A briefing by the Thatcherite Centre for Policy Studies (CPS) said an 'extraordinary increase' in GP salaries was partly to blame for declining value for money from the health service under the last government.
GPC deputy chairman, De Richard Vautrey, called the claims 'complete nonsense'.
He said: 'The reality now is that GP pay is falling and GPs are working harder than ever before delivering incredible value for money.'
'The proportion of spending in general practice compared with the rest of the NHS has gone down,' he added.
Responding to the latest official figures on public sector productivity, CPS director Tim Knox, criticised the measure used by the Office for National Statistics (ONS) - which showed a rise in health sector productivity of 6.2% between 1997 and 2010.
He said ONS figures failed to recognise the ‘huge increases’ in real spending, including on doctors’ salaries, over the period, and a 205% increase in prescriptions.
Mr Knox said that in reality, health expenditure rose 107% over the period, leading to a 10% decline in ‘value for money’ over the lifetime of the last government.
As well as GP salary rises, he blamed market pressures forcing up salaries in jobs where there has been no productivity rise because of the labour-intensive nature of the work.
He said: ‘Public services tend to find it more difficult to find ways in which to improve productivity than, say, manufacturing, where mechanisation can have large effects. Wages in areas which experience strong productivity growth tend to increase significantly over time. But labour intensive service industries such as healthcare and education then have to compete for labour in the same labour markets – meaning that costs tend to increase significantly even as productivity remains stagnant, thereby increasing the cost of the given healthcare output.’
Mr Knox said in order to avoid an ‘ever increasing tax burden’ the health service must increase productivity through ‘enhanced competition’, constant attempts to eliminate unnecessary bureaucracy, and freedom for doctors to innovate in the use of new technology.