Why is the public sector so unproductive?

The government has achieved its promise to halve inflation from last December’s level, borrowing has come in at little under the predictions made in March’s budget, and the Chancellor has felt able to lower taxes. But one thing isn’t going well: productivity. Little-noticed figures released by the Office for National Statistics (ONS) this week show that output per worker has fallen by 0.1 per cent over the past 12 months and output per hour is down by 0.3 per cent.

The problem is especially acute in the public sector. As a former board member of the ONS I know how difficult it is to measure public sector productivity and how politically hard it can be to tackle it – you could increase productivity in state education, for example, by increasing class sizes, but that would not help the standard of education and it wouldn’t make you very popular as a government.