I always try to be optimistic. But it’s time to face up to it. Britain is a global embarrassment. A shambling, sorry disgrace. No, I’m not talking about Brexit. I’m talking about productivity.
If your eyes just started to glaze over, I don’t blame you. The only person in whom the word sparks joy is Philip Hammond. But productivity is what makes the economic world go round and Britain’s is lagging woefully behind. For every hour the average worker sits at their desk, they contribute 20 per cent less to the economy than workers in other G7 countries. Since the financial crisis, the figures have essentially flatlined.
Yet there is one part of the economy in which the situation is even worse. In the third quarter of last year, productivity in the private sector rose by 0.7 per cent. But in the “non-market sector” (ie charities and the public sector), it fell by 1.9 per cent. Average productivity growth in government over the past 20 years is just 0.2 per cent and in social care, to give a particularly hideous example, the figure is now 20 per cent lower than back in 2000.
If you ever wondered why we pay so much in taxes and seem to get so little in return, well, this is a pretty good reason. The NHS, for example, is the world’s biggest user of fax machines and spends hundreds of millions to print and post outpatient letters that could go via email.
If the health service can match its best years for productivity in the next decade, it will be the equivalent of hiring 159,000 extra staff and carrying out 5.5 million extra treatments a year. Match its worst performance, and the government’s £20 billion investment will be largely wasted.
Across swathes of the public services, it is too hard to reward staff for good work, incentivise them to meet targets or fire the worst performers. Since 2000, the private sector has cut admin staff (because of these new-fangled things called computers) at seven times the rate of the public sector.
This productivity gap means that we are paying more taxes for worse services. It is also why Jeremy Corbyn’s renationalisation plans are so wrong-headed. The privatised industries have become dramatically more productive. His bright idea is to add at least £176 billion to the national debt to make them axiomatically less efficient.
Rather than thinking about what we can move from private sector to public, we need to think about how the public sector can match, or even vaguely approach, the productivity of the private. Otherwise, whether Brexit is conker hard or marshmallow soft, we are doomed to pay more than we can afford for public services that are worse than we deserve.
Robert Colvile is director of the Centre for Policy Studies think tank