Britain’s productivity CRISIS laid bare in four shocking graphs as public sector efficiency crumbles

Commentators have highlighted this is likely to continue under Labour with huge public sector spending increases already announced, including inflation busting pay rises for train drivers.

Sir John Redwood, former Cabinet minister and MP for 37 years, reacted: “The collapse of public sector productivity has caused a large black hole in the public accounts.

“According to the Treasury it costs £20billion a year more this year than in 2019 to deliver our public services, a number similar to Chancellor Rachel Reeves’ alleged missing money.

“This figure is before taxpayers need to find much more extra cash to take care of the inflation of wages and bought-in goods.

“The £20billion is the cost of all the extra staff hired to produce the same output. It is likely the Treasury estimate of £20billion understates, as there has been a further loss of productivity since it was made.”

Sir John Redwood took particular aim at the ‘bloated’ civil service soaking up taxpayer cash.

“The large-scale recruitment of extra civil servants and public sector administrators in recent years has also facilitated many more promotions, producing more managers relative to other staff, all on higher salaries.

“There has been a further expansion of regulatory activities, audit and supervision, as opposed to delivering more service. More regulation requires more compliance staff. None of this helps to increase useful output at a lower cost to taxpayers.”

The Tory veteran argued for a civil service reduction, the abolition of some public bodies and a sophisticated roll out of AI.

“Longer term productivity trends since 1997 have been poor in the public sector before the post 2019 collapse.

“This is surprising as there are many clerical tasks, from paying benefits to issuing licences, where computers can do – and often are doing – much more of the work, yet staff numbers remained high after the installation of big computing projects.

“There is talk of spending more on better computers and software and relying on more AI to replace people.

“The immediate task is to restore 2019 levels of productivity, when there was no AI. First recover the £20billion, then consider some ‘spend-to-save’ ideas.

“It will require government to get better at investing in technology and adjusting manpower down as it comes in.

“Doing more with the same number of people or doing the same with fewer is essential to reduce the burden on taxpayers and to create growth and prosperity.

“The public sector has let taxpayers and the economy down badly in recent years. The £20billion black hole created by the productivity loss is unaffordable and unacceptable.

“It is a genuine black hole that required damaging tax rises in the latest budget.”

It comes as Labour is rocked by a slew of damning economic developments today, including the cost of government borrowing rising to a thirty-year high.

With the incoming, tariff-friendly Trump administration in mind, investors and lenders are increasingly viewing the UK as an unattractive option for their cash.

This is particularly bad news for Reeves whose bombshell budget is largely funded by tax rises and borrowing.

The Chancellor and Prime Minister Starmer are in serious danger of following the footsteps of Liz Truss whose mini budget was crushed by market forces, albeit more slowly.

The economic picture, and by extension Reeves’ future, will become significantly clearer on March 26 when the OBR publishes its Spring Forecast.