Embracing new technology such as artificial intelligence and system reform in the public sector are among the actions Whitehall needs to take to boost productivity, the head of the Government spending watchdog has said.
Gareth Davies, comptroller and auditor general of the National Audit Office (NAO) used his annual speech in Parliament on Tuesday to also warn that “money is wasted” and public services “compromised” when there is a lack of preparedness for “increasingly likely events” such as pandemics or extreme weather.
Mr Davies laid out four fundamental points that he believes can help boost productivity in the UK and increase resilience to long-term threats such as cyber attacks.
NAO head Gareth Davies is making his annual #NAOspeech in @UKParliament.
Key themes:
📈Government must boost productivity & resilience to address rising demand for stretched public services💡Innovation can play a key role in achieving this
Follow the speech below 👇🧵(1/6) pic.twitter.com/5TPTQpMzuM
— National Audit Office (@NAOorguk) February 4, 2025
Among other things, he argued that departments should have effective accountability in place that means risks can be taken in a managed way, and harness new technologies such as AI.
“Since the 2008 financial crisis, we’ve seen lower productivity growth across the whole economy than in the decades before and that’s well-known. And Covid-19 of course didn’t improve the picture, particularly in the public sector.”
The NAO is an independent body that reports on the finances of government departments and other public bodies, and Mr Davies has the statutory authority to examine the value for money of spending of public funds.
He described AI as “rightly at the top of the agenda” when it comes to improving productivity, with “clear potential for reducing the time taken for routine tasks”.
“Our 2024 report on government’s use of AI showed that almost three-quarters of departments and national bodies were either already deploying AI tools or piloting them. The question is not whether AI will make a difference to productivity in the public sector but how to maximise the benefits whilst managing the risks,” Mr Davies added.
He also advocated “system reform” is on his “list” for productivity which will mean “tackling the causes of avoidable demand and allocating resources in a redesigned system where they can have maximum impact on outcomes”.
Mr Davies also said that departments should be investing in people and skills, and ensuring assets are managed so that services can be delivered.
Alongside productivity, Mr Davies touched on the UK’s resilience to shocks. The head of the watchdog argued the country should be “better prepared” at both a national and local level to be able to adapt to new information and events at speed.
“Resilience is a word that’s cropping up repeatedly in our work, particularly since the pandemic, he said.
“We have much evidence that money is wasted and services to citizens are compromised when we’re unprepared for what are now increasingly likely events, whether that’s pandemics, extreme weather or cyber attacks.
“All this evidence points to the same thing: we need to be better prepared nationally and locally; to have sound risk management in place; and to be ready to adapt to new information and events quickly and effectively.”
Recent reports released by the NAO have examined Britain’s resilience to cyber threats and the cost of the backlog in maintaining crumbling schools, hospitals and prisons.
Innovation is the “key to unlocking the gains we need in both productivity and resilience” Mr Davies said, as he called on departments and public bodies to have an “articulated risk appetite” and “harvest new technology” as well as a “culture of fast learning and evaluation; stopping failed experiments quickly”.
“It’s no coincidence that innovation thrives in times of crisis, such as when lives are at stake, organisations rapidly adjusted their risk appetites during the pandemic to meet urgent needs,” he told the audience in Parliament.
Ahead of Mr Davies’ speech a Government spokesperson said: “AI has immense potential to transform public services, and too much of our public sector is reliant on archaic digital infrastructure.
“Our six-point plan to transform public services with technology will drive responsible AI adoption, give public services the tools they need to coordinate themselves, and repair the foundations of their infrastructure to ensure they are resilient and secure – this includes Gov.uk Wallet and AI tools that streamline administrative processes, enhance decision-making and boost productivity across departments.”
