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October 31, 2016updated 07 Nov 2016 2:35pm

Government IT spending problems persist – report

Study says bigger push needed to break with the past

By Sam

A report issued today said conflict, resistance to change and contract stagnation are becoming things of the past but said Central Government must move quicker and at greater scale if it is to realise the required level of annual IT spending savings without sacrificing services.

The issues to be addressed include flexibility and agile approaches, departmental leadership and reducing the reliance on outsourcing with the report saying efficiency savings could be as great as £2bn per year between 2020 and 2025.

The report identified that some big public services run on computers from the 1980s. These legacy systems are slow, keep data fragmented and prevent services from being joined up.

The Institute for Government recommended ending long term outsourcing contracts and bringing control of New IT back in house.

“New IT is more flexible and can work as an ecosystem, rather than as a series of silos, creating economies of scale and joined-up services. Bringing IT in-house by ending large contracts is often necessary to make these changes,” it said.

It quoted Iain Patterson – former chief technology officer of the Driver & Vehicle Licensing Agency (DVLA) saying ‘you can’t transform what you don’t control’.6 There are risks in changing systems but it is a necessary step towards digital government.’

The report said: “HMRC claims that its programme to replace the £10bn ‘Aspire’ IT contract – through which supplier Capgemini has managed almost all of its IT since 2004 – will cut its IT spending by £200m (24%) a year by 2020/21.20”

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A HMRC IT profile shows the size of the challenge

A HMRC IT profile shows the size of the challenge


“Our analysis suggests that if those kinds of savings are replicated by the other large transactional parts of government, they could realise efficiency savings in the order of between £1.3bn and £2bn by 2020.25 However, ‘efficiency savings’ are not the same as spending reductions. Digital transformation requires investment. When DVLA’s ‘operating expenditure’ fell by £78m, its staff costs actually went up. HMRC’s underlying efficiency savings took place in the context of an overall increase in spending, with a cash injection given in the 2015 Spending Review to make its ‘Making Tax Digital’ plans a reality. It estimates that £700m of investment will be required to realise the £200m-a-year spending reductions promised by its Aspire contract replacement. This means that while digital change offers a cheaper way of running government in the long term, it will not be an immediate source of vast savings to government in the short term,” the report said.

“In 2010, the new Coalition Government made a break with the past. It brought new people in to set up the Government Digital Service (GDS) in the Cabinet Office. Government websites were brought together into GOV.UK and large IT outsourcing contracts became subject to strict controls. This started the process of bringing more people with digital skills into government, who were sent across government to help introduce new digital services. There was a lot of conflict and resistance to change, some failure and some success. Departments started to build their own digital capability. The challenge now is to move from relatively small changes to start to make the big changes – often called ‘transformation’ – that will really improve services and save money. These changes will extend far beyond the remit of the chief information or digital officers. Making it happen requires a big increase in the capability of the leadership of departments and agencies.”



Whitehall’s traditional approach to the control and assurance of projects (governance) was to lock down requirements at the start of a project, set a timetable, and then progress in a linear fashion from design to implementation (in a ‘waterfall’).

Can Government ever move from Waterfall to Agile?

Can Government ever move from Waterfall to Agile?

But the digital world has found that people do not know what they want until they see it, and that locking down requirements early on leads to software that people do not want to use. So they develop prototypes, testing them frequently with users, and adapting them quickly (hence ‘agile’). The arrival of digital technology has not removed the competing objectives and complex accountabilities of government, and teams must often recognise that they are part of a big programme with numerous interconnections. But governance of agile projects requires a specialist understanding of how they work.

Read CBR’s interview with the new head of the Central Government Council for IT procurement

Next: Labour Problems


But this form if IT is hugely disruptive and cutting edge. It requires strategy, planning and most of all skills.

The report said ‘Our interviewees, in fierce agreement with the National Audit Office survey referred to above, cited external labour market conditions as the biggest barrier to securing staff. The level of pay required to attract digital people has seen departments go through several rounds of recruiting to produce very few applicants. Interviewees felt that the only option, in a market that puts them in competition with the likes of Google and IBM, would be to break pay structures. This is a barrier to attracting and retaining people at all levels of seniority.”

government-spending-review-3Francis Maude, as Minister for the Cabinet Office, asked entrepreneur Martha Lane Fox to conduct a review. She called for ‘revolution not evolution’, recommending centralising and simplifying government’s web presence, with the aim of improving user experience. Mike Bracken was brought in to lead GDS. He was replaced in 2015 by Stephen Foreshew-Cain, who was then replaced by Kevin Cunnington in September 2016. Cunnington both runs GDS and is the cross-Whitehall head of function for digital, data and technology. Previously he was director general of digital transformation at DWP, global head of online for Vodafone Group and began his career in programming and IT consultancy.

Issues raised in the report:

  1. Digital transformation cannot be led by digital specialists alone. But there is insufficient understanding of digital transformation among other government leaders.
  2. The policy profession has not gripped the opportunities offered by digital technologies and methods. Making joined-up, simple, effective digital services has to start during policy design, not implementation.
  3. The traditional processes for controlling and checking government projects are unsuitable for digital development, which causes frustration on all sides, slows development and undermines accountability.
  4. Government will not be able to achieve its digital ambitions, unless the Civil Service is made a more attractive employer for people with highly sought-after digital skills.

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