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7. What steps he is taking to improve public sector productivity.
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Public sector productivity is improving, with the NHS delivering 3.5% productivity growth in 2025-26, beating its 2% target. The Government will continue to drive public sector efficiency so that taxpayers’ money delivers the best possible public services. In addition, we are investing in AI adoption across the public sector to help realise the overall target of £14 billion of efficiencies by 2028-29, as agreed at the last spending review.
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May I welcome the Chief Secretary to the Treasury to her new role? If she has any questions, may I recommend an excellent book by a former Chancellor, which has a number of tips? [Laughter.] The public sector is 20% of our national output, so it offers a major opportunity for the Government to improve our national productivity. Was it wise to give the ASLEF train drivers on the Avanti West Coast route an above-inflation pay rise without any apparent productivity quid pro quo? With the public finances so tight, should the rule not be that above-inflation increases must have productivity gains sitting alongside them?
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We in the Treasury Front-Bench team are wondering when the third book in the trilogy will come along and what it might be called. We have a guess for the title of the next book. I thank him for his advice in his books and in his recent Financial Times article. On train drivers and their pay, I am proud to be part of a Government who have avoided strikes that impact on public spending.
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Public sector productivity is improving, with the latest Office for National Statistics figures showing output continuing to grow faster than inputs, and Departments being challenged to improve efficiency and modernise outdated processes. Can the Minister confirm that the Government expect that will have a positive impact for residents in Feltham and Heston and people across the country, ensuring that Government services are faster, better and easier to access?
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I could not agree more with my hon. Friend. Driving public sector productivity is extremely important in two ways: first, because we get better value for money for taxpayers for the tax that people are putting in, including taxpayers in our own constituencies; and secondly, as she says, we are driving efficiencies, faster service delivery and using AI in the NHS to really drive improvements in care, as well as delivering more bang for buck.
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I call the shadow Minister.
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Many commentators have commented about public sector productivity underperformance. EY tells us that the public sector has underperformed to the point where it has cut GDP growth by 3% since 2019. The Institute for Government highlights an average of nearly 1% underperformance every year for that same period. Morgan Stanley reminds us that in the last year private sector productivity was up 1.8%, but public sector underperformance dragged it back into negative territory. Despite that, public sector pay was up over 6% last year, against private sector pay up just 2.8%. Why are the Government rewarding poor performance and does the Chancellor think that is sustainable?
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I can reassure the hon. Gentleman that we are focused on driving public sector productivity to reach the efficiency targets I talked about. We are holding each Department to account on that. As I said earlier, we are seeing great progress in the NHS, which is making a huge contribution to our productivity gains as a Government.