
    August 18, 2014

    Well, JR, I’m not going to say that we couldn’t manage with fewer MPs than 650 so that on average each would have more than the present 70,000 odd constituents, I’m just going to point out that:

    a) as geographical constituencies become larger the representatives inevitably become more psychologically remote from those they are supposed to be representing, as can be seen with the MEPs; and

    b) thanks to the past stupidity of MPs in allowing and encouraging mass immigration directly against the wishes of those they were supposed to be representing, as time goes by each MP will have more and more constituents even without any reduction in the number of constituencies; and

    c) we have an ever increasing number of unelected legislators-for-life packed into the second chamber of our Parliament, and curiously enough the same people who want to cut the number of our elected representatives are often also the strongest defenders of that archaic anti-democratic system; and

    d) unless the payroll vote in the Commons is cut in line with the number of MPs there will be fewer and fewer backbench MPs willing to voice independent views; and

    e) if MPs want to become more productive they should stop sub-contracting out so much of their work to the EU and other international bodies, and moreover charging us to do that rather than paying for it themselves as would normally be the case if a contractor puts out some of his work to a sub-contractor; and

    f) basically the problem we have with our MPs is not their quantity but their quality, and the Tories’ proposal to cut the number of MPs has never been much more than a cynical attempt to divert attention from the real problem.

    Apart from those six points, I would agree with you.

    1. Leslie Singleton
      August 18, 2014

      Denis–Personally I think (other things being equal, which they are not–such as the size of the Parliamentary buildings) that for the system to work as it should there should be many more, not fewer, MP’s. I live in a small village and to me the goal or perhaps dream should be that my MP be someone I know who can represent me properly; in other words as in a lot of things we should go back closer to the way it was. I do not know but wonder how many people each MP represented back in 1265 I think it was. There is no reality in MP selection these days and as I have written before they get elected on how good they are at kissing babies, making speeches, looking beautiful and being telegenic etc. Whether they are capable of anything seems irrelevant and in any event hard to determine. If my MP instead of (I have just realised) being in a different location many miles away (and whom I have never met nor particularly want to meet) lived where I do, everything would be greatly improved instantly. I think productivity numbers in this sort of context are meaningless and useless. Bit like GDP.

    2. Alan Wheatley
      August 18, 2014

      Though the second chamber may, as you put it, be packed with unelected legislators, and be archaic, and the system be anti-democratic, it does not have to follow that it is not beneficial for the political health of the nation.

      If there is to be a second chamber, why would the voters’ selection of who should be in it produce anything better than their selection of who is in the first chamber?

      One option would be not to have a second chamber.

      1. Denis Cooper
        August 19, 2014

        In what way could it possibly be beneficial to the political health of the nation to have its laws made by people who have been appointed as irremovable legislators-for-life through the patronage of David Cameron and his kind, any more than having its laws made by MPs for the rotten and pocket boroughs that the Tory party was so desperate to preserve on similarly specious grounds? If Karren Brady reckons that she would be good at making the laws that you and I must obey, on pain of punishment, then let her offer herself for popular election and explain why we should allow her to do that.

        1. Alan Wheatley
          August 20, 2014

          I accept there is much wrong with the second chamber as currently implemented. My point is that poor implementation of a second chamber does not make having a second chamber wrong.

          There are various things I would do to improve a second chamber so its impact on good governance was much better. One thing I definitely would not do is introduce elections.

          You do not say what you would do to improve it, or would you do away with a second chamber all together?

  22. Paul Rivers
    August 18, 2014

    So correct on poor public sector productivity. Take the recent guidance on the minimum number of nurses on a ward, it completely ignores the role of technology- for example an NHS hospital is about to adopt a monitoring system for vital patient functions which involves a digital sticking plaster with a wireless link and takes readings and can issue alerts every 2 minutes ( sensium)-this clearly will free up nurse time and improve productivity but will take years to be widely adopted.

  23. ian
    August 18, 2014

    The governments with companies went for migrants instead of technology they thought that was the way to go. Low wages and more people to do the job, now look at company like (retailers ed) helping the governments out with unemployed figures going down hill, mass layoff coming and store closing soon as they go for new technology. Government sector two teacher a classroom hospitals more backroom staff than front line staff to keep unemployment down same in whitehall quangos and such like more staff than they need. The productivity jobs were sacrifice for global warming now they want fracking. If you do not take the 200 pound a week job we cut off your money. Companies will be going for technology now like driverless lorries, trains, taxi and more robots that do not pay tax. More migrants with British passports. They use the unemployed and the 25% soon to be the 30% to coverup their failings, that is to say they are the reason the country is in a mess using up all the tax”s because they are bad people.

