On current government plans there will have been a rise in the public expenditure to GDP ratio by 5½ percentage points in the eight years to 2007/08, with much of the increase targeted on health, education and transport infrastructure. This chapter updates the previous Survey to document progress in improving outcomes, especially in health and education. It also reports on progress to improve national accounts measures of public spending outputs following the Atkinson review. Further improvements in outcomes, particularly once the ratio of public expenditure to GDP stops rising beyond 2007/08, will require efficiency gains across all public programmes. Planned increases in activity-based funding should further improve health care efficiency, but more could be done. Improving outcomes in transportation will require a combination of sustained higher investment and road pricing, as well as ensuring that local authorities have both incentives and resources to implement such changes.