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Real digital modernisation – a once-in-a-generation opportunity for the new UK government

A new UK government with a decisive majority offers a unique opportunity to finally introduce public services for the digital age – if the Conservatives are willing to take it

Decisive political majorities, such as that just achieved by the Conservative Party, offer a once-in-a-generation opportunity to pause the tinkering around the edges that passes for so much of our public policy, and do something really decisive and good.

There are recent signs that Dominic Cummings, Number 10’s chief special advisor, senses the unique responsibility for bold innovation that accompanies a clear majority, but that much of this reforming zeal centres on Whitehall decision-making.

Frustratingly, the biggest, boldest and most urgent innovation of all, and the one we all care about the most – achieving well-organised, personalised and efficient public services on behalf of all citizens – has been staring government in the face for years. My question is: will this government squander its majority on more tinkering, or will it tackle the challenge head-on?

Like many difficult policy decisions, deciding to fix our broken public services so they work properly in the digital era is actually very simple – it’s the execution that’s hard, which is why a clear majority is needed to “persuade” us all collectively to swallow a bitter pill that individually we’d rather leave on the bathroom shelf until tomorrow (or for the next generation), when our public services will be in a much worse state than they are today. Describing the problem, and its solution, are both easy – so I will do this quickly, so we can focus on what needs to be done.

Summary of the problem

Our public services are all “legacy” organisations – that is, they evolved before the internet, as a series of largely standalone organisational silos. This is normal and understandable for the time, because there was no “shared plumbing” – or digital infrastructure – to support functions and services common to all. Such shared digital plumbing allows organisations to focus on serving the public directly (by providing medical services, caring, education, justice, planning, regulation, etc) while consuming the rest of the services they need, which means pretty much anything else that isn’t serving the public directly.

Actually, public services are no different from any other legacy organisation – private, public or third sector alike – in having steadily accreted all sorts of functions that don’t relate to, and divert attention and funds from, their core purpose. Legacy organisations are illustrated in Figure 1.

Figure 1: The central problem with our public services

Figure 1 could be a picture of our 650+ NHS trusts, our 400+ local government organisations, or our 43 police forces, as well as any number of community functions such as housing, social care or third sector. While this way of organising public services was defensible to citizens in the pre-internet era, and even during the 2000s, when the cloud was at an earlier stage of maturity, in 2020, this has become a huge and unsustainable structural problem. No amount of increased tax/spend on this outdated structure will ever be more than a sticking plaster on this hopelessly outdated system, because:

  • A huge portion of the public service budget is spent on unnecessary activity, as each silo reinvents the wheel again and again. This waste is compounded by the associated inefficiency in areas such as procurement, systems maintenance, local reorganisations, inability to share best practice, and so on;
  • Silos are unable to share data, so citizens receive impersonal, uninformed services organised around bureaucracy, not people, and government is unable to leverage the vast social/commercial wealth of UK data to crowdsource innovation for the benefit of the public;
  • This rigid structure ultimately prevents government from behaving organically, as a series of collectively responsive, mutually supportive end-to-end services – for example, joining up health with social care, or combatting fraud.

Summary of the opportunity

In addition to shaking up Whitehall, the government’s new majority opens up a unique opportunity for big thinking in public services on a scale which has been largely impossible for a generation. Put simply, this government has the first ever opportunity to use standard, cloud-based digital technology to refocus public services on serving the public – removing, standardising and centralising the rest, as illustrated in Figure 2.

Figure 2: The ‘Heart FM’ model: A cloud-enabled public services

This sort of thinking is, of course, radical for public services – but it is normal for all modern, internet-enabled organisations. Take the radio station Heart FM as a simple example: it has local DJs, local advertising, discusses local issues, local weather, etc – but all the rest is consumed centrally, because:

  • It is of little/no concern to Heart FM’s customers;
  • It can be delivered far more cheaply;
  • Data (music, weather, advertising, etc) can be shared quickly and intelligently to deliver a better local service to customers and Heart’s sponsors (it’s a brokerage);
  • Local branches are free to focus 100% on their local customers’ needs.

