Home Contents
Chapter One: Access to knowledge, imagination and learning Chapter Two: Listening to the people Chapter Three: Skills for the new librarian Chapter Four: Network infrastructure Chapter Five: Investment and income Chapter Six: Copyright and licensing issues Chapter Seven: Performance and evaluation Chapter Eight: Implementation - creating the momentum Chapter Nine: A summary of recommendations and costs Appendices

5 Investment
& income


The UK Public Library Network will require a mix of funding solutions to meet the different financial requirements associated with developing the infrastructure, operating and managing the network, creating content, and developing new services. Although central government will need to play its part in funding, given its other priorities and public-expenditure pressures it will be necessary to draw on as wide a variety of funding sources as possible, and to seek to maximise the possibilities of cross-sector collaborations and partnerships with other public agencies and the private sector.

Possible sources of funding include:
  1. local and UK-wide partnerships with the private sector;

  2. central government/National Lottery;

  3. partnership between central government and local government, including library authorities;

  4. revenues from the users of certain added-value services;

  5. many other libraries which could potentially be considered as partners - for example:

    1. the further education and higher education libraries, which are funded through FEFC and HEFC;

    2. the school libraries, which are non-statutory;

    3. special libraries in commercial, public-sector and voluntary organisations.

The sources of funding will in turn govern the procurement methods that are possible - for example, it would be very difficult to procure a core central infrastructure through local financing.

The implementation of the network must be informed by the emerging vision for the public library service and the core aims and values which underpin it - particularly the key principle of equality of access. It must therefore marry short-, medium- and long-term goals within a strategic framework that avoids quick-fix solutions driven solely by financial considerations.

To realise a UK framework that is concerned with maximising public access to digital resources and ensuring no one is marginalised or excluded, a UK solution is required. Such a solution will need to ensure core funding to provide an agreed threshold of access provision in all libraries. Additionally, it will provide a focus to inform, coordinate, promote, facilitate and stimulate access to other funding opportunities at local, regional, UK and European level. This will maximise opportunities for collaboration, and will encourage innovative and imaginative ways of developing added-value services that in turn will help to sustain core services.

Unless provision of the proposed network is seen as a public service - if it is left to the private sector - there is a danger that the flow of information will be controlled for commercial purposes. The librarian must act as a disinterested broker - in certain instances ensuring that the user has access to a range of information from a number of different private-sector sources.

The first task is to conduct an inventory and audit of current infrastructure and services, so as to understand what is already in place, what is currently planned, and what needs to be boosted. Let us assume that we can then proceed by way of modular systems as follows:
  1. library authority networks of computer terminals in libraries, and perhaps elsewhere, mainly to link libraries and to access information on the Internet, but also to provide local tools such as educational software, and access to new services - see (b);

  2. the provision of library-generated community information services on Internet Web sites, however accessed - including possible access from the home;

  3. the purchase of access by library users to subscription services already available on the Internet;

  4. the scope to transact specified central government, local government, utility and/or retail shopping business over the Internet - the precise services to be selected by the library authority;

  5. the issuing of library cards, in whatever technological form, uniquely to identify readers, and perhaps also to charge them for any or all of the above uses.

A central body should be appointed to:
  1. specify, procure and supervise the UK managed network service;

  2. specify the service levels and connection policy to the library authority networks;

  3. set and monitor the standards for implementation of the network;

  4. coordinate procurement and direct the production of content;

  5. drive the overall implementation programme - including change management, training and support;

  6. establish an arrangement to enable local procurement of standard components such as PCs at standard terms, such that local areas benefit from the total purchasing power of the group;

  7. ensure equity of service across the UK;

  8. coordinate distribution of development funding to library authorities.

The following table illustrates the most appropriate source of funding for the various elements envisaged. Note: 'Central' means existing or new government programmes or grants and Lottery funding.
Elements Funding
Public Library Networking Agency Central
Commercial: purchased/licensed Centrally negotiated,locally procured
Consortia purchasing team Central
Government/public information Central/partnership
Library-/library+partners-generated Central/local and partnership funding(education sector/DTI/government; local authority as information provider)
Digitisation of rare and special collections Central/local/partnership
       Gateways Central/local
       Subscription Central/local
Common information framework


Training and development
Training programme management Central/local
Networked courses: delivery and accreditation Central
Staff release Local
Local training incentive fund


Network infrastructure
UK 'backbone'/Public Library Network (PLN) Central/partnership
Local library networks to PLN standards,plus associated kit Central/local or Central/local/partners(where metropolitan area networks, distributed access to catalogues, etc. are in development)

Financial instruments

Funding for ICT projects could, in principle, take a variety of forms, as follows.

