PublicTechnology dives into the detail of HM Treasury’s recently published efficiency plans document
This month’s Spending Review saw government departments committing to combined annual efficiency savings of £13.8bn by 2028-29, measured against planned revenue budgets for the current financial year.
A chunk of those savings is expected to come from better utilisation of technology to drive productivity gains, as well as increased efforts to cut down the use of expensive consultants – particularly in relation to digital services.
PublicTechnology put HM Treasury’s 48-page primer on department-level plans under the spotlight.
At the beginning of this year, the Department for Science, Innovation and Technology’s State of Digital Government report trumpeted the long-term potential for £45bn of annual savings from better use of digital across the public sector. The review also highlighted the public sector’s reliance on “costly” IT consultants, contractors, and managed-services providers.
So it is perhaps no surprise that those measures feature prominently among individual departmental plans in the Treasury document – or that DSIT’s plan seeks to position it as “an exemplar for modern digital government”.
DSIT pledges to “improve staff productivity and free up time spent on administrative tasks” through “exploring, identifying, and implementing AI opportunities across the department”.
According to the Departmental Efficiency Plans document, DSIT will deliver efficiency gains of £32m a year by 2028-29. It projects £7m of that figure will come from developing AI tools and platforms “initially for tasks like summarisation, drafting and automation of repetitive processes”, freeing up time spent on administrative tasks.
DSIT said its plans to reduce reliance on external consultancy and managed services – by transitioning these roles to in-house civil servants – will generate savings of £13m by 2028-29 and “support the development of a more diverse and inclusive workforce”. The department said it expected use of contingent labour to reduce by 40% over the period.
“Cabinet Office will develop a new operating model that includes moving all digital teams and associated digital tools and platforms into the centre of the department, which will generate people and commercial efficiency gains.”
Departmental Efficiency Plans document
While many departments made reference to reducing their reliance on consultants, unlike DSIT, few specified targets or anticipated savings. One exception is the Home Office, which floated a figure of £153m in annual efficiencies from “reducing third-party resources” by 2028-29, out of a total of £533m in efficiencies.
The department said contracts would be reviewed, with those boasting the “greatest scope for efficiencies” being prioritised. The Home Office made particular reference to the in-sourcing of specialist digital roles, which it said would achieve “the same outputs at lower cost”. It added that the Police Efficiencies and Collaboration Programme will also drive savings in third-party spend across police forces.
Other departments pledging to insource more digital roles to save money included the Foreign, Commonwealth and Development Office, the Department for Education, the Ministry of Housing, Communities and Local Government, the Department for Culture, Media and Sport, and the Department for Business and Trade.
Health and efficiency
The lion’s share of the efficiencies set out in the plan come from the Department of Health and Social Care and the NHS, which the department is responsible for.
DHSC will deliver “efficiency gains” of £9.1bn a year by 2028-29 – almost two-thirds of the entire cross-government efficiencies total.
Superficially, a breakdown of the total DHSC figure shows initiatives such as IT modernisation, shared services improvements and counter-fraud activity at the department and 12 other arm’s-length bodies count for a small proportion of the total: £121m.
The remainder of the efficiencies are related to the NHS Productivity Plan, which is targeting 2% annual growth in productivity across the health service over the course of the spending review.
However, the Productivity Plan is backed by “up to £10bn” in technology and transformation spending for NHS bodies up to 2028-29. According to the efficiencies document, this will see the NHS “invest in core technology infrastructure to optimise the use of clinical and administrative time and avoid delays caused by outdated technology”.
As PublicTechnology reported earlier this month, the main Spending Review document said the funding boost would support “the shift from analogue to digital” in the NHS, with “promising opportunities for AI adoption” also part of the picture.
DHSC’s efficiency plans include turning the NHS App into the “digital front door” to the health service, enabling patients to manage medicines and prescriptions, receive NHS communications securely and increase their access to medical services.
The NHS will also deliver a “single patient record”, allowing clinical staff to see test results and medical histories, “reducing administrative burden involved in accessing records, duplication and improving decision-making”.
Additionally, use of the Federated Data Platform will be expanded to give staff live data on their clinical area, including patient progress and surgery lists.
Artificial intelligence rollout
The Ministry of Justice is among those departments placing particular stress on the ability of AI to drive change. It is targeting annual efficiency gains of £356m by 2028-29, of which £121m are predicted to come from digital reform – which includes AI adoption, the use of technology for offender-management in the community and bringing some services in-house.
The department said it is piloting new uses of technology, including a proposal for “tech-enabled remote check-ins” for offenders in the community that could free up around 27,000 hours of Probation Service staff time every year.
MHCLG projects using AI to “expedite routine tasks”, check simple errors and help with administrative work such as note-taking will save an estimated 500,000 hours of staff time every year.
