TONY BLAIR’S pledge to improve Britain’s public services has been dealt a blow by a leaked cabinet document that shows their efficiency has collapsed since he took power.

The government has pumped extra tens of billions of pounds of taxpayers’ money into the NHS, schools and police forces but the confidential memo reveals that productivity in the public sector has slumped by 10% since 1997.

The document discloses that in health and education, which will be the battleground in the forthcoming general election, the situation is even worse with productivity down by between 15% and 20%. This means every pound the government spends is producing up to a fifth less in public services than in 1997.

In the past the government has publicly admitted only a 3% fall in productivity since Blair won office. Experts say the new figures suggest £20 billion a year of taxpayers’ money — equivalent to almost 6p on basic rate income tax — has been wasted on soaring wage claims and burgeoning bureaucracy, at the expense of frontline services.

The statistics, prepared for a cabinet committee meeting attended by Blair’s most senior ministers, directly contradict the prime minister’s claims to be delivering on public services. As a result, the minutes of the meeting reveal that Blair is now seeking to alter the way official figures are calculated to show Labour’s record in a better light.

He has ordered the Office for National Statistics (ONS) to change the way the figures are compiled so Labour can present a more “credible story” in the run-up to the next election, the minutes record.

The change is significant because the ONS said last December the British method of measuring public sector productivity was best practice globally.

The strategy is recorded in the confidential minutes of a March 4 meeting on public service reform. It was chaired by Blair and attended by ministers and election strategists, including John Prescott, the deputy prime minister, Gordon Brown, the chancellor, and David Blunkett, the home secretary.

It was seized on last night by the Tories as damning evidence to contradict Blair’s claim last autumn that productivity in the public sector was improving and to undermine a boast by Brown that Labour provides a “world class” health service.

The minutes reveal Blair is becoming increasingly desperate to get his message across that real improvements are taking place in hospitals and schools. Sixty per cent of the public believe they have not seen an improvement in public services, said the document.

The memo, which was marked “Restricted”, said: “Official data showed that productivity had fallen steadily since 1997, with a 10% decrease overall and 15-20% in health and education.”

The ministerial committee decided that it needed to change the way “official data” were compiled so it could pre-empt challenges. “A change to the definition of productivity in the public sector was vital, particularly in measuring health outcomes,” the minutes stated.

The document said ministers agreed to order Len Cook, director of the ONS, to change the way his office compiles productivity figures. This should be done with “more urgency”.

In a move that will reignite the row over Labour spin, the memo also spoke of developing “credible stories” to combat criticism of bureaucracy, of the need for “lodging key delivery facts in the public’s mind” and the importance of setting up a “proper system of rebuttal”.

The ONS is already working with Sir Tony Atkinson, an academic from Nuffield College, Oxford, who is reviewing existing ways of compiling figures. The minutes noted: “Challenges from the public and the opposition on the rate of public sector improvement were becoming more frequent, so it was important that interim figures should be produced in advance of the final report to provide simple, verifiable messages about progress on outputs. The ONS confirmed they would be able to do this.”

The need to change the figures reflected ministerial concerns that the public had lost trust in government statements on health and education. The memo said: “The prime minister said it was of fundamental importance that the major investment . . . was seen to deliver . . .

“Work needed to be done to lodge key delivery facts in the public mind . . . it was important that departments developed a proper system of rebuttal to address challenges on public sector performance.”

Ministers’ concerns have been reinforced by internal polling that suggests most people do not believe schools and hospitals have improved under Labour. “Figures suggested that 60% of the public believed they had not seen an improvement in public services. It was important that each department had at least two or three key delivery facts that it could communicate to challenge these perceptions,” the document said.

Ministers were also worried about how to defend the performance of the huge numbers employed in the civil service and local government. “A credible story was needed in both these areas.”

David Willetts, the Tories’ head of policy, said: “These figures represent a catastrophic failure of public policy. A massive problem is staring the government in the face.

“Instead of tackling the problem, the government is trying to change the way that the evidence is measured. It looks like the ONS might be being brought into a government spin operation.”

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