Ecommerce could save billions for UK government

The UK government could save up to £4bn a year in administration costs when it adopts an ecommerce strategy, according to the latest government report.

Paul Smith, the report's author, said the use of electronic commerce instead of paper-based transaction of revenues and procurements could mean a penny off income tax over the next four years.

Smith said: "The government needs more dealings over the telephone, more direct debits and credits, to try and move away from the government cash culture. For example, we took a look at a mixture of processes such as the allocation of benefits from the DSS, and decided what could go on a list for ecommerce and how to change it into a reality."

Bacs, the banking clearing system and a participant in the study, claimed local government could save £30m a year, or 10 per cent of annual expenditure, if it used direct credit for allocating housing benefit using the current IT system.

But central and local government systems do not need to be upgraded to take advantage of ecommerce, said Smith. "It's not like government has to invest zillions of pounds in new equipment. It just has to rethink the processes and make sure it fits a model that is right for a customer-fronted operation."

Smith claimed there is already evidence of the mindshift needed to carry out the move towards ecommerce. "The task now is to look at the speed of that shift and the degree of it. If you look at the government policy pledge, such as Blair's 25 per cent and beyond scheme and Mandelson's promise to get all routine transactions online in three years, it already shows they are willing," he said.