The structure in Figure 2 is increasingly replicated by modern organisations in almost every sector, from automotive to financial services.

Why is this difficult to achieve?

It’s immediately striking that any attempt to remove, standardise and centralise the activities in the red box in Figure 2 will be extremely difficult, for two reasons. The first is that this requires strong collective action, coordinated from the centre, since this is all about actually working together rather than merely talking about it.

The second is that working together like this will inevitably be met with fierce resistance from the myriad stakeholders – public and private sector – who benefit from preserving the activities in the red box in Figure 2. This double lock – of prisoners’ dilemma, and stakeholder interest – is the reason that little real (meaning “collective”) digital transformation has been achieved by government in the UK, or anywhere else.

“The phrase ‘digital transformation’ has now largely lost its meaning, as both citizens and public servants sense that nothing has really changed very much, while services deteriorate further under increased fiscal and demographic pressure”
Mark Thompson, Exeter Business School

Ironically, those who preside over simple technology modernisation projects mislabelled as “digital transformation” are usually the stakeholders in the red box, rather than citizens or those that directly serve the public. The phrase has now largely lost its meaning, as both citizens and public servants sense that nothing has really changed very much, while services deteriorate further under increased fiscal and demographic pressure.

So how can the government tackle this double lock to achieve the modern, optimised structure in Figure 2?

Step 1: Crunch the numbers – and communicate them

First, as with any other real (as opposed to pretend) digital transformation initiative, it is imperative to first build support for the plan by explaining it clearly, and by showing the benefits – this is step one.

The Cabinet Office should crunch the numbers to quantify the real social cost of the waste and compounded inefficiency of the activities in the red box in Figure 2 and communicate this clearly to citizens, who are effectively being “exploited” by it. It should then demonstrate the additional investment in public servants – doctors, teachers, social workers, police – released by shifting billions of pounds of public resources away from the red box and into the “blue” activities in Figure 2, as well as the other, many, tangible improvements in services that citizens will see from better use of data, and multi-agency collaboration.

In response to the inevitable, and misinformed, cries that real modernisation of this kind is “attacking public services”, government needs to demonstrate that it is firmly onside with the citizens who receive services, and with the public servants who provide them; that far from undermining public services, a bold, digitally enabled reconfiguration is in fact all about modernising, improving and securing them for future generations.

Step 2 – Common services, and a ‘localism in the digital economy’ bill

Second, having begun a national conversation about real public service modernisation, government needs to decide what functions belong in the red box in Figure 2, since the digital economy is accelerating all the time, meaning that new opportunities to stop reinventing the wheel will arise frequently.

As well as outlining and communicating the benefits of real transformation accessibly to citizens, this sophisticated “market radar” function is, of course, what (a far smaller, cheaper) Government Digital Service (GDS) should have been doing since 2012; unfortunately, it has been doing neither. Thus, step two is establishing a small, highly informed intelligence unit tasked with an annual review, redefinition and justification of which services should sit within the red box – for now, let’s call it a “common services function” – and which services, in contrast, should sit locally.

Establishing such a function – and the statutory principles and processes surrounding its constant review and redefinition – is likely to require legislation, since over time this digitally informed organising logic, and associated institutional process of review and redefinition, would come to underpin most UK public services. A “localism in the digital economy” bill would make it illegal, as well as socially unacceptable, to waste public funds on reinventing things that should instead be consumed once.

To summarise, public services in the digital era should comprise two elements: a digitally enabled “common services function” (red box) curated from the centre, consumed largely from the cloud, and configured locally; and a better-funded “localism envelope” of directly value-adding activity – doctoring, teaching, policing, caring, and so on – that citizens actually care about. The dividing line between the two should be constantly reviewed, communicated and underpinned with legislation. 

The goal: government at the centre of a vibrant, data-driven economy

Government should pilot this approach with a small, tight group of adjacent organisations – say, NHS trusts, or councils – learn quickly, and move on. The objective is to build a “minimum viable capability” (MVC) of common services – first within sectors, for example within health and caring, education, local government, criminal justice, transaction processing (DWP, HMRC), regulation, and so on, and then consolidating further across sectors. 

