The distribution of grants is an effective instrument for improving and steering economic, social and health outcomes in the UK.
And with the economic challenges being posed by the Coronavirus pandemic, it’s critical that the billions of pounds made available as grants get to the right people and the right organisations, and are spent in the right way.
In this article, Markus J Becker, Digital Growth Director at Capita, examines some of the key challenges for distributing government grants and explores how digital transformation can improve schemes’ effectiveness to boost the economy and create better outcomes for government, businesses and citizens.
Grants are a critical weapon in the Government’s arsenal for doing good, particularly in periods of economic distress such as the Coronavirus pandemic. When they’re used correctly, they funnel money to distinct causes and people, stimulating organisations, creating better outcomes and making society healthier.
Citizens can apply for lots of different grants, from help with education or childcare to money to start a business or to get through a difficult time. And the Government has introduced even more targeted schemes to support people as they try to get through the economic recession caused by the pandemic. In fact, our own desk research has revealed that the UK Government disburses more than £100bn a year in subsidies, grants and grant-related funded schemes.
As the Government turns its focus to re-energising the economy, it’s crucial that citizens get the financial support they need as quickly as possible. For each grant disbursed, scheme managers need to ask: how do we get public funds into the right hands?
At Capita, we believe that it starts with making it as easy as possible for people in need to apply for funds. Grant application platforms should be user-friendly and mobile-first. Statista reports that 86% of the UK population has access to a mobile phone - a figure that’s set to increase to 89% in 2024.
To achieve this level of ease, there’s work to be done. While most grants can be awarded using repeatable, rules-based, transactional processes, government grants are mainly bespoke and their administration can often cost more than 10% of a fund’s value.
Grant makers are under pressure. They have to show that their funds have a positive impact and aren’t being misused. They have an ethical responsibility to remove barriers to accessing funding and to create application processes that prioritise vulnerable people’s needs.
Key challenges for government grant disbursements
While the vision and intention may be there, government schemes face several legacy challenges, including:
- Lack of transparency of scheme performance and errors. The TRL Insight report on Fragmented Funding says: “There is no strategic overview of council funding and little co-ordination between programmes, particularly where they span departments”
- Lack of accessibility due to obscure rules or lack of awareness of their existence
- Frustratingly poor user experience and accessibility for online applications. Applicants are used to digital experiences in retail, where the process is seamless and well communicated, so they often abandon their application when they come up against obstacles or barriers
- Inefficient processes, made worse by the bureaucracy of compliance and auditing
- Preventing fraud. The National Audit Office estimates that 5% to 10% of grants are fraudulently claimed, while HMRC says that up to £258m in grants for the self-employed could have been fraudulent or paid in error
- Lack of data insights. Scheme evaluations are conducted post-event and the insight gleaned can’t be used to influence the scheme anymore. Collecting data points during the scheme’s life allows for adjustments to optimise its impact in real time.
- Large administrative burden caused by manual processes and the time it takes to set up a scheme
- Prohibitive operating costs
- Building confidence that grants are fairly allocated and used for their intended purpose.
Challenges for applicants
At the heart of each grant scheme is the intention to create better outcomes for people who need extra financial support. Those people are the schemes’ customers, and deserve to have customer experiences that are intuitive, simple and transparent. But many schemes make it difficult for them to apply for funds or to even find them in the first place.
Consider an online retailer’s digital experience. The retailer communicates with its customers all along the purchasing journey, keeping them up to date on key milestones such as when their purchase has gone through, when their order has been received, when their item has been packed, and when it has been shipped. This gives them peace of mind and an ongoing view of the process.
Now consider the owner of a small business who applies for a grant. The application system can’t communicate with them, update them on their application’s progress or tell them when they’ll receive the funds that they’ve applied for. As a result, they abandon their application and their business suffers, at a time when help was actually on the way. The design of this service needs to change.
“Clarity and speed are of the essence. Many of the companies that have been unable to use existing government support schemes are already on borrowed time – and will need these grants paid out swiftly if they are to survive”. Dr Adam Marshall, Director General, British Chamber of Commerce (May 2020)