Labour wins race to lead UK, but few would envy the load in its tech in-tray

Looming train wrecks face winning party after it promises investment and innovation

Analysis The United Kingdom woke up to the prospect of a new government this morning, but it faces old problems in tech projects, policy, and investment.

In policy, there are the challenges following Brexit including how to adapt data protection law, while there are new problems in how – indeed, whether – to create laws addressing the looming revolution AI. In investment, the UK has grand ambitions to become a world leader. In central government IT, the projects are too numerous to mention. But there are red flags to watch out for – some of them literally highlighted by Whitehall's own project watchdog.

Public sector tech projects

Starting with where your money goes, tax collector HMRC is facing a double barrel challenge. In July 2022, it began the hunt for a supplier to support its aging SAP system for tax collection, with the total contract value set at a maximum of £400 million ($511 million). It currently relies on a "highly customised version of the SAP ECC 6.0," which was launched in 2005. SAP is set to end mainstream support for ECC 6.0 in 2027, less than a year after the proposed contract ends. In January 2022, the authority awarded Capgemini a system support contract that runs out at the end of 2024.

HMRC is also looking at a challenging SAP overhaul to support its ERP system including HR and finance. The body is leading a group of Whitehall departments, which includes the Department for Transport (DfT) and Department for Levelling Up, Housing and Communities (DLUHC) under the umbrella of the so-called Unity program, which has already been awarded a "red" rating by the Infrastructure and Projects Authority (IPA). A red rating means "successful delivery of the project appears to be unachievable." The £500 million ($639 million) procurement has already begun.

HMRC is just one of the departments leading procurement for SaaS ERP systems to run central government departments in the shift to the new software model set out in the 2021 Shared Services Strategy for Government.

In June last year, the Department for Work and Pensions (DWP) launched a tender package worth up to £933.7 million ($1.2 billion) to lead a 12-year contract including both software and systems integration services that will also support Department for the Environment, Food and Rural Affairs (Defra), the Home Office (HO), and the Ministry of Justice (MoJ). The departments currently use different version of Oracle, with the Home Office already moved to the cloud with Oracle Fusion. In 2021, the MoJ cancelled its procurement plans for ERP to get in line with the new strategy.

In July last year, the Department for Science, Innovation & Technology (DSIT) – only formed in February 2023 – launched a procurement at £215.6 million ($275 million) for ten years, with the option of a two-year extension for a gaggle of Whitehall departments and arm's-length bodies. Called "The Matrix," it is the "trickiest" of the five clusters, Alex Chisholm, permanent secretary and chief operating officer of the Cabinet Office, told MPs in January.

The remaining two clusters are Defence and Overseas, which includes the Foreign, Commonwealth & Development Office, the Department for International Trade, and other units.

Seasoned watchers will know that getting a single ERP project right can be mind-bendingly complex – say hello to Birmingham City Council – but managing a string of projects at the same time while trying to keep budgets within the expectations of a government that promises to be frugal. Good luck with that one.

Outside Whitehall, public sector tech challenges abound, nowhere more than the NHS. Here, incoming Prime Minister Sir Keir Starmer has already said that "moving from an analogue system to a fully digital NHS … could totally reframe the NHS and how it operates, and save money."

Also in the NHS, Labour must decide what to do with the deeply unpopular Federated Data Platform project. Palantir bagged the £330 million ($412 million) contract under controversial circumstances in November last year. The government awarded the seven-year deal after the US spy-tech vendor netted contracts worth a total of £60 million ($75 million) without any competition. Use cases it has already built are set to transfer to the FDP.

Labour faces a dilemma over whether to ditch the contract and find another way to gather data to improve NHS efficiency or build on what has gone before, no matter how unpalatable some of its own team might find it.

Policy decisions Labour must make

On tech policy, Labour will face some tough choices, as politicians love to say. The Data Protection and Digital Information (DPDI) Bill, which the Conservative government created to allow UK law to diverge from European law on data protection following Brexit, was among the parliamentary votes dropped due to lack of time before the general election.

It has come under fire from experts who warned that independent oversight of facial recognition is at risk just as the policing minister plans to "embed" it into the force.

More broadly, legal experts have warned that the plans to create new data protection laws will make more work and add costs for business, while also creating the possibility of challenges to data sharing between the EU and UK.

Meanwhile, legislation governing the introduction of AI has been put on the back burner. The Conservative government opted not to introduce new legislation specifically for AI, instead promising £100 million ($125 million) to support regulators and researchers to cope with the challenges of introducing the new technology fairly and avoid people employing it for nefarious objectives. The EU, however, has introduced direct AI legislation, which oversees development, management, and deployment of AI models.

With few hardline Brexiteers in its government, Labour will need to decide whether it wants to move closer to the EU's position on both AI and data protection to make it easier for business to move data and develop technologies on both sides of the English Channel.

Science and technology investment

While promising not to raise taxes on working people, and without a significant expansion of government borrowing, Labour said it would invest £1.5 billion ($1.9 billion) in new gigafactories, £1 billion ($1.28 billion) in carbon capture technologies, and £500 million ($639 million) to support green hydrogen manufacturers.

In information technology, its industrial strategy aims to support AI development and remove planning barriers to new datacenters, which have been blocked in some locations.

Elsewhere, Labour has inherited the brainchild of Brexit strategist Domminic Cummings. The £800 million ($1.02 billion) ARIA project promises blue-sky research without specific definable returns. Modeled on the US military innovation outfit DARPA, it has been criticized for being slow to launch, although it is now off the ground.

With its ill-defined aims, it might seem low-hanging fruit for Labour cuts. But the party has indicated it will keep ARIA for now as it moves to ten-year funding cycles for R&D investment.


On data policy, Labour will be tempted to gently align with the EU. Despite the passions surrounding Brexit, it's difficult to see the detail of UK data protection law swinging votes one way or another. On tech investment, its plans seem laudable but it remains uncertain whether they will stand the test of public spending decisions if the economy does not go according to plan. It is public sector IT projects that will present Labour with the most difficult terrain. IT projects can be the graveyard of efficiency ambitions, especially as the leadership already appears to have banked the savings. There be dragons, Sir Keir. ®

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