UK Mini-Budget: Efficient public services can be a crucial component of growth

Public services can contribute to the Government’s growth ambitions, the Serco Institute has said ahead of the upcoming mini-budget.

Public services play a vital role in improving productivity, whilst at the same time directly adding to GDP and employment.

Furthermore, through greater competition and by working with private sector partners, further efficiency and quality improvements can be made to public services, independent research by Capital Economics for the Institute has found. Savings of up to 15% can be made through more competition in public service delivery, alongside potential improvements to quality.  For example:

• The UK Government currently spends around 35% of its annual budget on buying goods and services from businesses, academic institutions, charities and other non-public sector organisations
• This accounts for around £300billion in spending yearly on supporting public services
• If it were to match the share of spending on procurement from business to a similar level as those at the higher end of the OECD average, such as the Netherlands, taxpayers could benefit from savings to of £5 to £15 billion every year.

Greater saving, as well as improved quality, would benefit taxpayers and ensure strong public services can act as a foundation for a growth-orientated economic plan.

Commenting on the upcoming fiscal event, Serco Institute Deputy Director Ben O’Keeffe said:

“This mini-budget comes at a crucial time for the new Government, with the economy having jumped out of the frying pan of the pandemic, into the fire of an inflationary spike amplified by an international conflict.

“Tax cuts and measures to boost economic growth will have most impact when bolstered by strong public services. Of course, this doesn’t just mean doing what we’ve done before, but creating future-proof, innovative and efficient services for citizens.

“Our research has shown how competition and partnerships across sectors can create more efficient and better-quality services. In turn this improves productivity for the whole economy, whilst at the same time delivering greater value for money for the taxpayer.

“The Chancellor must back innovative public services if he is going to unlock this country’s full potential for economic growth.”