There’s been lots of talk recently of unlocking productivity within the public sector. How productivity level improvements lag behind the private sector and are in some cases actually falling.
Solving this conundrum is seen as critical to transforming public services. There is much talk of AI rushing to the rescue. However, we first have to solve the key problem with public sector economics.
Increasing productivity means one of two things:
- You need less people to do the work so you cut headcount
- You keep the same number of people, but you can do more with those resources.
The first option saves money, the second option gives you greater output.
The public sector obsession with people, or headcount, is holding back productivity growth.
Let’s take a simple example, self scanning machines at supermarkets. If I was selling these to Tesco, and I said for each one of my scanning machines, which cost the equivalent of one person, you will save three people, they would bite my arm off. As a result, these machines have become ubiquitous, and most of us have had trouble with “unexpected items in the baggage area” for the last few years.
Imagine if Tesco incentivised its store managers by the number of staff, they hired like the public sector. We operate in the criminal justice sector . I can take our platform to a police force and say that by installing our technology, which costs the equivalent of one officer, you can free up 10 officers to work on something else, or reduce your head count by 10 offices. The response I get is inevitably “Ah, the thing is, we have to have those 10 officers, the government says so”. The next sentence is inevitably “ and we don’t have the budget for innovation”.
Thus we are stuck between the rock of headcount and a hard place of a budget. I hear this similar gripe from many other innovative companies in the space. Often the money is there, but it’s allocated to unfilled positions and cannot be spent elsewhere. So we have money available, that could be spent on innovation, that would mean those same unfilled spaces not being needed in the future.
So what’s our alternative? We look for grant funding or beg for money from an underspend from another department. Lurching from funding crisis to funding crisis, bust to boom. However, this doesn’t lead to long-term systematic change. Or sustainable productivity growth.
We had to change the economics of running the public sector.
We have dedicated funding for innovation in this country, we lack bold decision making to move from concept to pilot to national solutions. The public sector values stability, however, this translates to carrying on doing what we’ve always done. Stop measuring our public bodies by how many resources they retain, but what output existing or indeed fewer employees can achieve.