Productivity puzzle corner: The Efficiency Wars redux

In a new series of articles, Professor Colin Talbot will explore public sector productivity in the UK. This issue is increasingly on the agenda of both main contenders as they vie to form the next government and is something that will likely occupy civil servants whoever wins
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By Colin Talbot

28 Mar 2024


One of my fondest memories was of taking on George Osborne on the BBC’s Newsnight programme back in January 2005. It was part of what I call the “Efficiency Wars”.

In 2004 Gordon Brown, the then-chancellor, had published another Spending Review. Alongside it appeared a review by Sir Peter Gershon of where £21bn of efficiency savings could allegedly be made across the public sector. They also published a review of civil service locations by Michael Lyons, that promised to move lots out of London and the south-east (and save money in the process).

No to be outdone, the Conservative opposition hurriedly produced their own efficiency plan in January 2005, fronted by businessman David James, which claimed to have identified £35bn worth of savings.

Both efficiency reviews were in my view at the time highly suspect, but at least New Labour’s plans had some detail and serious work behind them. I criticised them at the time during a Treasury Select Committee hearing and was memorably accused by Angela Eagle of “easy cynicism”. (I actually work quite hard at my cynicism.)

The Tories’ plan however was just a few flimsy pages that I was able to wave around on Newsnight. Their numbers were pure ‘back-of-a-fag-packet’. This was not serious stuff.

A bit of context here that may sound familiar. At the time of these events the Conservative opposition was not challenging the broad spending envelope or fiscal rules of the New Labour governments. They wanted to claim bigger efficiency savings so they could spend a little less and offer some tax cuts at the 2005 election. They didn’t start criticising Labour over-spending until three years later.

The Efficiency Wars eventually petered out with Labour claiming success (dubious) and the Tories moving on to claims of Labour overspending and borrowing after the 2008 global financial crisis.


So here we are again with the opposition – this time Labour – promising to stick to fiscal rules that would mean spending levels fairly close to current government plans. But both main parties claim they can make up the resulting holes in public spending with efficiency and, this time, productivity gains across public services.

Efficiency and productivity are close cousins. They both promise to be able to do more with less. Or the same with less. Or less with a lot less. In other words to improve the ratio between inputs (costs) and outputs (public services).

One further thing they both seem to have in common is that artificial intelligence and wider IT is somehow going to be a ‘game changer’ in both public and private sector productivity. This will turbo-charge growth, tax income, and the ability of public services to meet increasing demands and challenges.

I should say at this point I’m not some sort of Luddite. I’ve been an ‘early adopter’ of new technology my whole life. And I’ve worked as a technologist myself (telephone engineer) and on large scale tech projects. I’m just a realist about what it can and cannot do.

So in this series of short articles I am going to dig into just how realistic this talk of boosting public sector productivity is? What does it even mean in a public sector context where, for example, outcomes are at least, if not more, important than just ‘service delivery’?

Besides what I think is a misplaced reliance on AI, I also want to unpack the diverse contemporary nature of ‘public services’ and where this potential, or not, for real improvements in how we get things done. In some areas there is real potential. In others, not so much.

And I’ll not be investigating just in the abstract – I’ll be looking at many of the real-life examples of innovation and change – some of which are very much not about tech. These are often neglected because they are small scale, bottom-up, human-centred. In short not as ‘sexy’ as big, top-down, change projects. But they can often deliver better results, cheaper and faster.

I’ll be exploring examples that rely on more human-scale changes, different models of organisation and ownership, and ways of mobilising organisational, user and social resources to effect desired outcomes. In other words productivity (and efficiency) with a human face.

Colin Talbot is emeritus professor of government at the University of Manchester and a research associate at the University of Cambridge

Read the most recent articles written by Colin Talbot - It's time government embraced the human side of productivity

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