Spending Review: HMRC promised £750m to update IT and embrace SME tech firms

Chancellor unveils funding for tax agency’s tech infrastructure

Credit: Crown Copyright/Open Government Licence v3.0

Over the next three years HM Revenue and Customs will receive almost £750m to upgrade its technology infrastructure while opening up more IT procurement opportunities for smaller firms.

Spending Review documents outline the government’s intent to provide “significant levels of investment to modernise HMRC’s IT systems and improve the quality, resilience and security of its digital services”.

This will include £468m to with which “to reduce the risk of system failures, enhance the department’s ability to defend against cyberattacks and support the continued digitisation and modernisation of the tax system”.

A further sum of £277m will be provided to enable the department “to transform the way [it] procures IT services”.

The object of this revamp will be “creating more opportunities for smaller businesses to compete for contracts and delivering greater technological innovation” for HMRC.

The department is in the midst of delivering the Technology Sourcing Programme, a multi-year project to safely manage the transition out of several major IT supplier contracts and transform the processes which govern how an annual total of £900m is spent on tech.

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Speaking to PublicTechnology earlier this year, HMRC chief digital and information officer Daljit Rehal said: “We want to be the best at what we do, and that means working with the best technology partners – big, small and everything in between. We are opening up our IT supply chain, and bringing about a step change in the way that we work with partners. This will help us to protect key live services, modernise our IT estate, get the best deals for the taxpayer, and give us better access to new technology as it comes along.”

The necessity of “patching up legacy systems” across the department in order to cope with the demands of coronavirus response cost HMRC £53.2m during 2020, according to a report published earlier this year by the Public Accounts Committee. This equated to 80% of the total additional costs incurred as a result of the pandemic.

In the one-year spending round undertaken last year, HMRC was the biggest beneficiary of £600m committed to “fix outdated government IT”; the tax agency received £268m, with the Home Office being given £232mm the Department for Education £64m, and the Ministry of Justice £40m.

In this year’s three-year review, covering departmental budgets for 2022/23 to 2024/25, the government has promised £2.6bn of funding for initiatives related to “cyber and legacy IT… with a particular emphasis on improving the government’s own cybersecurity”.

There is little explicit detail of how this money will be spread between departments, although the Foreign, Commonwealth and Development Office is promised £100m “to support improvements to the FCDO’s technology platform and cyber security infrastructure”.

The Department of Health and Social Care’s settlement includes £2.6bn to invest in “innovative use of digital technology so hospitals and other care organisations are as connected and efficient as possible”.


Sam Trendall

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