Public Sector Productivity

Lord Londesborough Excerpts

Wednesday 9th October 2024 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I salute the noble Baroness, Lady Neville-Rolfe, for securing this debate. It is a huge and complex subject to cover in five minutes but, in the spirit of productivity, I will do my best. As we have heard, measuring public sector productivity is challenging—it has a range of qualitative aspects, not simply outputs or revenues. That said, UK public sector productivity has barely moved since 1997, while our private sector productivity, which lags many other countries, has advanced by 30%. That is some gap.

I will focus on the workforce and management. For 30 years, I ran a publishing business with numerous teams across the world, with similar targets, pay scales and incentives. They shared the same technology and infrastructure, yet team productivity varied wildly. There turned out to be two key factors: first, rigorous and smart recruitment and, secondly, effective management. Middle and senior management was absolutely key— the difference between being 20% over target and 20% under.

However, here in the UK, we struggle with management. Across our 32 million workforce, 8 million have a managerial role. Of those, 6 million are deemed to be “accidental managers”, with little or no formal training, learning as they go. As the Policy Exchange points out in its excellent report on NHS productivity, it is not about the volume of managers but about their competencies, how their roles are defined and where they are placed.

Rigidity in our public sector means that promotion to management is too often correlated to the number of years worked rather than aptitude or, indeed, attitude, and management itself is often resistant to change. We struggle to incentivise public sector workers on productivity. It is not in the culture, but it should be. Productive organisations set ambitious targets, engage their workforce and reward performance. But Governments, when they talk about productivity, tend to focus on cost savings, efficiency and value for money—not very inspiring.

Chancellor Rachel Reeves says that she has “fired the starting gun” to drive greater productivity in the public sector. She said:

“I expect all levels of government to be run effectively and efficiently … a civil service delivering good value for the British taxpayer and reform of our political institutions, including the House of Lords, to keep costs as low as possible”.—[Official Report, Commons, 29/7/24; col. 1039.]


Yes, we in Parliament should set a better example, but it turns out that House of Lords reform means removing one of the most productive groups in this House: the 90 elected hereditary peers—I declare an interest—and leaving in place well over 100 life Peers who barely ever attend, vote or contribute in any way. I am looking at some rather deserted Benches. That is politics, not productivity.

There is a wider problem. If we do not recognise and reward performance, productivity suffers. The latest round of public sector pay increases for doctors, teachers and train drivers did not just add £9 billion to that infernal black hole, they were rewarded without any commitment to a plan to improve productivity.

We need a fundamental reset: setting up a non-partisan productivity council on a statutory footing would be a start. I have suggested this three times before and never got any response. This body would inform, co-ordinate and evaluate policies that impact productivity across all departments, including the excellent idea of the noble Baroness, Lady Neville-Rolfe, of productivity assessments, which I wholeheartedly endorse. I look forward to hearing the Minister’s thoughts.