This article is an overview of the key recommendations from my report for Policy Exchange: ‘Small Pieces Loosely Joined: How smarter use of technology and data can deliver real reform of local government.’

Read the full report: Web version / PDF version.

The era of austerity has had a major impact on the UK’s public finances. In few areas has this been felt more acutely than in the local government sector.

According to the Local Government Association (LGA), local authorities in England face a funding shortfall of £12.4 billion by 2020. At the same time, councils provide 80% of all local public services – including those that support the most vulnerable in society – and demand for many of them is rising fast. £10 billion of savings have already been made through cutting back on discretionary services and finding internal efficiencies, but the low-hanging fruit is almost gone. The sector therefore has a choice: either it must stop providing some services altogether or fundamentally reinvent the way it works.

In my latest report, I describe how local authorities can achieve the latter by harnessing the principles of digital government: doing more and better with less, through smarter use of technology and data.

Figure ES1: LGA projections for income against expenditure for local authorities in England

The Problem of Fragmentation

The report argues that the single greatest barrier to achieving technology-enabled reform is the sector’s fragmentation. Across England and Wales there are 375 local authorities, each with their own leadership, local links and priorities. Added to that, there are approximately 18,500 elected councillors, 1,783,500 local government employees and thousands of delivery teams providing more than 700 services.

As independent organisations, over many years local authorities have separately procured or developed their own hardware, software and applications to enable them to carry out their functions and to deliver their services. As a result, though they all perform very similar tasks in their respective areas, each council’s IT architecture (the collection of software, hardware and processes it uses) is virtually unique to itself. This raises the cost of technology (through duplication, inefficiency and limiting economies of scale) and prevents local authorities from adopting – or rolling out at scale – the more efficient ways of working that could save significant money. Shared services, targeted and coordinated action, and reducing demand on council services all require shared data. The report highlights how local government’s fragmentation hinders that sharing from taking place.

Shortfalls of current approaches to digital government

Though there are many digital government initiatives taking place in local authorities – with some clear examples of excellence – I argue that too few are likely to make a significant impact. That is because they are largely fragmented and reinforce inefficient silos of people, IT and data when real value comes from joining them up and sharing. They tend to focus on technology and not on using data to enable better ways of working. They prioritise efficiency without looking to engage citizens, charities and businesses in designing and delivering public services – routes that offer potentially far greater long-term savings.

Progress is being hindered by the fact that much of the debate on local digital government is framed as a binary choice between localism and centralisation. The dominant narrative has been that the sector can have either local innovation and democracy, at the cost of duplication and inefficiency, or a Local Government Digital Service that dictates from the centre, saving money but disempowering local communities.

That is a false choice.

Instead, in Chapter 4 of the report, I outline a new vision for digital government. It entails putting in place the core building blocks on which digital reform depends: compatibility with open standards, a common data network, clear legal advice on data sharing, citizen control of personal data, interoperability of IT systems, a dynamic and flexible marketplace for online services, data analytics capabilities that cross public sector boundaries, budget flexibility and freedom to design local services to meet local needs. It also requires an acknowledgement that some of these cannot be effectively implemented at a local level.

Adopting the principle of subsidiarity

The report’s recommendations are therefore broken down into those that need to be performed by central government (or the public sector as a whole); by local government collectively; by regions; and by local authorities. In doing so, it outlines a model of digital government that can:

1. Support efforts to close the £12.4 billion funding gap;
2. Make services not just cheaper but better for citizens;
3. Prioritise getting the right (as opposed to the cheapest) technology to enable more efficient ways of working;
4. Promote local innovation (localism) while removing duplication and waste by developing common capabilities;
5. Increase collaboration within and between local authorities;
6. Enable coordination with other public sector bodies;
7. Engage the mixed economy (individuals, volunteer organisations and businesses) in public service delivery; and
8. Increase democratic engagement and transparency.

Summary of Recommendations

Central Government/Public Sector as a Whole

Recommendation 1

A newly appointed Government Chief Data Officer should work with representatives from local government, central government departments, other public sector bodies and industry, to define – and continuously update – open standards for data for the entire public sector. Standards should be set with a clear focus on achieving specific outcomes, for example delivering integrated care for the elderly. Compatibility with open standards should be highly recommended for 10 years, with a clear commitment that it will become legally mandated from 2025, allowing each organisation to phase out non-compliant systems.

Ensuring compatibility with open standards – common formats and schemas for recording data – makes it easier to move, share and analyse data from different IT systems. This helps prevent vendor lock-in, reduces IT costs, and enables more efficient ways of working (such as shared services) that required shared data. Since the delivery of complex public services – such as social care or supporting troubled families – requires coordination between many different organisations, compatibility with open data standards is needed across the entire public sector.

Recommendation 2

For public services to be joined up and efficiently coordinated, the whole public sector needs to have one secure mechanism for exchanging data, with a single set of compliance standards. The Public Services Network (PSN) and N3 (used by the NHS) should be merged to create a Single Public Services Network (SPSN). Longer term, government should consider whether that combined network could be replaced with secure, encrypted communication sent via the internet: a Public Services Virtual Network (PSvN). This would offer a Secure Network as a Service (SNaaS) for all but the most critical applications.

The Single PSN could be the mechanism for enforcing compatibility with open standards (as per Recommendation 1), creating the fundamental building block for communication and interoperability across the public sector. Moving to a virtual network in future (PSvN) would provide the flexibility and instant scalability to adapt to local government’s changing needs, including the development of smart city infrastructure and integration with Internet of Things sensors.

Recommendation 3

An Office of Data Responsibility (ODR) should be established as an extension to the work of the Information Commissioner’s Office. The ODR would be an independent body that: A) Provides common legal guidance on data sharing across the public sector based on current legislation; B) Independently reviews novel ideas for using data and helps share examples of best practice; and C) Gives independent auditing and accreditation of public sector data privacy and data ethics policies.

