Rachel Reeves’ so-called “budget for strivers” has been renamed a “budget for skivers” by critics pointing to Britain’s poor productivity growth in the public sector.
In an op-ed for the Sun On Sunday ahead of the Budget on Wednesday (October 30) the Chancellor said her first economic statement would a “Budget for the strivers”.
But some have claimed the Budget favours taxpayer-funded, government run organisations such as schools, hospitals and prisons over business.
Marketing director, James Clark, claimed: “This budget overwhelmingly favours public sector workers at the expense of the private sector. A budget for skivers is a better description.”
He pointed to figures for 2021-22 from the Office for National Statistics which show productivity growth flatlining in the public sector compared with just under 40 percent in the private sector since 1997.
Matt Ridley, who introduces himself as an author and biologist on his X account, said in response: “How in Heaven’s name is it even possible to achieve zero productivity growth in the public sector in the quarter century that saw the rise of the internet, mobile data, social media, satnav, LEDs etc., etc.?”
Productivity is a measure of how efficiently products or services are produced compared with the amount of inputs, such as the cost of labour, needed to do that.
Some economists argue that productivity growth in the public sector will be weaker because the work the state deals in are labour intensive.
While companies in the private sector can exit an inefficient or unproductive line of business, state run, public sector organisations and institutions cannot.
Public service productivity was estimated by the ONS to be 0.6% lower in the first three months of 2024 compared with the same quarter a year ago.
Annual estimates suggest public service productivity fell by 0.2% last year after a partial bounce-back of 6.5% in 2021 and 2.6% in 2022, following the coronavirus pandemic taking off in the UK in 2020.
Tory MP Jeremy Hunt identified restoring productivity as a national priority during his period as Chancellor of the Exchequer. This included plans to improve the use of technology in the NHS.
Improving public sector productivity has been identified by the Institute for Fiscal Studies as a way for the Government to deliver improved public services without having to spend more at a time when Britain’s finances are straitened.
The thinktank has said previously that boosting public service productivity public is “desirable” because it means the Government can deliver “more or better” services with the same resources, or deliver the same services with fewer resources.
Ms Reeves was accused of setting back efforts to increase public sector productivity when at a stroke she chose to raise public sector workers’ pay by £9billion without demanding conditions be met in exchange.
Mr Hunt has suggested giving workers something for nothing is a recipe for disaster and accused the Labour Government of “ducking” a “difficult” issue on productivity.
Labour claimed the pay deals were required to end industrial action, arguing the cost to the economy outweighed the cost of wage rises for public sector staff.
