Savings of £46 billion possible with digital business models

A leading think tank has argued that moving public sector and its suppliers to open book accounting and developing a ‘Lego block’ approach to services could save £46 billion per annum to the public purse.

Manifesto for Better Public Services, published by the Institute for Government at its digital innovation event, recommended that developing a ‘Lego block’ approach to services, like that undertaken by online businesses such as Amazon and Netflix, would help the public sector reduce duplication.

Combined with a 40 per cent phased reduction in duplicated administrative and managerial processes, functions, roles and systems in public services, such moves could save the public sector £46 billion a year.

Mark Thompson, senior lecturer at Cambridge Judge Business School, who launched the report, said: “Digital technology has been a game-changer for many modern organisations. They have dramatically improved their frontline services by completely rethinking and redesigning the way they operate. In contrast, much of our public sector still looks and feels very old fashioned: technology is often used simply to paper over the cracks of their existing processes and services rather than to rethink, redesign and improve them.

“The opportunity is colossal: the £46 billion saving we could achieve by eradicating wasteful administration and duplication is enough to fund an expansion to our frontline workforce of doctors, nurses, police and other key service staff equivalent to the entire population of Birmingham.”

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