Public services absorb 20 per cent of the UK economy, and this figure is likely to grow. We cannot be satisfied with simply creating a productive private sector – we should also be investigating public services as sites of innovation, improved productivity and skills development.

Technological advances are becoming perhaps the most important factor in transforming our service sectors. Sadly, however, public services often lag behind businesses in how they use technology to transform contact and connections between users and organisations.

We have seen a number of initiatives focused on increasing efficiency and productivity in our public services, most of them concentrating on back-office administrative tasks. There has been relatively little focus on the front end – the interactions between services and people’s lives have been relatively neglected.

For example, there are 61 different benefits entitlements forms, the majority of which require the same standard information to be provided. An average citizen will need to prove their identity to government at least 11 times per year. A small business can be faced with more than 20 helplines, and links to more than 25 web sites.

The history of public services has led to departments or agencies focusing on the supply of specific products, rather than taking a citizen- or business-led approach. Departments often focus not on the whole citizen, but on a particular aspect of that citizen. So a single, unemployed parent might be a benefit claimant to one department, a parent to another, a patient to a third and a learner to another.

This is profoundly at odds with how people relate to public services. Often they are trying to deal with a task or an event that does not fall neatly within any one part of government.

Over the next 10 years, government has an opportunity to provide better public services at a lower cost to taxpayers. The key lies in the way we invest in and deploy new technology, and there are three core elements to achieving this – see box, below.

Duplication continues to be a major source of inefficiency. For example, numerous government databases hold the same address information, all requiring separate input.

We have multiple identity management systems carrying out the same functions. In HM Revenue & Customs alone, it is estimated that a saving of £100m per year could result from better record management, eradicating duplication of effort and improving the quality of information.

Identity is a personal and sensitive issue. The systems we create for managing identity in government must acknowledge this and respect a person’s right to privacy. However, there are about 300 million contact details in the public sector, which equates to almost five sets of information for every citizen.

We cannot be under any illusions about the scale of the challenge. The Home Office has 20 verification procedures and 25 unique personal numbers. For tax and benefits there are 10 initiatives each using a unique number, and in children’s services there are nine.

The true customer contact innovations from technology will emerge only if this is a corporate agenda that cuts across pre-existing government departments, silos, agencies and delivery organisations. The best innovations will be those that use new channels to create genuinely new approaches to service delivery.

The development of Web 2.0 is beginning to herald yet another shift, from transactional to interactional web sites, where citizen contributions enable organisations to offer back to them increasingly personalised information and support.

The challenge for government is to embrace not only today’s technology, but also tomorrow’s, and to ensure that it deploys that technology in a way that is driven by enhancing the contact between people and services.

It is through this enhancement that we stand a chance of achieving our twin aspirations of better and more productive services.

David Varney is HM Treasury adviser of transformational government. This article is an excerpt from Unlocking Innovation, a new report from HP and think tank Demos.

Three key steps to transforming public service delivery

* A single point of contact

Citizens should have a single point of contact with government to meet a range of their needs, and businesses should have to provide information only once.

Achieving this requires a more effective grouping of public service delivery around common themes that are meaningful for citizens. My review of the government’s strategy for using different communication channels recommended that such an approach should be piloted. Initially this would be through exploring what a single point of contact might look like for the changes in circumstances associated with bereavement, birth and change of address.

The work is being taken forward jointly by the Department for Work and Pensions and HM Revenue & Customs. Its findings will provide the basis for a methodology to transform public service delivery.

* A channel optimisation strategy

In the early days of e-government, there was a sense that real transformation would come from transferring all services to the virtual world. This approach is misleading. The government’s strategy must be led by a focus on channel optimisation – matching each channel, whether phone, internet or face-to-face, to its best use for particular citizens.

By dealing more efficiently with routine transactions and by reducing the complexity of having to deal with different parts of government in different ways, service providers will be able to devote more of their time to delivering a personalised service to individuals.

* A strategic approach to identity management

A joined-up identity management regime is the foundation of service transformation. The ultimate aim should be a common registration system from birth to death, immigration to emigration.

This would simplify life by ensuring a consistent set of information across government, carried over and expanded as later life events or the need for new services occur.