Public Services: Productivity (Hansard, 12 May 2004)

§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)
My Lords, no "official data relating to public services" currently measure the productivity of health and education. It has become increasingly clear that the current data exclude some important public sector outputs, do not adequately recognise improvements in quality, do not capture improved outcomes and fail to recognise that present capital expenditure is designed to build capacity for higher output in the future.
In December 2003, acknowledging the importance and complexity of the issue, the National Statistician asked Sir Tony Atkinson to undertake an independent review of measures of government output and productivity.

§ Lord Roberts of Conwy
My Lords, I am grateful to the noble Lord for that Answer. I am sure he is aware that the figures in the Question are from a leaked restricted Cabinet committee document—a committee chaired by the Prime Minister—so I did not expect him to confirm them. However, can I at least try to persuade the noble Lord that productivity is not what it should be in the public services? What are the Government trying to do about that, other than trying to persuade the Office for National Statistics to produce more favourable figures?

§ Lord McIntosh of Haringey
My Lords, I was fully aware of where the figures came from—I read the Sunday Times too—but that is not the issue. The noble Lord, Lord Roberts, is saying that we are trying to produce more favourable figures. The problem is that the existing figures are not only much worse than inaccurate; they are actually perverse. They go in the opposite direction from common sense. If, like many educationists, one thinks it is desirable to reduce class sizes so that the ratios between pupils and teachers improve in the sense that kids get better education, 268 that shows up as a decrease in productivity in the education sector. It does not make sense and it must be put right.

§ Lord Peston
My Lords, does my noble friend recognise that the position is worse than he describes? We could easily raise productivity in health simply by not treating all the people whose expectations of life are poor and who are very ill and need difficult treatment. In education, if we did not try to educate people who have learning difficulties, productivity would rise dramatically. However, such action would go against our concepts of public service and so we should not fall for this productivity nonsense in the first place.

§ Lord McIntosh of Haringey
My Lords, by giving only one example from education, I was sparing the House a long lecture in agreeing with my noble friend Lord Peston. With regard to health statistics, outcomes show that, for example, chronic heart disease mortality is down by more than 20 per cent and cancer mortality by more than 8 per cent in under-75s since 1997. With regard to education, 52.9 per cent of 16 year-olds achieve five or more GCSEs at grades A-star to C compared with 46.3 per cent in 1997–98. These are real advances that show up as declines in productivity. It is total nonsense.

§ Lord Newby
My Lords, does the Minister accept that the Government are trying to do something about productivity in the public sector via the Gershon process and that many of the Chancellor's hopes of improving productivity rest with that? Will he confirm recent reports that the potential savings, despite being identified by the Gershon report, are being radically watered down by Ministers and civil servants?

§ Lord McIntosh of Haringey
My Lords, no, I will not confirm that. The message I am trying to get over is that there are real improvements in outcomes in health, education and the public services generally. These are starting to be recognised by the people of this country as real improvements in outcomes and we will not be diverted by perverse statistical errors.

§ Lord Taylor of Blackburn
My Lords, does my noble friend feel that, in view of what he has read and the leak in the Sunday Times, it is time he stopped taking the Sunday Times?

§ Lord McIntosh of Haringey
My Lords, I do not buy it—I come and read it in your Lordships' Library.

§ The Earl of Listowel
My Lords, is the Minister aware that mental health practitioners are penalised if they work with the carers rather than directly with the patients? If a mental health profession child psychotherapist works with the staff in a pupil referral unit, he can say, "According to the NHS, my time is 269 being as well spent as if I were playing a round of golf", whereas if he worked directly with a client, which is often important, that would be monitored and noted? Is that not a barrier to better partnership working and the more effective use of the scarce resource in mental health services?

§ Lord McIntosh of Haringey
My Lords, I am very grateful for that independent Cross-Bench confirmation of the message that I am trying to convey to the House. I am trying to say that this is not only a statistical aberration but one which could, if taken too seriously, cause damage to the public services.

§ Lord Clement-Jones
My Lords, we on the Liberal Democrat Benches have always supported far greater expenditure on the health service. However, is there not a danger of great public cynicism when the measurement of the use of that money is not properly evaluated? It seems that the Government have come very late in the day to discovering that their productivity measurement is flawed. Is it not high time that we had a much better measurement and that the set of statistics and the new set of measurements to which the Minister referred do not only coincide with the next general election?

§ Lord McIntosh of Haringey
My Lords, I am not sure that that is true. I seem to remember answering questions along these lines over a considerable period. It is true that we have only more recently appointed Professor Atkinson to look at the statistics. But doubts on this subject have been expressed in this House—and by me—for quite some time. If that is a rebuke for being too pusillanimous in resisting irrational opposition, I suppose that I have to share in pleading guilty to it.

§ Lord Skelmersdale
My Lords, we on this side accept that there is a real problem in measuring productivity in the public sector. However, does the Minister agree that international comparisons are far more helpful? What is his answer to the economists at the European Central Bank whose survey last year stated that Britain is more inefficient than the US, Japan or Australia to the extent that, if it matched the American standard, it could spend 16 per cent less on the public sector and still achieve the same results?

§ Lord McIntosh of Haringey
My Lords, I am grateful to the noble Lord, Lord Skelmersdale, for giving me notice of that question. I am afraid that the statistics to which he referred are subject—perhaps to a lesser, but still substantial, degree—to the same criticism as our own unofficial productivity statistics. Of course, real international comparisons, when properly carried out, can be of enormous value, but I am afraid that they are not carried out properly here or in other countries.