Budget: Departments to develop 'productivity plans' ahead of spending review

Jeremy Hunt allocates £800m to boosting productivity across public services
Photo: PA Images/Alamy Stock Photo

Departments will be told to come up with “productivity plans” ahead of the next spending review, the chancellor has announced, as he revealed further details of a drive to boost productivity across the public sector

Delivering the Spring Budget today, Jeremy Hunt revealed further details of the public sector productivity drive announced earlier this week.

The bulk of the funding for the programme – £3.4bn – will be spent on implementing an NHS productivity plan, with a further £800m to various initiatives in other public services.

Budget documents published alongside Hunt’s speech reveal that £16m of the sum will be spent on offering more prison workshops to boost employability and “focus resources on rehabilitative activities”; while £6m will be spent on digitising services in prisons. HM Courts and Tribunal Service will meanwhile “modernise” its communications by bringing forward digital reforms and reducing spend on first-class post.

Also included in the commitments are £34m to enable the Public Sector Fraud Authority to deploy artificial intelligence to detect fraud; and £17m to speed up a service-modernisation programme at the Department for Work and Pensions, which were both announced on 4 March.

The NHS productivity plan – which includes upgrades to equipment such as MRI scanners and digital transformation to support the rollout of universal electronic patient records and cut down on time spent on administration tasks by frontline workers – will be a “blueprint for other parts of the public sector to adopt”, according to the document. The NHS plan aims to generate £35bn in “productivity savings”.

The funding announcements follow on from Hunt's announcement last summer of the "most ambitious public sector productivity review ever". The cross-government review targeted "unnecessary" admin tasks, diversity initiatives and opportunities to use innovative technologies such as AI.

“Over the coming months, the Public Sector Productivity Programme will take this reforming approach to the delivery of public services and focus on improving productivity in other frontline services across the public sector,” according to the so-called Red Book which sets out details of the budget.

In the coming months, “relevant” government departments – which are not specified in the budget document – will “develop detailed productivity plans, building on their work to date and the funding announced at Spring Budget”.

The spending review will cover budgets beyond 2024-25 and is expected to take place after the next general election, which must happen before next January.

“This will provide the foundation to drive significant improvements in how crucial public services operate, so that the government can deliver the outcomes the public expect while controlling levels of government spending,” the Red Book adds.

“This continued work on the Public Sector Productivity Programme will ensure the government is more prepared than ever for the Spending Review, and the choices and opportunities it brings.”

A second policy document published alongside the budget says the programme will focus its efforts on five priority areas identified by the National Audit Office in January: procurement; reducing fraud, error and tax evasion; major projects; asset management; and digital transformation.

Addressing parliament in his annual speech, NAO head Gareth Davies told MPs that improving productivity could produce "a material contribution to the fiscal challenge, certainly tens of billions of pounds a year”.

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