  24. Brian Tomkinson
    August 18, 2014

    JR: “Part of the answer to our productivity problem lies with politicians and senior officials in public services developing a healthier interest in doing more, doing it better and doing it at lower cost.”
    I don’t expect to see that in my lifetime with the current crop of politicians we have in Westminster. Take HS2, for example, that you mentioned last week, I quote: “The best part of £400 million has gone and the company has nothing to show for it of more permanent value that gives us some net assets on its balance sheet.” Add to that the plethora of telecallers I receive daily, despite registering not to receive them, many of which claim to be government inspired : new boiler; loft insulation; cavity wall insulation; all3 of the previousitems ; kitchen replacement; plus others trying to encourage me to make a claim for personal injury, even though I haven’t had any, due to a minor car collision over 2 years ago; hearing loss due to employment….. add in the effects of migration it’s little wonder productivity is low, that is of course if anyone can accurately measure it, which I very much doubt.

  25. BobE
    August 18, 2014

    If we could vote online that would reduce costs and increase the number voting. If my bank can protect my accounts and privacy then so could the electorial system. I do road tax, income tax and driving licence online. Let us vote online next May.

  26. Stephen Berry
    August 18, 2014

    We should divide the public sector into two parts. One part, which includes health and education, where there is genuine demand for the sorts of services which are provided. There is a second part however, for which people would not pay voluntarily.

    The second part includes civil servants collecting useless and incorrect statistics about the economy, lawyers enforcing damaging state-concocted employment regulations at tribunals, an ever growing quangoland and much more. If we cannot abolish such people, in no way do we want to increase their productivity. If a particularly damaging business tax is introduced by government, why would we want the Inland Revenue to be super-efficient and squeeze the entrepreneur until the last pip squeaked? Let such public servants use up their full allotment of newspaper reading time!

    Moving to such areas as education and health. The school system encompasses two ideas, education and child-minding, and if we are brutally honest about the matter, the second is dominant in our schools. Education often best takes place at the one to one level and goes against the economies of scale rule. But child-minding is clearly an area where economies of scale are possible.

    We need to be wary when politicians talk about taking advantage of the new digital age. Who was it who talked about ‘The White Heat of the Technological Revolution’? The public sector has an impressive list of computer projects which promised much and delivered little. The public sector does not necessarily become more efficient by using the latest technological gadget.

    John reminds us that one of the plans of the present coalition was to reduce the number of MPs by ten per cent. Indeed, along with the ditching of the Identity Card nonsense, this was for me one of the more attractive parts of the coalition programme in 2010. So, here’s another part of the state productivity puzzle to finish with. How is it that the US Congress only needs 435 representatives for a population of more than 300 million whilst Westminster needs 650 MPs for a population of slightly more than 60 million?

    1. Denis Cooper
      August 19, 2014

      The US Congress is the federal assembly, you also need to take into account the 50 state assemblies which have control over many matters which in this country are dealt with by the UK Parliament. I don’t think there’s any easy way to make a fair comparison between the two systems, and nor is it necessary to do so to form a view whether we have too many or too few MPs.

      1. Stephen Berry
        August 19, 2014

        Point taken, Denis. Looking this question up on the internet, it seems that the House of Representatives reached 435 members in 1911. Since then, despite a tripling of the US population, the number has remained static.

        We should remember too that the UK now has devolved assemblies for Scotland, Wales and Northern Ireland. The trend seems to be to increase the powers of these assemblies, so, as this happens, will we be seeing a diminution in the number of MPs at Westminster? We wait with baited breath.

  27. outsider
    August 18, 2014

    Dear Mr Redwood, As ever you make important points but I do not think anything in the public sector explains the poor statistical performance of productivity since 2010. As I understand it, the number of public sector jobs has fallen since 2010 while employment in the private sector has risen.
    As you know, all the efforts of sympathetic statistical experts have failed to provide a reliable way to measure economic productivity in non-traded public services. What is the difference in value of average B grade A-levels and C grade, let alone the difference in the value of output between soldiers training on base and those out on manoeuvres? The only statistically safe way to measure the “value” of untraded public services is by the money put in, even though some creates great value and some is wasted.
    Apart from eternal vigilance, the best way to force in a productivity drive may be to set semi-arbitrary limits on the number of people the NHS or schools can employ or pay for through contracting out. That way, the extra money we put in would have to be used to upgrade staff by exchanging consultants for administrators or teachers for classroom assistants, by raising pay or improving conditions to attract better quality staff (the path of least resistance), by investing in more equipment and technology or by improving organisation and methods.
    In statistical terms, however, the recent poor productivity performance is down solely to the private sector, which is equally addicted to the cheap labour option.

