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Chris Wilkinson, Head of Sales for Healthcare and Public Sector for Siemens Financial Services in the UK
Several UK cities are looking to initiate smart projects and developments to improve the efficiency of local services, enhance sustainability and develop their competitiveness. Smart city initiatives improve the ‘livability’ of a city, helping to attract business and talent to support economic and business growth.
A number of cities are now approaching smart transformation through a series of smaller smart projects that help to generate savings and effectively pay for the initial investment. These projects, costing a few thousand to a few million pounds, can offer highly dependable Return on Investment (ROI), helping to ease the continued pressure on public budgets.
An example of one such ‘smart’ project is the introduction of vehicle routing, which aims to improve the management and flow of fleets of vehicles delivering public services such as waste collection and school transport across our cities. Geographical Information Systems (GIS), which can help to optimise the routing of services, are being installed across the globe so that better services can be delivered with fewer assets (vehicles, people and equipment). The investment cost for such routing systems can be rapidly recouped when compared to the savings gained.
For example, smart waste collection routes are planned to be more efficient so that local councils can look to reduce carbon emissions and save time and money. At South Staffordshire Council, the integration of GIS and route optimisation software has enabled the waste management service at the Council to save £380,000 per annum and achieve 94% resident satisfaction with waste collection services. 
Similarly, a requirement for a modern, efficient social transport fleet (transporting children with additional support needs, adults with learning disabilities and day care service users) has seen Glasgow City Council introduce smart phone devices for use by fleet drivers to improve routing, scheduling and vehicle tracking. Service improvements, increased fleet utilisation and a reduction in carbon footprint are just a few of the anticipated objectives of this Future City Glasgow project. 
Despite the obvious benefits of such projects, public sector budgets are often insufficient to implement the technology in the first place. Local councils are estimated to face an overall funding gap of £5.8 billion by 2020  and authorities are therefore looking to other forms of finance to help them invest in new equipment including technology to enable smart vehicle routing. The reality is that cities need to access a blend of public and private sector finance to accelerate their smart initiatives in a timely way and benefit from the resulting savings, efficiency, quality and citizen service improvements as quickly as possible. A diverse range of funding sources allows a city to make the full range of desired technology investments – using a combination of public and private sector finance – in a timely fashion. Different financiers can be sourced for the different types of technology investment. The sooner the smart investments are implemented, the quicker the savings (or revenues, or inward investments) begin to accrue.
A recent report from Siemens Financial Services (SFS), SmartStart (2016), identifies a number of potential Smart City initiatives – including vehicle routing – that can be financed by using funds from the private sector and have the potential to generate savings that effectively pay for the investment. The report estimates that as much as € 6.21 billion (£5.28 billion) could be available in funding from the private sector in the UK for these small-scale initiatives. Many of these projects effectively unlock more finance availability for cities from financiers that intimately understand how such smart city technology applications work and the benefits they produce.
Tailored, all-encompassing financing packages tend to be offered by specialist financiers who have an in-depth understanding of energy-efficient technology and its applications. Specialist finance providers understand the importance of implementing new equipment and new technology to generate revenue and cut operational expenses, and can therefore provide customised financing solutions that deliver energy savings and lower expenses, for instance, flexing the financing period to suit cash flow. This contrasts with the standard financing terms usually available from generalist financiers.
Vehicle routing is just one example of a small-scale smart city development. It can help to reduce councils’ cost of delivering certain services, by reducing fleet vehicle journey times and delivering an improved service with fewer assets. Specialist funding can help to make this technology more rapidly available in cities. Because private funding providers combine technological and financial expertise with a focus on innovative and customised financing solutions, specialist private financing will be the key to accelerating the trend towards SmartCity transformation. Cities require access to a wide range of financing methods, and private and public funding can complement each other as facilitators for a smarter future.
 Siemens Financial Services, SmartStart, Summer 2016
 Geoplace Exemplar Awards, South Staffordshire Council, https://www.geoplace.co.uk/documents/10181/138013/2013%20ehs%20Citizen%20Award%20slides
 Future City, Glasgow City Council, Social Transport, http://futurecity.glasgow.gov.uk/social-transport/
 Local Government Association, LGA responds to Local Government Finance Settlement, 15 December 2016, http://www.local.gov.uk/web/guest/media-releases/-/journal_content/56/10180/8106439/NEWS