Public sector productivity fell by 3.4% between 1997 and 2007 - costing taxpayers £58.4bn a year, according to the Office for National Statistics.

Douglas McWilliams, chief executive at the centre for economics and business research (CEBR), says: “Hard pressed taxpayers will not take too kindly to finding out that not too far short of half of the income tax that they pay is simply to cover the cost of the increased inefficiency of the public sector that has occurred since 1997.
 
“The increasing inefficiency of public sector spending is one of the reasons why taxpayers in the UK feel that despite much higher taxes, they do not seem to have been rewarded with a commensurate improvement in public services. It also gives some confidence that it may well be possible to make substantial cuts in UK public spending without too great an impact on the levels of services.”