Bankrupt councils and soaring taxes: Have archaic IT systems driven local authorities to breaking point?

By Leo Hanna, Executive Vice President at TechnologyOne

Our public sector can’t seem to catch a break. Most weeks recently, I’ve woken up to news of local councils declaring service cuts, unfathomable financial holes, or towering debt piles.

The daunting economic picture doesn’t help. Persistent inflation and 13 years of cuts mean local authorities don’t have the money to plug existing gaps, let alone meet increased demand from residents. Councils have put on a brave face, but many are yet to adapt to the realities of a sustained fall in revenue. In particular, too many still rely on outdated and clunky IT systems, stuck together with tape and chewing gum, to provide mission-critical services to our local communities.

This could not have been more evident than when Woking Council declared effective bankruptcy last month, with debt as high as £1.2bn – a staggering 7500% higher than the core funding available to it. The cause? Soured investments in hotels and skyscrapers – something that a modern asset management and planning, budgeting and forecasting solution could have helped to prevent through more informed support for medium and long-term decision making.

Unfortunately, while Woking is a striking example, it is far from the only council facing huge financial challenges. Thurrock Council found itself in a similar position last December, after it racked up a £470m deficit – more than three times its annual budget. Northamptonshire, Croydon, and Slough are other councils that have become effectively insolvent in recent years.

If the Chancellor wants the public sector to be more efficient, we must address this series of failures in local government. We can’t allow taxpayer money to be thrown away because of poor decision support systems. We’ve seen private companies, from the smallest start-ups to the biggest multinationals, make it through waves of economic uncertainty by investing in forward-looking, effective digital solutions. There’s no reason why local government can’t do the same.

The council leaders I speak with are all too aware of the need to do more with less.  But the most effective leaders are those who are embracing digital transformation, replacing outdated systems with cloud-based services that allow them to plan for an uncertain future and realise efficiencies, unlocking funding that they can divert to critical frontline services.

That being said, the way to implement such technology also needs a rethink. Traditionally, software vendors would provide software, another party would implement it, then a third entity would maintain and support that software. Massive consulting businesses have grown to give buyers advice on how to manage all that complication. Consultants and third-party implementation service providers don’t lose if projects run over time and over budget – it is their pockets the money is flowing into. They all have a financial incentive to make the process complicated and slow except the software vendor, who has already made a sale and moved on. It’s a flawed model that wastes billions and has sadly become an accepted reality.

Rather than maintain this status quo, councils have the opportunity to break out of this pattern and seek out alternatives. The next logical evolution in digital transformation will be to find a model that eliminates exorbitant implementation fees, and gives councils certainty about what implementing, running, and supporting the software will cost.

At TechnologyOne, we do exactly that with our Solution-as-a-Service (SaaS+) offering, which sees us take responsibility for delivering the complete ERP solution, not just the software, all for a single annual fee, thus drastically reducing the risk associated with these complex implementations.

At a time when local authorities are faced with difficult decisions to maintain essential services, spending money on IT may not intuitively sound like a priority. Sadly, as Woking Council has learnt, it can mean the difference between operating, and effective bankruptcy.

Just like many councils in the UK, Blackpool Council has faced budget challenges over recent years. The council chose to replace its inefficient legacy on premise financial systems with a Software-as-a-Service solution to help it deliver more than 200 services to the community while under tight budgeting constraints.

The new SaaS+ solution is helping the council automate its business process, lift productivity and improve decision making, allowing the council to plan for the long term and better service residents and council tax payers. The speed of the information available also allows the council to model various scenarios, enabling it to be prepared, no matter what the future holds.

We see too many in local government patching up legacy system with a hodgepodge of products and integrations, often because the cost of an implementation alone is completely prohibitive. While these investments may seem like the fastest solution to getting a new function or service in place, it’s a false economy. The way local government thinks about and implements technology is due for disruption, a revolution is long overdue.

Publish date

06 Sep 2023


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