The Local Digital Programme, a project run by the Department for Communities and Local Government (DCLG), had previously claimed that councils could make £600 million in efficiency savings over 14 years through a number of measures – including reducing tendering and implementation costs when procuring services.
It also suggested that the savings could be achieved by systems integration, more ‘automation’ and making better use of available data and technology.
The prediction was made as part of an ‘Alpha business case’ released to stakeholders in October 2015. The document looked at how common data standards could cut time and cost in local authority waste management services – such as reporting missed collections.
However, Local Digital has now revised down the potential 14-year savings by £100 million, following feedback from the Local Government Association (LGA) and other stakeholders.
Outsourcing
Its new Beta model reflects that only 50% of authorities outsource their main waste contract to the private sector, suggesting it had ‘erroneously implied’ that all 350 councils in the UK have tendering costs.
In addition, the beta model indicates that around 25% of councils are already confident about using data and technology to optimise services.
In total around £357 million of the 14-year savings are now directly associated with waste data standards, including £33 million from reducing tendering costs.
While the business model does not capture additional savings that could be made by suppliers to local authorities, it estimates that individual councils could save between £115,000 and £215,000 annually through adopting a ‘data standard’ around the reporting of information on waste.
In its reasoning Local Digital states: “The Alpha model implied that all councils face the same costs when they undertake digital development work and stand to benefit or save at the same level. Yet, in reality councils are at different stages in their digital transformation and have different existing technical set-ups and skills.
“This will mean that, for example, the cost of setting up a new online transaction might be greater for a less experienced council than for a council that has a strong in-house team and is already using APIs to communicate between systems.”
It adds: “The Alpha model also implied that all 350 councils go through a waste service tendering and implementation process every 7 years. This is incorrect as only an estimated 50% of councils outsource their waste contract. The new model therefore reflects this and just 50% of councils are shown to have the upfront costs of tendering and implementing a waste contract.”
In-house
The Programme’s estimation appears slightly higher than figures from Dr Adam Read of environmental consultancy Ricardo Energy & Environment – who in a recent article for letsrecycle.com claimed over 42% of all waste related services are being contracted out, 31% of delivered in-house and 30% delivered via a form of partnership (see letsrecycle.com story).
Local Digital has also addressed feedback that the cost of system integration between councils would be ‘too high’ – conceding that it is one of the most ‘expensive and concerning blockers to service optimisation’.
However, the Programme adds that more standardised management of data could drive more shared services and partnerships as well as foster technological innovation – as long as a ‘mass of adopters’ tips the market in its favour.
The Beta document is now open to further consultation with a finalised business case to be published at the end of March 2016.
Related Links
Local Digital Programme – Making the Case for Data Standards
Register for free to comment