UK govt promises digital reform in spending review. We've heard that before

How much wishful thinking has entered the pipeline will come to light in 2027

Opinion Today, the UK chief finance minister is set to detail government spending for the next three years and capital budgets for the next four. As the first multi-year spending review since 2021, it is a big deal.

After years of austerity and COVID-19, the pressure to spend taxpayer money will be great, but Rachel Reeves, Chancellor of the Exchequer, will be caught between the rock of raising taxes, the hard place of making spending cuts, and the cliff edge of increased borrowing.

Whatever she announces, though, the Labour government has told departments to reform how they invest in technology – some £14 billion ($19 billion) annually – and reflect that in improved efficiency, the magic bean on which every government places so much hope.

In a policy paper published in March, the Treasury found that past spending reviews had failed to take tech investment seriously.

"There is often insufficient funding for service maintenance and improvement. Financial pressures during and between Spending Reviews (SRs) often mean short-term savings are prioritized over long-term digital investments and spending on service maintenance is often deprioritized. This results in mounting technical debt with outdated legacy systems and hampers progress," said the paper jointly published by the Department of Science, Innovation and Technology (DSIT) and the Government Digital Service, which recently moved from the Cabinet Office to DSIT.

Evidence of the problem is not hard to find. In February, government auditors found that remediation costs for the UK tax collector's legacy systems had risen by up to 390 percent after MPs reported that government was likely to miss out on £1.75 billion in tax revenue because of poor digitization at His Majesty's Revenue & Customs (HMRC).

In 2021, a committee of MPs heard that the government did not keep a live register to track risks associated with legacy systems. When one was created, The Register revealed it was tracked on a shared spreadsheet.

Anyway, this time it will be different, or so March's joint paper says. The spending review awards will be based on a so-called Zero-Based Review (ZBR). The idea is that they will be justified from the ground up, rather than based on previous budgets. They will also require departments to take a "digital-first approach" to consider digital, data, and technology (DDaT) spending.

"Departments have been asked to involve their chief digital and information officer and internal digital functions when preparing ZBR returns," it says.

It goes on to say that an inter-ministerial group will check the results and "have a crucial role in ensuring that digital expertise is baked into consideration of fundamental reforms, including for areas not currently digitalized."

This may include an "external challenge panel to ensure key strategic judgments are informed and robust before SR25 settlements are finalized."

The joint review justifies the chance by saying "a paradigm shift in how the government allocates and funds digital programs is needed to ensure that it can enable better strategic investments in areas where long-term benefits are uncertain and more speculative, but the benefits are potentially large."

A long list of actions to back up its plans follows, including greater use of off-the-shelf solutions, changes to building the business case for smaller programs, and new funding models aligned to "the realities of digital delivery, reducing reliance on traditional processes and enabling more strategic, outcome-focused decision-making."

The review also promises a new set of metrics from the second quarter of fiscal 2025 – which we're about to enter in July – that will be integrated into "GDS-led performance processes."

If all this sounds good on paper, remember that government digital projects, just like those in the private sector, are prone to delays and failures in offering the efficiency they once promised, as HMRC has found.

How much wishful thinking has entered the spending review pipeline might only come to light when the next one begins in 2027. ®