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Public Sector Productivity Review: Fifteen questions

Executive Summary

Responding to challenges such as an ageing population, increased tax burden, and calls for tax cuts, both Jeremy Hunt, the Chancellor of the Exchequer, and Michael Gove, the Secretary of State for Equality, Housing, and Communities, have prioritised public sector productivity. Hunt initiated a comprehensive review concentrating on efficiency and innovation to prevent potential debt growth in the public sector. Gove allocated £600 million to local government, emphasising the need for productivity plans to enhance services and reduce costs.

However, these productivity initiatives are often accompanied with concerns about potential service cuts, corner-cutting, and unintended consequences.

This report suggests a shift in the discussion from mere cost efficiency to a more comprehensive evaluation of organisational productivity and effectiveness. The first section examines the fundamental concept of public sector productivity and explores potential measurement methods to establish an appropriate framework. The second section focuses on promising areas for productivity enhancement: digital transformation and human resource management.

The overarching goal of the report is to contribute to the discourse on increasing public sector productivity by delving into various dimensions of productivity and posing questions to policymakers and researchers for further exploration.

Redefining Public Sector Productivity: Moving Beyond Fiscal Efficiency to Embrace Organisational Effectiveness and Social Value

The significance of public sector productivity arises from its pivotal role in various aspects of our lives, spanning from specific services like education and healthcare to fostering job creation and economic stability. The complexities inherent in delivering public services involve an intricate network of interconnected entities, posing challenges for improvement and assessment. Over the past decade, efforts to enhance public sector productivity have predominantly focused on cost-cutting measures and resource consumption reduction. While effective in the short term, this approach has faced criticism. Consequently, we advocate for a more comprehensive perspective on productivity, emphasizing a thorough evaluation of organizational productivity and effectiveness, beyond just fiscal efficiency. We propose a refined concept of productivity that incorporates multiple outputs, outcomes, and quality improvements, considering the social value of public services. Utilising the value chain of public service delivery (van Ark, 2022) is valuable for better understanding this complexity.

Strategies for Enhancing Public Sector Productivity: A Focus on Digital Transformation and Human Resource Management

Addressing the issue of declining productivity growth across the broader economy, governments worldwide have acknowledged the imperative to bolster productivity within the public sector. This report delves into two promising strategies: digital transformation and human resource management.

We underscore the array of opportunities stemming from both strategies, concluding each section with a set of questions we deem essential for a prospective cross-governmental investigation into productivity.

Digital Transformation

We delve into the pivotal role of digital transformation in enhancing productivity within public sector organisations. This exploration encompasses the potential advantages of digital tools, particularly in streamlining operations to augment productivity. We exemplify this through the successful case study of ResilienceDirect, an initiative in public sector digitalisation that has notably enhanced collaboration in emergency response services during the Covid-19 pandemic.

In the subsequent section, we pivot to the observation that despite a handful of successful IT endeavours, the list of unsuccessful projects (budget overruns, delays, etc,.) is extensive. Instead of attributing these challenges to a singular cause, it becomes evident that various interconnected factors impede digital innovation and obstruct measurable productivity enhancements. We delve into these factors—adoption timelines, organisational change, data policies, and outsourcing—in detail.

Human Resource Management

The second part of this section underscores the pivotal role of effective human resource management in enhancing productivity within the public sector. While private sector HR practices have often been applied to the public sector, the distinct challenges faced by the public sector, including limited resources and heightened accountability, necessitate a more distinct approach. The introduction of motivational practices and performance management in the public sector encounters several challenges, particularly due to the complex stakeholder landscape. Accurately quantifying performance dimensions and defining outcomes in the public sector proves to be complex, limiting the efficacy of these methods.

Hence, in this section, we contend that HR teams should concentrate on developing an agile workforce, particularly to address the challenges presented by digital transformation. An agile workforce, characterised by flexibility and collaborative dynamics, is crucial for the successful integration of digitalisation and the ongoing advancement of public sector organisations. HR assumes a pivotal role in this process, including identifying skills gaps, executing targeted training initiatives, and re-evaluating recruitment practices to cultivate an agile and engaged workforce.


Authors: Nina Jörden, Lucy Hampton, Ayantola Alayande


  • Productivity Studies




N. Jörden, L. Hampton, A. Alayande (2024) Public Sector Productivity Review: Fifteen questions, Insights Paper No. 030, The Productivity Institute.