Efficiency, productivity, and technology in the public sector
The UK has a manufacturing problem. In fact, labor productivity has been near freezing (0.4%) since the 2008 financial crisis.
One of the first things the current government committed to, when it came into office, was to grow the UK economy, and that means tackling manufacturing.
Ministers also pledged to address the productivity gap in the public sector. If productivity is the problem of the economy as a whole, the situation is even worse in the public sector.
A prime example of this is in the NHS. Health and Social Care Secretary Wes Streeting has commissioned an independent inquiry into the health of the NHS. Health services have struggled to increase their outcomes – such as the number of surgeries – however more money, and more workers.
Lord Darzi report published on September 12, points to growing demand for health care and, as expected, low productivity.
But productivity remains a challenge across the public sector. And another reason is that public organizations do not always make good use of technology.
According to the Office for National Statistics (ONS), public sector productivity has increased by just 0.2%, on average, each year since 1979. The agency also estimates that productivity was actually 0.3% lower in 2022, than before the Covid-19 pandemic.
The ONS stresses that these are “test figures”, and are subject to correction. But it is clear that the public sector lags behind the private sector, even though private enterprises do not enjoy productivity gains themselves.
Over time, this causes many problems. We are putting more demand on public services, on the NHS, social care, education, security, the justice system… the list goes on. And, unless productivity improves, it will be difficult to continue, let alone improve service.
Then there is the expectation that there will be higher salaries, and pensions in the future, if it will be necessary to hire more people to provide those services. As the previous Chancellor, Jeremy Hunt, said earlier this year, “the way to improve public services is not always more money, or more people – we also need to run them more efficiently.” And the current government believes the same.
However, how can the government achieve this? Earlier this month, TechUK hosted its tenth “Building a Smarter Country”. meeting London. In this event, technology companies meet with civil servants, organizations, and local government officials – technologists and leaders – with the aim of building relationships between these two groups.
Building bridges
“We’re trying to find better collaboration between those government departments, the technology buyers, and our members, the suppliers,” says Heather Cover-Kus, head of the public sector program at TechUK. “It’s about procurement opportunities, but it’s also about the challenges those sectors may have, and how technology can address some of those.”
Part of this is to show innovation in the private sector. But Cover-Kus readily admits that the technology industry must understand the needs, and challenges, of the public sector and “how to be a good partner”. The government, on its part, needs to be exposed to innovation in the industry.
However, Cover-Kus is seeing a lot of enthusiasm from those working in the digital realm. The new system will bring its own ideas, and a new approach. But there are other trends, such as the sector’s interest in AI, that have developed since the last Parliament.
He admits: “It’s hard to have these conversations without talking about AI. “It’s made a big, big change in the way people work, and it has the potential to do some really interesting things. That’s going to be an important technology going forward.” such as the Department for Work and Pensions, and HMRC, are looking at AI to improve service delivery.
But there are also problems. Legacy systems remain a problem at all levels of government. And the cost of maintaining, or improving, legacy systems is closely related to the issue of skills. Efficiency is an industry-wide challenge. Cover-Kus says: “The government is looking for those technical people, but the private sector is also looking for those people. TechUK focuses on ideas around talent sharing and giving back, bridging the gap.
Money, too, will always be a consideration. Public sector funding for IT will always be limited. And the link between IT spending — or investment — and better services or lower costs can be harder to establish than in the private sector. And this is directly related to the question of production.
“I don’t know if this is something the IT industry can help with, but it’s not necessarily money. It’s also the way money is distributed, the cost of capital and the cost of working,” explains Cover-Kus. “We’re talking to the Treasury about what a different system might look like … we’re trying to tell a story about the technology side and improving productivity.”
Change
This could mean cheaper public services, or equally it could be providing more within the same budget. However, there is more at play than using technology and digitalization. Change is also needed.
Otherwise, there is a risk that all that the public sector will achieve is a limited improvement of existing business practices, and there are no real gains in efficiency, productivity, or more importantly, to from a citizen’s point of view, quality.
At TechUK, there is a passion for projects, like the Scottish government CivTech program, which every year allows civil society organizations to invite industry to help solve a specific problem. There is interest in improving data sharing, especially between departments, and different levels of government. And there have been achievements, such as the NHS tool, and automation at the Passport Office.
“The digital part is relatively easy; part of the technology is simple. But you can’t move the needle without change,” says Cover-Kus. “It doesn’t always just change the technology. Rather, it changes the way you work, and the way you think about a problem.
“It’s part of a broader business transformation, a broader public sector transformation. It’s not just creating a PDF form. It’s about rethinking the way things are done. ”
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