One in four UK government systems are outdated, resulting in £45bn in lost productivity savings, according to its forthcoming ‘State of Digital Government Report.’ Developed with support from Bain & Company, the report gathered input from over 500 leaders across 120 organisations. It highlights the need for significant investment in digital infrastructure and provides a detailed analysis of how legacy systems hinder the delivery of public services.
“The new findings are also expected to show government departments have been pushed towards bringing in contractors and consultants to complete basic technological tasks instead of full-time staff,” said the Technology Secretary Peter Kyle. “This trend was driven by weak salaries and headcount restrictions that stopped departments. This is despite them costing three times more than civil servants and eating up £14.5bn in taxpayer money a year.”
A key finding reveals that over one-quarter of digital systems in central government departments are outdated, with some areas reporting figures as high as 70%. Maintenance costs for these systems are significantly higher than for modern alternatives, with expenses often tripling or quadrupling. In 2024, NHS England reported 123 major system failures, causing disruptions to patient care and forcing staff to revert to manual, paper-based methods.
These inefficiencies also affect public access to services. Nearly 50% of all public services remain unavailable online, requiring individuals to apply for support in person or by phone. This leads to delays, particularly for citizens with complex needs, who may have to interact with up to 40 different services to access essential care and support.
To address these challenges, the government plans a series of reforms, including the deployment of artificial intelligence (AI) tools and the replacement of legacy systems. The Technology Secretary is set to outline initiatives aimed at reducing costs, improving service delivery, and fostering economic growth under the broader Plan for Change.
Among the initiatives are AI tools such as “Connect” and “Scout.” Connect aims to accelerate the connection of renewable energy projects to the national grid by prioritising viable projects and matching them with available capacity. This tool is designed to reduce delays currently hindering progress in the energy sector.
Scout focuses on managing large-scale infrastructure projects. By automating the analysis of extensive documentation, the tool helps detect issues early, reducing delays and improving project timelines and budgets. It is expected to support the timely delivery of critical projects such as hospitals and motorways.
Cybersecurity forms a central pillar of the planned reforms. The Government Digital Service (GDS) will expand its role to identify and address vulnerabilities in public sector systems. This initiative aims to enhance protections against cyberattacks and ensure uninterrupted access to essential services.
The report also emphasises the economic benefits of modernising public sector technology. Replacing outdated systems is expected to reduce operational costs, improve efficiency, and provide faster responses to citizen needs. Businesses are also anticipated to benefit, with streamlined approval processes reducing bureaucratic delays and supporting economic growth.
NAO highlights broader challenges in digital procurement
The National Audit Office (NAO), has identified further challenges in the government’s digital transformation efforts, highlighting inefficiencies in its engagement with technology suppliers. According to the public spending watchdog, improved procurement practices could save significant time and resources, but lessons must be learned from past digital transformation projects that suffered delays and cost overruns.
The NAO also pointed to a lack of digital expertise within key government functions. It noted that the Government Commercial Function (GCF), responsible for procurement, lacks the specialised skills needed for complex projects. Meanwhile, the central digital function, which oversees digital policy, is not resourced for detailed involvement in procurement activities.
“A lack of digital and procurement capability within government has led to wasted expenditure and lack of progress on major digital transformation programmes,” said NAO head Gareth Davies. “Government needs to rethink how it procures digitally, including how to deal with “big tech” and global cloud providers that are bigger than governments themselves.”
The NAO further noted that government procurement guidance often fails to address the complexities of digital projects, limiting collaboration with external stakeholders. It recommended that the government invest in technical expertise and develop a stronger understanding of digital markets to improve supplier partnerships and enhance public service delivery.
Read more: The UK’s public sector badly needs a software update. Here’s how to make it happen.
