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The dawn of the digital age has given finance directors the chance to make real savings - deals with the private se...
The dawn of the digital age has given finance directors the chance to make real savings - deals with the private sector have proved beneficial to both partners, says Jon Hanlon

Most finance directors would agree that if e-government works well then it can save the council a fortune, but making it work well is not that simple.

One-stop shops, call centres, smartcards and other innovations must be introduced with the user in mind to avoid the sort of high-profile failures we have seen so far.

Islington LBC took its housing benefit service back in-house at the beginning of May after the failure of its deal with ITNet to deliver an effective service to residents. The firm has been kept on to deliver back office functions, prompting fury from the Labour opposition. Deputy leader Richard Greening says: 'This deal is a half measure. People in Islington want to see the back of ITNet, but they will still be paying to have them here.'

The e-government market is still very new and deals can easily go wrong. But BT's head of local government Steve Crabbe says it is ripe for investment, which can benefit both the private and public sector.

He adds: 'I came from the finance sector where they were going through very much the same thing - in terms of modernising and joining up communications and technology.

'Local government has the problem that you have got to have money to invest, to save money. The private sector can provide the technical skills and the finance to bridge that gap.

'There has been the willingness to make the investment over the last five years, but it has not been a priority when councils have had so much to do.'

The drive to meet the government's 2005 deadline for getting all services online means councils are keen to make deals with the private sector, and firms are increasingly trying to tap in to local government.

But rushing headlong into IT partnerships can prove disastrous as the accounts of some companies highlight only too well.

Things also go wrong for cou ncils. When Hackney LBC's financial crisis was at its worst, chief executive Max Caller blamed contractors ITNet for almost half the deficit. His claims were backed up by a report from the Benefit Fraud Inspectorate, which said the service was poor and had significant shortcomings.

But not all the blame lies with ITNet since it is almost impossible for an external partner to turn round a service that is already failing seriously. However, the horror stories should not put councils off the idea of investing to successfully implement e-government.

It is hoped that on New Year's Day 2005 the nation will opens its doors to a bright new dawn of technological local government. Residents will be able to access services electronically and move seamlessly across the whole public sector.

Services will be available in the evening and at weekends, releasing resources which can then be used for front-line services. Call centres and other innovations should mean less administrative work for professional staff and better ways of working.

But as anyone who has ever phoned a call centre will testify, it seems to be difficult for organisations to make things simpler by centralising operations.

There needs to be investment in staff training, buildings and infrastructure and when there is a shortfall in areas such as social services, finance directors can not be blamed for failing to put e-government at the top of their list of priorities.

Outsourcing provides one way of getting the necessary capital finance for projects. This means councils transfer much of the risk involved, but it also means they transfer a significant element of control.

This can cause problems as unions fight for their workers' rights to keep their pensions and the same pay and conditions as they had under council control.

CIPFA's e-government forum manager Dr Paul Jackson says the financial benefits of e-government can be broken down into categories, which include tangible cost savings, such as lower office overheads and reduced spendin g on procurement. This sort of saving forms the basis for any serious business case for e-government.

Dr Jackson refers to another area in which savings can be made as 'productivity improvements' which can result in financial savings and help free resources.

He says: 'Diagnostic work by the council [Hillingdon LBC] found 65% of service transactions were relatively generic in nature and lent themselves to standardisation and citizen self-service.'

A third category of the benefit of e-government covers areas such as social inclusion, staff motivation and community leadership. Referring to the less tangible benefits, Dr Jackson says: 'While still valuable in themselves, such benefits do not easily translate into financial or productivity measures.'

There are myriad financial issues to consider when it comes to introducing e-government, which of course means a lot more than simply upgrading IT systems.

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