Minister's £1.2bn efficiency saving demand creates new challenge for public IT leaders

First services had to be put online, now they must deliver savings

First services had to be put online, now they must deliver savings

When e-government minister Phil Hope stood up earlier this month and expressed his confidence that councils would meet the 2005 e-government deadline, council IT managers must have swallowed hard. For he also issued them with a new, even trickier objective: using e-services to save £1.2bn.

According to Hope, the councils expect to meet the prime minister's target. The Implementing Electronic Government statements, submitted by every council in England, showed they were on track to meet the national target of delivering 100% of services online by the end of this year.

But achieving that target, set by the prime minister in 2000, could prove easier than meeting Hope's new target of using electronic services to deliver savings of £1.2bn by the 2007/2008 financial year.

The savings break down into £121m efficiency gains in 2004/ 2005 as a direct result of investment in local e-government, rising to £400m in 2007/2008, when savings from e-procurement are expected to take full effect.

Whether councils can achieve those sums will depend, in part, on whether the public take to electronic services in the way the government anticipates.

The targets will also require substantial efficiency savings in local government back-office processing, according to Glyn Evans, chairman of the information age government group at local authority IT managers organisation Socitm.

This would be a fundamentally different kind of challenge to that of putting council services online, Evans said. "The technical skills are the same but the organisational skills are very different. Putting services online is not about change, it is about doing something additional. Efficiency is helping business units do things differently, but not all business managers want to do things differently," he said.

"We are only just beginning to grapple with the agenda to deliver efficiency savings. Success will depend on how IT directors are seen in the organisation. If business managers see them as being able to deliver efficiency, the organisation will look to them for help."

The government's determination to get a return from its heavy IT investment since 1997 was encapsulated in last year's public spending review by Peter Gershon, which called for a 2.5% increase in government efficiency.

Eric Woods, government practice director at research firm Ovum, warned of anger in local authorities that this would translate into a simple focus on cost-cutting measures rather than extending services further.

Achieving the efficiency targets of central government would test IT managers' strengths, said Woods.

"Aligning IT and the business is far from easy. Organisational structures [in local authorities] create many complications. Reducing the gap between IT and the business is easy to say but hard to do. It will require strong leadership from IT managers."

But the legacy of Tony Blair's e-government targets could strengthen the hand of IT leaders when it comes to fighting for business process re-organisation within local authorities, according to Woods.

Blair's targets were "thought up during the dotcom hysteria and a rush to the web", said Woods. Although some of the initial targets proved spurious, the process focused local authorities' understanding on the capabilities of online services, he added.

Pressure from central government to get council services online increased the recognition and status of local government IT departments with the other business units.

"It has helped raise the profile of the IT departments and what it can deliver," said Woods. "It raised the profile of public sector IT and helped bring in new skills. Council members now recognise the importance of IT."

A new generation of council business managers understand the role IT can play in transforming the way local services are delivered, he said.

That industry experts think IT departments can lead the efficiency push shows how far they have come in the past five years. The prime minister announced the e-government deadlines in 2000, just as the dotcom hype was reaching its peak. Back then, local authority IT was not renowned for its technological innovation, but many councils have since risen to the challenge.

"The response of many councils has been impressive," said Woods. "Some IT departments have tackled e-government with imagination despite limited resources."

Those that have succeeded so far will have a good basis for coping with the challenge of delivering efficiency savings as well.

E-government moves up a gear >>


Hitting the target: countdown to e-government in England       

2000  Tony Blair announces that all government services will be available online by the end of 2005.   

November 2001  Local authorities in England need to spend £2.13bn to meet the government's 2005 target for electronic service delivery, research from e-government specialist Kable finds. The study of English local authority Implementing Electronic Government statements also warns that councils could face a funding shortfall of £1.78bn as they strive to meet the 2005 e-services target.   

May 2002  Public sector IT managers group Socitm warns Whitehall must rationalise the planning and funding regime for local authority e-government. It also points out the contradiction between councils forced into competitive bidding for short-term pilot projects and the need for stable, long-term funding to roll out successful approaches.  

January 2003  Take-up of local government online services will remain low for at least the next 10 years, a study by research firm ICM finds. The research reveals that only 7% of the UK population have contacted their local council using online services over the past 12 months, compared with 46% using the telephone.   

December 2003  Blair struggles to convince councillors in local authorities of the value of e-government. A Socitm report reveals 40% of elected members feel e-government either distorts local priorities, cannot be cost-justified, or is not a priority.   

February 2004  Newcastle Council declares it can provide electronic access to all its services 21 months ahead of schedule. The authority joins Birmingham Council and Tameside Council in meeting the December 2005 national deadline with time to spare.  

May 2004  The Office of the Deputy Prime Minister reduces the number of mandatory e-government targets local authorities have to meet by the 2005 target. The policy document sets 14 minimum requirements for e-government, including basic CRM, greater use of websites by the general public to support self-service outside office hours, and support for teleworking by local authority staff.    

July 2004   Every council in England gets £350,000 from central government to meet its e-government targets by the end of 2005.   

February 2005  English local authorities will have to deliver £1.2bn in efficiency savings to pay for e-government investment, says local government minister Phil Hope. Hope also announces that English local authorities expect to meet the target of delivering 100% of services online by the end of the year.

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