26th August 2026
Britain has become remarkably comfortable with discussing productivity as though it were somebody else's problem.
Businesses are told they must become more productive. Workers are encouraged to acquire new skills. Companies are expected to invest in technology, automate processes and find better ways of doing things.
But there is a much bigger question that receives considerably less attention:
What about the public sector?
If the Government is struggling to balance its books, if taxes are already high, if public services are under pressure and if demand for healthcare and social care is rising because the population is ageing, then there is an uncomfortable conclusion we eventually have to face.
The public sector must also find ways of becoming more productive.
That does not necessarily mean cutting thousands of jobs.
It does not mean putting 40 children into every classroom.
It does not mean sending sick people out of hospital before they are ready.
And it certainly does not mean closing every library, leisure centre or arts facility that doesn't make a conventional financial profit.
It means asking a much more fundamental question:
Can we deliver better outcomes with the resources we already have?
That question could become one of the most important economic questions facing Britain over the next decade.
Productivity isn't just about making widgets
In the private sector, productivity is relatively easy to understand.
A factory produces 1,000 items with 100 workers.
If it can produce 1,100 items with the same workforce, productivity has improved.
But schools don't manufacture products. Hospitals don't produce widgets. Libraries don't have a conventional output. Neither do social workers, museums or local authority planning departments.
Their outputs are much harder to measure.
A school produces educated young people.
A hospital produces improved health.
A social-care service helps people remain independent.
A leisure centre may help prevent illness.
An arts organisation can contribute to tourism, wellbeing and community life.
That makes public-sector productivity much more difficult to measure.
But difficult doesn't mean impossible.
And perhaps Britain has been too willing to use the difficulty of measurement as an excuse for avoiding the question altogether.
The latest figures from the Office for National Statistics demonstrate why the issue matters. Public-service productivity increased by 0.9% in 2025, following a 0.7% increase in 2024.
That sounds encouraging.
But public-service productivity was still 2.5% below its 2019 level.
Healthcare productivity was even further behind, at 5.8% below its 2019 level, despite increasing by 1% during 2025.
These aren't figures that suggest Britain's public services are collapsing.
They do suggest, however, that there is considerable room for improvement.
And when the Government is spending hundreds of billions of pounds delivering public services, even a relatively small improvement becomes financially significant.
The NHS is perhaps the clearest example
Take the hospital bed.
A hospital bed is expensive.
It requires a building, heating, electricity, cleaning, equipment, nurses, doctors, catering and a host of other services.
Yet thousands of people can occupy hospital beds even though they no longer require acute medical treatment.
They may be waiting for social care.
They may need rehabilitation.
They may be waiting for a care package at home.
They may simply be waiting for arrangements to be made.
From the patient's point of view, the hospital may be the safest place available.
From the NHS's point of view, however, keeping somebody unnecessarily in an acute hospital bed is an extremely inefficient use of resources.
So the productivity question becomes:
How can we safely get people out of expensive hospital beds sooner?
The answer isn't simply to discharge people prematurely.
That would be dangerous and could simply result in the patient returning to hospital a few days later.
The answer is to create the services around the hospital that allow people to leave safely.
Community nursing.
Rehabilitation.
Rapid-response teams.
Home-based treatment.
Better social-care coordination.
Virtual wards.
Better communication between hospitals, GPs, social care and families.
The hospital then becomes what it should be: a place for people who actually need hospital treatment.
This is genuine productivity.
The NHS isn't necessarily doing less.
It is doing the right thing in the right place at the right cost.
Prevention may be the ultimate productivity programme
There is an even bigger opportunity.
Prevention.
Suppose someone is at high risk of developing type 2 diabetes.
A relatively modest intervention involving diet, exercise and monitoring might prevent or delay the disease.
Compare that with years of treatment for advanced diabetes, complications, hospital admissions and medication.
The same principle applies to falls among older people, cardiovascular disease, smoking, obesity, mental health and many other conditions.
Yet government accounting doesn't always capture the benefit properly.
One department may pay for prevention today.
Another may receive the financial saving five years later.
The NHS might spend money preventing illness that otherwise would have required hospital treatment.
The Treasury may eventually benefit through lower healthcare spending and higher employment.
Social care might save money.
The welfare system might save money.
The individual may remain healthier and economically active.
That is productivity — even though it doesn't necessarily appear in the budget line where the original expenditure occurred.
Government needs to become much better at recognising this.
Schools present a different challenge
Education is another area where productivity arguments can easily become crude.
It would be very easy to say:
"Schools cost too much. Increase class sizes and employ fewer teachers."
There may be circumstances where larger classes are possible.
