The Child Package – using blockchain technology to improve services for residents

The municipality of Zuidhorn (now Westerkwartier) created the Child Package, based on the principles of Blockchain. The Child Package is a scheme intended for children from low-income households. Residents can log in on a website and use a QR-code to pay for child products at participating regional businesses.

Innovation Summary

Innovation Overview

On an international level, there has been widespread experimentation with blockchain technology over the past few years, both in the private and in the public sector. In an effort to promote digital development, the Dutch government has put together the Digital Public Sector agenda, which specifies targeted innovations, as well as matters relating to the protection of basic rights and public values. On a local level, authorities are experimenting with, among other things, possibilities offered by blockchain. The Zuidhorn municipality (currently Westerkwartier municipality) in the northern part of the Netherlands was one of the Netherlands’ first municipalities to build a fully operational application that is based on the principles of blockchain.

Bridging the gap between dignitaries and ‘regular people’ is what alderman Stol has set out to do. One of his responsibilities is to stimulate the ‘knowledge economy’ in the Zuidhorn municipality (19,000 inhabitants). This municipality is located at a short distance from the University of Groningen, Hanze University of Applied Sciences, and other knowledge institutions. Zuidhorn has set out to use this proximity to its advantage in switching to a knowledge-based economy. In putting together the municipal executive, potential members were asked how they would handle setbacks. Would you fall back on rules and procedures or accept that things can go wrong when taking new initiatives, because it is simply part of it? Sustainability (GroenLinks (left-wing political party)) and stewardship (ChristenUnie and CDA (centrist political parties)) coincided in the ambition to shape the knowledge economy and innovation in the municipality, for residents, but also for their children and grandchildren. The basic principle was to embark on this journey together, go on an adventure, and explore whatever you encountered along the way, not hiding behind rules, but seizing opportunities.

‘Our aim is to make Zuidhorn a little bit more beautiful every day’ is the overriding motto for the municipal organisation’s activities. To do so, Zuidhorn has adopt an outward-looking perspective and rewards initiative shown within the organisation. Coming from this innovation-oriented context, department head Erwin van der Maesen de Sombreff attended a conference one day where he became inspired by blockchain technology. He believed this technology would make it possible to verify the identity of applicants for services or products using software instead of having civil servants review each application. He decided to recruit an intern and appointed Maarten Velthuijs, with whom he signed an internship agreement. Going into the project, Maarten made it clear that he did not merely want to produce a thesis, but wanted to deliver a fully functional concept. ‘If I really want us to change the way we work, I will simply have to go along with this’, Erwin told himself.

Maarten saw blockchain as a way to take personal data out of databases and put it back in people’s own hands. Blockchain would make it possible to put personal data in the network in an encrypted form. And only you have the encryption key. The data is not owned by Google or any other commercial party, but not by the government either. You are the only one who can decide who can access your data. It is basically the start of a new form of internet, but in a way that puts people back in control, instead of commercial organisations. He put together an international team and came up with a concept with them for all applications for public services by using the standard roles of applicant, donor, provider, and validator.

The Child Package is a scheme intended for children from low-income households. At the time, running this scheme was a cost-intensive undertaking for the local authority, involving physical vouchers that people could use to purchase products at certain shops, and which applicants would have to pick up on a date set by the local authority. After four months of hard work, which involved close collaboration with local civil servants, the Child Package process was changed and provided using the new technology. Using the Child Package scheme now no longer involved transactions where money changed hands. Instead, residents logged in on a website using an activation code and could use a QR code to pay for child products at participating regional businesses.

Innovation Description

What Makes Your Project Innovative?

The Zuidhorn local authority was one of the first to have a working application based on blockchain principles, which greatly improves the way residents receive child benefits. The technology lets applicants claim their product in real time by logging in on a website and ticking the products for which they are eligible. This is far more user-friendly than physical vouchers and prevents residents from using the money for other purposes besides their child.

In the Netherlands, Zuidhorn is now seen as a pioneer in the area of innovative solutions. The results have received acclaim from many sides, and Zuidhorn has won various innovation awards.

What is the current status of your innovation?