This contrasts with the current approach of siloed organisations building minimum viable products (MVPs), which is really just the next generation of government legacy. It doesn’t really matter whether government or industry builds MVC, providing government owns the intellectual property – the architecture, data, application programming interfaces (APIs), and anything else it needs to secure central control of the red box in Figure 2, and the vastly enhanced informational and commercial power that this will bring.

Over time, with common enabling platforms/functions, public services move from the institution-centred “vending machine” government shown in Figure 1, to a citizen-centred, data-driven service organisation at the centre of an ecosystem of public, private, and third sector activities, as illustrated in Figure 3.

Figure 3: The mature stage

Figure 3 shows a modernised public services, where:

  • Non-value-add activities are standardised, optimised and centralised, delivering multibillion-pound savings. These efficiencies can be continually improved using machine learning;
  • Common services keep pace sustainably with, and benefit from, the accelerating digital economy, and can respond quickly to new innovation/legislation by updating once across the collective;
  • There is clarity of purpose around public services, with more funding for public servants, and less tolerance of non-public service activity anywhere in the public domain;
  • Data is pooled, enabling AI-driven predictive intervention, reducing failure demand and enabling organic “load balancing” across the system – such as between health and social care – as well as huge efficiencies across the collective and its supply chain;
  • Government benefits from platform economics. This includes huge economies of scale, crowdsourcing from an ecosystem of innovation/investment attracted by consolidated demand and data, and significant infrastructural benefits for UK economy.

Is digital modernisation of public services ‘right wing’ or ‘left wing’?

Modernising public services for the 21st century requires us to see beyond the comforting polarities of 20th century politics, because it contains discomforting elements for both sides. For the Left, the internet enables public servants to connect with the public they serve without many, if not most, of the intermediaries in the red box in Figure 2. As a result, public servants and the public constitute one “class”, and their intermediaries (public or private sector) constitute another.

This is because technology is opening up a gulf between the cost of these functions as we could consume them if we simply organised ourselves better, and the current cost of what people are paid to perform them – the difference constitutes “rent” paid to a separate class of public and private sector managers and administrators, skimmed off in salary and contracts, and the result is cuts to the front line. We will need to start to distinguish sharply between “public sector” and “public servants” – a move that will feel deeply countercultural for many.

For the Right, there is a growing public realisation that governments’ taxation and regulatory functions have been caught napping by the confluence of capital and data in emerging “big tech” platform businesses. Figure 3 emphatically depicts government, not big tech, at the centre of a vibrant mixed economy of public services, where the contributions of the various stakeholders are sharply delineated and clearly understood, the informational and commercial benefits accrue to the centre – in other words, to the general public – and other platform players are taxed and regulated properly. Such thinking calls for a fundamental shake-up of government’s approach to the market – both as a customer and as a regulator – that may feel new and uncomfortable for others.

“The government currently has no comprehensive blueprint whatsoever for real digital modernisation, and remains locked into an unsustainable structure, with myriad, often duplicatory, technology modernisation projects masquerading as ‘transformation’”
Mark Thompson, Exeter Business School

Conclusion

The government currently has no comprehensive blueprint whatsoever for real digital modernisation of the kind I have discussed, and remains locked into the unsustainable structure in Figure 1, with myriad, often duplicatory, technology modernisation projects masquerading as “transformation”.

Real transformation involves overcoming the double lock of prisoner’s dilemma and stakeholder interest, which requires strong reforming co-ordination from the centre, backed by unequivocal political support and effective public communication.

The new UK government has a unique opportunity to use its majority to do something firm about this unacceptable – and unsustainable – situation, and must offer the strong political leadership that is needed to disrupt a centuries-old legacy organisation that cannot possibly survive the internet era.

In response, progressive development of a common services function will realign public services with the way in which value is now created, measured and understood in the emerging digital economy, while enabling government to benefit from the massive informational and commercial benefits of digital platform models like that in Figure 3. It will still be years before the early successes of this model are widely understood and the benefits realised, but we have wasted enough time already. Please, Mr Cummings, look carefully at our public services.

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