The public sector would cost the UK “tens of billions” as productivity fell

[ad_1]

Tens of billions of pounds of additional funding will be needed to keep public services running this year due to a collapse in productivity that experts have blamed on poor management and working from home.

Public sector productivity fell 1.3% in the three months through September compared to the previous quarter, according to the Office for National Statistics (ONS). This compares to a 0.1% increase in hourly production across the economy over the same period.

This means productivity in the public sector is 7.4% lower than pre-pandemic levels, compared to an increase of 1.6% in the equivalent economy-wide measure.

Doug McWilliams, founder of the Center for Economics and Business Research (CEBR), said the collapse in productivity suggested spending on public services would be £73 billion higher this year than if public sector productivity had risen at the pre-pandemic rate.

The pandemic has enabled unproductive employees to get away with doing less work, McWilliams said.

“I think it’s a combination of poor management practices and working from home that has made it very difficult to get that part of the work-at-home workforce productive,” he said.

“In the private sector, there has been some productivity drawback from working from home, but it’s not huge. People in the private sector often end up working longer hours anyway because of the time they save on travel.”

Jacob Rees-Mogg, the former business secretary, also blamed the shift to working from home for the decline in productivity.

He pointed the finger at the “middle rank” of employees who found working from home “nice and relaxing”.

“It seems to me that there is a strong causal link between working from home and a lack of productivity,” he told The Telegraph, adding that there is “an overwhelming number of my constituents who are not getting the public service they deserve.”

The MP for North East Somerset, who has laid out plans to cut 91,000 civil service jobs under Boris Johnson, said the issue was about “the expectation that people will live up to their contractual obligations” as well as the need for leadership.

Mr Rees-Mogg said: “The instability of government in the past year hasn’t helped… When Boris Johnson was Prime Minister there was an intention to put people back in office which is starting to bear fruit.

“Then you change the prime minister twice and we’ve had some very bad numbers recently for people who simply don’t work.”

It is difficult to measure public sector productivity compared to private sector productivity because services are provided free at the point of use.

The Office for National Statistics has described the “huge challenges” posed by the economic value measurement pandemic as classes begin to run online and many operations have been postponed or cancelled.

McWilliams added that it was much more difficult to fire an unproductive worker in the public sector. He said, “In the private sector, if you work from home and don’t work, you’ll likely lose your job eventually. In the public sector, it’s much less easy for that to happen.”

Government data shows that large segments of civil servants still spend most of their time working from home. Only 16% of HMRC and Home Office staff were working from the office in the first week of January. This increased to just over half of the staff at HMRC in the next two weeks.

Occupancy at the Department for Business, Energy and Industrial Strategy that Rees-Mogg managed was just over 60% in the week of January 16th.

Asked how people would be encouraged to return to the office, Mr Rhys-Mogg said: “I think it’s kind of a carrot and a stick. It’s a reminder of people’s contractual obligations, which I suppose are constant, and the carrot ensures that the office is full and functioning, and so it’s where people want to be.” in it “.

Rhys Mogg, who resigned from the government in October after Rishi Sunak entered Downing Street, has also called for tax cuts to help stimulate economic growth.

“I think the state is getting too big,” he said. “I think we’re spending too much money, taxing too much.”

The comments contrast with the approach taken by Sunak, who suggested last week that only “fools” failed to understand why taxes should not be cut immediately to boost the economy.

However, Rees-Mogg warned that public spending also needed to be reined in to avoid a repeat of the chaos sparked by Liz Truss’ unfunded tax cuts in the mini-budget last September.

He said, “I think economic growth will only come if we have tax cuts, but we need to cut our coat according to our clothes. That means we need to control public spending.”

[ad_2]