Public Sector Productivity

Lord Leigh of Hurley Excerpts

Wednesday 7th January 2026 Lords Chamber

[Lord Livermore (Lab)]

I do not believe that that is government policy right now.

[Lord Leigh of Hurley (Con)]

My Lords—

[Baroness Kramer (LD)]

My Lords, this Question caused me to take a look at how the Government measure productivity. It strikes me as extraordinarily quantitative, taking into consideration almost no issue of quality. I am concerned that if AI is trained on these existing models, we are going to dig ourselves into a worse hole rather than make things better. Are the Government looking at how productivity is measured to give us something far more useful and valuable?

[Lord Livermore (Lab)]

I agree with a great deal of what the noble Baroness said. I noticed the noble Lord, Lord Leigh, who is very interested in this point as well, was on his feet. We have discussed it before in previous debates. We recognise the challenges in measuring public sector productivity, given the diversity of inputs and outputs in public services. The ONS recently published a review of its metrics. It has done a wide-ranging review into how productivity is measured and set out improvements that are now under way in many areas, such as healthcare, education and social security administration. It has included new quality adjustments, which better account for outcomes. I will take back to the Treasury the point the noble Baroness makes about the future adoption of AI.

[Lord Leigh of Hurley (Con)]

It is fair to say the ONS has a particular problem measuring NHS and public sector productivity because of the difficulty in measuring the outputs and inputs. None the less, the ONS reckons that public sector productivity has dropped 4.2% since 2019 and that, if it was at the same level as private sector productivity, the UK economy would have grown by 3%. Part of the problem is the measurement and part of the problem is the employment policies in the public sector. Will the Minister recognise the OBR’s warning that the Employment Rights Act will

“likely have material, and probably net negative, economic impacts on employment, prices, and productivity”?

[Lord Livermore (Lab)]

No. As the noble Lord says, public sector productivity has dropped significantly since 2019. This Government inherited a situation in which public sector productivity was 5.6% below pre-pandemic levels. That is clearly unacceptable and there are far greater issues going on than those that the noble Lord raises. I hope, as I have said before, that he will acknowledge some of the things this Government are doing to drive greater productivity in the public sector. We are working with the Office for Value for Money to identify £14 billion of efficiencies. We have gone further than that and identified a further £2.8 billion of efficiencies. We are investing in digital and AI transformation, workforce reform, rationalising the Government estate and improving procurement processes.