Public services productivity is still 8.5% below pre-Covid levels

Public services productivity has fallen again and is still 8.5 per cent below pre-Covid levels as Labour prepares to pour in more resources.

Grim official figures showed that state sector output relative to input went down 1.2 per cent in the three months to June, compared to the previous quarter.

The ONS has also revised down data for productivity in 2022, suggesting improvement in the aftermath of the pandemic nosedive was less than half as fast as thought.

The findings raise questions after Keir Starmer signed off a series of bumper pay deals immediately after taking office.

Chancellor Rachel Reeves then unveiled a massive packages of taxes, borrowing and spending at the Budget last month, insisting it was the only way to stabilise public services.

The ONS measures productivity in public services as the difference between output and inputs - the amount of resource such as staff and running costs.

The level was estimated to be 2.6 per cent lower between Apr and June this year than the same period in 2023.

Productivity fell by 1.2 per cent in the latest three months compared to January to March - which in itself was flat on the previous quarter.

The metric is estimated to be 8.5 per cent below the three months from October to December 2019.

The annual rate of productivity growth for 2022, when services were getting back up and running after Covid, was revised from 2.6 per cent to just 1 per cent.

Annualised quarterly estimates suggest productivity dipped 0.3 per cent between 2022 and 2023. 

In contrast, separate calculations of total UK productivity - looked at as output per hour worked - show a 2 per cent increase against the level before Covid. That could suggest the private sector is being dragged back by performance in the public sector. 

While stressing that the statistics were 'volatile', the ONS said the 'recovery of public service productivity from the pandemic is taking longer than previously estimated'.

'The coronavirus pandemic had a large impact on public services,' the stats body said.

'In 2020, inputs rose, reflecting the extra resources provided to public services to deal with the pandemic. 

'Conversely, output fell in 2020, as many services were delivered in a different way than in 2019, with additional costs and mandatory restrictions present for certain services.

'Our quarterly estimates show a decline in productivity of 25.4 per cent from Quarter 4 (Oct to Dec) 2019 to Quarter 2 (Apr to June) 2020, and a recovery of 22.7 per cent from Quarter 2 2020 to Quarter 2 2024. 

'Productivity was 8.5 per cent lower in Quarter 2 2024 than in Quarter 4 2019. 

'This reflects changes in the severity of the cases being addressed by public services, as well as the delivery of these services.'