Public and Private Sector Productivity Trends

Baroness Neville-Rolfe Excerpts

Thursday 30th October 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I agree. Fundamental skills are vital to improving our productivity. Labour quality is a key driver of productivity. The skills agenda is vital to that. That is why we recently set out measures to tackle that in the skills White Paper. I hope the measures she speaks about will also be looked at carefully.

[Baroness Neville-Rolfe (Con)]

My Lords, I very much agree on skills, but a large part of the productivity problem in the UK has been in the public sector. This is hardly surprising, since the Government awarded huge public sector pay rises last year without a direct productivity link. Civil service numbers have also increased. Low productivity and growing headcount are not a happy state of affairs. How does the Minister plan to improve that rather dispiriting situation?

[Lord Livermore (Lab)]

The noble Baroness is correct to say that public sector productivity is a major issue. I know that it is something she cares about deeply. Obviously, she will be aware that the Government inherited a situation where public sector productivity was 7.2% below pre-pandemic levels; that is obviously and clearly unacceptable. She said that pay rises were awarded without any link to productivity. That is factually incorrect. At the spending review, the Government established a programme of public sector service reform to drive greater productivity. Every department has committed to at least 5% savings and efficiencies over the spending review period, with the Office for Value for Money working closely with departments to agree bespoke targets. This will result in savings and efficiencies equivalent to nearly £14 billion a year by 2028-29, and public sector productivity has already risen by 1.5% since the election.