But simply increasing class sizes across the board could be counterproductive.
A teacher dealing with 30 children instead of 20 doesn't necessarily become 50% more productive.
There may be more classroom management.
More behavioural problems.
More marking.
Less individual attention.
More teacher stress.
And potentially more teacher sickness and early retirement.
The apparent saving could therefore become a false economy.
Instead, we should ask where teachers' time is actually going.
How much time is spent teaching?
How much is spent filling in forms?
How much is spent entering information into different computer systems?
How much is spent attending meetings?
How much is spent producing paperwork that is rarely read?
How much could be automated?
How much could be eliminated altogether?
If technology could remove ten hours of administrative work from a teacher's working week, that would effectively increase the amount of teaching capacity available without employing another teacher.
That is productivity.
And artificial intelligence may eventually have an important role in this.
But there is an important rule.
We shouldn't automate unnecessary work.
If a process is pointless, turning it into a digital process doesn't make it productive.
It simply produces pointless paperwork faster.
The first question should be:
Does this task need to exist?
Then:
Can it be simplified?
Then:
Can technology do it?
Only then should we ask how many people are required to do it.
What about leisure, arts and culture?
This is where the argument becomes politically sensitive.
A leisure centre doesn't necessarily generate a profit.
Neither does a museum.
A library may cost the council money.
An arts organisation may receive public funding.
But measuring their productivity purely in terms of financial income would be a mistake.
A leisure centre that keeps hundreds of people active may reduce future NHS expenditure.
A library may provide digital access, education and support for people who cannot afford other resources.
A museum can attract tourists.
An arts festival can bring visitors into a town who spend money in hotels, shops, restaurants and petrol stations.
A theatre can support the wider visitor economy.
The productivity question should therefore be:
What does society receive for every pound spent?
If a facility is costing £1 million and producing very little, that deserves examination.
But if another £1 million produces substantial economic activity, improves health and attracts visitors, closing it simply because it doesn't make a profit could be extremely short-sighted.
Public-sector productivity isn't the same as commercial profitability.
Local government may be where the public notices the problem most clearly
Anyone dealing with a council sees something very different from the Treasury's spreadsheets.
They see planning applications.
Road repairs.
Housing.
Waste collection.
Social care.
Schools.
Libraries.
Leisure.
Council tax.
Licensing.
Environmental services.
And increasingly, they see digital systems.
But digitisation isn't automatically productivity.
A council can have a beautifully designed website while still requiring its staff to process information manually behind the scenes.
It can have several departments maintaining separate databases containing much of the same information.
It can ask residents to provide information that another part of the council already possesses.
It can have multiple layers of management because nobody has reviewed the organisational structure for years.
This is where artificial intelligence and modern data systems could potentially make a profound difference.
Imagine a resident reporting a problem once.
The system identifies the issue.
It determines which department is responsible.
It checks whether the council already has the relevant information.
It allocates the case.
It updates the resident automatically.
The staff member deals only with the part requiring human judgement.
That isn't about replacing people.
It is about allowing people to spend their time doing things that actually require people.
Procurement is another elephant in the room
Government spends an enormous amount of money buying goods and services.
But public bodies frequently operate independently.
The NHS buys things.
Councils buy things.
Schools buy things.
Universities buy things.
Police forces buy things.
Government departments buy things.
Sometimes they are purchasing essentially the same products from different suppliers under different arrangements.
The private sector has learned that purchasing power matters.
If a company needs 10,000 computers, it doesn't normally want ten different departments buying 1,000 each without coordination.
Government should be asking much more aggressively:
How much duplication are we paying for?
There is no reason for every public body to reinvent the wheel.
Common standards, shared procurement and interoperable computer systems could release substantial resources.
And unlike cutting a frontline service, finding a cheaper way of buying the same thing is almost impossible to argue against.
The public-sector workforce isn't necessarily the problem
This is another area where the debate can become simplistic.
Britain doesn't necessarily have too many public servants.
It may have too many people doing work that could be eliminated, automated or reorganised.
That is very different.
A hospital may need more nurses but fewer people processing paperwork.
A school may need more classroom capacity but fewer administrative tasks.
A council may need more social workers but fewer duplicated management systems.
A government department may need more people making decisions but fewer people transferring information from one spreadsheet to another.
The objective should therefore be better deployment of people, not simply fewer people.
Indeed, if productivity improvements release workers from routine administrative tasks and allow them to move into frontline roles, the public could receive a better service while the overall workforce barely changes.
Government itself must lead by example
There is something rather uncomfortable about politicians demanding productivity improvements from private companies while public administration continues with inefficient processes.
The Government should be the biggest customer of its own productivity revolution.
