Public sector dependence on ageing tech and contractors costing £45bn a year, government claims

Sam Trendall January 20, 2025 in Economics and finance, News - 3 Minutes

A new study published this week will be accompanied by an outline of plans for a major revamp of the current public sector digital and tech landscape, ministers have indicated

The prevalence of ageing technology and the use of expensive contractors across the public sector is costing taxpayers £45bn a year, a major government report has found.

Due to be published in full this week by the Department for Science, Innovation and Technology, the State of Digital Government Report claims that a quarter of digital systems in use across central departments are “outdated”. In some agencies, the figure is as high as 70%, according to the study.

The maintenance of these “archaic” platforms results in maintenance costs of up to four times as much as a system running on up-to-date hardware and software, the report says.

The assessment also finds that “government departments have been pushed towards bringing in contractors and consultants to complete basic technological tasks instead of full-time staff”. This reliance on external support – which the report claims has been fuelled “by weak salaries and headcount restrictions” – results in an extra cost to the public purse of £14.5bn a year.

Alongside the publication of the report, which is based on research delivered by consultancy Bain, technology secretary Peter Kyle will announce “a wholesale reshaping” of the public sector technology environment.

“Technology that sits at the foundation of our country has been left to wither and decay under the hands of the previous government, too often grinding to a halt and stalling essential public services – racking up a huge bill for the taxpayer,” Kyle said. “It doesn’t have to be this way – and it won’t be with our Plan for Change. There is a £45bn jackpot for the public sector if we get technology adoption right, that’s twice the size of the black hole we faced when we took office, and it’s not an opportunity we can let pass us by.”

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While details of the minister’s planned overhaul are currently scarce, DSIT said that, as part of the revamped tech landscape, “an expanded Government Digital Service” will deliver various new offerings.

This will include a service designed to “search for vulnerabilities across the public sector”. When such weak spots have been identified, “support will then help different organisations fix these issues and make the UK more resilient to cyberattacks”.

Another new tool – formally announced over the weekend – is the Scout service which is intended to help detect potential issues with the delivery of major government projects, including hospital construction, defence programmes, and the delivery of transport infrastructure.

“It does this by automatically analysing thousands of documents to help detect problems earlier, enabling timely interventions that keep critical projects on track,” DSIT said.

In doing so, Scout will save officials from having to manually sift through as many as 150 reports, thereby reducing the process from “hours to five minutes”.

The Connect artificial intelligence service, meanwhile, will help to manage the queue of energy projects seeking to connect to the national grid by prioritising clean-energy schemes that are ready to deploy – ahead of those that are “speculative” or lack funding. The tool is currently “in development”, according to DSIT.

The State of Digital Government Report was compiled using feedback from 500 senior figures from organisations across the public, private, and third sectors, as well as analysis of data from more than 100 other bodies.