Re-usable efficiency: the innovation dividend

The public sector is under unprecedented pressure to deliver yet more savings. But more efficient use of data and technology means this can be achieved without having to compromise on services

The forthcoming government spending review will focus on the need for Whitehall departments to make further savings of £20 billion, on top of the £17 billion announced in July’s Budget and years of reduced expenditure. The challenge, says chancellor George Osborne, is simple: we need to do more with less. It’s a mantra that is being adopted across the public sector, including local government.

The good news is there is much room for improvement when it comes to efficiency and many departments have already invested in proven technology, which could be used to drive savings in other areas.

It doesn’t need to be about cutting services, but how you can reduce the work needed to achieve the same or better outcomes through re-use of efficient processes, technology and smart data

“It doesn’t need to be about squeezing or cutting existing services, but rather how you can reduce the amount of work you need to do to achieve the same or better outcomes through the re-use of efficient processes, technology and smart data to guide this,” says Charlie Bruin, chief executive of Liberata UK.

“It’s not a pain-free way of doing things and there’s still a political will required. But it’s about using data to target services better and re-applying efficient practices, which are already proven to work, to reduce the overall demand for service, rather than cutting the services themselves.”

This more effective use of existing processes and technology can lead to what Mr Bruin describes as the “innovation dividend”: payback from government investments in innovations that have already been made, but which could be applied more widely. This could account for a significant proportion of the 25 to 40 per cent savings that will be required in the upcoming spending review, he adds, simply through the re-use of innovations that deliver more efficient working.

As well as the benefits that come from driving customers to use web-based communications and eliminating errors in paper or online forms, Mr Bruin gives two examples of how public sector organisations can use data-driven technology to achieve real savings.

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The first revolves around more effective use of joined-up data, drawn from both public sector records and third parties such as credit reference agencies and other public domain information, to accurately identify fraud and error in claims for council tax reduction or housing benefit, where there is evidence of a mis-match with eligibility criteria.

With most cases selected on the basis of real-time evidence, rather than scoring, staff can more accurately target those where fraud or error may be present, rather than examine the totality of all claims.

“By combining broader sets of data you get a richer data analysis where you can more accurately assess the extent of fraud and error within your existing case load,” Mr Bruin explains. “If you superimpose on that what we think a fraudulent or erroneous claim looks like and use people who assess claims day in and day out to create a system of advanced rules – in our case over 80 of them – it is possible to re-use successful methods which are proven to reduce the workload at the same time as producing a better outcome.”

Using its service technology business CapacityGrid, Liberata is currently working with a consortium of 12 local authorities, led by Pendle Council, to conduct council tax reduction reviews. This has resulted in more than a third of the 15 per cent of cases flagged up by the data proving to have fraud or error present.

“It means you have a much more efficient use of resources, but it also gives you a very good outlook over the level of ineligible claims that are likely to be recommended for adjustment for the authority,” says Mr Bruin. “The average amount of money we are saving councils from overpayments is around £900 per case identified.”

Importantly, this independent data-led approach also highlights instances where people have been underpaid, he adds, allowing such situations to be resolved.

Were such a system to be rolled out across every local authority, this could result in a saving of £164 million just through council tax reductions alone, says Mr Bruin, but there is potential to drive savings of £2.16 billion were this to be extended to all benefit claims – a significant inroad into the total amount of savings being mandated.

Another example of more effective use of technology comes in improving statutorily burdensome processes involving multiple departments. “We’ve taken reconciliations technology, which is the ability to reconcile large volumes of data sets, and carefully adapted it to automate receipts, reconciliations and payments for public services to make government an easier place to do business,” says Mr Bruin.

He gives the example of fixed penalty fines, which must pass from the local police force to HM Courts and Tribunals Service for payment. “It’s a number of different departments and systems, maintained by different bodies,” he points out. “The role we play is to make that process, which they can’t change, much more efficient so it works for the customer, but equally reduces the cost and the administrative burden, not to mention reducing the number of instances for that process to go wrong.”

This has already been used by the Ministry of Justice, where Liberata has processed more than £1 billion worth of receipts in three million transactions, with 98.9 per cent of cases processed accurately first time, dramatically reducing the resources required to operate such systems and delivering savings of up to 30 per cent. With at least 345 million transactions across government ripe for similar automation, there is scope for huge savings.

Initiatives such as these demonstrate how government bodies and the public sector can make significant progress with their savings targets through reduced bureaucracy and workload, freeing up resources to focus on better service delivery and front-line services. Already this is resulting in impressive levels of savings. The two innovations featured here could lead to more than £2 billion being saved each year alone were they to be implemented across the board.

“The government is constantly reminding us that we all need to make savings to ensure our grandchildren are not left to pick up the bill,” says Mr Bruin. “At a time when the public sector is being told to think differently, perhaps the answers already exist within the system, and a more joined-up approach to data, technology and indeed its re-use will realise an innovation dividend for government.”

www.liberata.com