Private finance initiatives

In view of the extensive possibilities open to the private sector, there should be scope for private finance initiatives (PFI). The most relevant are:
  1. where an entire building or unit is built and operated by the private sector and leased back as a managed facility to the library authority;

  2. where just the ICT facility - kit and network services - is operated by the private sector and is leased back, for a fee, to a single library authority or a group of library authorities.

Whatever the sunk investment in ICT, or the scale and type of provision, there is scope for a PFI project in funding a specified level of service provision, over a specified contract life, with open communication standards and suitable training, operating and maintenance obligations. The more that appropriate risks can be transferred to the private sector, the more likely it is that the higher cost of finance incurred by a private-sector company rather than a public-sector body will be outweighed by greater value for money over the life of the contract as the private sector achieves better management of technology, service flexibility and risk. Provided the library user gets the service specified in the contract, there is no obvious reason why the library authority needs to own the hardware by which the service is provided.

Any mixed mode of funding might require some mechanism to ensure that the service can be sustained if one of the sources of funding is suddenly withdrawn.

Central government funding

Central government funding might be available - potentially as grant finance (no repayments) or loan finance (repayments funded from income according to a fixed schedule and interest rates), or even as some form of launch aid (repayments according to a percentage of commercial income above a threshold level, but no repayments if commercial income does not reach that threshold), though this last option would be seen as one that penalises the more successful operation. In view of the important role that the UK Public Library Network will play in the National Grid for Learning, it is important that funding for the National Grid for Learning should embrace public libraries as well as schools.

The key question for the library authority is whether the investment project looks sustainable. The key question for central government is whether seeking some form of return from early projects might help restore the resources to fund later developments.

In terms of distribution criteria, funding could be provided:
  1. on a formula basis (per head of population served, or based on the size of the local library network);

  2. on a challenge basis - for example, the best new content proposals for community information, say, drawing on a variety of partnerships between library authorities and/or others;

  3. based on geographical considerations (urban/rural factors).

Lottery funding

It may be possible to secure funding from the National Lottery, if central government sets suitable criteria for eligibility and distribution. One possibility is for the Millennium Fund to be replaced, after the year 2000, by a fund for connecting libraries, schools and others to the information superhighway.

One particular point to note here is that adequate revenue provision must be found to cover the operating costs of capital investment funded by the Lottery.

One way of addressing this might be through a Lottery endowment grant, where the funding is invested and the interest can be used as revenue - to pay staff costs, for example.

It should be noted that libraries are not currently eligible for Lottery funding of their core activities. To use Lottery funding for this purpose would require government intervention either:
  1. to change the eligibility criteria; or

  2. to identify this development as being such a significant enhancement to libraries' current role that it is no longer seen as a core activity and so falls within the Lottery's provisions.

Local government funding

Local government might likewise contribute funding by obtaining credit approvals (permissions from central government for the local authority to borrow funds on the market). Basic credit approvals can be used for a variety of purposes, and supplementary credit approvals can be used on condition that the funds are put to a specific use.

Credit approvals score as public expenditure, and affect the PSBR, so central government will have views on the overall availability of finance. Within this overall total, local authorities can exercise their discretion on their own priorities, except where central government imposes a view - perhaps by means of top-slicing credit approvals to give greater priority to funding specific types of investment project.

New information providers

There are new information providers who are required to reach specific audiences. TECs and business development agencies have been given a large amount of public money to do this - to brief small companies on how to export, for example. Public libraries are frequently seen as providing a useful channel for these agencies, and partnerships have already developed in some parts of the UK. The library can continue to act in the role of information broker and service provider. This would be a natural extension of its core role of providing mediated access to library services and resources, and would reaffirm the fundamental position of the library as a key node in the public knowledge network.


