Hunt targeted productivity but investment in this – in the public sector – was wholly absent

Hunt did set a target to improve public service productivity by 0.5% per year: a worthy goal. The IfG has long argued that lower productivity is harming service performance. And the government made correct diagnoses about some of the causes of poor productivity, such as high admin burdens on staff, but its solutions so far fall short. For example, there was some talk about using AI to reduce administrative burdens. Maybe, but talking about increasing investment in AI will seem like a cruel joke to frontline staff using computers that barely turn on. Similarly, the nod to shifting funding towards preventative services is sensible, but its efficacy is questionable in the context of 13 years of central government consistently prioritising acute spending.

What was conspicuously absent in the statement was capital investment. Hunt rightly highlighted importance of investment to productivity – but only in reference to the private sector. When it comes to the public sector, he instead confirmed capital budgets would be kept flat in cash terms beyond 2024/25. That means that budgets will fall in real terms, which will in turn make it much harder to meaningfully improve address issues of crumbling buildings and antiquated IT systems that act as such a drag on productivity.

The danger is that a blunt productivity target will incentivise short-termism – as in the 2010s, when public service productivity appeared to increase  but only as a result of reducing managerial and admin staff headcount, holding down the pay of frontline staff and shifting capital into day to day spending. Those policies directly contributed to the poor productivity across public services today. Productivity improvements are possible but require upfront investment. Any government that does not take that seriously is not serious about improving productivity.

Public services are struggling under the weight of more than a decade of underinvestment, pandemic backlogs, and inflation. Rather than putting services on course to recovery, the government has simply abdicated responsibility, leaving it to the next government to pick up the pieces.