Government often thinks of efficiency and productivity as two sides of the same coin. But the reality is that they are very different. And this difference will become ever more important. The government needs budget cuts that maintain (or even increase) the volume and quality of key public services.
The term efficiency is used to identify the minimal amount of inputs that an organisation needs to use to produce products or services. Or doing the same with less. For the past decade, through various spending reviews, Ministers have asked Civil Servants to streamline services. This has led to a drastic reduction in the number of public servants: the Civil Service is at its smallest since the Second World War. Local government had to address more immediate and significant budget cuts (and central government could learn from how they did this).
This translates into savings because government spends less on wages and other staff related costs. Other (often lesser but important) sources of efficiency include improvements to government procurement and reductions to fraud, error and debt.
The former Prime Minister, David Cameron, described this approach in the following terms:
What we are showing is that deficit reduction and an opportunity society are not alternatives. They can complement each other. Because with a smarter state, we can spend less and deliver more.
Just like businesses, government needs to constantly adapt and change to improve public services and reduce costs.
But the benefits from improving efficiency are starting to peter out
There is evidence that key public services are being pushed to the limit. For example, violence in prisons rose sharply since 2014, with assaults on staff increasing by 61 per cent in two years. And in other areas, such as the health service, there is a constant upward pressure on demand and costs due to a growing and ageing population, which suffers from an ever-rising tide of complex chronic conditions.
There is a limit to how far government can cut staff numbers. The Ministry of Justice has plans to employ 2,500 new prison officers to make our prisons more safe and secure. And thousands of prison officers at jails in London and south-east England are to get pay rises of up to £5,000 to boost staffing levels. Other key public services, including border controls and tax collection, have also had to rethink staff cuts.
So, if efficiency has run out of steam then what about productivity?
The term productivity is used to assess how an organisation is succeeding in progressively developing its performance. Or doing more with the same. Productivity enhancing changes are often far reaching and innovative, particularly in high impact areas such as education, healthcare and social care and protection.
Government initially made investments in digitisation, generally with a focus on improving efficiency in administrative services that support frontline service delivery. These services were more user-focused and relied on greater use of digital technologies, including the UK Government’s cloud first policy.
So far so good. But as government departments are placed under ever greater scrutiny, including the modelling of further cuts through the Treasury’s Efficiency Review, they need to look at more innovative changes in service design and delivery. The use of digital technologies must move beyond the back-office and front-office administrative processes and be applied to direct service delivery.
The next step – public service reform and the integration of technology
Education is one example of how this use of technology enabled organisational change can enhance productivity. My formative education in the 1970s and 1980s was premised on relatively little change. Teachers rarely took account of preferred learning styles. The global revolution of online teaching and learning through massive online open courses was a long way off.
The so-called fourth industrial revolution requires us to be agile and to be bold. The pace of change, driven by technology and globalisation, is so fast that two thirds of children starting at school this year will work in jobs that do not even exist yet.
Education is changing and becoming more efficient. Most students have access to laptops and tablets both at home and school (although we must always be wary that some students might not have access to technology or necessary skills). Teaching and learning is supported through online resources that share knowledge. Administrative processes are being digitised.
But it is worth looking to other countries for inspiration and examples of productivity boosting investments. Denmark, Finland and Estonia have already developed digital tools that save teachers’ time when revising tasks and exams, they are building new markets to provide digital learning materials, to be shared across schools and they are developing an online ‘education cloud’ to join up educational platforms and materials.
I would like to hear from teachers and public servants, across local and central government, to share and understand how they are using technology and adopting new ways of working. Please leave me a message, or contact me by email and we can continue the discussion.