In November 2017, the Child Package went live. Residents and businesses alike welcomed the innovation. Residents liked not being able to spend the money on other things, such as groceries, and because they could spend it only on their child. The local authority currently uses the outcome of this pilot to further develop the application.

Following the merger of local authorities on 1 January 2019, Zuidhorn became part of the larger Westerkwartier municipality. The Child Package scheme is now being prepared for a roll-out on a larger scale for the whole Westerkwartier municipality. With the creation of the Innovation and Research team, innovation has been made a structural pursuit in the new municipality.

Innovation Development

Collaborations & Partnerships

The innovation was driven by the department head of the Zuidhorn municipality. An international team of experts made the application, collaborating closely with local civil servants and the community (entrepreneurs). On 1 January 2018, support came from the Association of Netherlands Municipalities (VNG), in the form of a so-called ‘pilot starter’, delivering invaluable contacts with other municipalities.

Users, Stakeholders & Beneficiaries

Users of the Child Package are the residents from low-income households receiving the child benefits. Using the Child Package scheme now no longer involves transactions where money changes hands. Instead, users log in on a website using an activation code and can use a QR code to pay for child products at participating regional businesses.

Innovation Reflections

Results, Outcomes & Impacts

The Zuidhorn local authority has a workable application based on the principles of blockchain that can be further expanded, as it is based on technology that has the potential to become the standard for the entire public sector. Zuidhorn has put itself on the map internationally by winning the hackathon, engaged in innovative collaboration with the local community (entrepreneurs), opened a new knowledge-intensive institution in its municipality, but above all, it has made a contribution to an important public interest by making ground-breaking technology available within the public domain. The technology in question includes a globally usable application for all application procedures that require data verification, such as parking permits, environmental permits, grant applications, but also state pension or child benefit payments. The technology lets applicants claim their product in real time by logging in on a website and ticking the products for which they are eligible.

Challenges and Failures

The developers of the Child Package saw it as a challenge to work outside their comfort zone. At times, they felt insecure. Am I really allowed to make mistakes? To be able to innovate, they needed to think outside the box, albeit still inside the box of a municipal organisation. Also at an innovation-friendly organisation such as the Zuidhorn municipal authority, there were people who did not see the good in blockchain. Aside from that, it turned out to be difficult at times to explain the technical aspects of the application to colleagues without a technical background.

Conditions for Success

In developing the Child Package, the Zuidhorn municipal authority tapped into interest across society and politics in the application of new technologies such as blockchain. The municipal organisation’s innovation-friendly ecosystem also helped make the Child Package a success. The atmosphere was informal, you could just walk into a meeting of the municipal executive to present an innovative idea. Managers not only focus on results, but also allow room for experimentation. The Zuidhorn municipal authority showed the required drive and freed up funds to solicit and implement innovative ideas. The Child Package was not Zuidhorn’s first innovation.

Replication

So far, the Zuidhorn local authority has been one of the first in the Netherlands to implement a fully functional application that is based on the principles of blockchain. Other public-sector organisations could easily replicate this innovation, for example for subsidy and benefit schemes. After all, blockchain software is open source, meaning that any organisation can use it to build an application. The roles of sponsor, applicant, validator, and supplier that Zuidhorn used for the Child Package innovation are also universally applicable.

That said, the use of blockchain applications does require willingness in the public sector to accept a role change in society. The underlying principle of blockchain is mutual trust and reaching consensus. In these processes, the public sector no longer fulfils the central regulatory role. The system takes care of that itself. In countries where the public sector still fulfils a strong regulatory role, using blockchain could generate resistance.

Lessons Learned

The Zuidhorn municipal authority has experienced that blockchain applications lead to better services for residents. The power of blockchain is that it lets you speed up administrative processes enormously, and reduce them to what is really necessary. The success of the Child Package scheme shows how a small local government can take the initiative in propelling new technological applications and set an example for others to follow. By seizing this leading role, public-sector organisations can define the playing field for the development of such technology instead of leaving this to commercial providers and ultimately depending on these same commercial providers. Based on the principle of creating public value, they can thus shape the Internet of the future.

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