Gov may need to splash £245m per year on IT contractors – NAO

Please come back freelancers, forget IR35: all is forgiven

The government will need to splash £145m per year on 2,000 digital staff - or £244m using contractors - if it is to meet the serious shortfall in skills, according to the National Audit Office.

A lack of capability in government is even more pressing as departments face the twin challenge of adopting new digital technologies while building in-house IT capability that until recently were mostly outsourced, noted the watchdog in its Capability in the Civil Service report.

Amyas Morse, head of the National Audit Office, said today: “The civil service is facing ever-increasing challenges. The work of government is becoming more technical, continuing budgetary restraint is putting pressure on departments and the decision to leave the EU means government will have to develop new skills and take on work previously done by others.”

However, the issue of skills will only be exacerbated as thousands of tech contractors are set to leave the public sector amid a major crackdown on the tax freelancers pay via IR35.

Departments may need to reprioritise projects and fill skills gaps in coming years because of internal change programmes and external challenges such as exiting the European Union, it said.

Government has identified three main capability gaps for the civil service: digital, commercial and project delivery skills. There are currently £405bn of whole-life cost of projects in the Government Major Projects Portfolio.

Previous reports have pointed out the cultural challenge for specialists of combining successfully with departmental teams dominated by generalist, policy-oriented civil servants, said the report.

“One of the starkest examples of how this can go wrong is the Rural Payments Agency and Government Digital Service’s failure to work effectively together on Common Agricultural Policy delivery.”

GDS currently aims to train at least 3,000 people a year in digital skills in its academy. ®