A situation could be envisaged in which certain services - such as job search - were provided by franchisees within the library who could offer supplementary services across the library network. One way this might work is by the franchisee offering so many hours per week free to selected categories of client in return for the facility, and then charging for the service from there on. Additional revenues could also come from allowing companies to advertise their services across the library network. These examples show how added-value services may be developed to help sustain core services.

Clearly the cost benefits of such developments will depend on local circumstances. These developments will not be viable in all areas, and should not be regarded as a replacement for core funding, but where opportunities exist or can be encouraged - for example via a consortium approach, promoting models of best practice etc. - such partnerships will provide a valuable resource to support and sustain basic levels of access to networked services.

Other financial opportunities

It is also worth noting that statutory or regulatory instruments may be available to central government to affect the distribution of costs. For example, where there is a public interest in obtaining Web-site access to records of agendas, minutes and papers taken at meetings of statutory bodies, effective cross-subsidisation could be imposed on such bodies by legislating to require them to deposit such records with libraries in electronic form. This might also be the case with local government proceedings or issues.

As a condition of their operating licence, railway and bus companies could be required to deposit copies of their timetables and fare structures with the library, in electronic form - though the commercial benefits from making this information easily available to the public make it unlikely that regulation would be needed in this area. There was also talk, in the run-up to the recent general election, of telecommunications companies being required to provide libraries and schools with access to the information superhighway as a condition of their operating licence. Such a requirement could provide the foundation for a wider UK government information policy.

Financing knowledge provision

The issues involved in financing the construction of Web sites generated by the library sector to display information and resources on the Internet are substantially different from those concerning the core funding of the network. Again there are a number of different funding mechanisms, which would all apply:
  1. central funds to establish a core set of facilities;

  2. a pool of funding to upgrade the less well equipped libraries to a minimum level of facilities;

  3. pioneer funds (perhaps from the National Lottery), to enable particularly innovative proposals to be taken forward.

It will be important for the library to own the intellectual property represented by the information on its Web site, and to establish copyright where appropriate. If there is scope for a PFI project in this area, it may be limited to digitising important or rare archive material in return for a licensed period of exploitation under specified price and other terms, at the end of which period full ownership of the material must transfer back to the library. But, even this design, build, operate and transfer (DBOT) approach may be less satisfactory than a fully public-sector approach in which the library authority owns and manages the whole project - albeit placing a (fixed-price) contract with a private-sector company to build and manage the Web site to the library's specification.

As well as the capital costs of construction, account should be taken of the revenue costs of keeping Web sites constantly and consistently up to date.

It would be appropriate for the Public Library Networking Agency to issue guidance on the open standards to which Web sites should be constructed. One model might be that adopted by the Cyberskills Association, whose Cyberskills Exchange provides its members with a set of tools to provide a standard architecture, a common look and feel, and a structure for:
  1. searching;

  2. holding 'libraries' of information;

  3. discussion forums;

  4. conferences;

  5. reports;

  6. billable services.

The Cyberskills Exchange also provides a support group for the community of information managers that run the 'information hubs', offering advice and guidance on best practice.

Purchase of access to subscription services

It seems likely that, as with the printed word, different library users will want to access different sources of information on the Internet, some of which may set licence conditions or charge a subscription fee. For example, a student may require access to an economics journal, or a member of the public access to back issues of New Scientist. As part of the normal operations of the library, the library authority may elect to purchase access to these subscription services for its readers, whether or not it passes on charges to them.

The obvious requirement here is for a UK initiative to form a purchasing consortium to negotiate the very best terms for purchasing in bulk, where this is appropriate. Given the proportion of the UK population represented by library users - 58 per cent - the purchasing power of this consortium should be considerable.

There needs to be a consistent access policy, with perhaps some local flexibility where charges are deemed appropriate. But there is a need to ensure against situations whereby one authority charges and another doesn't, thus compromising the principle of equality of access.

Financing the infrastructure

This chapter is written on the basis of the recommendations made in Chapter 4 - namely:
  1. a single UK managed network service to provide the core 'backbone' services;

  2. a standard connection to existing library authority networks;

  3. a central fund made available to encourage library authorities to upgrade their existing networks and access devices where necessary.

