NAO chief Gareth Davies says that government needs to invest in tech to achieve efficiencies

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Government’s attempts to deliver digital transformation over the last 30 years have been hampered by excessive optimism, according to the head of the National Audit Office. 

In a speech given last week, head Gareth Davies said that government could achieve financial and operational efficiencies by improving its evaluation processes, the management of demand for services, and investing in digital.

But he warned that decades of technology-led reform have been sullied by unrealistic expectations.

“We have seen repeated cycles of digital change in government since the 90s, accompanied by an over-optimistic view of how easy this kind of change is to implement,” he said. “Government is not a greenfield site where brand new systems can be created at will. New ways of doing business and services need to fit into a government landscape still dominated by legacy systems and legacy data.”

Davies said the pensions scandal, where tens of thousands of people – mostly women – were systematically paid too little state pension, is an example of the impact this can have on citizens.

Errors by civil servants caused the Department for Work and Pensions to underpay 134,000 people a cumulative total of more than £1bn in state pension entitlement.

“One of the causes of this was a reliance on old systems that could not easily be updated,” Davies said.

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Davies said digital leaders in government have experience and understanding of the challenges government needs to overcome, but “have often struggled to get the attention, understanding and support they need from other senior decision-makers”.

The Central Digital and Data Office committed in its Transforming for a Digital Future Strategy, published in June, to work across government to mitigate legacy IT risk and to reduce overall government exposure to legacy systems. The spending review last year, meanwhile, pledged a total of £2.6bn across departments to update ageing tech and reduce cyber risks.

Beyond the investment in digital tools, government can also achieve Davies also said using data better can “unlock huge efficiency gains”. The NAO chief pointed to the examples of good practice that had emerged during the pandemic, including the furlough scheme, which he claimed was better targeted than the self-employed income scheme because HMRC had more up-to-date data for it. And he said widespread use of the NHS app during the pandemic has now translated into patients being more willing to engage digitally with the NHS.

More rigorous evaluation processes are the key to helping policymakers to make the right decisions, according to Davies.

“Despite government’s commitment to evidence-based decision-making, much of what it does is either not robustly evaluated or not evaluated at all. This is a serious problem,” he said.

He pointed out that, in December 2019, the prime minister’s implementation unit concluded that in most policy areas government has little information about the difference made by major spending programmes, with only nine of the government’s 108 most complex and strategically significant projects evaluated robustly. Seventy-seven of them had no evaluation arrangements at all.

By not evaluating robustly, Davies said the government is “not taking the opportunities to pursue more of what works, nor to stop what doesn’t work”. The NAO head said it is “easy to see” why evaluation is often not prioritised.

“The results can take a long time to come through, and nobody relishes being associated with a programme that is shown to be ineffective,” he added. “But we won’t embed better value for taxpayers if we don’t pay attention to what government spending is achieving.”