NHS productivity falling despite rise in spending

Estimates of NHS output since the 2001 election were cut sharply yesterday, delivering a fresh blow to government attempts to win support for its spending plans.

Estimates of NHS output since the 2001 election were cut sharply yesterday, delivering a fresh blow to government attempts to win support for its spending plans.

The Office of National Statistics said health service output rose by 3.7 per cent rather than its previous estimate of 4.1 per cent for 2002 and 2003.

The changes were based on extensive revisions of public sector accounts by the Oxford academic Sir Tony Atkinson that attempt to get a better measure of the output of the public services.

Last year the review found that NHS productivity was 4 to 5 per cent lower in 2003 than in 1997 when Labour came to power, triggering an angry response by John Reid, the then health secretary, who branded the figures "absurd".

Yesterday's cut in output, which comes despite a 40 per cent rise in spending in the past five years, could lead to a further downgrade of productivity figures.

No minister was commenting yesterday but Whitehall sources said the figures did not take account of substantial increases in quality of NHS services. "It is hard to have one measure of productivity that will capture the performance of public services. They are never going to reflect fully the improvements," one said. She pointed out that the maximum wait for surgery had halved, while there were 450,000 more operations in 2003 than in 1997.

The Government also hailed the overall conclusion of yesterday's paper that overall public sector output had risen by 0.5 percentage points between 1995 and 2003, delivering a 0.1 percentage point lift to total GDP. Output of education and personal social services were raised, while those of social security administration and the fire services were cut.

The Conservatives claimed that the report showed taxpayers' money was being wasted. George Osborne, the shadow Chancellor, said: "Given the huge amounts of public money which the Government has spent on public services, we are still not seeing the improvements that Labour promised." The ONS said the changes to NHS output were based on an increase in the number of data sources from 1,700 to 1,900.