Coffee House

Revealed: the most expensive government services

19 January 2013

7:14 PM

19 January 2013

7:14 PM

Anyone mulling how the government can save a tidy sum of money could do a lot worse than to sift through the slew of data released this week by the Cabinet Office on how much government services cost. It sounds a bit techy, but the breakdown of costs underlines how important the  ‘Digital by Default’ approach to public services pioneered by Martha Lane Fox really is.

Currently non-digital government transactions cost £4 billion a year. The Government Digital Service believes between £1.7 billion and £1.8 billion worth of annual savings could be made by making transactional services digital.


The Cabinet Office data shows that the most expensive Government transaction is the Rural Payment Agency Single Payment Scheme, which costs £727 per transaction.  The Environment department aims to digitise this service to reduce the cost.

When you examine the cost-per-transaction of solely digital services, you can see why departments are so keen to get in on the act. Stamp Duty Return Tax is an exclusively digital process and costs a mere 5p per transaction: the cheapest on the list. It is unacceptable that other services are not delivered in the most cost efficient way possible.

Before we get too excited and idealist, it’s worth remembering that not every service can be provided digitally. For example, while a passport application costs £64.68, GDS says total digitisation would not be more efficient because of the security implications. And in this case, the cost is picked up by the user, rather than the department.

But there are other services which can and should go digital because of the benefits for departmental spending. Digital revolutions aren’t just for nerds: they’re for bean counters too.

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Show comments
  • AnotherDaveB

    One way to reduce the cost burden of government, is to simplify it.

    I like the idea of “one problem, one government.” In other words, whether it is education or health care, either give the problem to the EU, Westminster or local government, but don’t give it to more than one.”

  • Tom Tom

    Can we discuss how Uk Citizens buy a Drivers Licence and are then inveigled into buying a new EU one to serve as an ID Card in Europe ? Or how DVLA data is shared with the Passport Agency and now will be accessuible EU wide ?

  • 2trueblue

    Name one government service that is not more expensive to run than a similar service in the private sector? It is just the total disregard for our money that is a windup, and it exists right across anything that involves any government department, central or local.

  • PhilipWalker

    So the line from the GDS is they won’t consider cutting costs where we bear them? I’ve got a newsflash for them: we *always* bear the costs; either directly through charges, or indirectly through taxes. And if it costs some sum less for us to get a new passport, then that money can be used to buy or invest elsewhere, which is a double benefit.

  • williamblakesghost

    Given that the TCO for most of these digital services is unlikely accurate I would take those figures with a pinch of salt. A simple change in legislation or a surge in birth rate/ immigration or an economic crisis (causing a surge in unemployment say) can blow those digital costs out of the water simply because a system becomes overloaded and requires a highly expensive upgrade in short order and thats if the costs are accurate and complete in the first place and I sincerely doubt that. No cost model can predict the cost of service error (user or otherwise) or the cost of change. Humans are far more adaptable than computer systems.

    ‘Beancounters’ as the author so quaintly calls them, along with management consultants, are a pestilence on the IT industry demanding impossible financial outcomes from technology which for all its benefits is still far less adaptable than the average human being at providing government services sufficiently flexible to address the needs of imperfect human beings.

  • alexsandr

    get the job centre and DWP corrospond with claimants by email rather than snail mail. I claimed ESA for a short period last year but I have had an endless stream of stuff through the post. Often several letters on the same day Why could it not be emailed at a fraction of the cost? (With the option of snail mail for those who cant do email)

    • Ron Todd

      HMRC is as bad no e-mailfor us plebs but I bet when the likes of Vince Cable had a little difficulty with his tax he had no problem contacting the people who could sort it for him. When I was having problems I had to write, I would get a reply froma different office that did not helpif I wrote back to that office for clarification which would result in a reply fromyet another office. I have had letters often contradictory from 11 offices from Cumbernauld to Plymouth.

  • toco10

    I would like the Inland Revenue to have sufficient resources and computer firepower to operate more effectively and review certain tax avoidance practices.By way of example why should highly paid BBC news hacks be allowed to receive their not insignificant largesse via limited liability companies which offer them opportunities to avoid National Insurance,pay dividends rather than salaries,claim expenses and employ friends and family to name but a few of the perks not open to the rest of us PAYE taxpayers.Taking National Insurance alone certain BBC hacks can save £100,000+ per annum if they pay dividends to themselves rather than salaries-all perfectly legal but seemingly unjust and hypocritical given the news hacks’ propensity to criticise tax avoiders at every opportunity.
    If the rest of us taxpayers were to be afforded the opportunity to push our remuneration through limited liability companies tax rates and National Insurance contributions would soar.

    • Glenn Ludlow

      As it is all legal, how would ‘sufficient resources and computer firepower’ help. Many people practice tax ‘avoidance’, including everybody that has savings in an ISA

      • toco10

        Yes but I am talking about BBC news hacks who earn their living criticising tax avoiders but have their noses in the very same trough!In addition it rankles somewhat that we the licence payers are footing the bill!Finally we are all permitted ISAs but most of us are unable to push our salaries through limited liability companies which offer rather different and very special tax avoidance opportunities.

        • HooksLaw

          You finally make the point — that the BBC which takes part in
          these dubious practices is happy to expose, report on and criticise others, not least MPs whose expenses practices may not be perfect but on the whole are similarly legal.
          An ISA is not tax avoidance – the govt are actively encouraging its use by offering a tax free sum

          • Tom Tom

            MPs have Exemption Clauses in the Finance Act which should be removed so HMRC renders their Expenses taxable

          • Gary Gimson

            These practices are not dubious. If, say, a journalist earns an income from several different sources (as many do), then this is the correct way to be paid – either being self-employed or via your own limited company.
            I am absolutely no fan of the BBC (see earlier posts), but I don’t believe that our much cherished national broadcaster is in the wrong here.
            And as others have said “avoidance” is perfectly legal. It’s evasion that’s illegal.

            • alexsandr

              it depends on whether the persons work is controlled, i.e hours worked, or equipment used. That is the basis of IR35.

          • an ex-tory voter

            Nonsense, an ISA is specifically a tax avoidance vehicle

        • an ex-tory voter

          Quite right, let’s ban these evil Limited Liability Companies. Let’s penalise and jail the plutocrats and hacks who live off the back of the people.
          After all, it was a roaring success last time, wasn’t it ?

      • Tom Tom

        BBC is taxpayer funded and subsidised. It exists by Royal Charter not as a Limited Company

  • anyfool

    That would be a wonderful thing to happen.
    That is until you realise that they have tried vast computerisation and these idiot civil servants have picked the wrong systems or are to stupid to operate them.
    It is doubtful if the money wasted would ever be covered by the cost savings if the current top civil servants remain in positions of authority.

    • HooksLaw

      The examples given show that basic computer payment systems are working fine. Paying taxes on line works fine, as does TV licences and Road Tax etc…

      Your rant is wrongly aimed.