Different library authorities will start with different sunk investments in ICT. Some may have well-developed internal systems - perhaps even with links to other parts of local government, and perhaps servicing most, if not all, the libraries in the area. The requirement for these authorities may be to extend the network to all libraries, to introduce some form of external gateway to the Internet, to upgrade the bandwidth of telecommunication links to a more suitable open standard, and/or to introduce security firewalls between the public and private parts of the network to prevent hacking. Other library authorities may have little sunk investment in ICT, and their local networks will have to be substantially upgraded.

Commercial transactions

If certain libraries wish to make available to their readers the opportunity to conduct business transactions over the Internet, the two main requirements are:
  1. an enhanced certainty that the reader is who he or she claims to be - to ensure that the library is not party to fraudulent misrepresentation;

  2. being satisfied that the reader is both able and willing to fund the costs of his or her transaction.

These are discussed further below.

Another opportunity for libraries may be the provision of suitable software for a variety of off-line uses. Typical hobby uses may require family history, gardening, computer-aided design or financial software. Further ranges of software will be needed for children's education after school hours or in the holidays, or for lifelong education programmes. Some libraries might choose to offer business applications, but this might be seen as beyond their remit and might impact upon local companies offering services to small businesses on a commercial basis. Alternatively, this is another area for potential partnership with the private sector.

On the other side of the fence, the library may be able to secure commission income from service providers who transact authorised Internet business - for instance from the sale or purchase of stocks or shares. Consortium negotiations may be needed to secure the best commission rates.

In deciding whether or not to provide such commercial services, libraries will need to consider the impact such provision might have on the conduct of normal business. There might be controversy if libraries were seen to be stepping beyond the bounds of their public-service role and competing with local businesses. In any case, it will be necessary for library authorities to ensure that they are not undermining local business potential through anti-competitive activities.

Library cards

Library cards currently fulfil a number of important functions, which could be enhanced by the use of smartcard technology, including the recording of:
  1. membership details;

  2. borrowing status;

  3. items on loan;

  4. use of facilities available - levels of access, and whether free or charged for etc.;

  5. approved charges for use of any library facilities;

  6. discretionary allowances - for example, for children and for those over sixty;

  7. approved business transactions on the Web;

  8. residency status - to allow the potential for votes being registered electronically, on local issues or in central referendums or elections. No such services exist at present, but these could be envisaged in the future.

In the case of establishing identity, it would be possible for libraries to make use of a central-government-sponsored smartcard, if one were introduced. Failing this, or while waiting for it to be developed, the library would follow the procedures it currently uses when issuing library cards to borrowers.

One solution might be for libraries to make use of a smartcard already in circulation, such as those which will be used for social security benefits (which would enable certain groups to be targeted for preferential or free access to key services, such as might help unemployed people to find jobs). Or there could be some form of prepayment card, like telephone cards.

Once again, there will be virtue in library authorities acting together to agree common standards for the issuing of library cards and the obligation to make payment in respect of debts incurred. This would facilitate out-of-area services being made available to professionals away from base, or to the general public on holiday or visiting relatives.

See paragraphs 5.55 to 5.60 for more on the subject of charges for facilities.


All procurement will be via open tendering, to secure best value for money. The EC Procurement Directives require advertising in the EC Journal for contracts in excess of £180,500.

All the usual public-sector disciplines will apply. Officers placing the contract will be accountable for propriety, regularity and best value for money, and will need to consider in advance the precise mandatory and desirable user specifications put out to tender, the appropriate degree of risk transfer, the scope for fixed-price or incentive contracts, and the penalties to be triggered by breach of contract terms or project milestones.

Risks and reward management
for ICT projects

In a PFI project the private sector will take on the project risks - both technical and business - but will expect to be rewarded accordingly. The supplier will usually be responsible for designing, implementing, running and maintaining the project solution, and also for any technology update needed to keep it current.

Many contracts specify a reward for the supplier based on how well the system is used. It is important to agree the right balance here between unit cost and level of usage, so that the supplier may incur some penalty if the system is not used as well as had been predicted, but gains extra revenues if it is used more.

The critical issue in any PFI contract is for both sides to have an agreed commercial deal at an early stage - each side has to understand the other's position vis-à-vis the way in which costs have been allocated. It needs to be made clear who bears the costs if anything goes wrong.