  28. Eddie Hill
    August 18, 2014

    Interesting post, but I’m not sure the public sector is productive at all. It is so bloated with things we don’t need, I can’t see it matters much whether or not they are productive and efficient.

    When looking at the private sector, I agree with Ian Wragg above.

    The Telegraph recently printed an article (by Jeremy Warner, I think) in which he put our falling productivity down to cheap labour. Companies were not investing in technology, systems, plant or machinery, or looking to improve their efficiency in other ways. They were able to maintain their profits by just hiring cheaper labour.

    However, I never understood how it was possible for a large “army of the unemployed” to drive down labour costs whilst we have a minimum wage! Doesn’t that just end up with taxpayers funding uncompetitive wages and a rigid labour market?

    Thank heavens we’re part of that protectionist organisation, the EU! Without it, our exports would be seriously priced out of the market.

  29. ian
    August 18, 2014

    Derivatives interest rate contacts can hold bank of england base rate of 0.5% down for a long time because if they put up the base interest rate up it could blow contacts and the financial system sky high. That doe”s not mean that your mortgages and loan will not go up, they will but not by much. They are box in a corner.

  30. outsider
    August 18, 2014

    Dear Mr Redwood, One reason for the poor private sector productivity performance is the growth of self-employment and small business start-ups. Self-employment has risen by 400,000 in the past year and ( if I have grappled successfully with the statistics) , by about 1.8 million over a decade. As you have often argued, there are many reasons why this is a good thing. But productivity is not one of them.
    Even before the crash, almost 40 per cent of new VAT-registered businesses were going out of business within three years and one would expect the failure rate to be higher for a new cohort of self-employed who have no experience of running their own business. If a business fails to make a profit and then has to write off its start-up costs, it is not going to help the productivity figures.
    The failure rate among new micro-businesses below the VAT threshold is generally thought to be much higher and there are a lot of people out there who are just hanging in and unable to pay themselves even the minimum wage. The number of internet businesses making a fortune is dwarfed by those barely ticking over.
    All of which means that, statistically, we rely more than ever on our horribly shrunken big UK company sector to deliver large-scale innovation and productivity growth.

    1. Kenneth R Moore
      August 18, 2014

      I suspect a great deal of more established businesses aren’t really viable and are only being kept alive by a lifeline of cheap credit.

      When this is taken away I suspect unemployment will rise with welfare costs sometime just after the next general election.

  31. APL
    August 18, 2014

    JR: “Many analysts puzzle over why UK productivity has failed to grow in recent years. ”

    You may well have part of the answer,

    But the true answer is that between 45% and 50% of the working population, those that work in; the civil service, local authorities, government QUANGOS, the military, MPs, MEPs, MSPs, MWA, etc etc, are NOT SUBJECT TO MARKET FORCES and consequently destroy the UK productivity figures.

    If we were talking about 10% of the working population, it wouldn’t matter, but 50% is a disaster.

  32. acorn
    August 18, 2014

    The shift of some city spiv jobs to eastern parts; and, the decline of oil revenue, expose what a crap job the legacy political parties have done to prepare this nation’s economy for the future. They will have to build a wall around London soon; just like the Zionists built in Palestine.

    I have recently been handling the probate for a senior member of my family, I have done a few of these over the last decade. What strikes me in this latest episode is the level of incompetence I am encountering. A State owned bank that made a total horlicks of transferring funds having lost the paperwork. A so called solicitor whom I had to instruct in the process of commissioning an oath, particular which bits of paper had to be signed and where. The UK’s “core” infrastructure is literally falling apart.

    You know this country is f****d, don’t you. Make sure your kids know before it’s too late.

  33. Alan Wheatley
    August 18, 2014

    Overall I agree.

    On the specific of “class size”, this needs a more precise analysis to be useful. It certainly depends on the pupils and it depends on the teachers.

    As to the pupils, an unselected, mixed-ability group of pupils is a much more demanding task that to teach pupils of similar ability and aptitude, and so the class size must be smaller. Or, from the productivity point of view, the bigger the class the more similar the pupils must be; they have to be selected.

    As to the teachers, there are definitely not all the same; their effectiveness varies, and consequently so does their productivity. It is interesting to muse on the relative merits of two poor teachers teaching a small class size as against a good teacher teaching twice the number.

    And last, but by no means least, these days we should be comparing how well a pupil is taught by a human teacher compared with being taught by a “computerised teacher”.

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