Public sector organisations across Wales are investing in innovation-led approaches as they seek to improve services and address long-term productivity pressures, according to senior leaders from transport, health and regional economic development.
Speaking on the Unlocking Wales' Productivity Potential podcast episode Productivity in the Public Sector, guests from Transport for Wales, Hywel Dda University Health Board and Cardiff Capital Region described a shared focus on outcomes, system design and staff-led improvement, rather than productivity targets based on increased activity or workforce intensity.
At Transport for Wales (TfW), productivity is framed around improving public transport outcomes while reducing the cost and effort required to deliver them. The organisation, which employs more than 3,000 staff and delivers rail, bus and active travel services, does not operate with fixed productivity KPIs. Instead, it assesses success through service reliability, network connectivity and passenger use, with any revenue reinvested back into service improvement.
TfW’s innovation lab is used to identify and test solutions to operational challenges, drawing on colleague-led insight, workshops and open innovation challenges with start-ups and scale-ups, many of them based in Wales. The approach prioritises problem definition before technology adoption, with rapid testing used to identify which ideas should be scaled and which should be abandoned.
Barry Lloyd, Head of Innovation and New Product Development at TfW, said productivity gains follow once the right problems are clearly understood, rather than being treated as an objective in their own right.
A similar emphasis on outcomes over activity was described within the NHS. Hywel Dda University Health Board, which plans and provides healthcare services for around 380,000 people across West Wales and employs approximately 13,000 staff, faces what it described as structural productivity challenges linked to demographics, demand and system complexity.
The health board measures productivity differently across services. In secondary care and high-cost settings such as theatres, productivity measurement is relatively well established. In primary and community care, where patients are supported over longer periods and continuity of care is critical, it is more difficult. The organisation is increasingly using patient-reported outcome measures to better understand the value delivered to patients in relation to the cost of care.
Huw Thomas, Executive Director of Finance at Hywel Dda, said productivity in health cannot be separated from trust, culture and system design, arguing that fragmented services and duplicated processes can undermine both efficiency and public confidence. He said productivity improvements are closely linked to prevention, patient flow and reducing unnecessary delays, noting that extended stays in hospital can lead to patient deterioration as well as capacity pressures.
He said:
“Productivity doesn’t improve when the system is under the strain that it’s under now. It improves when we are leading to provide staff with support and training and recognise that they’re trusted to solve problems.”
At a regional level, Cardiff Capital Region (CCR) brings together 10 local authorities across South East Wales and is measured not only on organisational performance, but on the productivity of the region itself. Its responsibilities include economic wellbeing, spatial planning and regional transport, covering an area accounting for roughly half of Wales’s population and economic output.
CCR said it does not define productivity explicitly in its public-facing work, instead focusing on innovation-led growth, inclusive prosperity and long-term regional outcomes. Investment decisions are assessed against metrics such as jobs, gross value added and private sector leverage, alongside wider social and economic impact.
Through programmes such as Infuse, CCR has invested in building innovation capability across public services, using testbeds and innovation partnerships to address complex challenges. One example cited was investment in healthcare innovation to support endoscopy services, where public funding was used to enable private sector solutions to be tested within a public service environment.
Owen Wilce, Senior Innovation Manager at CCR, said productivity improvements often emerge from sustained investment in people and capability, rather than from individual projects.
“Productivity gains come from those individuals closer to the frontline,” he said, adding that disciplined approaches to problem definition and experimentation were increasingly being shared across sectors.
Across all three organisations, leaders pointed to common themes: the importance of colleague-led improvement, clarity around problem definition, collaboration across sectors, and the use of innovation as a means of reducing friction within systems. Rather than focusing on extracting more output from existing resources, they described productivity as a by-product of better-designed services, supported staff and long-term investment in capability.
Hear more in the Unlocking Wales' Productivity Potential podcast episode Productivity in the Public Sector. Listen to the podcast here.
