payday loans and the missed opportunity?

In our book Digitizing Government: understanding and implementing new digital business models, there’s a table illustrating how often grand announcements have been made around the anticipated impact of technology on improving our public services:

Source: Digitizing Government. Alan Brown, Jerry Fishenden and Mark Thompson. 2014. Palgrave Macmillan.

(I guess I should update it with various similar pronouncements since 2013 tirelessly recycling the same sentiments.)

Despite some good work in various areas, 22 years on from the first quote above there’s still been little significant progress on the fundamental design of better public services. Technology often remains a sticking plaster rather than an enabler of real reform.

One particular disappointment is the limited success with opening up services, data and interfaces (APIs – application programming interfaces, which let computers talk to each other). Data is at the heart of our public services – or rather, it should be by now, to ensure that appropriate information is available to the right people at the right time.

Access to systems and their data is essential for a range of reasons, from better citizen control over their personal data, to frontline workers having the right information to do their jobs well, to radically improved service design. By which I mean design that can reconfigure services and processes independent of their owning department or systems, focusing instead on the users and their needs (in which I include public sector employees as much as citizens).

Two of the wellsprings for the current digital movement in UK public sector recognised the important role of opening up government data and systems.

Better for Less for example observed the need for the:

Automatic provision of core services and public data through open API’s …. This means public services can be driven and personalised by users, and new service packages created for them by third parties.

And Directgov 2010 and Beyond: Revolution not Evolution commented:

… government needs to move to a ‘service culture’, putting the needs of citizens ahead of those of departments. This increase in focus on end users should include opening up government transactions … [mandate] the development and opening up of Application Programme Interfaces (APls) to third parties

Yet subsequent work did little to progress these aspirations. However, while the use of APIs and data is not a great story overall, there are some notable exceptions. A good illustration of two very different approaches is the work of HMRC (taxation) and DWP (welfare). They’re interesting because their service and data processing models are almost exact opposites.

HMRC has largely outsourced the process of tax collection to third parties, such as employers and retailers. They collect and administer taxes such as Paye As You Earn (PAYE) and Value Added Tax (VAT), remitting to HMRC the resulting taxes where HMRC validates and assures the process is working as it should be. To achieve this, HMRC has long been a champion of APIs and the movement of data between external systems and HMRC’s systems.

HMRC’s approach to data has created a marketplace of service providers, everything from accounting and payroll package vendors and service providers to help employers manage PAYE and payroll data, to point of sale devices that ensure VAT collected is monitored and accounted for within a retail environment.

An entirely different approach is taken by the DWP, which operates an in-house model. Whereas HMRC has opened up the tax collection system and placed its burden (and opportunities) almost entirely on external organisations, DWP has opted to maintain exclusivity. Only DWP can handle the processes and data related to determining welfare.

DWP’s approach is not without its problems, including delays of up to 6 months for those most in need trying to claim disability benefits through to the more recent (and ongoing) assumption that Universal Credit has to be designed and built exclusively as an in-house system.

The DWP approach may be missing some of the best opportunities of the digital era. There’s a good case for looking at what might be possible if DWP, and indeed the rest of government, were to adopt the same model as that operated by HMRC. That is, to move to a more open approach to data, interfaces and processing.

Wouldn’t it be useful, after all, if we had co-operatives, mutuals, trade unions, third sector or even private enterprises who wanted to run welfare services, helping potential claimants with calculations, checking determinations and so on? And why shouldn’t such services be possible, in the same way employers, retailers and other businesses are trusted by HMRC with the important task of tax collection?

A vision for government adopting a third party, or intermediary, model of the type operated by HMRC long pre-dates recent “digital” initiatives. In 2003 the government set out an approach consisting both of citizen-appointed and government-appointed intermediaries in its “Policy Framework for a mixed economy in the supply of e-government services“.

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So which is the right approach: Open or closed? Inclusive or exclusive? HMRC’s or DWP’s? These questions span issues of both policy and technology, and require a good grasp of the way they interplay. Questions fundamental to determining the way in which modern public services can be designed include:

Should government maintain a monopoly on data collection and processing rules and calculations, or make them available via open interfaces for others to use?

Why is the HMRC model, of open APIs and external data collection and processing, not the general model for government?

The 2003/HMRC approach could be enormously beneficial, for example, if there was such a thing as a humanitarian and ethical payday loan organisation (yes, yes, I know this sounds like an absurd oxymoron, but it need not be – trade unions, credit unions, community groups and others could potentially and willingly step up to the task). If they had the right access to systems and data, they would be able to do something genuinely useful, with a beneficial impact on those in most need. 

With the appropriate consent of a welfare claimant, an ethical payday loan provider would not only be able to determine the viability and nature of a possible loan, they could also use that data to automatically cross-check with a DWP calculation service which benefits, tax credits, etc. applicants are entitled to. Doing so might reveal they are entitled to benefits they are not claiming, and might even in some cases avoid the need for a loan altogether – with as many as 300,000 people not currently claiming benefits to which they are entitled.

But such services can only be designed and delivered when government becomes much more consistent in its approach to data and APIs. And that requires smart thinking and leadership across the boundaries of policy and technology. 

By being able to access the right data via the right interfaces into government systems, such third party organisations and intermediaries, working with the consent and permission of the citizen, could provide a welcome public good to displace profiteering loan sharks. They could help ensure that any payday loans, for example, match individual circumstances and abilities, including the ability to pay without sinking further into debt.

One of the benefits of technology should be helping ensure people get what they’re entitled to more easily, efficiently and painlessly than is currently possible. Either directly themselves, or with the help of others acting on their behalf. If opening up online government services can be achieved through the use of external organisations in the case of taxation, then why not do so in other areas too, particularly welfare? 

Doing so could radically improve the way services can be designed and delivered around users. It’s why its been a repeated recommendation and seems to me to be one of the most significant missed opportunities of recent digital efforts. As to why this hasn’t happened yet at scale … well, I’ll end with another short quote from “Better for Less”:

Success will come from a technically literate government where ministers and officials are comfortable with their ability to use technology to do government better. This requires a commitment to learn about – and embrace – technology and the considerable determination that will be required to push through such a cultural change in Whitehall.

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