Public service output covers both central and local government output, and in most developed economies accounts for a significant share of total GDP. In the UK, the public sector is just over a fifth of total GDP in expenditure terms. An accurate and realistic representation of the contribution made by the public sector to overall GDP and productivity is therefore very important, simply because of its size.
A reinforcing reason for better measurement of public service output, inputs and productivity is public accountability. Public expenditure is financed largely by taxation and taxpayers have an interest in how the government uses the proceeds from their tax payments. Similarly, users have a right to information about the quantity and quality of the services they are being offered. The performance of public services is therefore of interest to tax payers, to those who use the services and to those who provide the services, as well as for the government to assess the success of its performance agenda.
This chapter sets out guidelines for measuring public service productivity: the measurement of non-market government output and of government expenditure on the inputs used to produce the output. Similar to the market sector, public service productivity is defined as the ratio of outputs to inputs.
Productivity growth is the change in this ratio over time. All public services productivity measurement is multi-factor productivity measurement. It should be noted that while significant progress has been made in measuring public service productivity, it is still a developing area and ONS will be consulting with experts and practitioners at various stages of this development.