Covid cash triggers plunge in public sector productivity

Productivity in the public sector plunged as extra funds were given to healthcare and other vital services to battle Covid.

In the three months to September, the public sector’s resources were 18.6pc higher than in 2019, according to the Office for National Statistics.

However, its output was only 8.9pc higher, indicating that productivity was down by more than 8pc and that the additional money was not accompanied by a successful drive to make the most efficient use of the cash.

The Government spent more than £1.1 trillion in 2020-21, up from £884bn in the year before the pandemic. 

It expects to spend £1.05 trillion this financial year, rising again next year and for the foreseeable future as the state never returns to its pre-Covid size.

As the severity of the pandemic faded, the public sector made up a little of the lost ground in productivity. 

Healthcare activity fell a touch in the third quarter of 2021, while spending on services fell by 1.5pc – the first drop since the start of the pandemic – indicating the health service managed to do almost the same amount of work with less money.

Britain has struggled to boost productivity for years, and the problem was seen as a key factor holding back the economy before Covid.

Lockdowns forced the nation to work in new ways, with dramatic shifts in productivity as a result.

For each hour worked, output was 1.1pc higher in the third quarter of 2021 than it was in 2019.

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