Insights from business world can help government operate smarter, says Cameron

Cameron said that technology has the potential to reform the way public services are delivered and the way public sector organisations operate.

"Businesses are constantly adapting and changing, using new technology or new methods of delivery, to improve their products and reduce their costs," Cameron said. "I’m not suggesting we should run government exactly like a business. I just mean that if we use their insights, we can help develop a smarter state."

"What energises many markets are new insurgent companies, who break monopolies and bring in new ways of doing things. We should apply this thinking to government. So many of our country’s efforts to extend opportunity have been undermined by a sort of tolerance of state failure ... Reform – whether be it’s breaking state monopolies, bringing in new providers, or allowing new ways of doing things – can cut the costs of these failures both economically and socially, and they help to advance the progressive causes of spreading opportunity and enhancing social mobility that I care so much about," he said.

In a speech on Friday last week, Cameron said that whilst steps have already been taken to reduce the cost of government through initiatives such as the reduction in size of the civil service, better procurement and increased use of technology, further changes are necessary to cut costs and help address the UK's budget deficit.

Cameron said, though, that austerity measures need not lead to poor outcomes and that he believed greater reform, devolution of power and a new efficiency drive can instead deliver "the most radical and most progressive government" of recent times.

As part of his vision, he said he would introduce reforms that will allow emergency services to work more closely together.

"Right now we have a situation where in most towns, the police, fire and ambulance services all have different premises, back offices, IT policies and systems, and procurement policies – despite all their work being closely related," Cameron said. "laces like Hampshire have shown the way forward, where the emergency services have brought functions together to save millions of pounds a year. We need to see that sort of thinking in other places."

"So I can announce today that we will introduce reforms that will enable the police, fire and ambulance services to work more closely together to save money and improve their effectiveness. And in areas with local support we will enable Police and Crime Commissioners to take on control of the fire and rescue services, including in London where that power will be vested in the Mayor," he said.

The move will "improve accountability, raise effectiveness and deliver savings for taxpayers", Cameron said.

Expert in public sector IT contracts David Isaac of Pinsent Masons, the law firm behind Out-Law.com, said: "Cameron's announcement fits into the efficiency agenda as well as the push towards decentralisation - where local authorities and regions are to be given much more autonomy. Changing the way the public sector operates will, however, raise a number of practical challenges that will need to be overcome."

"For example, cultural change will be necessary within public sector organisations if they are really going to achieve effective co-operation across different types of local authority services.  Shared service models have not exactly been a runaway success story to date.  Although there is considerable enthusiasm for greater autonomy, imposing change without proper consultation and learning the lessons of existing failures is very high risk," he said.

"Digital technology must be the platform by which improved public services are delivered but the purchase of new technology, and transitioning from legacy systems to it, can be complex, especially when any procurement must cater for multiple users within different purchasing bodies," Isaac said.