Insights from Productivity Pitches #1 on public sector productivity

The first Productivity Pitches event, jointly organised by the Institute for Government and The Productivity Institute, was a discussion between Cat Little, Second Permanent Secretary to the Treasury, Bart van Ark, Managing Director of The Productivity Institute and Nick Davies, Programme Director at the Institute for Government. The event revolved around several key themes, including the importance of embedding productivity into the culture and psyche of the civil service, the role of technology and artificial intelligence (AI), the challenges of long-term planning, and the impact of low morale on productivity. Visit the Institute for Government’s YouTube page to re-watch the event.

Integrating productivity into culture and processes

Cat Little emphasised the need to integrate productivity into the culture, psyche, and processes of the civil service. This includes leadership, management, and the way services are delivered. The Public Value Framework was mentioned as a tool to guide long-term productivity thinking, while the Shared Outcomes Fund incentivises departments to work collaboratively across challenging policy areas. She also stressed the need for tenacity in driving productivity improvements and learning from both mistakes and successes.

The role of technology and AI

Technology, particularly AI, was highlighted for its potential to transform public services. Bart van Ark noted that AI requires clear problems to solve and good data to be effective. Cat Little added that the public sector has not fully exploited off-the-shelf technology and digital services, and there is value to be gained from also implementing more basic technology, while also vying to be first movers on AI. There is an opportunity for AI to be a game-changer in areas like decision-making and policy development, but the balance between technology and human judgement must be maintained. It is important to remember that implementation of technology also requires investment in workforce skills and in management capabilities, as identified in chapter five of The Productivity Agenda by Diane Coyle.

Long-term planning and a holistic approach

The discussion touched on the difficulties in long-term planning due to political and planning cycles. Cat Little mentioned that while there is a lot of long-term work being done, it is not always well-communicated. Bart van Ark pointed out the need for a more long-term focus in productivity, moving beyond annual budgeting and taking a more holistic view of public sector productivity. This involves paying greater attention to the public sector delivery chain, which incorporates not just cost efficiency gains, but also organisational productivity and effectiveness. There are numerous examples within the public sector where the target has been hit, but the outcome has been missed.

Impact of low morale on productivity

The issue of low morale and its negative impact on productivity was also raised. Cat Little talked about the complication and difficulty in measuring the link between morale and productivity, though Bart van Ark stressed that workforce engagement and productivity are positively related. It is perhaps easier to have an engaged workforce within the private sector because the results of work are more readily available; more sales leads to more profits. When dealing with multiple outcomes, as with the public sector, this can be more challenging as the outcomes on citizens are not always seen directly by public sector workers. Nick Davies highlighted the fact that a lot of public services reply on people working above and beyond their contracted hours, which is impacted by low morale, as is staff turnover, particularly among experienced staff.

Central government and local level in productivity improvement

The conversation also addressed the role of “central versus local” in productivity improvement. The Productivity Agenda’s chapter on public sector productivity outlines the need for an adaptive organisation design, continuous innovation, and an agile workforce to improve productivity; it is possible that these aspects are best achieved at a local level. Cat Little highlighted that central government’s role is to create the conditions for the public sector to succeed through the correct allocation of funding and resources, and ensuring that the right skills and technologies are in place. But one of the big debates from a policy perspective is about how central government works with the whole of the public sector, and in particular frontline workers.

Outcome-based commissioning and procurement

Nick Davies posed questions about the barriers to outcome-based commissioning and the guidance needed for procurement teams to take advantage of new flexibilities. Cat Little stated that one of the biggest barriers to outcome-based commissioning is the need to have explicit understanding of what outcomes public services are trying to achieve throughout the whole system, which requires a strategic focus and aligning spending across different spheres of the public sector with those desired outcomes.

Public trust and productivity

Bart van Ark introduced the concept of public trust in relation to productivity, suggesting that productivity gains must be seen to benefit the public to strengthen trust in government. It is often the case that the public does not believe that any public sector productivity improvement would benefit them, due to their distrust of government. It is crucial to consider how the public sector delivers outcomes that the public can see is productive but also creates more equality.