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Chancellor Jeremy Hunt has ordered a cross-government review of public-sector productivity, a key ambition of which will be to identify ways to use digital tools and data to “deliver more for less”.

"Unnecessary" admin tasks, diversity initiatives and opportunities to use innovative technologies such as artificial intelligence will all come under scrutiny in the process, which will be led by chief Treasury secretary John Glen and will be published in autumn, the chancellor said.

The review will assess ways to increase public sector productivity growth in the short and long term, and deliver an additional 0.5% productivity output every year “to stop the state growing ever bigger as a proportion of our output”, Hunt told a Centre for Policy Studies event yesterday.

“We can be much, much more efficient,” he said. “We start, I am afraid to say, from a low base. Public sector output is 5.7% lower than pre-pandemic compared to private sector output, which is 1.3% higher.”

Hunt said this shows that the UK’s “innovators, job creators, entrepreneurs and risk takers have bounced back but the public sector is still feeling the effects of a once-in-a-lifetime pandemic”.

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“But now, with that pandemic behind us, we need a renewed focus on public sector reform,” he added.

Hunt said he wants the exercise to be “the most ambitious public sector productivity review ever undertaken by a government, with the Treasury acting as an enabler of reform”.

“So we will spend time getting this right. But if we do, the rewards are clear,” he added. “More innovation. Better public services. Less pressure on the public purse. A growth mindset that delivers more for less not just more for more.”

Hunt said his approach followed that of former prime minister Margaret Thatcher, whose “union reforms, privatisations and support for competition delivered lasting growth and productivity”.

The chancellor highlighted a recent review by the National Police Chiefs’ Council that found 443,000 officer hours are spent filling in forms and dealing with “unnecessary” administrative tasks as an example of where savings could be found.

Innovation – such as harnessing the potential of AI and building on cutting edge initiatives like the NHS AI lab and the Foundational Model Taskforce – will drive savings, he said.

Hunt also suggested diversity and inclusion-focused jobs could be cut, invoking similar statements by statements by Liz Truss during last year’s Conservative Party leadership election.

Referring to a review by think tank Conservative Way Forward which found 10,000 public sector workers are focused predominantly on equality, diversity and inclusion initiatives, Hunt said: “Breaking down barriers for disadvantaged groups should be everyone’s responsibility, not something you tick a box to achieve at further cost to taxpayers.”

In August, Truss said D&I roles in the civil service – of which she claimed there are at least 326 in government departments – “distract from delivering on the British people’s priorities”.

Hunt said he had also commissioned national statistician Sir Ian Diamond to review how public sector productivity can be measured more effectively.

“The UK is one of the few countries to include public sector output measures as well as input data in its productivity statistics, which is a good start. But we can still do better,” he said. “Crime, for example, is down approximately 50% since 2010 – great achievement. That excluded fraud and computer misuse, which wasn’t measured then. But it barely makes a dent on their policing productivity figures because our productivity figures don’t capture crime outcomes. Likewise on defence, we measure what we spend, but not how safe that makes us. And where we do measure outputs and the quality of delivery, mainly in the NHS, we count the number of hospital treatments but not the value of preventative care, even though that saves lives and reduces cost.”