The creation of the Office of Data Responsibility would be a key step towards supporting local authorities in responsible data sharing that could reduce costs and improve public services. Councils are currently hindered from embarking on data sharing initiatives due to confusion over what the law does and does not permit. The ODR would provide legal clarity. Following the controversies of schemes such as Care.Data, the ODR would also independently adjudicate and advise the public sector on developing more ambitious data initiatives.

Recommendation 4

The public sector should commit to compatibility with personal data stores, based on open standards. Except in cases of extreme sensitivity, citizens should have access to the data that the public sector holds about them. Government should set dates by when citizens can access their records from each public sector organisation via their personal data store. Where public services hold verified attributes about people (e.g. qualifications, licences, proof of residency or status) it should be ready to hand digital versions back to individuals for reuse.

One of the key lessons from Care.Data was that the government cannot embark on ambitious data projects while giving no immediate, personal, direct and tangible benefit (or mechanism for giving and withdrawing consent) to citizens. It should have been done in conjunction with efforts to give people access to their own personal health records online. The same principle applies to the wider public sector. Until citizens are given control of their own data, government is likely to come unstuck time and time again when it tries more advanced data initiatives. Personal data stores could put citizens in control of which organisations share their data with each other.

Recommendation 5

To ensure interoperability of IT across the public sector, a new iteration of the Digital Marketplace (formerly the CloudStore) should be created, listing only systems that are compatible with open standards and can communicate with the Single Public Services Network (SPSN). Suppliers of proprietary systems should be required to provide open APIs so that all systems can share data.

The main marketplace for IT systems used by local authorities should ensure its products are compatible with open standards (as per Recommendation 1), and integrate with the Single Public Services Network (Recommendation 2). This would be a vital part of ridding local authorities of the bespoke, siloed legacy IT that currently keeps costs high and prevents better ways of working.

Local Government Collectively

Recommendation 6

A Local Government Digital Service, owned by the sector, should be established that creates and manages a Local Government Data Marketplace (LGDM). The LGDM would be a competitive online marketplace that brought together local authorities that needed particular online services (transactions, apps or data) with individuals, businesses and other organisations that could provide them. It would operate strictly in accordance with open standards and integrate with the SPSN to create solutions that could be scaled across the sector.

Local authorities do not need a version of the Government Digital Service to build their online transactions or apps. That would entail government becoming a monopoly supplier of IT to itself, the very antithesis of innovation. Instead, a Local GDS should build the equivalent of an app store: the Local Government Data Marketplace (LGDM). The LGDM would enable local authorities to declare the transactions, apps or data they need and let the market innovate to provide them.

By creating a marketplace, local authorities would be able to source their front-end digital services at a competitive price. If several councils needed the same service via the LGDM, companies would be able to offer much cheaper prices for all, as instead of having to deal with hundreds of different organisations (and different interfaces) they could create one solution that worked for all of them. As prices became cheaper for standard solutions, this would in turn encourage more local authorities to converge on common platforms, ways of working and capabilities, driving down costs still further.

Regionally

Recommendation 7

Each of the UK’s cities should establish an Office of Data Analytics (ODA) to emulate the New York City Mayor’s Office of Data Analytics. Each ODA should be tasked with helping increase the efficiency of public sector operations by targeting resources at areas of greatest need, and identifying areas for significant expansion of shared services. The ODA would also release a subset of non-sensitive data on a city-wide open data portal, enabling third parties to create apps and products. Once established in cities, the remit of ODAs should be expanded to cover their wider regions, including rural areas.

Each Office of Data Analytics would collect, combine and analyse datasets from the local authorities and other public sector organisations in their region, and then provide their insights back to those bodies. This would enable local authorities to see how the issues they address feature beyond their boundaries (enabling them to identify potential for more shared services), coordinate the activities of different teams using real-time data, and target their resources by predicting where future issues were most likely to occur.

Locally

Recommendation 8

The roll out of Whole Place Community Budgets should be accelerated for Local Authorities that commit to sharing data with their region’s Office of Data Analytics. Redesigning public services and delivering value from data insights are mutually dependent and need to be delivered hand-in-hand.

Whole Place Community Budgets have the potential to become the gold standard for how digital government works. They encourage public sector teams based in a specific geographical area to work together, sharing resources and budgets to prevent issues arising or escalating. They start by designing fundamentally better ways of working, which can then be enabled by smarter use of technology and data. A report by Ernst and Young found that greater data sharing and data analysis was needed in order to spot potential areas for efficiency to make the scheme work. As a result, the roll out of Whole Place Community Budgets should be accelerated for local authorities that agree to share their data with their Office of Data Analytics.

Potential Savings

Estimating the potential savings that could be delivered by adopting these recommendations is extremely challenging. However, the examples given in the report indicate that together they could make a substantial contribution towards meeting – or exceeding – the sector’s £12.4 billion funding gap. Developing more shared capabilities could save £1 billion over five years. Implementing a New York-style data team in each city offers to increase the efficiency of some public services fivefold and help predict and prevent fraudulent claims, such as the £1.3 billion lost each year to housing tenancy, benefit and Council Tax fraud. Expanding shared services could plausibly increase savings to more than £500 million each year. Putting in place data-sharing arrangements to make a success of Whole Place Community Budgets across the country could save the public sector between £9.4 billion and £20.6 billion over 5 years. Hundreds of millions more stand to be saved by removing bespoke IT and replacing it with commoditised platform components based on open standards. As a result, the report argues that the local government sector should set a target to use these measures to achieve at least £10 billion of savings by 2020.

Full Report

Read the full report: Web version / PDF version

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