The public sector productivity problem

Last week I thoroughly enjoyed the company of public sector finance professionals at Public Finance Live in Westminster. There were some great sessions and, despite some very tough messages about the external challenges, there was a sense of energy and a positive mindset from the local government finance directors we engaged with.

We are heading to the LGA Annual Conference 2023 in Bournemouth tomorrow, and we hope the conference stimulates a similar sense of energy amongst Chief Executives and Leaders despite the pressures they are facing.

Last Monday, at the CIPFA President’s Dinner, CIPFA Chief Executive Rob Whiteman said that there is a post-Covid productivity problem in the public sector. We agree; but we’d go much further – the public sector productivity problem has been around for decades, hidden in plain sight. The problem now is that we cannot afford it anymore.

Better outcomes should cost less. Public services should improve outcomes for people. Public spending should be seen as an investment, with a return measured in better lives and great headroom for government spending.

This isn’t a nirvana, which can never be achieved. Some local authorities are already achieving this across many of the big services they deliver to their local residents. And those authorities are more financially sustainable as a result. We measure productivity by looking at outcomes per £. By way of an example, an extract from our IMPOWER Index (for older adult social care, below) shows the huge distribution of productivity across 149 English local authorities – but importantly, the performance that CAN be achieved in the top right-hand box.

Local authorities can’t fix the whole public sector productivity problem. But they can make major strides to securing the win-win of driving their own financial sustainability by improving the lives of their residents. We’ve spent the last 10 years helping local authorities make their services profoundly more productive. Get in touch if you’d like to find out how!