The Chancellor of the Exchequer recently asked the National Statistician to review its measures of public sector productivity. Grant Fitzner writes about how this work is progressing and why measuring public service productivity is more challenging than other areas of the economy.
Measuring productivity in the private sector is relatively easy; you simply add up that company or sector’s output, and then divide it by the number of workers or hours worked.
But in the public sector, where there is often no direct charge for the services being delivered, it can be a little trickier to measure productivity and changes to it.
How much improvement to pupil outcomes are schools delivering? How has the quality of adult social care services changed over time? What was the impact of the Coronavirus (COVID-19) pandemic on health services? These are not easy questions to answer, but they are ones the ONS have been seeking to answer in order to measure the output of public services in a way consistent with that used for the private sector.
To bridge this measurement gap, adjustments need to be made to take into account the quality of the services being delivered to the public.
This is a challenge, as less than two thirds of government services currently include quality adjustments when reporting on their level of service delivery. Indeed, even for those that do, these adjustments are inconsistent across public services, making it hard to compare or produce consistent overall data to cover public services as a whole.
Public services currently equate to one-fifth of the output of the UK economy, so it’s vital that statistics in this area provide a true reflection of productivity levels and are reported as accurately and effectively as possible. Improving these measures will also help our understanding of the value of public service performance and its contribution to the public and economy.
We are working with HM Treasury and other government departments to improve both our data sources and our methods, to ensure we capture changes in productivity across the public sector in a better and consistent way. Our first findings will be prepared for the Chancellor’s Autumn Statement, with the project expected to run over two years.
One reason that we are well-positioned to take on this task is that the ONS has been at the forefront of work internationally to improve the measurement of public service output and productivity at least since Lord Atkinson conducted his review of the measurement of government output and productivity in 2005. The Chancellor’s request shows great trust in our expertise and confirms the ONS is indeed well-positioned to lead such a vital project to produce statistics for the public good.
Reviewing and updating measures of public service productivity to ensure consistent and accurate reporting across the public sector will clearly be a challenge, but one that I am keen to take on.
This post was edited on 8 August 2023 to clarify how we measure productivity in the private sector.
Grant Fitzner, Chief Economist and Director of the ONS’ COVID-19 response