UK Spending Review prescribes £10B digital remedy for NHS

Between a borrowing rock and a fiscal hard place, Labour chases efficiency

In the UK's first multi-year Spending Review since 2021, the government has announced £10 billion ($14 billion) in NHS technology and digital transformation by 2028-29, an increase of nearly 50 percent on the current financial year.

The announcement comes as the Labour government plans to ensure department spending plans have digital transformation "baked in" to support greater efficiency across the public sector. The hopes are that it will ease pressures on the national health services especially, with the total waiting list for procedures and appointments standing at a whopping 7.43 million as of January this year, according to the NHS confederation.

The Spending Review 2025 statement, which sets departmental budgets until 2028-29 and capital investment until 2029-30, said the NHS would invest in "core technology infrastructure to optimize the use of clinical and administrative time and avoid delays caused by outdated technology."

The government plans to introduce a single patient record, "so patients are in control of their data and clinical staff can see test results and medical histories, reducing the administrative burden involved in accessing records, duplication and improving decision-making."

It also said the NHS would expand its use of the Federated Data Platform, a controversial system based on technology from US spy-tech firm Palantir, to "improve the management of resources and performance across the NHS."

NHS England, the non-departmental public body that runs the NHS in England, has already called for suppliers to detail technical and data architecture for the single patient record and identify technical challenges.

It will be Labour's second attempt to crack this problem. In 2003, it introduced the NHS National Programme for IT (NPfIT) with a budget estimated at £12.7 billion ($17.2 billion). Although it introduced a number of new technologies, it fell short of introducing electronic health records throughout the NHS. Estimates suggest around 12 percent of hospitals in England are still heavily paper-based.

The Spending Review also introduces plans for the UK tax collector, which gets an uplift in investment in digital services over this SR period of £500 million ($679 million) to make it a "truly digital first organization." By 2029-30, His Majesty's Revenue & Customs (HMRC) aims to make sure 90 percent of dealings with taxpayers are digital self-serve, up from around 70 percent in 2025.

"HMRC maintains a large IT estate with a large volume of legacy systems and platforms which are costly to run and maintain. Its strategy is to move to Software as a Service (SaaS), buying modern platforms and services from the market and decommissioning the legacy estate. These modern tools are cheaper to run, generating an efficiency upon decommissioning of the legacy system," the Spending Review document said.

The government has also promised a lift to R&D funding to reach £22.6 billion ($30.7 billion) per year by 2029-30. Benefiting will be the quango UK Research and Innovation, which gives out grants, and the UK's renewed membership of Horizon Europe, the EU-led research program. A new R&D Missions Accelerator Programme, designed to address national priorities such as healthcare and non-carbon energy, gets £500 million, which the government hopes will stimulate a further £1.5 billion ($$2 billion) of private investment. The Spending Review says it will top up the £800 million ($1 billion) allocated to the Advanced Research and Invention Agency (ARIA), the blue-sky research group launched by Boris Johnson's Conservative government, to £1 billion ($1.4 billion). The government has also promised up to £750 million ($1 billion) for a new supercomputer at Edinburgh University.

While investment in government IT might be welcomed, expectations for returns are high. The government says it will contribute to £13.8 billion ($18.7 billion) total savings by 2029. But as anyone in IT knows, programs get delayed, process changes can be tough to embed, and leadership focus can move on. IT can quickly go from being a magic bullet to a millstone. ®