Why I think Cambridgeshire councils could learn from Netflix, Spotify and Airbnb

Senior lecturer suggests how we might save £5.2bn or so.

The other day, I was chatting to someone in the social care area of our council, who was desperately worried about what service cuts were doing to their ability to look after vulnerable people in the Cambridge area; the line is now being stretched to the point that any further cuts seriously risk “service failure” – council-speak for Something Bad happening.

As a resident (and council tax payer) who lives and works in Cambridge, and who happens to teach digital business, I find this all very frustrating – because I think much of these cuts are completely unnecessary.

Nor, by the way, do I think the answer is ever-escalating tax-and-spend: demand for public services just keeps growing, against a background of falling wages, growing inflation, low productivity, declining share of world GDP, and what appears to be shaping up to be an economically damaging, badly-managed Brexit. Anyone who thinks that simply upping taxes on “the rich” will sort that lot out is kidding themselves.

So what’s the answer?

As part of my teaching, I regularly look at how modern businesses are reorganising themselves to take advantage of the “shared plumbing” of the internet, and can’t help but think about how we might learn from some of these household names (think Rightmove, Spotify, Airbnb, etc) to modernise our own public services. Inescapably, they design themselves to focus on where they add value most efficiently – and don’t waste their time building and maintaining their own “special” versions of stuff that other people can provide better.

For example, take a Hollywood studio in the 1930s. Whereas once this studio might have “owned” the whole value chain – scriptwriters, set design, composers, camera people, and editing suites right through to cinemas – today’s box sets are assembled by a differentiated value chain that includes content creators, publishing tools, content management, enablers, monetisers, and portals like Netflix. By working in this way, each can avoid building and maintaining all these functions over and again, enabling them to focus much more efficiently on where they generate value.

So what’s all this got to do with the fact that there are too many potholes in Cambridge-area roads, or that our social care services are dangerously overstretched? Simply, that there’s much less money left over for these – the important activities where the council really delivers value to citizens – because these councils (the same applies to other public authorities across the UK) waste so much of our money replicating standard stuff that they could use modern internet technology to stream like Netflix films.

Stuff like case management, registration, workflow and licensing is duplicated again and again in councils across services (such as waste management, planning and transport) – as well as again within many of its suppliers’ services. As there are 353 councils in England, each of these replicates all these routine tasks tens of thousands of times over and over again.

So, time for some back-of-envelope numbers: how much money could we potentially save nationally for our councils if we streamed, say, 40 per cent of these activities, rather than buying and running it all again and again, with all the associated administrative functions?

Well, according to Gov.uk, the total revenue expenditure by local authorities in England is budgeted at £93.5bn in 2016-17. Assuming, conservatively, that they spend 14 per cent of their budget on administration (as a rough proxy, this is what the NHS admits to spending; I suspect it’s much higher), 14 per cent of £93.5bn is £13.1bn, and 40 per cent of that is £5.2bn. Assuming each council benefited from this equally, that’s an additional £14.7m for each England council every year.

So I’m afraid we’re being failed by our councils. This isn’t their “fault”: modernising what they do for the internet age is very difficult, councils typically dislike sharing, and they inherited this mess in the first place.

So it is OK, then? Try saying that to someone who works in social care, or to a homeless person on Jesus Green.