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Public sector 'inefficiency' costing £58.4bn

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Decreasing public sector productivity is costing taxpayers £58.4bn a year, according to a thinktank.

The Centre for Economics and Business Research made the claim after analysing Office for National Statistics figures.

The CEBR said public sector productivity had declined by 3.4% between 1997 and 2007 whereas, over the same period, productivity in the market sector rose by 27.9%.

CEBR chief executive Douglas McWilliams said, if the productivity calculation was applied to central government final consumption expenditure and further education applying to under 19s, it equated to £58bn per year.

He said: “This cost simply relates to the falling behind in public sector productivity since 1997…

“Hard pressed taxpayers will not take kindly to finding out that not too far short of half the income tax that they pay is simply to cover the cost of the increased inefficiency of the public sector that has occurred since 1997.”

Mr McWilliams said the figures suggested it would be possible to make substantial cuts in public spending without too great an impact on the levels of services.

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Readers' comments (1)

  • It's not that I don't believe that the private sector is more efficient than the public sector, because I do.

    Any organisations that had to put up with government targets, standards, interfering, audit commission inspection (amongst other inspectors) has to be more costly and more inefficient.

    It is just I don't believe these figures. The gap could possibly be bigger or smaller. It is just how did they come up with the figure for it to be valid?

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