George Osborne has a lot of pressure currently to divulge the source of his estimated savings for the next Parliament. Commentators have been pressing for details of funding sources. Perhaps he doesn’t want to reveal his detailed plans to Labour, who seem caught between the binary options of raising taxes to protect services and raising minimum wages whilst admitting that cuts are needed. But then all parties appear short on substance for detailed fiscal plans.
Why is almost no-one in Government seriously leading the Efficiency agenda?
Britain needs to harness technology better across all sectors to increase efficiency. Take just my specialist sphere of knowledge, smarter document and identity management. Recently I presented our technologies to a group of Angel Investors and Private Equity firms at Cambridge Wireless
; the Chairman of the Judges, Cambridge professor and seasoned investor David Cleevely, summarised the potential impact of these. He estimated that 1-2 million jobs could be saved from the UK economy in the next 5 years.
Well I’m no politician, but using an average worker’s cost-to-company1 that equates to a £ 62-125 Billion saving, every year - more than enough to balance the books2,3.
That’s a lot of productivity that can be harnessed by both public and private sector organisations. If you’re interested in how, well we assist organisations with processing information of all kinds efficiently within forms and documents; think of workers being able to quickly, easily and compliantly create and send documents to every type of media with almost no IT involvement. And in this ‘omni-channel’ approach, every document can have the maximum amount of personalisation needed. Better still, whilst state-of the-art enabling both legacy Systems of Record and modern Systems of Engagement, it’s a fraction of the cost and complexity of current or alternative systems.
And when citizens, workers and consumers are happy with the documents, the technology enables half of the country’s paperwork (i.e. that still using wet ink signatures) to be replaced at a stroke with highly secure, legally compliant biometric electronic signatures. You can be uniquely identified just from the angle, speed and pressure of your handwritten signature on almost any touch device, Smartphone, Tablet or PC. Even the DWP have now recognised this potential and are reducing fraud with real-time elimination of moon-lighting and similar upon signing for benefits in Job Centres.
Think about the potential for replacing inefficient processes (expensive licences, frustratingly complex outdated IT, security code generator devices, waiting for couriers, paper handling and storage, etc.) and the enabling of mobile workers to provide services from wherever they are without needing to return to the office to complete the documentation. Over 70% of German’s top 30 Insurance Companies, 40% of their top 20 banks and the Swiss Social Security already have. That speeds up all transactions. Perhaps that’s helping to drive their growing economies.
And of course efficiencies through such document and identity technologies is just one area amongst many potential efficiency areas available to Government to help balance the books. Government needs to lead not lag, a philosophy not lost on Francis Maude who last month addressed 'the economics of identity and the role of GOV.UK'. This activity is both critical and essential if we want to compete and win internationally. So come on George, admit that you’ve got a bag of tricks up your sleeve and prioritise efficiency over aiming to slash costs from random budgets. But don’t let on that the European Democrats over the Channel got there first!
Assumptions and Notes:
Note 1: Average Salaries and employee true Cost-To-Company
- Average salary of £27,612, means a typical cost-to-company of at least £52,982 including pension, holiday pay, business costs, IT services and NICs but excluding bonuses, overtime and benefits (using Source: www.accountingservicesforbusiness.co.uk/calculators1/true-cost-of-an-employee ) and a lot more for public sector workers with perks like defined benefits pensions
- Median gross earnings excluding overtime, benefits and pension contributions was £14.15 per hour in the Public Sector in 2013 (Source: Public and Private Sector Earnings -March 2014 - Office for National Statistics)
- Allowing for pension contributions alone, worth at least 30% of each worker's salary, the median gross earnings for Public Sector workers in 2013 equate to approximately £18.75 per hour. This represents a true cost to taxpayers of £62,257 per year per worker. (Source: www.rosaltmann.com/public_sector_pensions : actuarial calculations show that the public sector government-guaranteed, fully inflation-linked pensions gives workers >30% more every week in the form of pension accrual as deferred pay)
- Because the private sector has a more dispersed wage distribution than the public sector with more higher-earners, ONS considers that the mean gross hourly earnings excluding overtime and benefits/pensions, is a better measure. By this, public sector workers earned on average £16.28 per hour in 2013, and private sector employees earned £14.16 per hour. However private sector workers have greater proportion of earnings as overtime and bonuses, which raises the actual cost-to-companies (CTC). (Source: Public and Private Sector Earnings -March 2014 - Office for National Statistics)
- Factoring in all these variables, the public sector figures including pensions of a CTC of £62,257 per year per worker are used in the above estimates, as roughly equating also to private sector total CTC including bonuses.
- George Osborne’s 20 March 2015 Budget highlighted Treasury spending plans and a deficit between what the government receives in tax and what it spends in 2015-16 and beyond. Government borrowing is likely to be around £90bn in the 2014-15 financial year. It is then set to fall to £75bn in 2015-16; then £39bn, £13bn and by 2019-20 plan an overall £7bn surplus. (Source: the Office for Budget Responsibility)
- Public Sector accounts for one in five jobs. The savings from these technologies within Public Sector alone represents 14%-28% of 2014-15 borrowing deficit. Over the term of the next Parliament, if commenced soon, they could wipe it out entirely with efficiency savings from government departments and reduced fraud in welfare and tax matters.
- Chris Jones is Managing Director of Icon UK Limited, specialists in proven best-in-class document and identity management solutions and software. For more information, see www.icon-uk.net.