A risk register must be agreed that covers all areas, including technology, usage and any vulnerability to changes in legislation. The register must specify who is responsible for each risk, and both sides must agree how the risks will be minimised and managed. If too much risk is passed over to the supplier the costs may well soar, so the right balance needs to be found.

There needs to be a process of continuous review, monitoring how the contract is being managed, and this too must be defined at an early stage. It must be made clear what will happen if the requirements change, if new applications are needed.

An exit strategy must also be defined, specifying what will happen at the end of the contract period, who owns any assets, and how the contract will be rebid.


Access to network services could be free at the point of use, even if the library is required to make payment to a service provider, or could be charged to the user. This crucial issue cannot be determined in principle at this stage, since it will relate to the funding source of the UK Public Library Network, particularly if public/private partnerships are involved.

There are a number of key factors which underpin and inform this principle:
  1. The principle of free access (to a defined level of service) at the point of delivery raises the question of how the service should be paid for rather than what level of charge is appropriate.

  2. The emerging information and communication technologies are the new literacy, and the successful communities of tomorrow will be those who, given access, are informed and educated in the use of these technologies.

  3. Without such access, groups of people will be cut off from this developing knowledge-rich world, and their ability to survive and succeed in the information economy will be greatly reduced. This will have knock-on effects in terms of social inclusion/exclusion, impact on local communities and local economies, and a widening gap between the information-rich and the information-poor.

  4. Conversely, establishing a threshold of free access within a UK public library network will:

    1. ensure a basic equality of access throughout the whole country;

    2. provide a UK platform to facilitate the cultural change necessary to encourage people to acquire and use the new information and communication skills and to adjust more rapidly to the developing information society;

    3. very quickly build up the critical mass of users that justifies investment in the infrastructure;

    4. move the debate away from the bottle's neck to the bottle's contents: the future of the network lies not in the technology but in the content and services that can be made available.

Investing in the skills base of the country now will both stimulate demand for content and develop the necessary expertise to provide it. Given the global nature of the developing information and communication technologies, this will help the UK to gain market advantage and build a more secure future for the country. Any charge will act as a barrier to access. It will not affect the ultimate direction of change, but it will affect the pace of that change. Where the threshold of access is established will determine whether the country takes a quantum leap forward into the information society or merely breaks the sound barrier.

Having established the threshold of access that is free at the point of delivery - and that may require a change to the legislative framework - attention can shift to the development of added-value services that may provide revenue streams to support and sustain the core service. For example, just as today books are free but one pays to borrow CDs and videos, a fiction library might be free but added-value services for business might be charged for. One could charge a user to access a commercial database or to book a holiday, or even rent 'virtual' space out to a business on the library Web server.

Charging according to use within this framework will not compromise the principle of equality of access. Where resources are still scarce initially, access to 'free' services may be time-limited to provide a simple regulatory mechanism.

Collaboration with other public- and private-sector bodies will be vital, not only in terms of developing added-value services but also in enabling maximum benefit to be derived from available resources - for example, bending existing local ICT resources towards development of integrated networks, realising potential economies of scale, cost sharing, resource sharing and expertise sharing. A number of examples of public/private- sector partnerships have already been outlined above. While all have (potentially) a local application, much can be done at UK level to facilitate such arrangements to ensure effective coordination and exploitation of best practice.

Income potential

The proposed investment will result in a number of opportunities to generate income which can be used to offset some of the costs or to improve or diversify the service. These might include:
  1. new services which exploit the infrastructure and are offered on a commercial basis;

  2. sponsorship and advertising fees;

  3. charging for specialist training - which may be delivered through partnerships;

  4. enabling commercial organisations to use the infrastructure - to 'rent' space on the library network, for example;

  5. charging for commercial use of content whose digitisation has been funded through this initiative; this represents a major opportunity for UK content and services as worldwide exports ;

  6. income from central government for the provision of electronic services.

No attempt has yet been made to quantify the value of these opportunities.

Home Contents
Chapter One: Access to knowledge, imagination and learning Chapter Two: Listening to the people Chapter Three: Skills for the new librarian Chapter Four: Network infrastructure Chapter Five: Investment and income Chapter Six: Copyright and licensing issues Chapter Seven: Performance and evaluation Chapter Eight: Implementation - creating the momentum Chapter Nine: A summary of recommendations and costs Appendices

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