Finance: We're online to call government direct

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ONE OF the Government's most delayed and most significant policy statements was launched last week. Yet, largely because of the war in Yugoslavia, it went almost unnoticed.

By 2008, all public contact with the Government will be possible electronically - via the Internet, interactive TV or multimedia kiosks. Within two years, 90 per cent of the Government's low-value purchases will be conducted electronically and every job seeker will be able to look for work electronically. By the end of next year, we shall all be able to obtain instant advice on health concerns using a 24-hour a day NHS Direct call centre.

The Modernising Government White Paper also announced that the Cabinet Office could block Bills that imposed unnecessary regulation on business. Local authorities and other public bodies will also be deregulated. Public servants whose performance is poor may be refused annual pay increases. Targets are to be set for increasing the number of women and ethnic minorities employed in the civil service.

The proposals represent the biggest reform of the public sector since the Thatcher revolution that saw the creation of Next Steps agencies, transferring two-thirds of civil servants from Whitehall departments to arm's-length bodies, and the obligation on public organisations to contract out or market test the delivery of services.

When Jack Cunningham, minister for the Cabinet Office, told the Commons of the "learning labs" that would help ministers and senior civil servants to make policy better, that public services would be organised around "common life episodes" - such as birth, marriage and death - and of creating "joined-up" government he was accused by opposition MPs of swallowing a management consultant's dictionary and introducing "play station government".

Leaders of the IT industry, though, welcomed the White Paper. John Wolfe, government strategy manager at ICL, said: "There is an underlying commitment to deliver better services focused on the citizen. This might not appear particularly innovative - it is when you consider that the model in which we interact with government hasn't changed fundamentally since the end of the First World War." Mr Wolfe stressed the benefits to the individual of being able to advise the state just once of a change of address or of the death of a relative, knowing that all relevant national and local public bodies will be notified.

But not everyone will appreciate data sharing - by the police and tax authorities on suspected drug traffickers, for instance. Banks have already shed staff by assisting customers to use branches less and use cash machines, call centres and the Internet. Persuading welfare claimants to apply electronically could cut many jobs in the Department of Social Security.

The Department of Trade and Industry reported that a financial transaction conducted through a bank teller costs $1.07, (68p) through a call centre it is 52 cents, using a cash machine it falls to 27 cents, but over the Internet it is just one cent. The move to virtual channels enables organisations to dispose of properties - and the move to re-source accounting in Whitehall is causing departments to focus on the cost and value of their fixed assets. This view is endorsed by a recent study by the National Audit Office of Ministry of Defence offices, which found that electronic records can dispense with 80 per cent of paper files and reduce the need for office space.

Just as impressive is the opportunity for savings by moving to electronic procurement - it is much cheaper to buy goods over the Internet. Those savings rise when a buyer is required to enter into a wide tendering process - and the time it takes is greatly reduced.

These efficiency improvements rise markedly if the whole buying process is re-engineered. If budgets are delegated, buying departments dismantled, procurement cards issued, electronic ordering instituted and ledgers automatically updated, then as much as 90 per cent of buying costs can be eliminated.

For all the fine words of making public services more citizen-centred, there is also a strong motivation to bring down the costs of government. Even Gordon Brown might smile at that.