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E-binge that will cost us dear

Sun, 15th Aug 2004

YOU MIGHT imagine that the dotcom boom is over. So it is, in the private sector. Among companies, investment in internet ventures dried up more or less overnight three years ago. It now exists as a kind of residual hangover - a fading if embarrassing reminder that overindulgence in hi-tech investment can damage corporate health.

The news doesn't seem to have percolated through to the public sector, however, which is in the middle of a binge that, if it happened in a pub, would be subject to agonised hand-wringing and questions in Parliament.

According to the research company Kable, which tracks public sector ICT (information and communications technology) spending, e-government - the government's requirement that all local and central government services should be available electronically by the end of 2005 - will cost the taxpayer pounds 7.4 billion by 2006. Since 2001, the e-government gusher has been spouting at an average rate of pounds 1.5bn a year. Central government's share of the total will be some pounds 4.4bn, local government pounds 3bn. (These figures don't include education, health and defence.)

It's an article of faith that e-government is 'a good thing'. Progress towards e-government gets local authorities brownie points in their official comprehensive performance assessments - authorities that invest in ambitious computer-based 'solutions' such as contact centres, customer relationship management (CRM) databases and comprehensive web portals get higher marks than those that don't. As further inducement, over the last four years they have received pounds 675 million in central government funding for e-government projects - a figure that is, however, dwarfed by the pounds 4bn mopped up by government departments for the same purpose.

But what's it all for? The accepted line is that, by making essential information available online, e-government can foster democracy and inclusion and improve the quality of service to citizens and business. In theory, too, it can contribute to efficiency by cutting the cost of service delivery - electronic transactions can be much cheaper than paper-based ones.

So now, with the next election approaching and public services high on the political agenda, the pressure is on to turn the promise into reality. In the just-published expenditure round, Gordon Brown demanded returns from his expensive investment. Government agencies have been given until December to tell him how they are going to persuade the public to use their e-services.

You mean... that's right: until now no one has bothered to find out what people actually want from e-government. As the 2005 deadline approaches, so little is known that the Office of the Deputy Prime Minister, which is responsible for pushing local authorities online, has launched a pounds 2.5m 'e-citizen national project' (www.e-citizen.gov.uk) - a marketing wheeze to discover "what makes an e-citizen tick" and to catapult e-government take-up to success.'

You might think that was something to be done before spending pounds 7.4bn. As it is, while in some cases e-transactions can work well (see right), overall the picture is unpromising. Kable reckons that by 2006 savings from the e-government investment will total a princely pounds 819m. As the graph shows, even taking the figures out to 2015, on current form e-government savings will never even equal current spending.

The reasons for this are summed up in another Kable report, 'What do they mean by "yes"? Shared services and the Gershon agenda' (www.kablenet. com/kablereport). One of the most important is that in the rush to to meet the 2005 online deadline, people have forgotten the underlying point of improving service - as always happens, the target has become the de facto pur pose, to the detriment of the real one.

The result, says one local authority boss, is 'a field day for consultants and IT vendors'. An e-government specialist adds: 'We're building all these capacities and now we have to help the services find ways of using them. They're solutions looking for problems... everyone is busy working on the solutions and no one on the problems.'

Regulatory pressures compound the issue. Councils have to invest in e-government to pass their audit tests - but putting services online does nothing to raise customer-satisfaction ratings. 'So who are we working for?' asks a puzzled chief executive. 'Government inspectors, or citizens?'

In any case, while putting basic transactions online may make sense, for more complex issues, for instance around social need, human contact is needed. 'A lot of it is fundamentally misguided, because it is people who are good at absorbing variety, not machines,' says a systems specialist quoted by the report.

Finally, the financial approach to e-government has also been as ill-thought-out as the wildest dotcom. 'Just adding e-government as another access channel to service is the worst of all worlds,' complains a leading academic observer. 'E-government as a free good, with departments allowed to do ludicrous "invest to save" bids, is clearly unsustainable.'

Crap service delivered over the internet, as a chief executive puts it, is still crap. In this perspective e-government, far from being the harbinger of a brave new service economy, is turning out to be a monument to the bad old one. You can have any service you like so long as it's what we've decided to provide: what better definition of the producer interest could there be than that?

simon.caulkin@observer.co.uk

additional research by Robert Colvile

The Observer, 15 August 2004


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