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The Mayor of London The London Assembly

Economic benefits of data release

The new coalition government’s commitment to transparency heralds an exciting time for the possibilities of open data.  The data release movement is relatively new and it’s difficult to predict its full economic impact in advance.

The US leads the way in encouraging and financially incentivising the software community to develop new apps based on publicly available data.  The first round of the Apps for Democracy competition in Washington DC saw 50 new apps created in 30 days.  The city gained $2.5m in development work outlaying just $50,000 in prize money for the winner.  The Californian government introduced a transparency website costing $21k with $40k annual operational costs.  As a result of citizens reporting on unnecessary spending the state saved a whopping $20m in a few short months.  A similar website in Texas saw $5m savings, again within a few months of operation according to an EU e-gov survey

Clearly data release can reduce fraud and curb unnecessary spending.  The MPs’ expenses scandal has stimulated more interest in this area but there are already websites dedicated to examining how public money is spent.  Releasing full financial breakdown of spend can save millions, as a recent case in Canada proved.  A $3.2 billion tax evasion fraud was exposed when financial data was made publicly available.

What can we in London learn from this?  The main lesson appears to be that engaging with and trusting citizens to participate in the democratic process leads to great rewards for the state.  The public sector can really benefit from the creativity and entrepreneurial spirit of private companies as well as the common sense of people interested in holding the state to account. 

Open data allows apps to be designed by people for people, creating an ecosystem that allows the most useful to flourish. This is great for the development sector but the public sector also benefits.   Public sector IT projects are notoriously costly and the most likely to fail so putting development into the hands of specialists makes perfect sense.  Less financial and reputational risk to the public sector, more opportunities for small IT companies and individuals to make their mark – a more collaborative interaction between government and citizen.

A lot of time is spent by the public sector responding to requests for information from the public and journalists.  Operating on the assumption of openness reduces the time needed to deal with these requests and frees up resources where they are most needed.

The public sector has also spent huge amounts on PR promoting or highlighting aspects of the data they are willing to release.  In an open data society, people draw their own conclusions about what is important to them.  In the future, the public sector will have to engage in a more equal debate with citizens on issues which matter to them – leading to wide-ranging benefits for the citizen and the state as services are delivered in a way that corresponds to real needs and provides real value for money.

Different types of data will stimulate different parts of the economy. For example, releasing accessibility data removes barriers to work, leisure and tourism for disabled people.  Releasing transport data, especially live feeds, improves travel experiences and increases passenger numbers (or encourages them to adopt more sustainable travel practices). But the benefits may be even more far-reaching than the obvious.  Knowing how long till the next bus means you can pop into the shops while you wait.  Or choose to walk if it means getting to your destination quicker.  Or wait for the next, less crowded bus – particularly useful for people with reduced mobility.

In the Unites States an industry is starting to develop selling analysed data back to the public sector.  This removes the need for the public sector to have highly specialised and expensive technical staff, and encourages the development of specialised – and taxable – services springing up.

Finally, with the economy at a significant low and a huge budget deficit, attracting inward investment is key to improving the economy.  Releasing data into the public domain will enable foreign investors to accurately gauge the extent they want to extend their operations or otherwise invest in the UK.  In the short term it may feel counter-intuitive to open up data which does not paint a rosy picture of the economy.  In the longer term international investors are more likely to be attracted to make investments in a country that releases its data, enabling them to accurately assess all the potential risks and benefits of investment.  This is a great opportunity for London to become a leading light in the field of open data.