It has the scale to make enormous gains from common software, shared services, artificial intelligence, automated processing and better data.
But technology alone won't achieve it.
Government has to be willing to ask whether an existing activity should exist at all.
Departments have accumulated responsibilities over decades.
Rules are added.
Forms are added.
Checks are added.
Committees are added.
Reporting requirements are added.
Eventually nobody remembers why half of them exist.
That is how bureaucracy grows.
A genuine productivity programme would occasionally ask a brutally simple question:
If we stopped doing this tomorrow, who would actually notice?
If the answer is nobody, stop doing it.
But there is a danger in chasing productivity too aggressively
Productivity must not become another word for making people work harder.
A nurse already working under enormous pressure isn't necessarily going to become more productive by being given another ten patients.
A teacher cannot simply work faster indefinitely.
A social worker cannot safely deal with twice as many vulnerable people.
A police officer cannot investigate cases properly by simply increasing their workload.
There is a point where pressure reduces productivity rather than increasing it.
Burnout produces sickness absence.
Staff leave.
Recruitment becomes harder.
Experience disappears.
Agency costs rise.
The short-term saving becomes a long-term cost.
True productivity should therefore make work easier, simpler and more effective, not merely more intense.
Britain faces a choice
The Government cannot endlessly solve every public-service problem by spending more money.
Taxes are already high.
Borrowing has limits.
Debt interest is consuming enormous sums.
The population is ageing.
Demand for healthcare and social care is rising.
Defence spending is increasing.
And voters are unlikely to accept permanently increasing taxes simply to maintain systems that themselves may contain considerable inefficiency.
That leaves a difficult choice.
We can cut services.
We can increase taxes.
We can borrow more.
Or we can try to become substantially more productive.
In reality, Britain will probably have to do all of these to some degree.
But productivity should be much higher up the agenda than it currently is.
Perhaps we need to change the question
Instead of asking:
"How much more money does the NHS need?"
we should also ask:
"What could the NHS achieve with the money it already has if the system were redesigned?"
Instead of asking:
"How many teachers do schools need?"
ask:
"How much of a teacher's working day is actually spent teaching?"
Instead of asking:
"How much does the council need?"
ask:
"How many separate systems and processes are we paying to maintain?"
Instead of asking:
"Should we close the leisure centre?"
ask:
"What health and social benefits are we currently buying from it, and could we obtain those benefits more cheaply somewhere else?"
Those are much harder questions.
But they are the questions Britain needs to ask.
The uncomfortable conclusion
The public sector cannot simply be treated as a bottomless extension of the Treasury.
Every pound spent ultimately comes from somewhere.
It comes from taxation.
Borrowing.
Economic growth.
Or future taxpayers.
And if public spending continually rises faster than the economy's ability to generate wealth, eventually the arithmetic becomes impossible.
That doesn't mean public services are wasteful.
Far from it.
Millions of public-sector employees provide essential services every day, often under enormous pressure.
The problem is that good people can be trapped inside inefficient systems.
A nurse cannot redesign the NHS.
A teacher cannot redesign the education system.
A council employee cannot eliminate decades of accumulated bureaucracy.
Those changes require political leadership.
And perhaps this is where the productivity debate should begin.
Not with the question:
"How many jobs can we cut?"
But with:
"Why are we doing things this way?"
Why does the patient still occupy the hospital bed?
Why does the teacher spend so much time on administration?
Why does the council need three systems to hold essentially the same information?
Why does government repeatedly collect the same data?
Why are public bodies buying the same things separately?
Why are we paying to deal with problems that could have been prevented more cheaply?
Those questions could save considerably more money than simply cutting frontline staff.
Britain's financial problem is not going away.
The Government cannot continually increase spending faster than the economy grows.
And yet demand for public services is unlikely to fall.
That creates an unavoidable equation.
More demand + limited money = greater productivity required.
We can postpone confronting that equation.
We can argue about taxes.
We can argue about cuts.
We can argue about whether the public sector is too large or too small.
But eventually the arithmetic wins.
The real opportunity is to make Britain's public services better rather than simply bigger.
That means using technology intelligently, eliminating pointless bureaucracy, preventing illness rather than merely treating it, getting patients into the right care setting, giving teachers more time to teach, sharing procurement and systems, and measuring outcomes rather than simply counting expenditure.
And perhaps that is the productivity revolution Britain really needs.
Not asking public servants to work harder, but designing a public sector in which less of their time is wasted.
Because if Britain cannot find a way of doing that, the alternative is likely to be increasingly familiar: higher taxes, tighter budgets and difficult arguments about which services can no longer be afforded.