John Redwood is a former Secretary of State for Wales and MP for Wokingham. He writes regularly at his diary
There are some great doctors and nurses in the NHS who work tirelessly and go the extra mile to help patients. There are some wonderful teachers in state schools who inspire pupils and stay to organise the after school activities. This article praises them and it not about them. Despite a cadre of great employees dedicated to the right spirit of public service, the public sector as a whole is racked by low productivity, poor quality of service and too many disasters.
One fifth of the economy represented by public services has produced practically no productivity growth since 1997. It has failed to recoup all the lost productivity it experienced during covid lockdowns.
There are long waiting lists for NHS treatment. There are schools that put up with poor results. The Post Office put good employees into prison blaming them for computer mistakes. Some hospitals have scandals over avoidable deaths of babies. The contaminated blood scandal hit too many patients, giving them diseases that damaged or ended their lives. There are crashes, signal failures and delays caused by nationalised Network Rail. Our Border Force brings illegal migrants into the country instead of keeping them out. These quality problems are manifestations of more general management issues. Why does the public sector have so many well paid managers, and why are the management results overall so poor?
The civil service has expanded from 384,000 in 2016 to 515,000 (full time equivalents) this year with no visible sign of improved performance. Indeed, productivity collapsed over covid and the lockdowns. NHS employee numbers have expanded from 1.03m (fte) in 2016 to 1.38 m (fte) in 2025, an increase of a third in under ten years. In the case of the NHS it is true more nurses and doctors and more support staff to handle a rising caseload were clearly needed, but the productivity numbers show it fell 2019-25 as the new staff were added.
So why is productivity so poor in the public sector? It is because the public sector employs too many people who are not doing work directly linked to providing patients, pupils, clients, service users with more and better service. It is because the plentiful supply of managers does not succeed in managing the large staff in ways which promote greater quality and efficiency. Over seven years when fast changes in computing have allowed many private sector companies to achieve much more administration with fewer people the public sector has both spent a lot on computers and ended up with more staff to do the same thing.
The public sector likes to blame a lack of money or a lack of staff for any crises or shortfalls in its service. They see efficiency drives as undermining quality. When asked to do a cost down exercise they list a series of unpalatable cuts affecting users rather than dismantling unwanted parts of the overheads.
In good organisations quality and efficiency are opposite sides of the same coin. Get things right first time and you save remediation and repeat costs. Provide a better service and you can shrink the complaints department. Have fewer, better managers and the staff will respond to positive direction, instead of groaning under too many managerial requests. Have limited numbers of managers and they will be forced to concentrate on the essentials and on getting things right first time. Use limited stocks well and turn them over quickly so there will be less waste and damage of stock items with the bonus of smaller warehouses.
The public sector fails to reply promptly, needs to send holding replies and ends up having to provide a longer reply after the excessive delay. NHS appointments are made more complex by use of digital technology that should make them easier. Patients needing treatment often get their appointments cancelled at the last minute. Some clinics continue to provide same time appointments for many people so they have to wait needlessly. Companies House with its new digital ID system prevents some people from registering their directorships or updating the information. No one bothers to sort it out.
There are two systems of ultimate authority in the public sector. Arms length bodies like nationalised industries and regulatory authorities are run by well paid Chief Executives who are jointly responsible for the conduct and results of institutions with the Chairman of the Board. They have boards of non executives who are meant to monitor standards, performance and budgets. The larger bodies pay around £250,000- £500,000 basic pay to the CEO and usually grant a bonus, however bad the performance. This reveals the weakness of Chairmen and a lack of proper Board accountability. Each CEO of the Post Office as its losses built up and its employees were mishandled was in most years paid a bonus when they should have been reprimanded or sacked for the continuing losses and the disaster of employee maltreatment. The bosses of HS 2 were rewarded very well for losing control of the costs on an heroic scale and delaying the project by more than a decade.
These bodies need to be put under more accountable CEOs, with bonus schemes geared to the main outcomes the government wants. In the case of the Post office, bonus should only be paid on return to profits and on full resolution of the employee issues. In the case of HS 2, the CEO should only get a bonus if there have been big improvements through cost down and delay elimination from the current dreadful situation. The Governor of the Bank of England should not be earning any bonus all the time he is losing the state huge sums on bonds. Boards need to be told to craft proper incentive schemes only paying big money to CEOs who are saving taxpayers serious money or bringing in more business revenue to the industry they are running.
Departments and services that are run by Ministerial departments face the challenge of Ministerial responsibility. Ministers are not full time well paid CEOs of their departments. Nor are they mere non executive Directors having to leave working decisions to senior executives. The public holds them to account and blames the Minister if things go wrong. Even where the Minister has appointed a Chief Executive or senior official to run something, the Minister is still in charge and does have to intervene if their chosen one is failing to deliver or taking actions that anger the public.
In the Home Office successive Home Secretaries have not wanted a large supply of illegal migrants coming into the country. They themselves are not going to become border officials at Dover or captains of the Border Force vessels who pick up many of the migrants mid Channel. The public however recognise that the Ministers can direct, reinforce or change these people, and can change the rules and requirements placed on them. Failure to do so will rightly result in Ministers being held to blame for the continuing disaster of our failed border control. Ministers do need to get into the detail of why staff are not stopping the boats or smashing the gangs as required. They need to find people and measures to do so urgently.
There are obvious things to do to shed overhead and rid government of too much wokeish overlay impeding serving the public better. There needs to be a staff recruitment freeze in most areas allowing an overstaffed activity to slim down without redundancies by merging or abolishing posts as they become empty. There needs to be a complete revision of bonus arrangements to pay better bonuses for success in quality and cost reduction, paying nothing for failure to raise productivity. There needs to be a destocking exercise as the public sector is heavily overstocked. The NHS had a stock of protective clothing ahead of covid but much of it was no use when there was an outbreak that needed it. Government needs more just in time supply capacity on tap and less stock deteriorating in warehouses. There needs to be more of a switch from stocks in a central location to just in time delivery from suppliers.
Everything needs ton be more businesslike. The service users need to be seen as the customers or clients. They should receive a timely and good quality service, or be told why they do not qualify. Their complaints should be taken seriously, and future faults of the same kind designed out of the system. Far from efficiency and quality being enemies, we need good public sector managers who grasp their interconnection and know how to deliver. A 10 per cent productivity gain should be easy given the dreadful figures this century. That would be £60 bn of savings or £60bn of more service for no extra cost.
Is this a peculiarly British problem or is it the norm across the world that public sector provision is invariably characterised by poor service and low productivity?
My own feeling is that as long as the ultimate financial backstop is the tax payer or ‘magic money tree’ these problems will always be present. It may be possible to make some improvements at the margin but without the continuous iron grip of a minister and permanent secretary / ceo refusing to accept decline any such improvements are likely to be transient.
The ultimate solution is to put as many of these things into the private sector as possible, subject to the demands of shareholders. Just because many services are essential, eg health and education, and cannot be afforded by all without assistance, doesn’t mean the government has to be the provider.
Peter Gershon said that the 10% productivity improvement he planned was impossible without a change of motivation on the part of senior civil servants. He also said that given such a change of approach 30% or more, was achievable with no loss of service. So what has changed, other than the loss of the very modest improvement under the Cameron Government.