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This week, Keir Starmer ir declared that digitalisation of government services will allow the public sector to achieve up to £45 billion in savings and productivity benefits each year.
The British Prime Minister has arrived at that total after this year’s review commissioned by technology secretary Peter Kyle and conducted by officials in his department with consulting firm Bain & Company.
Their report, published in January, estimated that the more digital technology and artificial intelligence is used, the more they save 4-7% of public sector spending in total, and the “strongest lever” to drive reform across the state. Importantly, however, we did not provide a detailed breakdown.
Where does savings come from?
Officials from the Ministry of Science, Innovation and Technology told the Financial Times that the estimated £36 billion (80%) of efficiency comes from simplifying and automating delivery across the public sector.
This includes performing administrative tasks such as transcription of meetings, organizing and analyzing state consultations, summarizing policies, and conducting legal and legislative research. Government AI incubators are currently developing “Humphrey,” a package of tools that cover each of these areas, named after the TV series Mandarin.
These tools could save billions of pounds a year from the money currently being spent on contractors. For example, an analysis of government consultation responses alone would cost a total of £80 million a year.
Where do other savings come from?
An additional £4 billion in predicted savings comes from “moving the transition to service processing to cheaper online channels,” officials predict. This includes moving from expensive government communication modes such as postal communication and text messages to email.
Whitehall is launching a beta version of the Gov.uk app this summer. It aims to provide Britons with a single point of online access for all interactions with the state. This provides the government with an inexpensive way to communicate with its citizens.
Digital compliance solutions could save another £6 billion by reducing fraud and errors, officials said. Digitalization is expected to improve data management in HM Revenue & Customs and beyond, improving the ability of algorithms to find fraud and tax evasion.
How reliable is government calculations?
Some experts are skeptical. Nick Davis, program director at the government’s Think Tank Institute, said he understands how digital technology can increase productivity, but warned that suggesting key “cacheable” savings priorities could be misleading.
“Transaction” services such as passports, driver’s licenses and other back-office functions can be automated, but replicated with individual-centric services such as healthcare that require frontline staff.
Davis predicted that achieving such “large scale” true savings would require the need to stop providing some services rather than simply automating.
Joe Hill, policy director at the reform think tank, said it was “clearly clear that more savings can be made through areas like fraud,” but warned that neither the Treasury nor the Office for Budget Responsibility should build these savings in a model based on “a general commitment to digitalizing and automating across the public sector.”
Chi Onwurah, Labour Chair of the Commons Science, Innovation and Technology Committee, said the total appears to be “theoretically reliable,” but requires coordination between the minister, civil servants, systems and suppliers. “The past promises of public sector technological change are far too often unrealized,” she warned.
