An innovative new digital service design to liberate UK SMEs from bureaucracy and cut the costs of government.
Small and medium-sized enterprises (SMEs) are the engine of job creation and a crucial driver of economic growth. Even in these austere times, the government funds dozens of SME grant schemes, support services and tax reliefs – but too often, the UK’s army of emerging entrepreneurs, innovators and traders aren’t welcoming the Treasury’s love.
On the contrary, many SMEs view government as a source of bureaucracy, complexity and heavy-handed regulation.
From the perspective of SMEs, well intended policies such as the introduction of quarterly tax reporting and universal pensions can look like yet another distraction from their core business. Even when government introduces a business tax break or grant scheme, SMEs can be put off by convoluted application processes or onerous reporting requirements. Furthermore, some government policy unashamedly adds to SMEs’ workload: the policy aim of passing more compliance work onto businesses, for example, fits with the administration’s view of government’s role and the need to cut public spending, but hands companies extra duties such as checking the immigration status of people applying for jobs or renting properties.
The result: SMEs often find themselves diverted from the task of building successful businesses by the need to manage relationships with the many arms of government. Every dreaded interaction with government is accompanied by a separate pile of paperwork, requesting information in a unique format, for submission via a separate system. In this environment, although each public body might be confident that it’s discharging its duty; the duty of the public sector as a whole to support and assist Britain’s SME sector is badly undermined.
Let’s reimagine this: we believe there’s a powerful way to help the government both increase the take-up of its support initiatives, and lighten the data, compliance and regulatory burdens placed on SMEs.
Just consider all the different interactions between government and businesses and how much duplication and complexity that creates for SMEs. Apprenticeships funding; workplace pensions; grants supporting training, science and innovation; police checks; health and safety; tax compliance and reliefs; buying frameworks– if all these interactions could be managed through a digital, citizen-centric portal able to prepopulate forms and mediate data exchanges, life for SMEs would become so much simpler.
So, rather than requesting new data for processing inside Whitehall, all central government departments interacting with SMEs should permit managed access to its own data – enabling enterprising private sectors firms, applying the principles of service design, to build simple ‘one-stop shop’ Digital portals to all government services - to dramatically reduce workload for government and simplify and improve the services for SMEs.
HMRC has shown the way forward here. In recent years, many private sector companies – KPMG included – have launched digital platforms enabling SMEs to centralise all their accounting, bookkeeping, tax, payroll, compliance, and performance metrics work. HMRC’s provision of ‘application programme interfaces’ (APIs) enables these platforms to connect directly into government systems, submitting data and receiving ‘kitemarks’ verifying compliance. This makes life easier for HMRC, which can pass the task of calculating tax liabilities over to the private sector – and for the SMEs, which benefit from a single dashboard combining and simplifying all their interactions with HMRC.
Here, government has stepped back from the case management business, instead auditing and verifying compliance with the rules it’s laid down; and the private sector has come in to apply the principles of service design – building apps and digital ‘portals’ that make life easier for service users. So everyone benefits from a transformed set of services; and if this approach were applied across the government’s SME interactions, the benefits would increase exponentially.
We believe that other departments should follow the lead of HMRC, to enable these portals to be extended to provide access to all government services. For example, rather than inspecting paper documents and completing forms for processing by the Home Office, SMEs could check instantly whether individuals were eligible for employment or rental housing. Rather than submitted grant forms piling up in the business department whilst civil servants check applicants’ tax status or property ownership, apps could submit verified data sourced directly from HMRC or the Land Registry; they could even prefill large chunks of the paperwork, greatly easing the burden on applicants.
These innovative digitally enabled services have the potential to greatly reduce the civil service’s workload. With accredited external partners collating and presenting relevant information to government bodies, there would be less need to exchange and cross-check data between departments. And with service users benefiting from streamlined systems and external advice in their interactions with government, the burden on call centres and complaints systems would fall.
In time, these capabilities could be extended to cover SMEs’ relationships with bodies in the private and wider public sectors – linking directly into banks’ systems, for example, or connecting to local authorities to manage business rates or Enterprise Zone grants. And all of this could be achieved without any cost to government: SMEs have proved happy to pay modest subscriptions for these services, which could be subsidised by advertising revenue where clients chose.
There’s a clear way forward here; one that would create huge value. And once we’ve started to realise some of this enormous potential, then SMEs can – at last – start basking in the warmth of all that treasury love.
© 2017 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
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