It is planning for £50m in annual efficiency gains by 2028-29, £45m of which will be through “workplace and digital reform” – which also includes plans for greater in-house delivery of services by reducing reliance on contractors. The department said it had achieved a 50% reduction in consultancy spend since 2023-24, but did not specify a target for the future. “Further efficiencies will be driven by building digital capability and learning platforms in-house, and using the Government Legal Department as the default for legislative activities rather than external firms,” it said.
MHCLG said it is also working with councils and other organisations to streamline the process of submitting data and information to the government for funding applications, as part of a programme that includes moving from custom software for each fund to a single platform. The department said that, as well as significantly reducing administrative burdens for users, process improvements would result from a standardised approach to reporting and monitoring, and more efficient data processing.
At the Department for Energy Security and Net Zero, efficiencies of £157m a year are planned by 2028-29, with £19m of that figure due to come from increasing workforce productivity by “integrating AI into the working habits of staff”.
DESNZ said it is also “exploring further applications of AI in its operational delivery” in planning, consumer-facing work, counter-fraud work, and policy design and consultation.
The Department for Transport is planning for £663m in annual efficiencies by 2028-29, but it does not give a breakdown of the figure for digital activities. Nevertheless, the measures are described as including “AI initiatives” to increase automation and self-service at the Driver and Vehicle Licensing Agency’s contact centre and the expanded use of robotic process automation software.
At the Driver and Vehicle Standards Agency, meanwhile, projects to modernise driver testing, including moving to digital test certificates and online test-route planning are proposed.
One area where DfT is predicting efficiency savings as a result of broader policy change is from the creation of Great British Railways, which is ending 30 years of rail-service privatisation through franchising.
The department said the transfer of rail services back into public ownership – which is due to be complete by 2027 – would create efficiencies and “remove duplication of functions”. DfT said its plans to “consolidate rail websites and ticketing” would bring efficiencies in operational running costs.
Cabinet Office eyes digital change
At the Cabinet Office, £40m of efficiencies are being targeted by 2028-29, of which £18m is set to come from “shared services, workforce and digital reform”.
The department, which until last year was the home of the Government Digital Service, said it is “committed to empowering staff with AI tools to enhance efficiency and deliver significant operational and productivity gains”.
£13.9bn
Cross-government annual efficiency savings target
2028/29
Target date for savings to be achieved
90%
Target for proportion of HMRC interactions to be conducted digitally, up from 70% currently
27,000 hours
Projected annual time savings for Probation Service as a result of remote check-in tech for offenders
It is also developing a new operating model that includes moving all digital teams and associated digital tools and platforms into the centre of the department. “This will generate people and commercial efficiency gains through reducing headcount and contingent labour, as well as reducing duplication of contracts, platforms and services,” it said. Those gains are projected at £3m a year.
“Digital improvements to services” accounts for more than half of the £312m in annual efficiencies expected to be delivered at the Department for Work and Pensions in 2028-29.
DWP said it would reform benefit administration through its “Service Modernisation Programme”, which includes a new delivery model that clusters services and takes advantage of AI and automation. One area in which the department is seeking to cut time spent on manual administration is by using AI and automation to review CVs produced by jobseekers.
Big investment at HMRC
HM Revenue and Customs secured £500m in revenue funding and £1.6bn in capital funding at the Spending Review to improve its IT and online services. In return, the expectation is that the tax-collection agency will become a “truly digital-first organisation” over the years to 2029-30.
HM Treasury wants to see at least 90% of HMRC’s customer interactions conducted digitally by the end of the four-year period, up from the current 70%.
According to the Departmental Efficiency Plans, HMRC is targeting the delivery of £773m in efficiencies by 2028-29. Of that figure, £126m is projected to come from increased use of digital services as the main form of customer-communication.
Some £235m in efficiencies is expected to come from improving and modernising the department’s IT estate in 2028-29.
The efficiencies document said HMRC’s strategy is to decommission its expensive-to-run legacy IT estate, and move to “software as a service”, buying modern platforms and services from the market.
It said the move would allow for connected data that paves the way to employ AI and other digital tools to “create internal efficiency and productivity”, as well as allowing for a streamlining of the volume of services and platforms used.
“Fewer platforms and services, operated under SaaS, will enable efficiencies across the current range of licences due to rationalisation of the IT estate,” the department said.
Pocket-money savings at HM Treasury
As the driver of the Spending Review, some may consider it ironic that HM Treasury has the smallest planned annual efficiencies figure for 2028-29 of any major department: just £13m.
Of that figure, just under half – £6m – is expected to come from AI and automation, via “embedding AI into the department’s work across policy roles and utilising it to deliver effective operational transformation”.
Part of that work involves the development of AI to automate case-allocation processes and use standard lines to produce draft responses.
The Treasury also said it is creating a new digital and data function within the department to drive wider tech adoption, implement new digital-first solutions and improve specialist career pathways.
Some £4m of the department’s efficiency target for 2028-29 is categorised as “non-pay”, which includes reducing its office-space footprint in the capital and “transitioning” to digital-only files.
